It seems that almost every day we are bombarded by new stats about the cloud and its expected growth over the next few years. Among them are those that point to the private cloud market as the “one to watch” in the next few years. According to a recent Gartner report, “Polls show that IT professionals focused on the data center are concerned with public cloud computing security and privacy issues. Most plan to invest more in private cloud computing through 2012.”* The growth of public cloud also continues to grow at a steady clip, with Gartner predicting that “by 2015, 50% of Global 1000 enterprises will rely on external cloud-computing services for the top 10 revenue-generating processes.”**

By all accounts, the cloud has made a lasting impression on the way IT is delivered. But, now that the honeymoon stage is coming to an end, the insight that is consistently missing from these findings is how, if at all, companies are measuring and relaying the cost, quality and value of cloud services. With the role of today’s CIO shifting from a provider of technology components to that of an IT supply chain strategist, their new priority will be to understand how to maximize business value by leveraging multiple supply chain options, including all forms of public and private cloud as well as traditional IT and outsourcing options. This includes understanding the total cost and value of IT services delivered through any delivery model, analyzing the ROI of private and public cloud projects, providing proper cost and quality transparency to line of business units, and managing the mix of vendors, services and delivery options for optimal financial benefit. In short, they will require a new breed of real-time metrics and control systems to manage the economics of New IT.

The need to manage the cost and quality of the cloud has quickly become one of the biggest drivers behind a movement knows as Technology Business Management or TBM.  The premise behind TBM is to help CIOs look at IT through the lens of a business leader. By extension, that means having the ability to compare the overall value of internal IT services to those provided in the cloud. As the cloud novelty wears off, and companies focus on maximizing value in operations, we are seeing more companies report that cloud services aren’t always the most cost-effective option. Clearly, this type of analysis cannot be accurately assessed until the metrics are in place to make an apples-to-apples comparison between internal and external IT services.

In closing, we’d like to hear from those of you in the trenches. Has the availability of public cloud services placed you under more scrutiny by the CEO or CFO to demonstrate the cost and value of IT?

*Gartner, Inc., Tom Bittman, April 30, 2010, Private Cloud Computing Plans from Conference Polls

 **Gartner, Inc., David Mitchell Smith, November 22, 2010, Predicts 2011: Cloud Computing Is Still at the Peak of Inflated Expectations