Business News

The cloud hangover

By Business & Finance
21 December 2015
cloud computing hangover

Keith Tilley, examines cloud technology and all its complexities. Are there hidden costs that nobody speaks about, he asks?

Cloud computing has proven hugely beneficial for businesses across a wide spectrum of industries. Added mobility and flexibility are key reasons for this, but it is often cost that is the true driving force behind cloud adoption.

The subscription model used by many suppliers has enabled more businesses than ever to gain access to transformative technologies without having to pay prohibitive up-front costs. This has expanded the digital economy to include companies that would not be considered traditional technology firms.

However, as with any new technology, cloud adoption has not proved smooth-sailing for all organisations. In fact, many businesses have faced unexpected costs as a result of migrating to the cloud, along with a host of other unforeseen issues. Recent research undertaken by Sungard Availability Services found that hidden cloud costs are widespread. Published in a whitepaper titled, ‘The Cloud Hangover’, the study found that 81% of businesses across the UK, Ireland, France and Sweden have experienced unplanned cloud expenditure in some form. If businesses are to see cloud computing in terms of the many advantages it can provide rather than as a disruptive influence, they need to be fully aware of all its potential costs.


The hidden costs of cloud computing cannot be summed up in just one sentence. Each organisation, depending on the complexity of its IT services, the number of vendors it is using and its employee numbers, will face different levels of expenditure, both planned and unplanned. The research carried out by Sungard AS found that while some organisations have benefited greatly from cloud computing, others have chosen to avoid the technology altogether, and many more have been disappointed with their initial deployments.

Some 53% of organisations across Northern Europe have had to spend more than originally planned managing their cloud environments, as implementation proved more challenging than initially expected. For many businesses, it is simply proving too difficult to evaluate the long-term costs of cloud computing. While it is easy to budget for the core subscription service being provided by cloud vendors, less obvious costs are causing IT leaders all manner of headaches.

The subscription model used by many suppliers has enabled more businesses than ever to gain access to transformative technologies without having to pay prohibitive up-front costs

On average, organisations have spent an additional £320,000 over the last five years due to unexpected costs including people, systems integration and internal maintenance. It’s important to remember that the cloud is not a quick-fix and transitioning from traditional IT resources will require time, and therefore, investment. Cloud vendors also need to take some responsibility for hidden costs, however. Sungard AS found that 29% of organisations had to commit more money than they were expecting to manage their cloud service provider, suggesting that the latter was not always as transparent as it could have been.


Keith Tilley

Keith Tilley, Sungard Availability Services

One of the biggest drivers of unforeseen costs in the cloud environment is increased complexity. While many claim that outsourcing IT resources to a third party will simplify business processes, many organisations suffer from having a multitude of cloud vendors, each with their own distinct integration issues. 43% agreed that the cloud had increased the complexity of their IT infrastructure and 55% of those surveyed said that they now pay more to integrate their systems.

When complexity gets out of hand, it can negate the very benefits that drew your organisation to cloud computing in the first place.

Nearly half (41%) of organisations are now re-thinking their use of the cloud as a result of complexity and cost, but it is a shame that these issues are overshadowing the many benefits that the technology can bring. When implemented correctly, the cloud can provide businesses with increased mobility and productivity while also lowering their IT bills. Ultimately, long-term cost evaluations must be considered and planned for prior to cloud migration, if businesses are to avoid suffering from a cloud hangover.