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Is the cloud a good investment? Does it deliver strong returns? How can we invest responsibly in the cloud? These are questions IT and finance leaders are wrestling with today because the cloud has left many companies in a balancing act—caught somewhere between the need for cloud innovation and the fiscal responsibility to ensure they are investing wisely, getting full value out of the cloud.  

One IDC study shows 81% of IT decision-makers expect their spending to stay the same or increase in 2023, despite anticipating economic “storms of disruption.” Another 83% of CIOs say despite increasing IT budgets they are under pressure to make their budgets stretch further than ever before—with a key focus on technical debt and cloud costs. Moreover, Gartner estimates 70% overspending is common in the cloud. 

The need for cloud innovation amid economic headwinds has companies shifting their strategies, putting protective parameters in place, and scrutinizing cloud value with concerted efforts to accelerate return on investment (ROI), specifically on technology.  

New Parameters Designed to Protect Cloud Investments 

While many companies are delaying new IT projects with ROI of more than 12 months, others are reducing innovation budgets while they try to squeeze more value out of existing investments. Regardless of how pointed their endeavors are, most IT and finance leaders are looking for ways to better govern cloud transformation. That’s because, in today’s economic climate, leaders aren’t just responsible for driving ingenuity, they are held accountable for ensuring the company is a good steward of its technology investments with concentrated emphasis on: 

ROI: Capitalizing quickly on new cloud technology, recognizing benefits, and taking ownership of IT assets, success measurement, and feedback loops Operationalization: The ability to effectively use and secure cloud assets as well as manage new service providers and expenses Sustainability: Ensuring that cloud transformation can continue to afford positive outcomes with minimal impact on the business for both near- and long-term success 

If the past three years were dedicated to accelerated cloud transformation, 2023 is being devoted to governing it. But it’s not just today’s tumultuous times calling for executives to heed to the reason of fiduciary responsibility. The cloud also necessitates it—particularly when companies want to achieve ROI faster. 

Cloud ROI Dynamics: Understanding the Economics of Innovation 

The cloud can make for an uneven balance sheet without proper oversight. It needs to be closely watched from a financial perspective. Why? The short answer: variable costs. When the cloud is infinitely scalable, costs are infinitely variable. Pricing structures are based on service usage fees and overage charges where even marginal lifts in usage can incur steep increases in cost. While this structure favors cloud providers, it starkly contrasts the needs of IT financial managers—most have per-unit budgets and prefer predictable monthly costs for easier budgeting and forecasting.  

Additionally, companies aren’t always good at estimating what they need and using everything they pay for. As a result, cloud waste is now a thing. In fact, companies waste as much as 29% of their cloud resources.  

As companies lift and shift their workloads to the cloud, they trade in-house management for outsourced services. But as IT organizations are loosening their reign, financial management teams should be tightening their grip. Those who aren’t actively right sizing their cloud assets are typically paying more than necessary. Hence, why overspending can easily reach 70%. 

Achieving Cloud ROI in One Year 

Achieving ROI in one year requires tracing where your cloud money goes to see how and where it is repaid. Budget dollars go down the drain when companies fail to pay attention to how they are using the cloud, don’t take the time to correct misuse, or overlook service pausing features and discounting opportunities.  

But cloud cost management is not always a simple task. The majority of IT and financial decision-makers report it’s challenging to account for cloud spending and usage, with the C-suite cite tracing spend and chargebacks of particular concern. The key to cost control is to pinpoint and track every cloud service cost across the IT portfolio—yes even when companies have on average 11 cloud infrastructure providers, nine unified communications solutions, as well as a cacophony of unsanctioned applications consuming up to 30% of IT budgets in the form of Shadow IT.  

When you factor in these dynamics and consider that cloud providers have little incentive to improve service usage reports, helping clients better balance the one-sided financials of the relationship, you can see why ROI can be slow-moving.  

FinOps comes in to bridge this gap. 

