Building a Business Case for Cloud Computing

Your business case needs to be brief and communicate the basics of cloud computing in a manner that is easy for a layperson to understand. Analogies are a good way to convey this information to nontechnical audiences, such as your executive leadership team.


Complex ConceptAnalogy
Cloud computing is billed based on actual usage on a recurring basis, and does not require an upfront investment in computer hardware, networks, staff, or facilities.Cloud computing is similar to purchasing electricity from the utility company. When you use electricity, you get a bill from the utility. The utility customer doesn't have to invest in purchasing or maintaining power generation equipment, staff, or facilities.

Economies of Scale

One of the benefits of cloud computing is the ability to take advantage of economies of scale. Cloud service providers provide a large-scale platform to a number of different clients, which reduces the unit cost that each client pays.

In a traditional on-premise IT model, each organization has to invest in data center facilities, telecommunications links, network infrastructure, servers, storage, staffing, applications, and databases. Under a cloud computing model, an organization can simply rent these items from an organization that invests in these items on a much larger scale.

Return on Investment (ROI)

Calculating the return on investment (ROI) (the amount of return on an investment relative to its cost) is critical for an organization's decision-making process. Organizations are more likely to invest in an initiative if you can provide management with evidence that the investment will pay off financially. For example, if you find that moving the organization's infrastructure to the cloud will result in a 431 percent annual cost savings, then you should highlight this savings in your presentation.

Building a business case for cloud computing comparing on-premise vs. public cloud computing and a return on investment.

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In this case, ROI would be calculated with:

gain from investment (GFI) = $10,073 - $1,596
cost of investment (COI) = $1,596

ROI = (gain from investment - cost of investment) / cost of investment

($8,477 - $1,596) / ($1,596) = 431%

ROI = 431%

On-Premise Model vs. Cloud Model for Data Storage
On-Premise ModelCloud Computing
Hardware/software hosted on-premise by the organizationHardware/software is hosted off-premise by an external organization (public cloud model).
Provisioning is based on estimated peak demand, which can lead to insufficient resources during peak periods and a surplus of resources during normal periodsProvisioning is dynamic based on actual demand.
Internal IT staff support the entire technology stack -- data centers, networks, compute, storage, applications, and databasesStaffing requirements can vary, depending on the type of cloud services acquired. If all infrastructure needs are provided by the cloud provider, then an organization could eliminate many IT positions such as network administrators, systems administrators, and data center staff.
Capital expense budgets are required, and it can take a long time to add capacity or refresh systemsCapital expense budgets are no longer required, and additional capacity can be added quickly.
Departments may or may not have financial chargebacks for IT servicesBilling is automated, and reports can be provided for finance to charge individual departments.
Source: The Open Group. (n.d.). Building return on investment from cloud computing. Retrieved from

IT Business Needs

You will need to assess the IT needs or requirements of the business to determine whether cloud computing is a feasible option for the organization. To evaluate what the IT business requirements are, you should look at the company's historical IT needs (current IT infrastructure), future growth areas of the business (new business and expected growth projections), and evaluating financial factors (ROI, TCO, IT budgets, service costs).

Cloud Reference Model

A cloud reference model or architecture helps you to better understand the different parties that perform transactions, processes, or tasks in a cloud computing model, as well as the interactions between these parties.

Cloud reference architecture of a cloud provider, cloud consumer, cloud auditor, and cloud carrier. This also includes service orchestration, cloud service management, security, privacy, and cloud broker.

Source: National Institute of Standards and Technology. (2011). NIST cloud computing reference architecture. In the public domain.

Cloud Architecture

Cloud architecture is a term referring to the various components required under a cloud computing model. For example, in an infrastructure as a service (IaaS) delivery model, these components might include compute and storage nodes and network connectivity, and it is up to the cloud architect to determine how these components should interact with one another. In a software as a service (SaaS) delivery model, these components might include front-end interfaces (web, mobile), middleware (business-specific applications, application servers), back-end (databases), load balancing, and caching services (Akamai, memcached, Amazon ElastiCache).

Cloud Migration Methods

Organizations moving to cloud computing models need to evaluate how to migrate their existing IT workloads and data. Each organization has to evaluate whether it wishes to hire a third party to help facilitate the migration, or perform the migration using its own IT staff. Different migration methods may be used depending on whether it is an application, database, or infrastructure services.

Current Trends in Cloud Computing

Cloud computing is fast-paced and rapidly evolving, so the current trends today will be different than the trends tomorrow (Boulton, 2016).

  • Some organizations may shift away from private clouds, in favor of less expensive public cloud implementations.
  • Cloud cost containment is very important, and new cost management tools are being developed to aid in this.
  • Applications are being rewritten as native cloud applications.
  • Enterprise applications are moving to the public cloud.


Boulton, C. (2016, November 2). 6 trends that will shape cloud computing in 2017. Retrieved from

Khasnabish, B. (2010). Cloud reference framework. Retrieved from

Liu, F., Tong, J., Mao, J., Bohn, R., Messina, J., Badger, L., & Leaf, D. (2011). Special publication 500-292: National Institute of Standards and Technology (NIST) cloud computing reference architecture. Retrieved from