How Organizations Are Measuring Cloud Success

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Cloud adoption has entered the mainstream.  Organizations are embracing cloud to drive enterprise-wide innovation that improves customer relationships while simultaneously delivering operational efficiencies.

But how are enterprises measuring the success of their cloud initiatives?  What criteria are they using to decide which workloads should move to the cloud?  How are they using ROI?  What other key performance indicators are they tracking?  Data collection for our latest IBM Institute for Business Value (IBV) study entitled, “Tailoring Hybrid Cloud” reveals how organizations are evaluating their progress throughout their cloud adoption journey.

What criteria help decide which workloads move to cloud?

Since not every workload is suited to the cloud, organizations must decide which functions should be migrated to the cloud and which should stay on-premise.  We discovered four predominant metrics that organizations employ to determine which workloads should move to the cloud:  cost, security and compliance requirements, timing/speed to market, and estimated return on investment.

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How are ROI calculations used for evaluating cloud initiatives?

In most organizations we surveyed, ROI is used extensively throughout the cloud adoption process.  80 percent of enterprises say that ROI is a key input to their decision-making process for their future cloud initiatives.  77 percent of executives surveyed are confident in their abilities to effectively use ROI to accurately measure their cloud initiatives.  Finally, 74 percent of business leaders say they consistently and objectively compare their achieved ROI with the original expected ROI for their enterprise cloud initiatives.

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ROI calculations are important in evaluating cloud initiatives in other ways.  60{07c2b926d154bd5dc241f595a572d3349d41d98f2484798a4a616f4fafe1ebc0} of enterprises use ROI as a process metric to help prioritize their portfolio of cloud initiatives.  This popular use of ROI is closely followed by 59{07c2b926d154bd5dc241f595a572d3349d41d98f2484798a4a616f4fafe1ebc0} of organizations employing ROI as a results metric – measuring the impact of a cloud initiative after it has been implemented.

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What key performance indicators (KPIs) are measuring cloud adoption success?

We’ve discovered so far that over 50 percent of the executives we surveyed rely heavily on financial metrics – principally, cost and ROI – to determine the path to success for their cloud initiatives.  Finally, we asked our survey respondents to name other key performance indicators they track when measuring the benefits of cloud adoption.

Once again, a financial metric is the most popular.  47 percent of organizations report they track increase in revenue margin.  Yet another financial metric – rate of change in the reduction of total cost of ownership (TCO) – comes in a close second with 45 percent of executives emphasizing this key performance indicator.

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For more findings on how hybrid cloud can address an enterprise’s unique needs, including recommendations for getting started, consider reading “Tailoring Hybrid Cloud: Designing the right mix for innovation, efficiency, and growth”.

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