Managing Cloud Cost Centers: The Rise of FinOps 

Cloud services are now dominating IT expense sheets, and when increasing bills delay ROI, IT financial managers go looking for answers. This has given rise to the concept of FinOps (a word combining Finance and DevOps) which is a financial management discipline for controlling cloud costs. Driving fiscal accountability for the cloud, FinOps helps companies realize more business value and accelerate ROI from their cloud computing investments. 

Sometimes described as a cultural shift at the corporate level, FinOps principles were developed to foster collaboration between business teams and IT engineers or software development teams. This allows for more alignment around data-driven spending decisions across the organization. But beyond simply a strategic model, FinOps is also considered a technology solution—a service enabling companies to identify, measure, monitor, and optimize their cloud spend, thus shortening the time to achieve ROI. Leading cloud expense management providers, for example, save cloud investors 20% on average and can deliver positive ROI in the first year. 

FinOps Best Practices  

As the cloud makes companies agile, managing dynamic cloud costs becomes more important. FinOps help offset rising prices and insert accountability into organizations focused on cloud economics. Best practices for maximizing ROI include reconciling invoices against cloud usage, making sure application licenses are properly disconnected when no longer necessary or reassigned to other employees, and reviewing network servers to ensure they aren’t spinning cycles without a legitimate business purpose. 

Key approaches include: 

Auditing: The ability to granularly collect and maintain service information across the broader cloud ecosystem, analyzing real-time usage data in a central system using AI-powered analytics Cost Optimization: The insights to recognize cloud waste and quickly reduce inefficiencies, adjusting services and reallocating unused app licenses or infrastructure resources Vendor and Expense Management: The ability to validate spending and use automation to reduce the management burdens of bill pay, chargebacks, and allocation Professional Services: Strategic and tactical help at key moments including cloud migrations, cloud service discovery, contractual negotiations, and IT budget forecasting and spending 

Is the cloud a good investment? Yes, as long as the company can effectively see and use its assets, monitor its expenses, and manage its service. The cloud started as a means to lower costs, minimize capital expenses, and gain infinite scalability, and that reputation should payout even after being pressure tested by the masses. With a collaborative and disciplined approach to management, companies of every size can recognize quick ROI without generating significant waste or adding unnecessary complexity.  

To learn more about cloud expense management services, visit us here.     

Cloud Computing

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Organizations are racing to modernize their legacy technology, architecture, infrastructure, and databases. Modernization often revolves around cloud migration. But not every approach provides the same ROI. Before committing to a migration strategy, organizations must identify the best approach for their business requirements.  

Each approach comes with its own benefits, time commitments, and cost. This whitepaper and on-demand webcast will help organizations calculate the ROI from adopting a given approach by answering the following questions: 

Where am I spending big dollars today to run my applications in a legacy mainframe? What are the benefits of each of the cloud modernization approaches? How much does each approach cost, in terms of both money and time? 

Create a business case for modernizing your legacy applications to the Microsoft Cloud with this whitepaper and webcast from TCS. 

Cloud Computing, Retail Industry

Posted on Posted in Digital transformation, General topics Tagged with , , , , ,

Organizations are racing to modernize their legacy technology, architecture, infrastructure, and databases. Modernization often revolves around cloud migration. But not every approach provides the same ROI. Before committing to a migration strategy, organizations must identify the best approach for their business requirements.

Each approach comes with its own benefits, time commitments, and cost. This whitepaper and on-demand webcast will help organizations calculate the ROI from adopting a given approach by answering the following questions:

Where am I spending big dollars today to run my applications in a legacy mainframe?What are the benefits of each of the cloud modernization approaches?How much does each approach cost, in terms of both money and time?

Create a business case for modernizing your legacy applications to the Microsoft Cloud with this whitepaper and webcast from TCS.

Cloud Computing

Posted on Posted in Digital transformation, General topics Tagged with , , , , , ,

Motivated by multiple drivers, enterprises across nearly all industries are increasingly embracing artificial intelligence (AI) and machine learning (ML) to enhance efficiency, profitability, and customer experience while improving evidence-based decision making. Ever-increasing volumes of available data, both structured and unstructured, combined with ongoing innovations in the software and infrastructure space capable of handling large data volumes efficiently, is facilitating this adoption.

