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Businesses that overlook ROI analysis are missing cost savings

Organisations have more chance of meeting their cost saving expectations following cloud migrations if they carry out ROI analysis before

Businesses are turning to cloud computing projects expecting cost savings, but many that don’t carry out return on investment (ROI) analysis are missing out.

A survey of 400 companies from Unisys has revealed that while 80% of businesses expect to cut costs through the cloud, many are not, which can often be blamed on a lack of ROI analysis.

It found that 59% of the companies did an ROI analysis, and of them 82% achieved expected savings. In contrast, only 57% of businesses that did not do an ROI analysis achieved their savings.

“Our research clearly shows that in cloud transformation, the old adage is true: ‘Failing to plan is like planning to fail’,” said Paul Gleeson, vice-president, cloud and infrastructure services at Unisys.

Migration to the cloud means weighing up many options, such as private, public, hybrid, community and other cloud combinations.

“Those choices can create unforeseen complexities that can easily derail expectations,” he said.

When it comes to the different types of cloud in use, the findings showed the use of traditional on-premise datacenters will decrease from 43% now to 29% in 2019, while private cloud use will increase from 20% now up to 28% in two years. Over the same period, public cloud use will rise from 18% to 21%, and hybrid cloud from 11% to 13%.

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The return on investment of a cloud project is difficult even for IT suppliers to predict the true cost of moving to the cloud, according to Mark Lewis, head of outsourcing at law firm Berwin Leighton Paisner.

“From the outside, we don’t really know the total cost of ownership when moving to the cloud, but I do know it’s far more complicated than we are led to believe,” he said.

“It is a whole project deciding what you are going to move to the cloud, how you are going to do it, who you are going to do it with and integrating it with your other systems.”

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