CXO

Businesses caught out by the complexity of cloud

Business and IT executives say higher than expected implementation costs is the number one challenge when buying cloud services.

Firms are commonly underestimating the cost of integrating cloud services into their business, according to a survey of business and IT executives.

Higher than expected implementation costs was the most common challenge brought up by 674 executives surveyed for The Cloud Takes Shape report by auditor KPMG.

Firms that see cloud services as "buy, bolt on and go" are being caught out by costs said Steven Salmon, principal advisor for KPMG in the UK, as they fail to appreciate the level of organisational change needed.

"It requires organizations to fundamentally transform the way they procure, manage and use their IT applications and services which, in turn, drives up the cost and complexity of implementation," he said.

"In the context of the hype, confusion and simplistic vendor models, we come across organizations that have assumed that cloud could be implemented within their existing business and IT architecture without recognizing the significant transformation that must occur before cloud benefits can be fully gained."

Businesses implementing cloud services need to consider how to redesign business processes and IT management, as well as integration with existing internal and external IT infrastructure, he said.

"Respondents also tended to underestimate the costs and complexity of integrating multiple cloud provider platforms and traditional systems into cohesive and interoperable business services that span functions across the organization.

"The reality is that most organizations will engage with many cloud service providers to support different business processes and functions but - with no clear industry standards yet in place - will find the process of ensuring interoperability to be rather complex."

Businesses need to devote time and resources to developing an integration strategy for cloud services, with KPMG predicting the CIO's role will increasingly be one of "business' service integration broker" on a commercial, process and  technical level.

Other challenges listed by executives when adopting cloud services included loss of control of IT infrastructure, security and a lack of visibility into future demand and costs.

More than 80 per cent of respondents said they use cloud services related to HR, IT management and email and collaboration today, or plan to do so within the next 18 months.

By far the most common reason for choosing cloud services over alternate form of provision was cost reduction, followed by speed of deployment.

About

Nick Heath is chief reporter for TechRepublic UK. He writes about the technology that IT-decision makers need to know about, and the latest happenings in the European tech scene.

8 comments
Imprecator
Imprecator

Don't worry folks, it's ALL IT's FAULT AS USUAL

Phil - Cloud4 Computers
Phil - Cloud4 Computers

We are a cloud provider and I note with interest when discussing migrations with potential new clients, that many of our competitors are simply lining their pockets with outrageous costs going in for migration services, setup charges and other extra's especially for Hosted Desktop migrations. Although at Cloud4 we do charge for migration, it is a realistic charge that covers the real cost of engineers time. We are focused on developing long term relationships with our clients and our profits come from on-going subscriptions, not from taking advantage at the outset to make a quick buck! However it appears not many hosting providers see it this way!

HAL 9000
HAL 9000

So the cloud is not cheaper when you actually go to use it no matter what the providers tell you. Just how much worse are things going to get after you have shelled out that Extra Money to get In The Cloud. Seems to me that the issue here is You find the problems as you go with no clear idea of the costs involved but no matter what its Cheaper because some Salesperson said it was and you read it on the Internet. Like everything related to the Cloud this is just spin with no substance and is something common with all of the Trendy Things that come out of Proposed IT Sales to save business money. Actually its a way to make lots of money for a Business that doesnt yet exist and con the existing business out of whatever money that they previously had made while telling them its better for them this way. Col

CharlieSpencer
CharlieSpencer

Let's see; one, two, ... Yeah, that's about what I figured.

Tony Hopkinson
Tony Hopkinson

lets someone press their greed button. The cloud is an operating system, moving to it should recieve the same sort of scrutiny from management as some wild eyed wild haired propeller head from the basement telling them they should switch to linux because all the software is free. If the guy had combed his hair into suitable points, put a nice suit on and practiced smiling for a week we'd all be using ubuntu...

tjpuk
tjpuk

I have a suspicion that one of the biggest issues we will get is when you get to the stage of changing suppliers. Where will data reside? How will it be migrated? We all know how difficult this is when you have direct control over this - when it's in the Cloud? Of course, this isn't a reason not to do it, just something else to consider.

Tony Hopkinson
Tony Hopkinson

Unfortunately I'm one of those techno types that could be sacrificed by a successful sale. So I'm going to deny ever doing so in the extremely unlikley event of some non-technical decision maker ever seriously asking my opinion...

Tony Hopkinson
Tony Hopkinson

Okay Hopkinson what do you want this time? Can I go to the toilet please sir? Damn says cloud salesman that's the fifth time that's happened today. May be we are in the wrong place.

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