In the past two blogs we’ve looked at the inertia of Enterprise IT and the issues with use-case development for private cloud. Today it’s the business case.

Business cases are typically written for, and approved by, senior management who don’t fully understand technology – its possibilities and limitations. They use IT services more than most demographics and always want the latest tech – for themselves at least!

So what is the business case for private cloud?

Is it to increase revenue? Possibly, in some indirect not-so-obvious way.

Is it to decrease costs? Not at all, unless you were really inefficient to begin with. It does reduce the transaction cost of establishing a new platform but that is but one smallish component of a projects cost. Building a private cloud requires a big upfront investment with no immediate return, a real “field of dreams” situation. Cloud is about speed, automation, self-service and a little experimentation.

A business case must be able to measure and demonstrate success. You need a metric and it’s difficult to measure cost reduction or revenue improvements with a private cloud. You could use project delivery and time-to-market metrics. You could measure how many applications are running on your private cloud. You could measure developer satisfaction and/or usage. None of these metrics are easy to measure or necessarily translate to a successful outcome though. If project delivery times go down is it related to cloud or other improvements? If you measure how many applications are running on the cloud is it just shuffling your existing portfolio around?

The truth as I see it is this. IT has to transform to meet modern requirements and Cloud computing is one necessary component. Disruptions like big data, mobility, wearables, gamification, social networking, high speed networking, Internet of things, global logistics & resourcing can’t be delivered effective using traditional IT.  Practices like Agile and DevOps – and other things – complement cloud computing for these same ends. IT now plays in a border-less environment with abundant resources, nimble competitors and changing technology. The game has changed.

So cloud is one piece of an IT transformation. But why a private cloud? It’s hard for business users and developers to get excited about internally provided services they can get from Amazon, Rackspace, Google or Microsoft already. Enterprise IT wants to demonstrate robustness, stability and change control but users really only care about usability and provisioning times.

To demonstrate the value of a private cloud you need to demonstrate success in the realm of all this disruption and it has to be something that is difficult to do in the public cloud for security, legal, integration or performance reasons. Choose a significant project/platform in this realm, and bolt it to your private cloud project. A champion project for your cloud.

Your business case then includes a complete end-to-end platform and the success of the private cloud is tied to success of the champion platform, by how well the platform is “harnessing change for competitive advantage”. For example, how do the release cycles compare to your existing platforms? What are the scale limitations? How easy is it to add features and fix bugs compared to your legacy platforms? How well does it perform in the digital world? Do developers use the private cloud? Can users get at the data anywhere and any time? What is the next project that could benefit from this approach?

The business case for a private cloud stacks up only if you have a significant partner at the beginning, or at least very early on. This could be a significant project, application or business area. Sure, run some proof of concepts to familiarise yourself with cloud technology but then get this key user who can provide feedback on the platform, someone who can do regular releases on the platform, someone who depends on your cloud to run their business. This partnership could then be the seed for a new digital enterprise.

In the next post we’ll look at all those thing’s private clouds can’t do!