Implementation of AI technology and ML solutions can require significant investment. Based on our experience spanning multiple industries, we have identified key considerations which can help any implementation of AI/ML be much more efficient, leading to a successful adoption (as compared to AI technology “sitting on the shelf”) and enhanced return on investment.

Business challenge identification: The first step toward a successful implementation of any AI or ML solution is to identify business challenges the organization is trying to tackle via AI/ML and gain buy-in from all key stakeholders. Being specific about the desired outcome and prioritizing use cases driven by business imperatives and quantifiable success criteria of an AI/ML implementation is helpful in creating the roadmap of how to get there.

Data availability: Enough historical data, relevant for the business challenge being tackled, must be available to build the AI/ML model. Organizations can run into situations where such data may not yet be available. In that case, the organization should develop and execute a plan to start collecting relevant data and focus on other business challenges that can be supported by available data science. They can also explore the possibility of leveraging third-party data.

Data preparation and feature engineering: This is one of the most important steps in the development of an effective AI model. In this step — in addition to the usual data cleansing, data integration, use of AI tools such as Natural Language Processing to incorporate structured data, judicious and creative feature engineering, creating the training and test data, etc. — it is also important to consult with the business stakeholders and the legal team to ensure that the data/features being used in the model comply with any relevant regulatory frameworks and laws (e.g., Fair Lending). It is also important to incorporate “existing wisdom” in this step. For example, if the objective is to build a fraud detection model, prevalent fraud patterns already known to the organization’s investigation unit should be incorporated. In addition to enhancing the effectiveness of the model, this builds confidence for the end-users of the solution, thus facilitating adoption of the model.

Selection of an appropriate modeling approach: For any given business challenge, it is common to find that multiple AI and ML algorithms are applicable. Often, the simpler algorithm or model with fewer parameters may be a better choice (assuming the performance of different models is similar). A particularly important step in this process is to consider model explainability — is the selected model able to provide human-understandable, plain-English explanations and reasoning behind its decisions? In certain regulated industries, reasons behind decisions made by an analyst or algorithm are a requirement. Many AI/ML algorithms are, by nature, “black-box” in that the contributing factors for the model outcome are not clear. Model explainability packages, such as LIME or SHAP, can provide human-understandable explanations in such situations.

Strategy for operationalization: Having clarity around how the predictions and insights from AI/ML fit into daily operations is clearly needed for a successful implementation. How does the organization plan to use the model scores/insights? Where does the AI/ML model “sit” within the operational workflow? How will the model insights/score be consumed in the process? Is it going to completely replace some of the current manual processes, or will it be used to assist the analysts in their decision-making? Will the solution be implemented in the cloud or on-premise? How will the data flow into and out of the AI/ML solution when implemented? Is there a funded plan for procuring the necessary hardware and software? Having a well-defined roadmap that addresses such questions will go a long way in making sure that the solution gets operationalized and does not sit on the shelf.

Phased implementation approach: The human factor is one of the hurdles faced in any AI/ML implementation effort. People are often uncomfortable with sudden and dramatic changes to their existing processes. A phased implementation approach can help mitigate such concerns. We often suggest a pilot phase, in which the AI/ML solution runs in parallel with the existing process — so that relevant teams have an opportunity to compare the outcomes of the two and become comfortable with the new process.

Training, skilling, and enablement: Of course, it is important to build teams with expertise in various areas of the AI/ML space. Ensure that the relevant skills and resources to support the operation of the AI/ML solution are available. Any skills gaps should be bridged by either training the existing resources or bringing in new resources with appropriate skills.

Thinking through each of these recommendations and having a clear strategy from the beginning to address them will greatly enhance the chances of success and return on investment for any AI/ML implementation.

Learn more about our artificial intelligence services and emerging technologies practice.

