Why Cloud Computing is Harder and more Expensive than we Thought

According to the Cloud Survey report published this week by consulting firm KPMG International, a number of businesses say cloud computing challenges are harder and more costly than they originally thought.

The study indicates that one-half of the 650 respondents said their organizations already have some cloud-based platforms up and running.  This is a rise from past surveys where cloud-based systems were operational only within a small fraction of the enterprises surveyed.  Enterprises are clearly moving from the “kicking the tires” stages to initial implementation of cloud computing projects.

Reasons sited by enterprises participating in the study around moving to cloud computing include making it easier for them to enter into new markets, as well as driving process transformation.  The agility value of cloud computing seems to be the core driver, more so than operational efficiency.  This is a bit of a change from the initial reasons enterprises were moving into the cloud, with the battle cry of operational cost reductions and avoiding capital costs.

What’s interesting about the study is that one-third of those surveyed said the cost of moving to cloud-based platforms were higher than expected.  Core to the cost overruns were the higher costs around changing existing business and IT architectures to accommodate the use of cloud-based resources.  Clearly, those leveraging cloud-based platforms for the first time did not see this coming.

Common problems they encountered included failure to address changes that were needed in:

  • Business-process redesign
  • IT management capabilities
  • Systems integration
  • Infrastructure management
  • IT “configurations”

Of course, many in the survey had misconceptions about what adopting cloud-based services would mean.  They cited the “hype and confusion” around cloud computing as causing the difference between expectations set, and the resulting realities.

Resetting Expectations

The problem with cloud computing is that, in order to be successful with this technology, you need to drive systemic changes within your core enterprise architecture.  This is the part of the effort that many step over before they jump feet first into the cloud.  So now we get reports of cost, risk, and effort being at much higher levels than expected.

There is really nobody to blame for this.  The hype and misinformation around cloud computing has been unprecedented.  Listen to the hype, and one would think that moving core processes and data to public or private clouds would solve all problems around IT.

The reality is that most enterprises are not ready for the cloud.  They still have inefficient security approaches, data scattered everywhere, poorly designed processes, as well as aging infrastructures.

As enterprises implement cloud-based platforms, they find that they are just extending their existing IT assets to cloud resources.  Therefore, in many instances, those IT assets will have to change around the use of cloud computing in order for all IT systems to function effectively.

For example, think about the ability to synchronize data residing on-premise with data residing in the cloud.  Or, the ability to manage identities across local and cloud-based resources in support of a distributed security model required by the use of cloud computing.  What will it cost to accomplish these tasks?  What is the value in relation to the cost?

The solution to this dilemma is rather easy.  We need to be more realistic about what cloud computing truly costs, and the true value cloud computing will bring to the business.

There are a specific things you should consider before moving to cloud-based platforms, including PaaS, IaaS, and SaaS, including, but not limited to:

The current state of the data.  If your enterprise data is a mess, then the relocation of parts of that data to cloud-based resources will exacerbate the problem.  Before making moves to public, private, and hybrid clouds, you need to fix issues within the enterprise data.

The current state of the business processes.  Like data, if the business processes are not a great shape, and in need of redesign, it’s better for you to get that done prior to relocating those processes to cloud-based systems.  Consider the concept of process partitioning, or which processes will reside on-premise or in the cloud, as well as how they will be linked.

The current state of the network.  Bandwidth issues kill cloud deployments due to the reliance on Internet connections and internal network hardware.  If your infrastructure is showing signs of age, it won’t work and play well with public clouds that will consume and produce huge amounts of data each day.

The current state of security.  Cloud computing typically requires a different way to approach security, such as the use of identities and more sophisticated approaches to encryption.  Security is a holistic concept, thus changes need to occur around core enterprise systems, as well as those moved to the cloud.

All of this costs money and time, and perhaps more money and time than originally anticipated.  That said, the use of cloud computing technology is typically both tactically and strategically effective.  We just need to become more aware of the changes that need to occur around the use of cloud-based resources, and consider those costs when considering the business case for cloud computing.

 

 

 

 

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David S. Linthicum

SVP Cloud Technology Partners

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  1. This is absolutely true. We have seen many incomplete cost comparisons between ‘cloud’ and on-premise infrastructure; once you add up costs of real monitoring/instrumentation, re-architecture or adaptation costs to cloudify the apps, figure in the data integration costs with interdependent products, add the real cost of personnel (usually this is hidden under the so devops obfuscation masquerading as agile development!) – the true picture emerges.

    Companies that use a hybrid approach, using the self-provisioning and automation concepts into the internal infrastructure (assuming scale), and select which apps and data can and should not go into the public cloud are the real winners here. Others are in for such nasty surprises.

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