ROI Analysis and Costs of Lock-in of Cloud Services

ROI Analysis and Costs of Lock-in of Cloud Services are needed to to find the true value of the return on investment in cloud or rather shifting to Cloud. We discussed before about Return on Investment (ROI) and the potential risks of Lock-in effect that is associated with Cloud Computing. This article, ROI Analysis and Costs of Lock-in of Cloud Services basically combines these two divergent topics. Although divergent, for practical purpose, ROI Analysis and Costs of Lock-in of Cloud Services are quite related to net revenue.

ROI Analysis and Costs of Lock-in of Cloud Services : Basic Points

Most of the cloud computing services, specially SaaS, promise for a higher rate of ROI, but in order to find the real value of the return on investment in cloud computing services like SaaS, the companies or individuals need to dig deeper. First, for the company or the individual, to calculate the total cost of an IT service and compare it with the potential return on investment is a difficult task and cloud computing services is no exception if the level of difficulty is the parameter. A detailed analysis of the benefits of cloud computing to include the benefits in short, medium and long term as well as the termination costs.

Approaches Towards ROI Analysis and Costs of Lock-in of Cloud Services

Hidden costs, that the companies or individual users might not be able to detect in advance while moving to a cloud computing service includes the cost of return to in-house service, due to a change in regulatory or policy or unexpected expenses due to the initial migration of systems and the lock-in with a specific service model.

To calculate the investment needed to return to in-house service, companies must take into account several factors. These include the payment for the extraction and validation of data and the cost of hiring IT resources needed to accomplish this task. Migrating to cloud applications and services also includes a number of different costs that must be taken into account. Companies will indeed rewrite applications to operate in a virtualized environment and reformat the data to match the sizes of the SaaS provider.

It is important to look at the economic level of different cloud deployment models. It would be more effective in terms of cost to change the type of service or type of cloud deployment. Instead of using a public cloud or a private cloud, hybrid can eliminate the need to carry out some security checks. Using PaaS and IaaS services rather than SaaS mitigates the risk of technological lock-in. Each alternative should be analyzed to determine the best cloud model based on the environment.