Connect with the authors:

Scott Laliberte

Managing Director – Emerging Technologies Global Lead, Protiviti

Lucas Lau

Senior Director – Machine Learning and AI Lead, Protiviti

Arun Tripathi

Director – Machine Learning and AI, Protiviti

Artificial Intelligence, Machine Learning

Posted on Posted in Digital transformation, General topics Tagged with , , , , ,

One of the most important parameters for measuring the success of any technology implementation is the return on investment (ROI). Providing a compelling ROI on technology initiatives also puts CIOs in a stronger position for securing support and funds from the business for future projects. This compounding effect shows just how imperative it is for enterprise technology leaders to ramp up the ROI from their deployments.

Here are a few strategies that CIOs have employed to churn out the maximum returns from their technology endeavours.

Align projects with business goals

Too often IT initiatives are undertaken solely as technical projects, with only loose affiliation with line-of-business stakeholders, ushering in the risk of drifting too far from the overall goals and business objectives of the organization. For organizations to work optimally, “information technology must be aligned with business vision and mission,” says Shuvankar Pramanick, deputy CIO at Manipal Health Enterprises. If well aligned, such IT projects can even help generate new business opportunities, he says.

Citing an example, Pramanik says that if the discharge process for hospital patients holding a third-party health insurance, which typically takes five to eight hours, can be brought down to one hour with the help of technology intervention, a new patient can be admitted and given that bed faster, leading to substantial business gain.

Moreover, “by aligning projects goals with broader organizational goals, you can create several more opportunities for the organization,” Pramanik says.

“Suppose a hospital develops an app for patients’ appointment and consultation. In due course of time, this app will gather a lot of patient (demographic) data that can be leveraged to offer new promotional features (discounts, for instance) or enhanced services,” he says. “If the data shows there are more pregnant patients at the gynecology department, they can be offered certain attractive packages so that they are engaged with the hospital till their delivery. Later, the hospital can send suggestions to them for continuing consultation in the pediatrics department in the same hospital after their delivery.”

In this way, a simple app initially targeted for booking appointments can not only help retain patients through their pregnancy but also convert them to pediatrics’ patients, thereby opening a new line of business, Pramanik says.

Embrace diversity of thought

Jaspreet Singh, partner at advisory and consulting firm Grant Thornton, says that diverse teams have repeatedly proven to be smarter and more efficient if core business goals are aligned with technology implementations.

Depending on the objective of the project, diverse viewpoints from stakeholders across roles (users, business leaders, developers, etc.), across functions (HR, Finance, IT, etc.), and across backgrounds, identities, and abilities can play a key role in maximizing the return on an initiative — especially an organization-wide project, such as an ERP implementation.

Pramanik says diverse teams have different life experiences, which enable individuals to approach problems differently, in turn helping them to empathize with end users in new ways. “It is important

to value diversity to learn new things, exchange ideas, and experiences to achieve the best outcome. To achieve a particular objective there can be multiple ways. Different opinions will help zero down to the best possible option and help lead the project in the best possible manner,” he says.

Diversity of thought helps negate biased decision making. It also draws a more holistic vision for the project by compounding varied viewpoints, Singh says. “Diversity of thought processes pushes the team to challenge themselves continuously and strive to think outside the box. Diverse teams constantly re-examine facts and remain objective,” he says.

Savvy CIOs believe in bringing all parties to a common table from the beginning. But Pramanik emphasizes that IT leaders must formulate the best way to exchange ideas while giving voice to all stakeholders. This requires breaking down silos and assessing each party’s thinking styles so that the final implementation witnesses a smooth acceptance.

“In case of building an application for HR department, the chief human resource manager needs to take the opinion of and get consent from all the downline HR heads, so that all the aspects of the applications are covered and there are no acceptability hiccups later on,” Pramanik says. “If the perfection level of the app is 90% to 95%, your customization will be minimal in the future and the application will bear a high ROI. But this perfection can be achieved only if (in this case) all the HR heads put in their thoughts and suggestions during the discussion phase itself.”

Deploy scalable technology

From ERP implementation to application building, CIOs swear by scalable technology. “And why not, tech scalability can make or break ROI,” says Pramanik.

