An initiative from The Open Group has developed a set of key considerations for how to build and measure return on investment (ROI) for cloud \n\ncomputing initiatives from a business perspective. By examining the benefits cloud computing offers organizations and showing the potential return it can \n\nprovide from the beginning, companies may find it easier to gain buy-in for cloud initiatives from the executive team, as well as the IT department. Cloud computing has been described as a technological change brought about by the convergence of a number of new and existing technologies.\nThe promise of cloud computing is identified primarily by the following key technical characteristics: \n\n\u2022 The ability to create the illusion of infinite capacity performance is the same if scaled for one or one hundred or one thousand users with \n\nconsistent service-level characteristics.\n\u2022 Abstraction of the infrastructure so applications are not locked into devices or locations.\n\u2022 Pay-as-you-go usage of the IT service; you only pay for what you use, with no or minimal up-front investment costs. You typically just use the \n\nservice through a connection and device.\n\u2022 Service is on-demand and able to scale up and down with near instant availability. Typically, no forward planning forecast is required.\n\u2022 Access to applications and information can be obtained from any access point.\n\nBut this is only half the story. These technical characteristics can also be found in many non-disruptive technology solutions. What sets the promise \n\nof cloud computing apart is that the rate of change, magnitude of cost reduction and specific technical performance impact that cloud computing can \n\nprovide is not just incremental, but can give a five-to-ten times order of magnitude of improvement.The Capacity-Utilization CurveThe famous graphic used by Amazon Web Services illustrating the capacity versus \n\nutilization curve has become an icon in cloud computing. The model illustrates the central idea around cloud-based services enabled through an \n\non-demand business provisioning model to meet actual usage.This model is important to businesses because one of the core precepts of cloud computing is to avoid the cost impact of over-provisioning and \n\nunder-provisioning of computing resources. This benefit is in addition to the opportunity for cost, revenue, and margin advantages of business services \n\nenabled by rapid deployment of cloud services with low entry cost, as well as the potential to enter and exploit new markets.We contend that years from now when cloud computing is seen in a historical context, the capacity versus utilization curve will be seen as an iconic \n\nmodel that had the same effect as previous well-known business models, such as Moore's Law, which, for example, has been seen as a major indicator \n\nof microprocessor speed in the computing industry and is now being applied to other industries, such as solar power, to define the rate of efficiency \n\nimprovements.8 Ways to Cloud Computing ROIThe problem with using the view of capacity and utilization alone is that it is a technology provider\/seller viewpoint essentially based on key \n\nperformance indicators (KPIs) rather than business benefit metrics. This model is primarily concerned with two specific measurements: \n\n\u2022 IT capacity - measured by storage, CPU cycles, network bandwidth or workload memory capacity as indicators of \n\nperformance.\n\u2022 IT utilization - measured by uptime availability and volume of usage as indicators of activity and usability.But effective cost\/performance ratios and levels of usage activity do not necessarily imply proportional business benefits. They are just indicators of \n\nbusiness activity that are not in themselves more valuable than lower operating cost. What is needed instead is a set of business metrics that build on the \n\ncloud computing model.The following are business metrics that can help translate the indicators from the capacity-utilization curve to direct and indirect benefits to the \n\nbusiness:1. The speed and rate of change - Cost reduction and cost of adoption \/de-adoption is faster in the cloud. Cloud computing creates \n\nadditional cost transformation benefits by reducing delays in decision costs by adopting pre-built services and a faster rate of transition to new \n\ncapabilities. This is a common goal for business improvement programs that are lacking resources and skills and that are time sensitive.2. Total cost of ownership optimization - Users can select, design configure and run infrastructure and applications that are best suited for \n\nbusiness needs. Traditionally this has often been decoupled when IT projects are handed off to production services. In cloud computing environments \n\nthese are joined up.3. Rapid provisioning - Resources are scaled up and down to follow business activity as it expands and grows or is redirected. \n\nProvisioning time compression can go from weeks to hours.4. Increased margin and cost control - Revenue growth and cost control opportunities allow companies to pursue new customers and \n\nmarkets for business growth and service improvement.5. Dynamic usage - Elastic provisioning and service management targets real end users and real business needs for functionality as the \n\nscope of users and services evolve seeking new solutions.6. Risk and compliance improvement - Cloud computing green capabilities can be leveraged through shared services.7. Enhanced capacity utilization - IT avoids over-and under-provisioning of IT services to improve smarter business services.8. Access to business skills and capability improvement - Cloud computing enables access to new skills and solutions through cloud \n\nsourcing on demand solutions.These measures define a new set of business indicators that can be sused to create a "score card" of your current and future operational business \n\nand IT service needs relating to cloud computing potential. The work of The Open Group is developing tools and frameworks to enable businesses to \n\nevaluate these cloud computing opportunities to focus on how flexibility, competitive advantage, compliance risk and security in all aspects of the cost of \n\ncloud adoption can be better defined in a business language.A full copy of the Cloud ROI paper written is available here.Mark Skilton is currently Global Director responsible for applications strategy and service offer development for Capgemini Global \n\nApplications Outsourcing Services. He can be reached at firstname.lastname@example.org.