Rethinking Cloud ROI from a Customer’s Perspective

by Louis Columbus on July 20, 2011

Seeing the proliferation of cloud ROI, TCO and cost calculators brings to mind my economics professors who strove with a passion to reduce complex consumer decisions into simple, very powerful formulas. Like these calculators pervading the market, my economics professors showed a passion for accuracy, precision and measured perfection.

The only trouble is that people, companies and markets defy and will deliberately not conform to an equation, cause-and-effect strategy or series of artificial incentives to get them to change. If there is one single, loudly reverberating fact in this economy, it is that marketing and selling strategies based on economic theory alone are failing. The business benefits of cloud computing need to be more integrated into these ROI and TCO calculators to make them relevant. They need to reflect more of the customers’ needs to be useful.

It’s Time To Bring The Customer and Their Strategies Into The Equation

Of the many white papers, e-books and websites all claiming to translate cloud computing server usage and capacity planning metrics into business benefits, the Open Groups’ white paper published in 2010 delivers useful insights. The research and analysis was produced by Cloud Business Artifacts (CBA) project of The Open Group Cloud Computing Work Group. You can find the entire document here.

The following table is from the section on building ROI for Cloud Computing using Key Performance Indicators (KPIs) and Metrics. While this table is a start, what’s missing are more metrics related to the Web customer experience. There needs to be more measures of whether customer experiences were successful or not by application, and if and how SaaS-based applications contributed to customers’ expectations being exceeded or not.

One of the biggest benefits all ROI and TCO calculators attempt to quantify is speed of cost reduction and time reduction, but what about speed of strategy execution? For many of these online tools, prospects using them would have no idea how their investment will accelerate their goals. All they see are costs related to the technology. Not much if any analysis is provided how the technology relates to their strategies being attained more quickly, completely and profitably.

And what about enabling channels to sell more effectively? Launching products on time, synchronized across online and offline channels and having consistency of messaging, pricing, services – in short the entire user experience– is rarely if ever mentioned. Ironically the greater the focus on ROI and TCO calculators, the greater the lack of focus on creating a truly exceptional customer experience while attaining complex selling strategies.

It’s time for the industry’s vendors to wake up and realize that they are selling for the most part to nonconformists not robots. ROI and TCO calculators that don’t reflect what customers really want to accomplish and stay centered on technology alone are missing huge opportunities to sell on value.

Bottom line: The comfort that comes from attempting to take the chaos of a market and crystalize it into an equation is an illusion – the real test of a vendor’s value is being able to navigate customers to their goals using technology when necessary, not as a crutch.

Cloud ROI and TCO Calculators

Amazon Web Services Economics Center http://aws.amazon.com/economics/

Amazon Web Services Simple Monthly Calculator http://calculator.s3.amazonaws.com/calc5.html

Astadia Cloud Computing ROI Calculator http://www.astadia.com/products-and-services/IT-cloud-transformation/roi/

Azure ROI Calculator (written in Silverlight) http://azureroi.cloudapp.net/

Commentary: http://social.msdn.microsoft.com/Forums/en/windowsazure/thread/c4155f48-d51f-4c14-b79c-3f8248ac9646

Azure TCO calculator http://www.microsoft.com/windowsazure/offers/

Cloud Business Review – Cloud Migration ROI Calculator http://www.cloudbusinessreview.com/cloud-migration-roi-calculator.html

EMC ROI Analyst (requires opt-in) https://roianalyst.alinean.com/emc/Welcome.do

GetApp Cloud Computing Calculator http://www.getapp.com/cloud-computing-roi-calculator

Google Cloud Calculator http://www.gonegoogle.com/#/company-name

Rackspace Load Balancer Calculator http://www.rackspace.com/cloud/cloud_hosting_products/loadbalancers/pricing/