“When building a mobile app for offering a particular service to the customers, say e-pharmacy, you should develop it in such a way that if the business wants to offer more diverse services (x-ray or blood sample collection) through the app in the next two to three years, the requirements should fit into the application without changing its core architecture or else there will be a big dent on the ROI. Initially building a scalable app may look expensive but changing the complete architecture later will incur more cost,” he says.

Similar considerations of follow-on returns should be kept in mind when considering legacy modernization initiatives. For example, even if an existing ERP is working efficiently, and there is no tangible ROI in migrating to the newer version, an upgrade can still be advantageous. As V Ranganathan Iyer, Group CIO of auto component manufacturer JBM Group, says, “the new version of the ERP will accommodate newer technology enhancements, which can be leveraged to derive unforeseen returns out of the project in the long run.”

Here, a cloud-native approach can be beneficial, Singh says.

“A business may have introduced a new product or solution that requires less infrastructure because it has less capacity needs in the beginning. Eventually, however, it will be necessary to scale up the infrastructure as the customer base grows. This is simple to accomplish with the aid of a cloud service provider since there are options for real-time scalability in the infrastructure. Hosting the entire infrastructure on-premise will turn out to be exorbitant,” he says.

Adopt the agile methodology

While many CIOs have implemented agile methodologies for project deployment, those who haven’t are missing opportunities to streamline their project investments.

Anjani Kumar, CIO at pharmaceutical company Strides, says agile offers the flexibility to break down a project into various small parts, which are delivered through cycles or iterations. This visibility on iterations during the project is extremely effective.

“At the end of each sprint or iteration, a minimum viable product is released, which can be used by end users. Any changes in market demands and user requirements can be considered in subsequent sprints. This approach ensures that the ROI is boosted by considering the changing demands on the IT initiative and making course corrections as per market demands,” he says.

“For instance, in the case of a mobile app built for a company’s sales representatives, the process can be split into three components — the UI/UX component, data integration, and integration with other third-party apps. As the final step for ensuring payment, integration compliance on payments must be introduced through PCI-compliant coding. This is followed by an end-to-end testing upgrading from component,” Kumar says. “If we have 30 screens for UI/UX, then in the typical waterfall delivery, the 30 UI/UX screens would be available only at the end of the project, after which the users might give feedback, which in turn might require changes to kick in further refinement in the UI/UX. As opposed to this, in agile delivery, 7 out of the 30 may be considered in one sprint delivery. At the end of that sprint, users would have a UI/UX for testing and it would be open to any changes if required instead of being there till the end of the project.”

Projects are executed — and adopted — much more effectively when users can provide feedback in iterations, Kumar says. “Consequently, the adoption of such an initiative would also be much higher and that would lead to boosting of ROI.”

Leverage a platform-based approach

Gopinath Jayaraj, CIO at automotive manufacturing company Tata Motors, says, “ROI can be multiplied several-fold by leveraging a platform-based approach as opposed to deploying point solutions.”

Investments made in digital initiatives that are standalone in nature may not necessarily integrate with the rest of the business processes or IT landscape of an organization, thereby yielding limited returns, he says.

“However, if one takes a platform approach where requirements from multiple business streams are considered and then a solution is designed leveraging components of existing landscape, the investment requirement is reduced while the return increases as we are now fulfilling beyond point requirements,” Jayaraj says. “As more requirements are added, the need to invest in them individually is eliminated and the overall ROI is boosted because of reusing the already established component. Platforms establish flexible, loosely coupled integrations among key enterprise system components and can be leveraged for multiple use cases in the future.”

Giving an example, Jayaraj says an appropriately designed enterprise digital platform with a harmonious data model can be reused for multiple applications on the customer side. For example, a well-designed auto spares digital service can be used effectively for supporting a customer-browsable spares catalogue, effective real-time assistance for auto mechanics during service, and an e-commerce platform for selling spares and accessories.

The DigiVOR project at Tata Motors is an example of a platform-based approach. It not only addresses customer service and inventory management for Tata Motors but also helps increase revenue through spare part sales for those customers who might have taken up the grey market route for fulfilling spare parts orders.

