With written contribution from Uri Maoz and Andy Wahl
I recently read an interesting article about a new analytics system that many NBA teams are using. This system records video of all its basketball games and collects information to a central database where the data is analyzed to offer insights that help optimize player’s game. For example, by using the system, the Miami Heat learned that when Chris Bosh is within 1.07 meters of the basket, he catches the rebound 74.6 percent of the time.
What does this have to do with cloud-based IT?
The NBA analytics system helps teams measure the ROI of its assets (players) when they’re used in certain situations—something that many organizations need to do with cloud IT. Most organizations lack the kind of transparency and data insights that can help measure and optimize their ROI on cloud usage. But what if you could collect and analyze data about cloud services and resource providers the way NBA teams track player performance? What kinds of analytics would you need? What benefits would your organization see?
Key business metrics that matter
How do you even measure the financial and business performance of cloud services?
Here are two examples that show you how to evaluate the financial health of your cloud business, as demonstrated using HP Cloud Delivery Optimization (CDO). This is a new solution powered by HP IT Executive Scorecard as part of HP Cloud Management’s business and financial reporting capability
Services Usage and Profitability — It’s critical to understand your organization’s usage of cloud services and their profitability. Let’s say you are delivering services, either to outside customers or to multiple internal departments. There are a few questions you need to ask yourself:
Which of your customers is using more services and paying more money?
Which services are being used most, and by which customers?
Which services are the most profitable?
What is the average cost to deliver a service?
What is the average lifespan of services?
Finding answers to these questions about your cloud business performance will help your organization make effective strategic decisions about how to optimize it. For example, Figure 1 is a screen captured from the mobile application of HP CDO (Figure 1), and shows cloud financials details about service cost, revenue and profit.
Resource providers’ usage — It’s also important to understand how your cloud services use resource providers like Amazon, vCenter or HPCS, and what they cost. The way resource providers charge for their services varies significantly, and understanding your actual usage vs. the cost can reveal opportunities for big savings. As you can see in Figure 2, the CDO solution collects usage and cost information about both private and public resource vendors, and presents a detailed picture for comparison.
These are just a couple of examples of the kind of financial and business metrics that organizations should measure when evaluating their cloud-based IT services. In my next blog, I will look at cloud performance, and how to more accurately measure it.