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Introduction

This report explains the current IT spending patterns, and how the metrics used to support any cloud strategy must be carefully analyzed taking into account other elements such as workloads, cost, and value.

Highlights

  • Stepping back and taking a more considered approach to the cloud, actually treating it like any new technology, reveals that the cloud is not a singularity, or a silver bullet, but rather a concept that has many interpretations.
  • Ovum believes that cloud economics, the subject of this report, is a more complex equation than people first think.
  • The second and third order realities of the cloud revolve around the elasticity and security/privacy concerns of organizations.

Features and Benefits

  • Learn why CIOs must gain more granular visibility into IT spend and how it relates to business activity.
  • Discover how service integration and management (SIAM) represents the ongoing cost of managing IT delivery.
  • Discover why the challenges with understanding cloud economics are many and varied and cover more than just hard financial metrics.
  • Understand the main costs and key benefits associated with delivering IT.

Key questions answered

  • How is the spending ratio between cloud and on-premise changing IT budgeting?
  • What is the biggest challenge for cloud computing in 2017?

Table of contents

Summary

  • Catalyst
  • Ovum view
  • Key messages

Recommendations

  • Recommendations for enterprises
  • Recommendations for vendors

Understanding IT budget and where the majority of the budget is spent

  • How the spending ratio between cloud and on-premise is changing IT budgeting
  • Cloud links more of the IT spend to business activity, but does not solve all the issues

Service integration and management (SIAM) represents the ongoing cost of managing IT delivery

  • Why the current process-centric approach to service management must be augmented to solve the challenges of service delivery in the cloud

The challenges with understanding cloud economics are many and varied

  • Cloud costing is a complex mix across different service types
  • The metrics used can cause greater confusion

Main costs and key benefits associated with delivering IT

  • Capturing all the costs is critical for an informed decision
  • The value a business derives from its use of IT is often underreported

Ovum's simple cloud economics model

  • Bringing all the elements together might not always provide the expected answer
  • Understanding the workload characteristics
  • Comparing costs is only part of the equation to get the organizational maturity, or readiness, for the cloud

Appendix

  • Methodology
  • Further reading
  • Author

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