“The moment Tata Motors receive a VOR (vehicle-off-road) call registered (either through the digital portal or a call), the support team starts figuring out the critical spare that’s required and putting out a DigiVOR order into the system. DigiVOR initiates an automatic search across all spare inventories that Tata Motors has with the dealer distributors, and authorised service centres in the vicinity of the vehicle,” says Jayaraj. Consequently, this platform-based approach has helped Tata Motors in two business areas: customer service and sales. Not only does DigiVOR reduce turnaround time for procuring inventory from a dealership near where an incident has occurred; it also ensures increased revenue for Tata Motors through spare part sales, as customers can now procure original spare parts through this initiative.

ROI and Metrics

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Ease of implementation and return on investment (ROI), combined with ease of use, continue to dominate the business to business (B2B) software buying process, according to a report from software marketplace G2.

The report, which is based on a survey of 1,002 global decision-makers with responsibility for, or influence over, purchase decisions for departments, multiple departments, operating units, or entire businesses, showed that at least 93% of respondents indicate the quality of the implementation process is very important when deciding whether to renew a software product.

The respondents said they are looking for the least amount of friction while adding a new solution or software to their technology stack and that ease of implementation can add to the frictionless experience, according to the report.

In fact, 77% of respondents indicated they have either worked with a vendor’s implementation team or have worked with a third-party vendor for implementation, as opposed to 34% of respondents indicating that they handle implementation with their internal teams.

These implementation teams play a pivotal role as they shape an opinion about vendors and can help make contract renewals easier, the report noted.

Pricing no longer an effective sales tool

Pricing, according to the respondents, was the second-least favored factor in the buying process. The survey showed that sticker price is no longer a sales tool and has been replaced by proof of return in investment.

The decision makers ranked ease of implementation as the top important factor while ROI within six months and ease of use were the second and third most important factors among 12 other considerations, including price, as part of the buying process.

The survey data showed that these decision makers want to achieve ROI quickly and believe that an easy implementation process combined with an easy-to-use product may help them generate returns faster.

Lower switching costs affect renewal rates

At least 53% of respondents surveyed said they conduct research and consider alternatives when a product is up for renewal as opposed to 45% claiming they renew the software they already use without considering other options. This phenomenon can be attributed to increasing options and lower switching costs, the report showed.

However, the group of decision makers that renews a product without considering options is growing slowly. There has been a 3% increase year-on-year for the same category, according to the report.

Vendors must make information such as proof of ROI available in early stages of adoption in places where these decision makers frequent for researching new products, as a majority of decision makers are still looking for alternative products, the report said.

At least 76% of respondents said product and service review websites are trustworthy and transparency in the validation of the reviews is key. More than 33% of decision-makers surveyed said transparent validation of reviews is the most helpful feature when using online software or service review sites.

The report also shows that most enterprises have a six-month contract period, which leaves limited time for vendors to make an impression on the buyer. At least 57% of respondents said they have a six-month period compared to just 11% stating that they have two-year or multiyear contracts in place.

Buying directly from vendors is slowing down

Buyers are slowly shying away from buying directly from vendors, the report highlighted. Only 60% of respondents said they bought directly from vendors, a 9% decrease from the previous year.

Alternatively, buyers are increasingly purchasing software from third-party marketplaces and value-added resellers (VARs), according to the report.

At least 28% of respondents said they were buying software from third-party marketplaces, an increase of 6% from the previous year’s survey. Further, 11% of respondents said they were buying software from VARs, a 4% increase year-on-year.

Buying committee changes complicate purchase process

The B2B buying journey, according to the report, is becoming increasingly complex due to changes in buying committees. At least 80% of respondents said their enterprises or organizations have such committees in place.

More than 67% of respondents said buying-decision makers are changed frequently or nearly always during the software buying process, up by 15% from previous year’s survey.

Another challenge is that the buying committee is more likely to have changed at the time of renewal from when the product was originally purchased, the report showed.

IT Strategy, Software Licensing