How do you measure ROI for a cloud computing solution in Sales Engineering?

As a sales engineer, you need to demonstrate the value of your cloud computing solution to your prospects and customers. But how do you measure the return on investment (ROI) of a cloud service that has multiple benefits, costs, and risks? In this article, you will learn how to calculate and communicate the ROI of a cloud computing solution in sales engineering using a simple formula and some best practices.

1 Define the scope

The first step to measure the ROI of a cloud computing solution is to define the scope of the project and the goals you want to achieve. You need to identify the current situation, the desired outcome, and the timeline of the implementation. You also need to consider the stakeholders, the risks, and the assumptions involved in the project. By defining the scope, you can set realistic expectations and avoid scope creep or confusion.

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2 Estimate the benefits

The next step is to estimate the benefits of the cloud computing solution for your customer. Benefits are the positive impacts that the solution will have on the customer's business, such as increased revenue, reduced costs, improved efficiency, enhanced security, or better customer satisfaction. You can use various methods to quantify the benefits, such as benchmarking, surveys, case studies, or industry standards. You should also prioritize the benefits based on their importance and relevance to the customer's needs and goals.

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Viral Patel

Director | Sr Director | Chief Architect | data and AI/ML | Enterprise platforms | Service Delivery | Salesforce CRM, Oracle/SAP ERP, Oracle Agile PLM, ALM, Digital Workplace
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Potential additional benefits may be related to regulatory compliance and data privacy related requirement especially for a global company. Sales domain has lot of customer data and some of it could be confidential or highly confidential. With standard public cloud mddel, it is easier to extend the solution to other geographies.

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3 Calculate the costs

The third step is to calculate the costs of the cloud computing solution for your customer. Costs are the negative impacts that the solution will have on the customer's budget, resources, or operations, such as upfront fees, ongoing subscriptions, migration expenses, training costs, or maintenance costs. You can use various sources to estimate the costs, such as vendor quotes, invoices, contracts, or historical data. You should also account for the hidden or indirect costs, such as opportunity costs, switching costs, or risk costs.

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Viral Patel

Director | Sr Director | Chief Architect | data and AI/ML | Enterprise platforms | Service Delivery | Salesforce CRM, Oracle/SAP ERP, Oracle Agile PLM, ALM, Digital Workplace
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Most of the public cloud vendors provide cost estimators allowing one to understand the order magnitude cost. One should not assume that current/onprem perpetual license can be used with public cloud install as well.

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4 Apply the formula

The fourth step is to apply the formula to calculate the ROI of the cloud computing solution. The formula is:

ROI = (Benefits - Costs) / Costs x 100%

This formula will give you a percentage that represents the ratio of the net benefits to the total costs of the solution. The higher the percentage, the higher the ROI. For example, if the benefits of a cloud computing solution are $100,000 and the costs are $50,000, then the ROI is:

ROI = ($100,000 - $50,000) / $50,000 x 100% = 100%

This means that for every dollar invested in the solution, the customer will get two dollars back.

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Viral Patel

Director | Sr Director | Chief Architect | data and AI/ML | Enterprise platforms | Service Delivery | Salesforce CRM, Oracle/SAP ERP, Oracle Agile PLM, ALM, Digital Workplace
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Both benefits and costs should be calculated at least for 3 to 5 years or higher to make more accurate ROI calculations. Most of the time , depending on the scope, # of applications and size of migration it may take a year or longer to realize the benefits.

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5 Adjust the results

The fifth step is to adjust the results of the ROI calculation to account for the time value of money and the uncertainty of the future. The time value of money is the concept that money today is worth more than money in the future, because of inflation, interest, or other factors. The uncertainty of the future is the concept that the benefits and costs of the solution may change over time, because of market conditions, customer behavior, or other factors. You can use various tools to adjust the results, such as net present value (NPV), internal rate of return (IRR), or sensitivity analysis. These tools will help you discount the future cash flows and evaluate the risk and variability of the solution.

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6 Communicate the value

The final step is to communicate the value of the cloud computing solution to your customer using the ROI results. You need to present the results in a clear, concise, and compelling way, using charts, graphs, tables, or stories. You also need to highlight the key benefits, address the potential objections, and compare the solution with the alternatives. You should also tailor the message to the audience, using the language and metrics that they care about and understand. By communicating the value, you can persuade the customer to buy your solution and build trust and credibility.

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7 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?

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Viral Patel

Director | Sr Director | Chief Architect | data and AI/ML | Enterprise platforms | Service Delivery | Salesforce CRM, Oracle/SAP ERP, Oracle Agile PLM, ALM, Digital Workplace
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Depending on your industry and processes covered under sales domain, it is highly likely that SaaS solution exists in the market and may take care of 70 to 80% of the requirement. In this case, it should be prioritized over custom build in the cloud. Typical CRM strategy should be part of the CIO/CXO level strategy and may require different approach, decision making criteria then just ROI based approach. If you are a large company, it may be worth considering one of the big consulting companies to put together business case including benefits/cost and a draft roadmap.

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LENIE CEA CAPALARAN

Sales Manager-Legacy Batteries Power Solution| Lead Acid Lithium Batteries |Solar Solution Empowering Your Legacy with Reliable power!
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This can be done by comparing the costs of the solution to the benefits gained, tracking key performance indicators, and conducting regular assessments to ensure the solution is delivering the expected ROI.

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How do you measure ROI for a cloud computing solution in Sales Engineering?

1

2

3

4

5

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7

1 Define the scope

2 Estimate the benefits

3 Calculate the costs

4 Apply the formula

5 Adjust the results

6 Communicate the value

7 Here’s what else to consider

Sales Engineering

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How do you measure ROI for a cloud computing solution in Sales Engineering?

1

2

3

4

5

6

7

1 Define the scope

2 Estimate the benefits

3 Calculate the costs

4 Apply the formula

5 Adjust the results

6 Communicate the value

7 Here’s what else to consider

Sales Engineering

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