6 hidden costs to cloud and how to beat them

Many companies have failed to realize the potential savings cloud can deliver by not identifying the hidden costs of cloud

When cloud computing first hit the mainstream, cost control was among its biggest promises. The move from capital expenditure to operating costs was what first attracted many companies. Since then, however, experience has identified many hidden costs that the second generation of cloud adopters would do well to consider. What are these costs, and how can companies mitigate them?


1. Perennial costs

All computing projects involving a shift to public cloud infrastructure carry some naturally-occurring costs. Businesses cannot expect to simply migrate workloads to lower-cost computing infrastructures without any additional expenses. Instead, they must consider the technical overheads.

The costs of getting data into the cloud and securing it once there can be a surprise that companies don’t allow for. Renting the necessary bandwidth to migrate data or paying for its physical transport should be an item on the budget sheet. Also, don’t underestimate the cost of technology to securely encrypt data before it leaves the premises.

2. Not having a business case

Beyond these technical costs, there are more strategic considerations that will affect the real-world cost of your cloud computing project. One mistake easily made is not to produce a firm business model in advance.

Companies sometimes say that they haven’t saved the money they’re expecting after a cloud migration, but in many cases, they haven’t highlighted cost reduction as a primary objective. In these scenarios, they may not have followed through on the initial migration with measures that would save money.

For example, instead of decommissioning legacy infrastructure after a cloud migration, they may continue operating it to recover sunk investment. This would increase their scale of operation and expanding rather than contracting their cost base.

3. Not being flexible enough

Conversely, another hidden cost in cloud computing is defining your business case too rigidly. Businesses that constrain their cloud computing objectives too much may not allow for future expansion as business needs change.

Companies may be able to use cheaper cloud computing services based on narrowly defined operating parameters, especially when dealing with low-cost generic cloud service providers who offer a one-size-fits-all solution. However, these environments may be restrictive if they later wish to expand their cloud computing environment with new applications.

Planning cloud computing service contracts that allow for growth is an important part of a mature migration strategy. It will prevent hidden future costs as companies rush to rearchitect their cloud ecosystem in preparation for further digital transformation projects.

4. Migration costs

Once a business has defined its use case and found a flexible, mature cloud service provider, they may still suffer hidden costs when migrating to their new cloud environment.

One common cause of cost escalation here is a piecemeal approach to the migration process. Instead of taking a top-down view of migration, companies sometimes look at it from the bottom up, with different departments managing their own migration separately.

This fragmented approach makes it difficult to spot transformation opportunities, and can lead to duplicated efforts, which unnecessarily increase the overall investment in migration. It can create a situation where multiple operations teams are needed: one to manage legacy applications on old infrastructure, and another to handle new applications that have been migrated across.

Moving applications in an uncoordinated fashion also means that it takes much longer to get to a point where companies can enjoy cloud computing’s economies of scale.

5. Application management

During the migration process, companies must carefully plan their applications’ interoperability with the destination cloud environment. It can be difficult to ensure that applications reconfigured or rewritten for cloud operations run seamlessly in a new infrastructure. The interactions between them can be complex, and it makes sense to work closely with the cloud service provider to iron out any problems ahead of time. Otherwise, they can drive up costs as service outages disrupt business operations.

In addition to working with the cloud service provider during the migration process, one way to avoid this problem is to begin with a proof of concept. This will incur an up-front cost, but may avoid greater expense further down the line. A stitch in time, as they say, saves nine.

6. User behaviour

Strategic planning, coordinated migration and attention to technical detail all play a part in helping to avoid the hidden costs of cloud computing. However, one of the biggest contributors to cost in the cloud is the one between the chair and the keyboard. User behaviour can dramatically drive up costs in unexpected ways.

Untrained users may take advantage of the cloud environment’s new, fast service provisioning to access all kinds of services from virtual machines to storage capacity without thinking hard about the consequences. It may be easier for them to leave these resources half-used and littering the system without properly cleaning them up, leading to server sprawl and associated management costs.

Avoid these issues with a combination of user training and structured procurement workflow to introduce some checks and balances. Take advantage of IT service management tools that will make your cloud computing environment responsive while keeping users accountable.

A smart approach to the cloud

These hidden costs in cloud computing are common, but far from unavoidable. Forewarned is forearmed, and shining a light on these costs helps to make them more visible. Strategic planning at the start of your project will help you to reap the rewards of migrating your IT ecosystem to run on multiple cloud infrastructures and minimize risk.

Download our cloud ebook ‘Create a cloud experience your business can depend on  to find out more about best practices getting the most return on your cloud investment and overcoming common cloud challenges.


Dave Bignell

Dave Bignell is a cloud transformation specialist at Orange Business. He began his career almost 30 years ago working on European Space Agency satellite projects, before taking on roles in neural networks image processing in the medical sector and control systems in the utilities industry. Over the last 15 years Dave has specialized in intelligent networks services delivery, infrastructure governance and cloud services at Orange for the telecoms and retail sectors. Dave holds a degree in Engineering Science from the University of Durham and a MSc in Artificial Intelligence from the University of Bristol.