UNIT V – CLOUD SERVICE GOVERNANCE & VALUE

IT Governance Definition, Cloud Governance Definition, Cloud

Governance Framework, Cloud Governance Structure, Cloud
Governance Considerations, Cloud Service Model Risk Matrix,
Understanding Value of Cloud Services, Measuring the value of Cloud
Services, Balanced Scorecard, Total Cost of Ownership
 IT Governance & Cloud Governance
 The term "Cloud Governance" is commonly used to describe the processes, criteria, and regulations that go into
making those decisions.
 It offers a unified set of rules for the organization at large to follow regarding the cloud computing paradigm.
Cloud Governance is required for better:
• Security
• Cost Control
• Compliance
• Policies
• Processes
• Standards
• Visibility
 Understanding the value of cloud services
Understanding the value of cloud services is crucial for organizations as it helps them make informed decisions and
optimize their cloud investments. The value of cloud services goes beyond cost savings and includes various aspects.
Here are some key points to consider when understanding the value of cloud services:

1.Cost Savings: Cloud services can reduce capital expenditures and offer a pay-as-you-go model, which often leads to
cost savings. Organizations can better allocate their budgets and reduce the need for on-premises infrastructure.

2.Scalability and Flexibility: Cloud services provide scalability and flexibility that allow organizations to quickly adapt to
changing business needs. This agility can lead to increased productivity and competitiveness.

3.Innovation: Cloud services enable organizations to access cutting-edge technologies and tools without heavy upfront
investments. This can drive innovation and accelerate time-to-market for new products and services.

4.Global Reach: Cloud providers have data centers in various regions, enabling organizations to expand their services
globally with ease. This can lead to new markets and revenue streams.

5.Security and Compliance: Cloud providers invest heavily in security and compliance, often providing a more secure
environment than on-premises solutions. This can protect against data breaches and regulatory fines.

6.Disaster Recovery and Business Continuity: Cloud services offer robust disaster recovery and business continuity
options, ensuring that data and operations can quickly recover in case of unforeseen events.
7.Reduced IT Maintenance: Cloud services typically reduce the burden of IT maintenance and management,
allowing IT teams to focus on strategic initiatives rather than routine tasks.

8.Collaboration and Mobility: Cloud services enable collaboration among remote teams and provide mobility
solutions that support the modern workforce.

9.Data Analytics and Insights: Cloud services offer powerful data analytics tools that help organizations gain
valuable insights from their data, enabling data-driven decision-making.

10.Elasticity: Organizations can scale resources up or down as needed, paying only for what they use. This
elasticity can lead to efficient resource utilization and cost control.

11.Environmental Impact: Cloud providers often invest in energy-efficient data centers, which can contribute to an
organization's sustainability goals.

12.Vendor Ecosystem: Cloud providers offer a rich ecosystem of third-party apps and services that can enhance an
organization's capabilities.
To understand the value of cloud services, organizations should conduct a comprehensive assessment that
considers their specific goals, requirements, and challenges. This assessment should involve not only financial
considerations but also the strategic, operational, and competitive advantages that cloud services can provide. It's
essential to measure and monitor these benefits over time to ensure that cloud investments continue to deliver value
to the organization.
 Measuring the value of cloud services

Measuring the value of cloud services is essential to determine the return on investment (ROI)
and assess the effectiveness of cloud adoption. Metrics to consider when measuring the value of
cloud services:
Cost Savings and Cost Efficiency:
Calculate the cost savings achieved through the adoption of cloud services compared to traditional on-premises
solutions.
Monitor and analyze cloud expenses to identify opportunities for cost optimization, such as rightsizing
resources and leveraging cost-effective pricing models.
Agility and Time-to-Market:
Measure how quickly the organization can deploy new applications and services in the cloud compared to
traditional methods.
Assess the impact of faster time-to-market on revenue generation and competitiveness.
Resource Utilization:
Evaluate resource utilization in the cloud to ensure that you are optimizing the use of computing, storage, and
network resources.
Scalability and Performance:
Monitor the ability to scale resources up or down as needed and measure how it affects system performance.
Assess whether the cloud can handle peak workloads without performance degradation.
Innovation and Business Transformation:
Track the adoption of new technologies and services made possible by the cloud, such as
artificial intelligence, machine learning, and Internet of Things (IoT).
Measure the impact of cloud-driven innovation on revenue, customer experience, and
operational efficiency.
Security and Compliance:
Evaluate the level of security and compliance achieved in the cloud compared to on-premises
solutions.
Monitor compliance with relevant regulations and industry standards.
Downtime and Availability:
Measure the availability and uptime of cloud services and assess their impact on business
continuity.
Calculate the cost of downtime and how the cloud mitigates it.
User Experience and Customer Satisfaction:
Collect feedback from end-users to gauge their satisfaction with the performance and
availability of cloud-based applications.
Monitor customer satisfaction to understand how cloud services impact the customer
experience.
Environmental and Sustainability Metrics:
Assess the environmental impact of cloud services, such as energy efficiency and carbon
footprint, and consider this in sustainability initiatives.
Data Analytics and Insights:
Measure the value derived from data analytics and insights generated by cloud services in
terms of better decision-making and improved business strategies.
Total Cost of Ownership (TCO):
Calculate the TCO over time, considering not only the direct costs but also indirect costs,
including migration expenses and ongoing management.
Balanced Scorecard Metrics:
Use a balanced scorecard approach to assess various aspects of cloud service value, including
financial, customer, internal process, and learning and growth perspectives.
ROI and Payback Period:
Calculate the ROI of cloud services by comparing the benefits realized against the costs
incurred.
Determine the payback period, which is the time it takes for the benefits to cover the initial
investment.
 Balanced Score Card

