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Hidden costs of moving to the cloud

by Don Neske​

Are you tired of hearing about “the cloud” yet? It might be one of the most overused (and misapplied) terms in business today.

But it still dominates IT discussions — and IT budgets. A global survey commissioned by Compuware1 revealed that CIOs ranked cloud technology as their top investment priority. In that same survey, however, nearly 80 percent of CIOs expressed concern around the hidden costs of moving to the cloud.

That’s a pretty big dilemma that’s worthy of further examination. The technology that companies desire most of all is also one that they’re wary of.

How can you reconcile this dilemma? 

The technology that companies desire most of all is also one that they’re wary of.

The downpour

First of all, “hidden” costs don’t mean features or fees that get folded into a sale at the last minute. They mean expenses of ownership and operation that weren’t anticipated ahead of time, and which often result from a misunderstanding of how to properly take advantage of the cloud.

In my experience, there are two common contributors to these hidden costs: failure to integrate, and failure to optimize. 


Integration: Moving to the cloud generally means moving some systems and applications (or portions of them) to the cloud and leaving others as is. This creates a chasm, however, between cloud-based and on-premise systems, which you have to integrate by overlaying application programming interfaces (APIs) that allow your disparate systems to work together. Failing to integrate means that your software-as-a-service (SaaS) systems become increasingly siloed from everything else, which leads to data duplication and discrepancies. Complicating matters further, integrating and maintaining these cloud and on-premise technologies adds a layer of complexity and cost that many companies don’t consider when the decision is made to move some systems to the cloud, which can create both operational and budgetary concerns if not properly accounted for.

Optimization: I’ve also seen companies migrate systems or applications to the cloud and assume that their work was done — as if simply “moving to the cloud” is enough to take advantage of the expected efficiency and savings. That, however, is not the case. What makes the cloud effective is its elasticity: The cloud allows you to shift capacity as needed, putting more computing power behind systems or applications when usage is heavy and — the most important part — lowering that support when usage is lower. If you don’t fluctuate resources (CPU, RAM, storage, VMs, etc.) in tandem with usage, you’re just leaving the faucet running. Companies who do this aren’t benefiting from the efficiencies and savings they expected, so to them it appears as if they’re suffering from some kind of “hidden cost.”

Implementation itself can also create issues. Oftentimes, such work is done on an ad-hoc basis across departments rather than as part of a wider cloud plan, with little to no control over who is in charge of what. This is wasteful at best, both in time and money spent. At worst, it can disrupt critical business functions. Without proper controls and defined lines of authority over who is in charge of what, cloud implementations can become a giant mess for all involved. Proper planning is crucial.


Staying dry

The total costs of moving to the cloud are hard to estimate, as they encompass a great deal of resource-intensive work: migration, integration and optimization. The cost of integration may be unavoidable — but with a skilled and trained IT staff or IT services provider that knows how to erect a properly integrated cloud infrastructure, you can mitigate that cost by integrating immediately upon migration and maintain those integrations over time. IT services providers can also train your in-house staff to monitor usage and optimize cloud resources accordingly, or, if needed, they can do that crucial work for you, so you use only what need as you need it.

Considering cloud migration? 

Understand the pros and cons — and avoid the hidden costs. 
The cloud is a dominant business agenda today because of how it enables agility. But many businesses are attracted to the cloud without truly understanding how it operates, and this, more than anything, is the source of the hidden costs intimidating many prospective cloud adopters. The umbrella that keeps you dry, therefore, is simply knowing how to properly take advantage of the cloud to make it work for you.
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Don Neske is the Director of IT Services, Strategic Marketing at Ricoh USA, Inc.. He brings more than 17 years of experience to the role, with advanced expertise in building highly competitive services and solutions portfolios, and success in aligning and delivering strategies that improve the efficiency, reliability and security of customers’ information technology and data. Currently, he oversees the strategy, direction and new business development for Ricoh’s IT services business, including its dealer and direct channels. Neske earned a Bachelor of Arts from Rutgers, the State University of New Jersey. 
1 Archana Venkatraman. "Hidden cost of cloud computing is CIOs’ biggest concern." ComputerWeekly. July 13, 2013. http://www.computerweekly.com/news/2240188240/Hidden-cost-of-cloud-computing-is-CIOs-biggest-concern