Financial Transparency: The Starting Point for Cloud Computing

-by Steve O’Connor, general manager for IT Business Management, and Michael Coleman, business management executive, BMC Software

 

Like many IT executives, you might be considering cloud computing as a way to costeffectively deliver IT services to the business. You’re not alone. IDC predicts that revenue from IT cloud services will grow from $17.4 billion in 2009 to $44.2 billion in 2013; this is a five-year annual growth rate of 26 percent, which is more than six times the rate of traditional IT offerings. (These figures do not include spending for private cloud deployments. They only include information for public IT cloud services offerings.) While cloud service providers are poised to reap these forecasted revenues, enterprise IT organizations also anticipate financial advantages from cloud computing.

 

The on-demand nature of cloud computing can result in significant cost savings for an enterprise, because end users pay for only the services they use and because the IT organization’s supply and demand model will be more effective. However, the cost could actually go up unless you do a cost-benefit analysis so that you can determine what services to move to the cloud. But how do you determine which IT services or resources can be more cost-effectively delivered through the cloud? To make that determination, you need to know your current costs to deliver specific services — you need financial transparency within the IT organization. Doing this analysis requires having the right information to make decisions.

 

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