Organizations can increase their ROI by reaping revenue growth and cost savings, and a host of other strategic and operational benefits through the cloud.
A recent SoftwareOne study of 300 IT leaders shows that as organizations advance on their cloud journey, their return on investment increases, their cloud investment costs decrease while their revenue and cost efficiency increase.
Organizations just beginning to migrate to the cloud – cloud beginners – invest 1.3% of their revenue in the cloud (average $2 million), while those more advanced – cloud leaders – invest 1.1% (average $4.6 million). .
Startups attribute a 19% reduction in overall business costs versus a whopping 25% for leaders attributed to cloud use. Similarly, 26% of startups benefit from an increase in revenue, with that percentage rising to 48% as these companies transform into cloud leaders.
Conclusions Cloud investments help companies:
- Scale your business
- Increase flexibility and agility
- Improve market competition
- Treat customers well
Bridging the Cloud Talent Gap
According to Craig Thomson, senior vice president of cloud and application services at SoftwareOne, the biggest surprise in the report is how many companies still don’t appreciate the cloud talent gap.
“They think they can gradually develop their skills,” he said. “But to build a bridge between where you are now and where you’ll be in two years, they need to inject new talent into their organization, whether that’s with new hires, contractors, or third-party consultants.”
Thomson says it’s important to understand the issues at the start – a cloud migration roadmap that covers technology stages, culture, processes and skills.
“You have to understand the gaps in your company and what you can do to close those gaps,” he said. “It’s very important to recognize early that there is a talent gap. It only gets harder if you wait.”
When it comes to successfully executing a cloud investment strategy, organizations must first and foremost understand that the cloud is becoming more complex, Thomson said.
“As a result, it can increase costs if not approached strategically,” he warned. “To avoid bad cloud spending, companies should start by looking at their entire portfolio of applications, consider what is most important to prioritize for modernization, and begin their journey toward cloud financial management.”
Control cloud spending with FinOps
Many companies are starting to implement FinOps practices, Thomson said, which they consider table stakes if they want to keep control of their cloud spending and be able to track what value or revenue their transformation initiatives are generating.
“Cloud financial investment can come through tooling — often multiple tools — consulting services, and, for larger organizations, people,” he said.
From Thomson’s perspective, the key to maximizing ROI is understanding the workload of the business case by workload, which will determine how companies will handle each workload when migrating to the cloud.
“Companies must ensure that every investment in capability drives a commensurate ROI for the business,” he said. “Planning how investments in the cloud will advance business efficiencies for customers or make your operations more efficient and effective is essential.”
For an effective cloud budget, an organization must consider all operating expenses associated with their cloud investment, including people, software, and provisioned resources.
Because cloud costs are changing in real time, ROI and unit economics will play a major role in decision making.
“The more clarity and insight a FinOps practice can provide into the optimization opportunities it can provide, the better positioned the organization will be to address these changing costs,” said Thomson.
This means organizations must create a culture of accountability, or shared responsibility across departments, regarding cloud spending.
“Ultimately, this helps ensure cloud and modernization efforts are maximized for long-term success,” he said.
About the author
Nathan Eddy is a freelance writer for ITPro Today. He has written for Popular Mechanics, Sales and Marketing Management magazine, FierceMarkets, and CRN. In 2012, he made his first documentary film The Absent Column. He currently lives in Berlin.