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Avoiding the Cloud's Dark Shadow: Needless Costs

By Jeffrey M. Kaplan
Jun 8, 2012 5:00 AM PT

Today's rapidly expanding array of cloud-based applications are quickly delivering quantifiable business benefits, as three years of THINKstrategies Best of SaaS Showplace (BoSS) Awards have clearly proven.

Avoiding the Cloud's Dark Shadow: Needless Costs

However, it is also becoming clear that poorly managed deployment of today's cloud alternatives can generate needless costs that must be better contained to ensure they don't overshadow the potential benefits.

The Perils of Bypassing IT

A major driver of unanticipated costs is the unauthorized adoption of cloud services by corporate end-users and strategic business units seeking to circumvent their IT departments or central procurement offices.

This "consumerization of IT" or "shadow IT" effect is fraught with potential pitfalls when inexperienced personnel unilaterally acquire a cloud service that may appear to be economical up front, but could include ongoing fees that can multiply over time.

For example, many of the Amazon Web Services (AWS) and other "on-demand" Infrastructure as a Service (IaaS) offerings are very appealing for periodic uses, but are not conducive economically for ongoing production purposes. Business users or units that are not experienced in calculating these costs could be surprised to see their bills surpass their original estimates.

Even if they properly estimated their own isolated costs, the clandestine use of cloud services by multiple users and business units within an organization could either lead to duplicative costs or fail to take full advantage of volume discounts.

Obviously, these direct costs can be compounded by far greater indirect costs associated with potential compliance and security issues.

On the Cost-Control Vanguard

In the 1980s and 1990s, a group of software vendors emerged to provide telecommunications cost management solutions to businesses in response to the chaos created by the deregulation of the telecommunications industry at that time. Today, we're seeing a similar pattern as a new group of cloud cost management and optimization players are gaining attention in response to growing cloud cost-control concerns.

These companies include Cloudability, Cloudyn, Cloud Cruiser and Newvem.

Another set of cloud-oriented application performance management (APM) and wide area network (WAN) optimization vendors, like AppFirst and Aryaka, are also helping organizations maximize the value of their cloud services.

These companies are not only helping IT and business executives better understand their cloud costs, but also are accumulating interesting data from across their customer base that could provide even more useful benchmarks that will help IT and business executives make better cloud acquisition decisions. These benchmarking capabilities are another example of the ultimate value of shared cloud services, which I first discussed in this space in 2009.

I've been pleased to see a growing number of corporate decision-makers increasingly recognize the business benefits of cloud solutions. Now, it is time for them to get on top of the unanticipated and often unnecessary costs that can arise from improperly acquired and managed cloud services.

Jeff Kaplan is the managing director of THINKstrategies and founder of the Cloud Computing Showplace. He can be reached at

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