More organisations opting not to calculate cloud ROI, ISACA finds

An interesting series of findings from ISACA in its latest report: almost one in three organisations polled are not calculating return on investment in their cloud computing initiatives.

The findings, which appear in a report titled ‘How Enterprises Are Calculating Cloud ROI – And Why Some Enterprises Are Moving Ahead Without It’, reveal how companies are increasingly moving away from the ROI model. “If ROI is not calculated in advance of implementation, it becomes difficult to validate or refute the expected value,” said Ed Moyle, ISACA director of thought leadership and research.

As a result, enterprises who are not going down the ROI route are instead calculating cloud investments by non-financial criteria, such as greater business agility, and shifting funding from capital expenses to operating expenses.

78% of the more than 100 CIOs polled said their enterprise has implemented some form of cloud computing. Of that figure, 84% said their organisation uses software as a service, with 49% using infrastructure as a service and 36% platform as a service.

Just over a third (35%) of respondents said they calculated ROI on cloud initiatives before and after implementation, compared with 29% who only do it before implementation, and 4% who opt for after. Of those who do calculate ROI, just under half (49%) opt for a hybrid model, compared with a quantitative (45%) and qualitative (23%) model.

When it came to what factors organisations considered when putting together their ROI calculation, operational expense formed 98% of responses, while capital expenses or savings (91%) was also highly considered. Changes in staffing requirements – cited by 68% of those polled – business impact (66%) and transition expenses (57%) were also cited by the majority.

The wide range of responses and lack of consensus leads ISACA to one conclusion; the need for an industry-wide tool. “Although the majority of enterprises do continue to calculate cloud ROI at some point in the cloud implementation process, the challenges associated with the mechanisms available for them to do so are clear,” the report concludes. “Without an industry-wide consensus for cloud ROI calculation, adoption of a formalised model is understandably stunted.”

The issue of calculating cloud ROI has naturally been around since the very first initiatives. ISACA itself proposed such a universal model in its previous ‘Calculating Cloud ROI: From the Customer Perspective’ whitepaper. Back in 2011, this publication explored some of the models around at the time, including Azure, Amazon Web Services, and VMware.

You can read the full ISACA paper here (registration required).