Industry

How organizations are measuring cloud success

Share this post:

Cloud adoption has entered the mainstream.

Organizations are embracing cloud to drive enterprise-wide innovation that improves customer relationships while delivering operational efficiencies.

But how are they 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 return on investment (ROI)?  What other key performance indicators (KPIs) are they tracking?

Data collection for our latest IBM Institute for Business Value (IBV) study titled “Tailoring Hybrid Cloud” reveals how organizations are evaluating their progress throughout their cloud adoption journey.

Criteria for 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 premises. 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 ROI.

measuring cloud success 1

ROI calculations for evaluating cloud initiatives

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

measuring cloud success 2

ROI calculations are important in evaluating cloud initiatives in other ways.  More than half (60 percent) 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 percent of organizations employing ROI as a results metric, measuring the impact of a cloud initiative after it has been implemented.

measuring cloud success 3

KPIs for measuring cloud adoption success

More than 50 percent of the executives surveyed rely heavily on financial metrics — principally, cost and ROI— to determine the path to success for their cloud initiatives. We also asked 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. Nearly half (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.

measuring cloud success 4

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

More Industry stories

IBM and Intellect Design Arena aim to transform large banks with cloud

A new set of solutions from IBM and Intellect Design Arena will bring APIs, machine learning, predictive analytics and more cloud capabilities to automate and customize corporate banking. IBM will work with Intellect Global Transaction Banking (iGTB), a subdivision of Intellect Design Arena, to “jointly develop applications, cloud services and infrastructure for financial institutions (FIs), […]

Continue reading

Enable your smarter business with IBM Cloud

Think about the last time you traveled on an airplane. The airline’s cloud played a critical role in your experience, from the app you used to book your flight, to checking in at the kiosk, to the on-demand notifications that told you where to pick up your bags. Today, your cloud strategy needs to be […]

Continue reading

Automated platform for processing workers’ compensation claims runs on IBM Cloud

Workers’ compensation insurance covers employees who get injured at work and lose their ability to earn income. Typically, the employer agrees to pay an injured employee so they are not personally financially affected because of something that happened while they were working. What that means, though, is the compensation is also high in comparison to […]

Continue reading