Cloud RoI: Are Indian CIOs moving ahead without it?

What is behind the modern Indian enterprises’ love for the cloud model? One would think, moving away from traditional IT would involve the CIO donning the hat of an accountant to plan initiatives in terms of RoI and explain his/her moves to the board quoting only stats.

IDC estimates that spending on public cloud services and infrastructure will hit USD 15.08 billion in 2018, an increase of 35.7 percent from 2017. Enterprises are increasing their cloud spend, but it is not the financial metrics or RoI calculations that are taking them there.

A recent ISACA survey reveals that 32 percent of surveyed enterprises did not calculate RoI for cloud services. In an interaction with CIO India, Indian IT leaders explain the idea behind their cloud journey, and what is driving success stories in the cloud.

Harnath Babu, CIO at KPMG India, says that the advantage of the cloud is that you can quickly try out something new. “Instead of provisioning a new datacenter and going through the whole development, you can go for a quick start to your project through the cloud. And then take a call on what works from a long-term perspective. It has more to do with agility.”

The ISACA report states that enterprises are increasingly justifying their cloud investment based on non- financial criteria. This could mean intangible factors such as user experience and better business agility or shifting funding from capital expenses to operating expenses.

“If my requirement is short-term or if I have peak workloads coming in, I’d go for cloud. I wouldn’t want to keep myself locked in on on-premise,” adds Babu.

But the choice is also driven by factors such as the size of the organization and duration of the project. RoI analysis is necessary when organizations have visibility in terms of how long the project is going to run, if it’s a stable workload, and deployed from scratch. “If you are starting afresh, then there has to be a clear business case. You have to evaluate the cost that will be incurred on-premise vs cloud. And a cloud model is not sustainable for long-running workloads,” he explains.

The ISACA Cloud RoI Survey reveals that fewer enterprises are explicitly calculating cloud RoI than in the past. It’s not that enterprises don’t see the value in calculating RoI, but there are a number of challenges including the lack of a reliable calculation model and investment driven by non-financial goals.

Pratap Pat Joshi, head-IT at Mercedes-Benz India says that RoI could be intangible or tangible. “For Mercedes-Benz India, our customer-facing applications are hosted on the cloud. We have not deployed any RoI tool as there are many other factors which you have to consider before moving data to the cloud,” he explains.

According to Joshi, RoI calculations could go wrong as market dynamics are always changing. “It’s difficult to calculate net scenario in terms of cost, however, a tool may be useful. But it may not be accurate,” he elaborates.  

Intangible factors such as customer experience, agility and transparency are driving cloud adoption for enterprises.

Debashis Singh, CIO at Mphasis India says that in the digital age, speed matters the most. “Customer experience, ease of usage and employee productivity are gaining priority today. Services industry is more aligned with the people. If internal employees or customers are unhappy about an initiative, then the return that you get from a business perspective is low,” he explains.

He elaborates that you cannot do a cost-benefit analysis on things that have a positive impact from a long-term perspective. “Calculating RoI is a traditional method, which is taking a backseat because it consumes a lot of time and effort, and does not give results in terms of agility that businesses currently want,” he points out.

In a nutshell, explains Harnath Babu, “Today’s RoI calculation can be very basic in terms of what you need to add more to the existing setup.” Depending on the workload requirement, it could be a simple business case. But yes, it is agility and customer experience that are driving cloud investments, he opines.