Guest Blog: Evaluating a return on investment with cloud software

Computing in the cloud can be a boon for businesses, when done right. The accessibility of documents and resources over the Internet rather than running an internal IT infrastructure can save a lot of resources and time, which can help maintain operations outside of headquarters and allow expanding outside a certain range. Yet while most businesses see the potential with infrastructure as a service and other cloud solutions, there is one thing that is lacking in terms of how they can assess its success: return on investment.

This is the core metric of any analysis on whether to invest in any project, especially infrastructure, in a business. However, until recently there have not been many reliable ways of calculating this for cloud-based solutions. Now, as more businesses look to the cloud as a possible solution to their infrastructure, the need for ROI results has picked up.

The need for evaluation?

With cloud computing on the rise, the potential uses for businesses have split into three services. One is the well-known software-as-a-service, which covers components to a company’s operation, according to TechTarget. SaaS includes Web based services such as document creation and collaboration software, data analytics and file storage. The other more recent phenomena is infrastructure-as-a-service, which places IT equipment in the cloud and has it managed by an outside vendor.

The renting company controls security, software and databases in an IaaS solution, while the vendor covers the rest. The more advanced third form of this is platform-as-a-service, which has a vendor covering practically everything that is part of an IT infrastructure. With PaaS, the only thing the business manages is the software, renting the resting out from a service provider.

With such a diverse range of choices, having an accurate assessment on the ROI of a cloud solution is essential. In a report from Information Week, about 80 percent of business professionals surveyed said they were at least somewhat likely to be evaluating for ROI in any upcoming cloud-based integration projects.

There is good reason for this: Among those who were surveyed, 37 percent thought that using the cloud would be more expensive than using in-house IT, deliver worse results or both. That number increased to 53 percent when applied to IaaS solutions. This is in spite of 52 percent using SaaS technology and 38 percent using IaaS. In addition, almost 90 percent of respondents were at least somewhat concerned of excess costs caused by errors or hacking from a distributed denial of service attack from using the cloud, which is an important factor when measuring a medium-term ROI of about 3-5 years.

With these concerns, having a proper evaluation with cost analysis run against the benefits of using a web-based service can make a major difference in one’s business operations.

Originally published in the Sage ERP Blog, 8/6/2014 at 4:27 am by The Sage ERP Team.