2011 vs 2013 : Cloud versus On-Premise

Continuing my last post it’s interesting to compare 2011 ROI case studies with 2013 ROI studies and in particular the results of cloud versus on-premise projects. Cloud case studies averaged 522% ROI in 2011 while for 2013 they averaged 359%. Despite the lower ROI the payback was better, dropping from 12 months in 2011 to 5.8 months in 2013. That tells us 2011 projects were bigger and more impactful while 2013 projects were more modest and incremental. The total investment costs confirm that view with 2013 projects costing 1/3 that of 2011 projects. On-premise projects were relatively stable with around a 300% ROI and 8 month payback in both years. Cloud still beats on-premise when it comes to ROI and payback and in all three years made up approximately 50% of the total projects.

Here’s the interesting part. In both 2011 and 2013 the ongoing costs during the first 3 years remained surprisingly consistent. For on-premise projects the ongoing costs made up approximately 16% of the total project while for cloud projects the ongoing costs made up 45% of the total. The ongoing costs of cloud are higher but don’t seem to be increasing. The outlook for consultants is a bit less rosy, dropping from 50% of the initial cost in 2011 to 36% in 2013, reflecting the general trend towards less customization.