Uncovering The Hidden Cost Of Cloud Computing

Hidden Cost Of Cloud Computing

Without a doubt, there are a number of compelling benefits associated with cloud computing, especially in terms of the agility and scalability that cloud can provide. However, that doesn’t necessarily mean that cloud computing is the cheapest, fastest or simplest option for your IT delivery, regardless of what some vendors may have told you.

Any decisions in this area must be driven first and foremost by your own particular business requirements, and not simply by the availability of this technology. Cost will be one of many important areas to consider in this regard, especially as there are a number of potential costs hidden ‘in the cloud’ that may not be immediately apparent.

When evaluating the cost versus the benefits of any cloud computing solution, you’ll need to look at three very important areas. The first is licensing costs. A lot of people don’t realise that software licensing can actually account for between 30 and 40% of their total IT costs.

Also, the pricing of these software licenses will vary widely by vendor. You’ll also need to check whether the software licenses that you’ve purchased for your traditional infrastructure environment will transfer to the cloud, since many won’t, especially if you haven’t subscribed to a maintenance contract.

Does it matter? Absolutely. If you decide to migrate some or all of these services to the cloud, you’ll need to make sure that you understand the current licensing agreements that you have in place, and then carefully work out the cost implications before moving any/all of them to the cloud.

For example, Microsoft will happily allow you to migrate your existing software licenses to the cloud, but only if you have Software Assurance in place for them. If you don’t, then you’ll basically have to purchase the licenses all over again.

The second important factor to consider is transition costs. Unfortunately, moving a service to the cloud will never be as simple as some vendors would like you to believe, so you’ll definitely need to do your homework before rushing into any decisions. To begin with, you’ll need to consider what internal resources and/or third-party services will be needed to support this transition to the cloud, and you will also need to be aware of the associated risks.

The cost of the bandwidth that you’ll need to support a cloud solution is the third area that will need to be considered. Cloud may be able to give you easy access to your data, storage and applications via internet, but that means that your connectivity to the internet will become even more important in terms of resilience for availability and also bandwidth for performance.

As a result, you may find that you’ll have to upgrade your internet connectivity, but again, you’ll need to do your homework first. Why? Because you’ll want to make sure that any new bandwidth charges won’t outweigh the cost savings that you were hoping to achieve with cloud in the first place!

An alternative (and recommended) solution to gobbling up loads of extra bandwidth is to deploy thin client technology to reduce network traffic and increase application performance. However, implementing a thin client solution such as Citrix will obviously have its own cost implications to consider.

One thing is for sure: any change in delivery method will require both money and effort, and will inevitably cause some at least some disruption to your business-as-usual processes. In addition, you’ll almost certainly need to do some integration work in order to keep your key processes tightly knitted together.

So, while the ‘headline’ cost of cloud computing may seem attractive at first glance, the costs involved with migration, integration and consultancy will also need to be considered very carefully, especially as these costs can vary wildly depending on the state or complexity of your current IT environment, as well as your future requirements. Asking these key questions at the outset and apply careful analysis and evaluation will definitely help you to avoid any unexpected costs further down the line.

Jon Milward

As the Operations Director of Northdoor, Jon Milward is responsible for the development and delivery of IT solutions-based on Microsoft technologies. Following a PhD in Physics, he began his career with the Defence Research Agency (now Qinetic). During a nine year career with DERA he was promoted from research scientist to heading a major business group with P&L responsibility. After an Executive MBA at London Business School, Jon joined IBM reseller Platinum Blue with the objective of growing the business and developing new internet-based technologies where he became MD.

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