A balanced scorecard typically includes four perspectives: Financial, Customer, Internal Process, And Learning And Growth.
1. Financial Perspective:
1. Cost Savings: Measure the cost reductions achieved through cloud adoption, including reduced capital expenditures and operating
expenses.
2. Return on Investment (ROI): Calculate the ROI by comparing the financial benefits (e.g., cost savings, increased revenue) to the initial
investment in cloud services.
3. Total Cost of Ownership (TCO): Monitor the TCO over time to ensure cloud services remain cost-effective.
2. Customer Perspective:
1. Customer Satisfaction: Collect feedback from end-users to gauge their satisfaction with cloud-based services and applications.
2. Service Quality: Measure service availability, performance, and responsiveness to ensure a positive user experience.
3. Service Availability: Track uptime and downtime to assess the impact on customers and business operations.
3. Internal Process Perspective:
1. Time-to-Market: Measure how quickly new applications and services can be deployed in the cloud, and assess its impact on innovation
and competitiveness.
2. Resource Utilization: Evaluate the efficiency of resource allocation and utilization in the cloud.
3. Agility and Scalability: Assess the ability to scale resources up or down as needed and its impact on operational efficiency.
4. Learning and Growth Perspective:
1. Employee Skills and Training: Monitor the development of cloud-related skills among employees through training and certifications.
2. Innovation and Adoption of New Technologies: Track the adoption of innovative cloud technologies and their contribution to business
growth.
3. Compliance and Security Awareness: Measure employee awareness and adherence to security and compliance policies related to cloud
services
 Total Cost of Ownership

• Total Cost of Ownership (TCO) in the context of cloud services involves calculating the
comprehensive costs associated with adopting and operating cloud-based solutions over a
specific period.
• TCO analysis is essential for organizations to make informed decisions about the economic
feasibility of moving to the cloud.
1.Direct Costs:
1. Subscription or Usage Costs: Start by calculating the direct costs, which are typically subscription fees or pay-as-you-go
usage charges for cloud services. This includes costs for virtual machines, storage, databases, and other cloud resources.
2.Indirect Costs:
1. Migration Costs: Include the expenses related to migrating existing on-premises applications and data to the cloud. This
may involve costs for hiring migration experts, software tools, and downtime during migration.
2. Training and Education: Factor in the cost of training and educating employees to work effectively with cloud
technologies.
3. Management and Administration: Calculate the costs associated with managing and administering cloud resources,
including staff salaries, software tools, and third-party services.
4. Data Transfer and Bandwidth Costs: Include costs related to data transfer and network bandwidth used to move data in
and out of the cloud.
5. Integration Costs: If you're integrating cloud services with existing systems or third-party applications, account for the
costs of integration efforts and tools.
6. Security and Compliance Costs: Consider expenses associated with ensuring security and compliance within the cloud
environment, including security tools, audits, and compliance certifications.
7. Operational Costs: This covers ongoing operational expenses such as monitoring, backups, and troubleshooting.
8. Licensing Costs: If you are using licensed software or third-party applications in the cloud, include their licensing fees.
9. Support and Service Level Agreement (SLA) Costs: Account for the costs of support and SLA agreements with your
cloud service provider.
10.Downtime Costs: Estimate the cost of downtime or service disruptions, including lost revenue and employee productivity.
11.Environmental Costs: Consider any environmental or sustainability costs associated with your cloud provider's energy
consumption and carbon footprint.
3.Amortization and Depreciation: For capital expenses related to hardware and software
purchases, calculate amortization and depreciation costs over the expected useful life of the
assets.
4.ROI and Payback Period: Compare the total costs to the financial benefits and
determine the return on investment (ROI) and payback period to assess the cost-
effectiveness of cloud services.
5.Ongoing Monitoring: Regularly review and update your TCO calculations to account for
changes in cloud usage, cost structures, and evolving business requirements.