How Unexpected Costs Create a ‘Cloud Hangover’

 
 
By Dennis McCafferty  |  Posted 12-16-2015 Email
 
 
 
 
 
 
 
 
 
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    How Unexpected Costs Create a ‘Cloud Hangover’
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    How Unexpected Costs Create a ‘Cloud Hangover’

    Unanticipated cloud expenses can reach seven figures, and cloud investments often don’t live up to the hype—creating a cocktail of concern for CIOs.
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    Public-Private Preferences
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    Public-Private Preferences

    35% of surveyed IT decision-makers said their company has invested in hybrid cloud computing infrastructure over the past three years, while 34% said their organization has invested in private cloud infrastructure. 23% said their business has invested in a public cloud.
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    Performance Assessment
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    Performance Assessment

    63% said their organization's deployed cloud solutions have met expectations.
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    Biggest Cloud Adoption Business Drivers
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    Biggest Cloud Adoption Business Drivers

    Increased security: 45%, Need to keep shadow IT under control via cloud service purchases: 39%, Cost savings: 39%, Greater business agility in responding to customer/market demands: 39%, Enhanced competitive advantage: 38%
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    Prominent Purchase
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    Prominent Purchase

    44% expect their company to spend no less than $750,000 on implementing cloud services over the next calendar year, up from 30% whose organization spent this much two years ago.
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    Unexpected Expense
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    Unexpected Expense

    79% say their company has encountered no less than $75,000 in unplanned costs over the last three years to make their cloud services as effective as possible, with nearly one of five saying their organization has spent at least $1.5 million on this.
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    Biggest Sources of Unplanned Cloud Costs
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    Biggest Sources of Unplanned Cloud Costs

    Upgrades: 36%, Customizations: 35%, Internal maintenance for software: 35%, Consultancy charges at implementation phase from cloud provider: 34%, Personnel required to manage deployment: 33%
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    Burdensome Bill
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    Burdensome Bill

    More than three-quarters of IT decision-makers said their company spends at least $15,000 on maintaining cloud services every month, and more than one-third said this expense amounts to no less than $60,000 a month.
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    Onerous Effort
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    Onerous Effort

    63% said their organization has struggled with cloud implementation, and 74% said they've had to bring in additional external support to complete implementation.
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    It's Complicated
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    It's Complicated

    72% said that investing in cloud services has increased the complexities of their company's IT environment.
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    Big Buildup
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    Big Buildup

    67% said the cloud has emerged as "broadly positive," but it hasn't lived up to its hype.
 

While the majority of CIOs and other IT decision-makers are generally satisfied with their cloud deployments, they're burdened with a wealth of associated, unplanned expenses, according to a recent survey from Sungard Availability Services. The unanticipated costs amount to tens of thousands of dollars—if not millions—for most companies, to pay for upgrades, customizations, software maintenance and consultancy charges. With this, organizations are looking to gain competitive advantage, increase security, enhance business agility and, ironically, benefit from new cost savings. (After all, you gotta spend money to save money, right?) In balancing the need to minimize unplanned costs while deriving the most value out of the cloud, CIOs admit that, while they're glad they invested in the cloud, the phenomenon hasn't exactly lived up to its hype. "Businesses are experiencing a 'cloud hangover' from the unexpected expenses and the market perception that indicated all workloads can easily move to the cloud," said Chris Ortbals, vice president of services product management at Sungard AS. "For many enterprises, the cloud can bring great efficiencies for the right workloads. (But it's important) to identify what can be optimized by shifting to the cloud and what may be best suited to perform best in a hybrid approach." More than 245 IT decision-makers took part in the research.

 
 
 
 
 
Dennis McCafferty is a freelance writer for Baseline Magazine.

 
 
 
 
 
 

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