Trying to calculate the return of investment of internal IT services is a very difficult task. Businesses today want their costs justified on a service by service basis. There are problems with this approach though.

There is a lot of variously aged products which have been thrown together to make a system that by some miracle manages to work despite the incompatibilities that lie within it. Replacing and introducing a new system has its own set of problems and implications that will affect more than just the individual project.

When calculating return on investment factors such as power, cooling and square footage are normally attributed to the I.T department. It is very hard to determine the delivery cost of individual services without having some kind of individual metering.

Many vendors haven’t yet caught up with visualisation so the internal cloud may actually end up costing you more, yet moving them to a hosted provider may to end up been a cheaper option either. The licence costs of hosting a service locally could be very high and the removal from volume licence agreements could then raise the costs of applications in other areas of the business.

At a glance hosted cloud services seem to be the cost effective answer. Calculating the return on investment should be as easy as subtracting the up front costs. But in reality there are other considerations to be made.

The first thing to consider is that when a cloud service fails you lose money. The inability to access the services make the entire solution obsolete. This is why a service level agreement is crucial when having a cloud service system in place.

Integrating cloud services into your local I.T system could prove to be both very complicated and also very expensive. Costs such as the training of staff on the new system, a review of your internet connection, reliability and redundancy will all need to be considered.

Another major consideration is that of security and privacy. Security in a cloud service can be better than an internal system though placing customer information in a cloud service will bring legal considerations or adjustments to the business insurance.

Bringing together all the information required for a comparative analysis can be very tricky as it involves a lot of communication from different sections of your business. Management, I.T and accounting all have to come together for a comparative analysis.

Measuring the value of existing service delivery is a worthwhile exercise; inefficiencies creep in to all IT deployments over time. Once you can quantify the costs of business as usual, give various hosted services a go.

Tags: cloud services