Avoiding the Cloud’s Dark Shadow: Needless Costs

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

However, it is also becoming clear that poorly manageddeployment of today’s cloud alternatives can generate needless costs that must bebetter 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 servicesby corporate end-users and strategic business units seeking to circumvent their ITdepartments or central procurement offices.

This “consumerization of IT” or “shadow IT” effect is fraught with potential pitfalls when inexperienced personnel unilaterally acquirea cloud service that may appear to be economical up front, but could include ongoingfees 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 arenot conducive economically for ongoing production purposes. Business users or units thatare not experienced in calculating these costs could be surprised to see their bills surpasstheir original estimates.

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

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

On the Cost-Control Vanguard

In the 1980s and 1990s, a group of software vendors emerged to providetelecommunications cost management solutions to businesses in response to the chaoscreated by the deregulation of the telecommunications industry at that time. Today, we’reseeing a similar pattern as a new group of cloud cost management and optimizationplayers are gaining attention in response to growing cloud cost-control concerns.

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

Anotherset of cloud-oriented application performance management (APM) and wide areanetwork (WAN) optimization vendors, like AppFirst and Aryaka, are also helpingorganizations maximize the value of their cloud services.

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

I’ve been pleased to see a growing number of corporate decision-makers increasinglyrecognize the business benefits of cloud solutions. Now, it is time for them to geton top of the unanticipated and often unnecessary costs that can arise from improperlyacquired and managed cloud services.

Jeffrey M. Kaplan

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

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