When considering return-on-investment (ROI) calculations, organizations tend to become too pre-occupied with manipulating the denominator – i.e., reducing spend. They often fail to focus on how deploying cloud services can create business value and deliver significant benefits to the organisation. Though the concept of benefits management pioneered by Cranfield University (Peppard, 2007) is not new to the business, it needs refocus in the cloud computing model. The compelling reasons behind the refocus of benefits management are:
- Cloud services focus primarily on cost – capex to opex
- Cloud services promise lower transaction costs due to multi-tenancy and scalability
- In a typical IT project the management attention is more because of the execution duration. This will prompt management to ask more questions about the benefits of the investment. In cloud computing there may not be a project manager and benefits owner.
- A cloud service can be initiated outside IT department and a business case can be created overstating the benefits. The organisation may lack the structure to monitor ongoing benefits
- Organisations need clarity between monitoring service levels and monitoring benefits. Many organisation focus mainly on cloud service provider’s service levels and overlook their internal benefits management
- Cloud service providers can provide many features that may be very attractive. However, organisations need to realize that they need business process changes in order to use those features. So, they may not end up using all the features
Principles of benefits management:
Cloud computing does not have any inherent value: It may be very obvious fact. We need to differentiate between “investment” and “cost”. If you are investing in a product/service/asset the value should increase with time without doing anything. The typical example is real estate (of course, in normal times!). When you subscribe to a cloud computing, with time the organisation value is not going to increase – unless the organisations utilise the service.
Cloud computing services enable people to do things differently: If your organisation is prepared to do things differently, cloud computing services will certainly enable you to do so. Some of the examples are:
- A small business subscribing to a CRM SaaS to increase their customer base
- A publishing company utilizing Amazon for managing their graphics storage
- A consulting firm subscribing to Agile Project Management services
- A non profit organisation using Infrastructure As A Service (IaaS) to manage their Disaster Recovery
Benefits must be actively managed for: We need to identify the person/group responsible for managing the long term benefits of a cloud services subscribed. Ideally there could be a Governance board or the business owner. Portfolio/Programme Management Office/ Service Management Office can have the monitoring responsibility.
The benefits management approach
For managing cloud benefits we need 3 things:
- A governance framework that is empowered to take decisions – approve , change, terminate cloud subscriptions
- A monitoring body, typically a Programme/Portfolio Office that will track the benefits of cloud computing
Processes (and tools) that enable benefits identification, tracking and reporting
Benefits Dependency Network (BDN)
The first two requirements are part of organisational structure. The existing structures can be modified to include cloud oversight and benefits management responsibility. Benefits Dependency Network (BDN) is the important piece of puzzle that traces the enabling features of the cloud subscription to the intended benefits.
Expanding Cloud Service capabilities:
We are now in an exciting time where the cloud service capabilities are expanding in a rapid pace. This expansion has its own drawback. The business needs to constantly scan the environment and choose the right service for them. A business cannot overlook the importance of market scanning.
Introducing Kloudax: Cloud Service Catalogue
To provide the business with a comprehensive profile of the cloud market, we created Kloudax. (www.kloduax.net.au )
Kloudax is a portal that provides an overview of the cloud market that enables the business to see “what is out there”. Kloudax groups the services in categories and provides additional tools that empower the business to make informed decisions. It also includes an introductory e-learning course and ROI calculator.
The portal is still evolving. Please do provide feedback. If you think some cloud providers are missing, please let us know. If you wish to add any features that will be useful to you, please provide feedback. Did I tell you that it is all free?
J.Peppard, J. Ward, E.Daniel, ” Managing the Realization of Business Benefits from IT Investments,” MIS Quarterly Executive, March 2007. online reference: http://www.som.cranfield.ac.uk/som/dinamic-content/research/documents/peppardwarddaniel07.pdf , viewed on 01 July 2012