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.


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

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