Too often ROI is more a feeling than a real measure. Here is my proposed approach to structure a way to understand the ROI.
Using a technique learned in French school, let’s split the problem into its components.
ROI can be split into
- Return: Assuming money being the unit of measure, then the amount of money generated by the investment is the return.
- That return must be related to a business metric (sales or transactions).
- The return (i.e. the amount of money generated by the investment) needs to be easy to obtain.
- There must be a recognition of what good looks like and what is a good ROI. This might change over time as the FinOps practice matures.
- Investment what is the investment, how is it calculated, does it include people costs, running costs. Are we checking the investment of a cloud migration, or the long term return in a Cloud strategy?
ROI is not simple, but applying some thinking ahead of time and agreeing on what good looks like, can go a long way.