Cutting costs is often cited as a key motivation for cloud computing, but businesses who don't plan their implementation carefully could end up paying out more than when they were running services in-house according to a leading research firm.
Cloud computing promises to tackle two hitherto irreconcilable IT challenges: the need for lower costs and demand for increased innovation. However, a new report from Ovum suggests that instead of boosting efficiency, companies that are ill-prepared will end up with their inefficient IT simply spread across a wider area.
Despite claims from suppliers that cloud computing will inevitably cut costs, businesses could find themselves having to pay more, said Ovum senior analyst Laurent Lachal. "Every time you talk to a service provider, they tell you buy my stuff because it will lower your cost and boost your profit. It might be the case but you had better do your calculations first," he said.
IT departments will need to invest heavily to integrate cloud services into their own IT structures if they are to benefit from the flexibility the cloud offers, he claims. "This integration and orchestration requires a lot of effort. You have got to think about integration at all levels, governance, management, process and data integration."
The European Union's decision to fund a three year project that will investigate privacy and security issues around cloud computing - ranging from regulatory and legal issues to technical questions over how data stored remotely can be secured - further underlines the breadth of issues involved in the integration process.
According to Lachal, CIOs need to do their homework if they are to get value for money from cloud computing suppliers, but most organizations do not understand the choices on offer. Public cloud services can charge according to the number of CPUs and how much memory a client uses, as well as network throughput and the amount of data they need to store.
Companies also need to understand the range of pricing structures. For instance, if a company develops an application that is CPU intensive and does not store a lot of data and puts it on a cloud service where CPU costs are high and data costs are very low, the return on investment will be much lower. Some cloud suppliers charge companies on the basis of the size of data footprint and then compress the file to store it, but still charge based the original footprint.
After a Masters in Computer Science, I decided that I preferred writing about IT rather than programming. My 20-year writing career has taken me to Hong Kong and London where I've edited and written for IT, business and electronics publications. In 2002 I co-founded Futurity Media with Stewart Baines where I continue to write about a range of topics such as unified communications, cloud computing and enterprise applications.