Cloud and ROI

Pricing program budget overrunsA new report from Nucleus Research finds that cloud computing delivers more than just fast deployment and low upfront costs. Nucleus says that on average, companies find 1.7 times greater ROI than on-premise deployments. The research firm looked at 70 cases studies ranging from $30,000 to $10 million.

Overall companies spent 40% less on consulting fees and 25% less on application support personnel. Application changes can often be carried out by business analysts versus developers, and the cloud vendor takes over much of traditional application support and maintenance.

Apparently the biggest benefit of all is that cloud ROI improves over time. Nucleus points out three major differences with cloud computing:

  • Because of the iterative nature of cloud projects, and the fact that business users can expand and adapt their use over time (often without additional consulting investment), companies are more likely to expand the footprint or workflows of cloud applications without additional consulting costs.
  • Because new users can easily be added over time, companies are more likely to expand the user footprint as they identify opportunities for more value.
  • Because most cloud upgrades are relatively transparent to end users, companies can take advantage of incremental upgrades to drive greater productivity in areas such as mobile access, integrated analytics, improved workflows, and a more intuitive user interface.

In all, four out of five cloud deployments found an  incremental  increase in benefit without a corresponding increase in costs. Nucleus concludes with a stinging assessment of on-premise benefits: “Only organizations that plan to never grow, change, or upgrade their application after its initial deployment are likely to achieve better ROI from on-premise applications than cloud ones.