New CIO Research Cites Cost Accounting Gap and Need for More Complete Metrics as Missing Links to Justifying Cloud and Virtualization Investments
SEATTLE, Wash. – March 10, 2011 – Apptio, the leading provider of on-demand Technology Business Management (TBM) solutions, today announced the findings of a survey conducted in partnership with the Worldwide Executive Council (WEC), a research firm that facilitates dialogue between executives and Wall Street investors. The survey entitled, “IT Survey on Cloud Computing, Virtualization, and IT Financial Services,” provides fresh insights into how CIOs and other IT decision-makers at large enterprise organizations are evaluating and implementing cloud technologies, with a focus on the specific financial metrics they use to rationalize their investment in cloud services. To download a free copy of the report, visit the Apptio Resources page.
While enterprise CIOs anticipate making a significant investment in private and public cloud technologies over the next twelve months, the survey reveals that the majority of IT decision makers often don’t have the necessary metrics to build an intelligent business case for moving applications and infrastructure components to the cloud. Moreover, the vast majority of those surveyed indicated that they neither possess the ability to track utilization nor are they able to recover these costs via “chargeback” or “showback”, further complicating their ability to calculate ROI for the business.
“Our research shows that while enterprise CIOs remain enchanted by the cloud and the promise of instant scalability and automated provisioning, they’re still struggling to understand the economic drivers behind the cloud decision,” said Keith Muma, Vice President of the Worldwide Executive Council. “Like a traditional supply chain manager, CIOs must be able to calculate their Cost of Goods Sold (COGS) to build a strong business case for the cloud. This survey demonstrates that fundamental metrics like tracking, utilization, and the ability to present a ‘bill of IT’ back to the business will become essential to CIOs as their cloud strategies mature.”
Key findings of the survey include:
- 80% of respondents get some amount of their current server infrastructure delivered through a private cloud, however, nearly 90% report they are not charging end-users based on their private cloud consumption, representing a significant gap in financial transparency and accountability of IT service costs;
- While a majority of IT executives (64%) believe that tracking utilization levels of virtualized and cloud infrastructures will be “important” or “very important” during the next 12 months, nearly 40% said they are not currently tracking utilization levels of virtualized and cloud infrastructure;
- Almost 90% of IT leaders surveyed believe it will be either important or ‘very critical’ to improve IT services tracking in virtualized and cloud environments in the coming year;
- 80% of IT executives surveyed believe metrics related to cloud would grow in importance over the next 12 months and almost 75% believe there is very high value in being able to accurately measure the COGS for their ‘cloud-based’ operations; and
- Nearly one-half of executives surveyed (48%) report the cost of cloud services to their business units as a lump sum of all IT costs while more than 20% do not provide any reporting back to their business units.
“Everyone is talking about how the cloud is transforming IT but too little is being said about the economic drivers that ultimately support the cloud decision,” said Chris Pick, CMO at Apptio. “As this survey demonstrates, most CIOs do not have the ability to precisely calculate what it costs to deliver IT services to the business. Without a solid understanding of their fully loaded baseline costs, they’re unable to benchmark their own services to third-party cloud providers and consequently, they’re incapable of delivering IT services at market rates. Technology Business Management solutions such as those provided by Apptio empower CIOs with the intelligence they need to fully understand when it does – and does not – make sense to move application and infrastructure components to internal or external cloud.”
The Worldwide Executive Council (WEC) interviewed 100 US CIOs from firms representing a broad range of vertical industries, including financial services, communications, business services, retail, manufacturing, healthcare, technology, media, engineering/construction, aerospace, oil and gas, wholesale/distribution, utilities, government, and entertainment. All CIOs interviewed work at firms with at least $50 million in annual revenues and indicated that their IT organization employ a shared services model, supporting multiple business units, functions, or departments with shared IT resources.
Apptio is the leading independent provider of on-demand Technology Business Management (TBM) solutions for managing the business of IT. Apptio enables IT leaders to manage the cost, quality and value of IT Services by providing deep visibility into the total cost of IT services, communicating the value of IT to the business through an interactive Bill of IT™, and strategically aligning the planning, budgeting and forecasting processes. Apptio’s TBM solutions play a critical role in helping companies understand and drive chargeback, virtualization, cloud and other key technology initiatives. Global enterprise customers such as Bank of America, Boeing, JPMorgan Chase, Microsoft, St. Luke’s Health System, and Swiss Re rely on Apptio® products and services to reduce costs and align IT with business priorities. For more information, visit the Apptio website or the Apptio blog.
Barokas PR for Apptio