The cost benefits of cloud computing and virtualization are still unclear, according to the results of a new survey conducted by Apptio, a provider of on-demand technology business management solutions. The "IT Survey on Cloud Computing, Virtualization, and IT Financial Services," made in partnership with the Worldwide Executive Council (WEC), offers insights on how CIOs and IT decision-makers at large enterprises evaluate and implement cloud technologies.
The survey focused on specific financial metrics to determine how enterprises rationalize their investment in cloud services. It found that while enterprise CIOs do anticipate significant investments in private and public cloud technologies during the next year, the majority of IT decision makers lack the necessary metrics to build a solid business case for moving their applications and infrastructure components to the cloud. The majority of those surveyed indicated that they don't have the tools to track utilization, nor are they able to recover costs through chargeback or showback methods, which complicate their ability to calculate ROi for business.
Eight percent of survey respondents indicated they get some amount of their server infrastructure delivered through a private cloud, but nearly 90 percent said they are not charging end users based on private cloud consumption, which represents a gap in financial transparency and accountability of IT service costs. And while 64 percent of IT executives believe that tracking utilization levels of virtualized and cloud infrastructures will be important during the next year, nearly 40 percent are not currently tracking the utilization levels of virtualized or cloud infrastructure.
The survey also found that nearly 90 percent of IT leaders believe it will be important or very critical to improve their IT services tracking in virtualized and cloud environments in the coming year. Metrics related to the cloud will grow in importance during the next year, according to 80 percent of IT executives, while nearly 75 percent of those surveyed believe being able to measure the COGS of their cloud-based operations is of great value. Almost half of those surveyed reported the cost of cloud services to their business units as a lump sum of all IT costs, and more than 20 percent do not provide any type of reporting back to their business units.
"Our research shows that while enterprise CIOs remain enchanted by the cloud and the promise of instant scalability and automated provisioning, they're still struggling to understand the economic drivers behind the cloud decision," said Keith Muma, vice president of the Worldwide Executive Council. "Like a traditional supply chain manager, CIOs must be able to calculate their Cost of Goods Sold (COGS) to build a strong business case for the cloud. This survey demonstrates that fundamental metrics like tracking, utilization and the ability to present a 'bill of IT' back to the business will become essential to CIOs as their cloud strategies mature."
"Everyone is talking about how the cloud is transforming IT but too little is being said about the economic drivers that ultimately support the cloud decision," said Chris Pick, chief marketing officer at Apptio. "As this survey demonstrates, most CIOs do not have the ability to precisely calculate what it costs to deliver IT services to the business. Without a solid understanding of their fully loaded baseline costs, they're unable to benchmark their own services to third-party cloud providers and consequently, they're incapable of delivering IT services at market rates. Technology Business Management solutions such as those provided by Apptio empower CIOs with the intelligence they need to fully understand when it does -- and does not -- make sense to move application and infrastructure components to internal or external cloud."
The WEC interviewed 100 US CIOs from a number of vertical industries, including financial services, communications, business services, retail, manufacturing, healthcare, technology, media, engineering/construction, aerospace, oil and gas, wholesale/distribution, utilities, government and entertainment. A free copy of the report is available through the Apptio Resources page.
Edited by
Tammy Wolf
