Private Cloud: It's Not About ROI

Most private cloud discussions revolve around the return on investment of the architecture. Many discussions begin and quickly end with ROI. The reason is that ROI is very difficult to show in real numbers for any IT investment, but more so when the majority of the costs are soft costs.

ROI is an important factor and can’t be left out of discussions, but it’s not the only factor and likely not the most important factor. Private clouds provide business agility, and business agility provides many things. Bringing new internal services online faster can help a sales force be more effective and thus create more profit. New customer-facing services adopted rapidly can create new revenue streams. Getting services to corporate end users more quickly can increase security/compliance by negating the drive for them to turn to "shadow IT" deploy-it-yourself public services (such as Dropbox file sharing and Google Docs).

IT originally enabled business--that is, gave it advantages over competitors. During the past 20-plus years, we’ve become a cost center--a drain on profit and a necessary evil. Think back to the first email systems deployed. Prior to those, companies were using written memos, phone calls, letters, and so on. If you deployed an email system before your competitor, you now had the advantage of faster communication and therefore the opportunity to capitalize on that and create more revenue. Over the years, we’ve slipped from that to a "keeping up with the Joneses" IT model. We burn money to keep the necessary IT lights lit.

Private cloud is not about reducing the money burned on the IT cost center; it’s about returning IT to its rightful place as a business enabler. Using orchestration and automation workflows to provide rapid, on-demand services to the end user allows IT to move at the pace of business. Self-service portals in the hands of the user provide a platform for innovation through trial and error without the wait times of traditional IT provisioning. Have an idea for a Web app? Check out a 30-day lease on X compute cycle, Y storage space and Z performance profile. Didn’t work out? Don’t renew the lease, and the resourcesreturn to the pool.

As important as the rapid provisioning and on-demand service is the chargeback and reporting capabilities. Regardless of whether you actually charge back costs to departments or business units, tracking the ITspending of those units provides visibility into how effectively resources are utilized. Business Unit A uses 63% more resources than Business Unit C but provides half the revenue? Why? This doesn’t onlyprovide the negative "what are you doing with these resources?" capability, but also the positive ability to more easily gain sponsorship for IT spends. For example, a successful business unit that is shown its actual resource utilization and the profit it helps generate may be more willing to sponsor that storage capacity increase you require.

When assessing a private cloud deployment, don’t get hung up on ROI. Yes, money is always important, but remember that the service and benefits you’re trying to provide are equally or more important. I alwayslike the analogy of purchasing a car: Sure, I can get the bottom-of-the-line model and get myself to and from places, but that next model up with in-dash navigation and premium sound may be what I pick. Can I show ROI on that premium model? Probably not with realistic numbers because it’s all based on soft costs, but knowing that I won’t be getting lost as often and the ride will be more comfortable when I’m stuck in traffic has a value of its own.