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How to Combat the Rising Cost of Cloud Computing Services

Sep 23, 2014 6:00:00 AM

by Charles Bystock

combat-rising-cost-cloud-computingIs the cost of cloud computing services rising? Results of the 2014 Future of Cloud Computing survey were released in June. They show enterprises are adopting cloud computing services in ever-greater numbers.

Executives surveyed cited agility, cost and scalability as their top reasons.

The survey identified two clear trends: enterprises are using the cloud to generate new business and new revenue:

  • Between 2011 and 2014, SaaS adoption increased from 13% to 74%.

  • 56% of businesses are now using IaaS to increase scalability .

  • 41% of businesses are using PaaS to develop and test new applications.

  • Almost 67% of businesses said they planned to move data to the cloud by 2016.

  • 48% are using the cloud to create new products and increase revenue.

  • 45% say they are already running their company in the cloud, or they plan to do so.

This is not a picture of overwhelming concern about rising costs of cloud computing services. In fact, the survey notes that IT managers view the cloud as a savior – enabling them to offload mundane-but-needed cost-center functions and more strategically direct skilled IT staff toward new business development. Development facilitated and speeded through the use of cloud-based tools.

Are there cost issues associated with cloud computing?

Yes, and they’re often hidden. While executives see cloud computing services as an opportunity to boost business and income, cloud-related problems can put companies at risk of losing business and revenue they already have. Why?

The cloud isn’t infallible. Service interruptions and outages can happen. So can slow-downs or other problems that directly affect customer interactions with your company. And by now, everyone is acutely aware that today’s customers are not only demanding but impatient. The most miniscule delay can cause even devoted customers to click away from you forever.

That loss can be difficult to quantify, but its effects are no less painful. Poor service performance or unreliable availability not only annoy customers to the point of abandonment, your IT staff may also suffer work delays waiting for a cloud provider to fix the problem.

Another CIO study, conducted in 2012 by Compuware – admittedly not an entirely unbiased source – noted that two-thirds of respondents planned to increase investment in cloud computing services in 2013. But 79% said they are concerned about performance-based hidden costs. Specifically:

  • 64% worry about degrading the end user experience, both internally and for customers.

  • 51% cited potential negative impact on brand perception and customer loyalty.

  • 44% expressed concern about a drop in revenue, either due to unreliable performance or to added costs of trouble-shooting cloud computing services.

  • 35% suggested the more complex environment would inherently make resolving problems more costly.

  • 23% were also concerned about increased workload associated with managing vendors and SLAs.

Obviously the way to combat these potential problems is greater awareness that enables faster response. But nearly three-quarters of companies said they are tracking and managing cloud application performance either manually or using outdated tools. Many of them said their only metric was uptime.

Since adoption of cloud computing services is clearly increasing, it’s incumbent on companies to establish an IT environment that’s not only agile and scalable but which enables problems to be quickly detected and resolved before they turn into costs.

Opportunity ahead.

Cisco notes cloud computing is a key factor in emergence of the Internet of Everything (IoE). Whereas there were about 200 million devices connected to the internet in 2000, Cisco says there are about 10 billion in use today, expected to rise to 50 billion by 2020.

Cisco says IoE will drive new sources of value (net profit) for enterprises, predicting “IoE value” could be as much as $14.4 trillion by 2022. That represents a potential boost in profits of almost 21%.  

If your enterprise is poised to capture the value of the cloud instead of suffering from hidden costs, you may expect to see a significant increase in profits.

cloud computing

Photo Credit: @toddle_email_newsletters via Flickr. 

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