Who Ultimately Pays for Cloud Computing? It Depends
When the department or user group of a company decides it wants to use a cloud-borne service, who ponies up with the money for the service? In the case of outside services from a providers just as Amazon Web Services or Salesforce.com, there may be discretionary funds within a line of business that are transferred via credit-card transaction. If there's an internal service within a private cloud, then, the question of who pays gets cloudy also. How much should the owner of a service carry the costs of design, maintenance, server provisioning and upgrades if other departments are tapping into said service?
Questions of cloud service funding and financial justification were explored in a new study of 500 IT and business professionals and 400 IT firms just released by CompTIA, the IT vendor industry association. In my previous post here at Forbes, I explored the staffing issues and opportunities identified in the survey that are arising as a result of cloud.
In most cases, it appears that information research departments end up paying the tab for everyone's cloud indulgences. Fifty-six percent of companies are paying for cloud solutions through the IT department's budget, and another 28% are specially requesting funds for a cloud transition.
Demonstrating the business drive to obtain services outside of IT departments, 48% of companies report they are paying for cloud solutions through line-of-business budgets.
The funds come through IT or line of business
Whether the funds come through IT or line of business, justifying cloud expenses has become elevated to that of other operational expenses - that is, more business financial executives are demanding to see where the payoff will occur. Fifty-three percent of respondents who calculate potential return on investment say that a "high level of detail is needed," and 47% need a moderate level. "It is likely that cloud solutions procured with standard operating budgets follow similar procedures," the CompTIA report states.
Cost savings is only one piece of the cloud ROI puzzle - and often not the best measure of cloud computing. Actually, the CompTIA report observes, "the number of firms that have found cost savings to be lower than original estimates steadily grows from year two of cloud adoption and beyond. Channel firms as well find that hidden costs add up over time, though the initial entry into the market is not cost prohibitive."
There are other potential benefits that may ultimately delivery far greater ROI, nevertheless are difficult to measure - agility, flexibility, employee and customer satisfaction, and time to market. Such factors require careful baseline measurements earlier, while and afterwards cloud projects are introduced. A company that employs cloud proactively and judiciously likely has a corporate culture that supports a wide range of research - from analytics to good employee relations - and in this way, it may be difficult to parse the impact of cloud computing initiatives on positive impacts to the bottom line.
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I am an author and independent researcher, covering technology, information innovation trends and markets. I as well can be found speaking at business IT, cloud and SOA industry events and Webcasts. I serve on the program committee for this year's SOA & Cloud Symposium in London. I am as well one of 17 co-authors of the SOA Manifesto, which outlines the values and guiding principles of service orientation in business and IT. Much of my technology work is in conjunction with Unisphere Research/ Information Today, Inc. for user groups including SHARE, Oracle Applications Users Group, Independent Oracle Users Group and International DB2 Users Group. I am as well a contributor to CBS interactive, authoring the ZDNet "Service Oriented" site, and CBS interactive's SmartPlanet "Business Brains" site. In a previous life, I served as communications and research manager of the Administrative Management Society, an international professional association dedicated to advancing knowledge within the IT and business management fields. I am a graduate of Temple University.
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