The following guest blog post was authored by Keith Tilley, Executive Vice President of Global Sales and Customer Services at Sungard Availability Services. The post was adapted for Cloud Computing Today from a Sungard Availability Services white paper titled The Cloud Hangover.
Cloud computing was the great hope for many businesses, giving them access to IT resources that they could never have afforded (or perhaps did not even exist) within traditional IT infrastructures. Promising greater mobility, agility and collaboration at lower costs, cloud computing was marketed by some vendors as a quick fix to all your business needs. The reality, as many organisations are now discovering, is much more complex. For all its advantages, the adoption of this new technology has left many companies experiencing a “cloud hangover,” with integration issues and unexpected costs having a detrimental effect on their business.
From Hype to Hangover
Research carried out by Sungard Availability Services, and published in “The Cloud Hangover” whitepaper, looked at the reasons for cloud adoption and its subsequent impacts across 400 IT decision makers in the UK, Ireland, France and Sweden. It found that although there was plenty of optimism surrounding cloud migration, it wasn’t always well-founded. Cloud expenditure has grown rapidly, rising from an average of £350,000 in 2010 to £1.18 million in 2014. A number of factors are driving this growth, with 52 per cent of businesses expecting cloud solutions to reduce IT costs and 40 expecting reduced IT complexity. The Sungard AS research also reveals, however, that many businesses are not receiving the ROI that they expected.
In fact, the cloud hangover is so widespread that 53 per cent of organisations admitted to spending more on managing their cloud infrastructure than they originally planned and 37 per cent have not achieved the day-to-day savings that they expected. The reason for this unforeseen expenditure is that it is difficult to evaluate the long-term costs of cloud computing. Aside from the initial set-up and subscription costs, many organisations are not planning for future outgoings. Internal maintenance (40 per cent), systems integration (37 per cent) and people costs (33 per cent) were all cited as unplanned expenses related to cloud adoption.
Cloud computing is also being blamed for increasing the complexity of IT infrastructure, particularly when businesses are renting services from multiple vendors. Integrating these disparate systems together, alongside legacy resources, is proving a time-consuming, and financially draining, issue. 43 per cent of respondents to the Sungard AS survey revealed that the cloud had increased the complexity of their infrastructure, with 55 per cent now paying more to ensure the integration of their IT estates. The complexity and hidden costs of cloud computing threaten to undermine the many benefits that the technology can offer businesses, which is why it is critical that they understand the key steps to implementing effective cloud solutions.
Achieving Cloud Success
If businesses are to make a successful migration to the cloud, they must first invest time in planning and preparing for the transition. The first step is to identify the business drivers that make the cloud attractive to your organisation. IT benefits, such as automated software updates and increased flexibility, are obviously important, but wider business implications also need to be considered. Understanding what the cloud will deliver in terms of practical business benefits will ensure that the technology is only implemented where useful and helps organisations to select the right vendor for their needs.
When discussing their cloud options with third party suppliers, there are also a few key things for businesses to keep in mind. Evaluate the service level agreement (SLA) very carefully to understand what your supplier is guaranteeing in terms of availability, capacity, performance, upgrades and security. Consider the kind of insurances you need and ensure they are included in the very earliest stages of negotiation. Being able to mitigate and react to risk is a key aspect of cloud partnerships and will need effective dialogue between suppliers and their customers.
Automation is another important step to reducing your cloud expenditure. Which business processes can be streamlined and which need to remain manually controlled? Understanding this prior to cloud deployment, is vital if businesses want to reduce the amount of resources devoted to cloud management. The migration process itself must also be carefully considered. Can your existing apps be transferred to the cloud as they are, or will they need to be reconfigured? Cloud vendors may be able to help with the migration process, but ask for examples where they have transferred business processes in the past to avoid any potential headaches.
With 57 per cent of organisations viewing cost savings as a key driver for cloud migration, being able to keep cloud budgets in check is clearly vital. Before contracts are signed, businesses need to confirm any up-front capital expenses, operational expenditure and any potential increments as a result of “cloud bursting.” Being fully aware of your billing model is absolutely key if you wish to achieve cloud success without facing unexpectedly high costs.