The hidden truth of cloud computing: The rising cost of cloud is bleeding businesses dry

It has been said that cloud computing acts as an additional avenue for their customers to access and store data in a cost effective way. The harsh reality about cloud technology is fast becoming a necessity in moving forward, along with the rising cost of maintaining and updating the infrastructure. While it is well documented that cloud computing delivers rich services to organizations on a scalable, pay-as-you-go basis from anywhere, at any time, the complexity of these services has increased dramatically over time.

In December 2012, Compuware commissioned Research in Action, to conduct a global, independent survey of senior IT professionals’ attitudes and concerns relating to cloud computing. The survey consists of 468 IT decision makers from organizations across a range of industries in the Americas, Europe, and Asia.

Participants were required to pick a single top area of investment over the time period and nearly a quarter chose cloud for test and backup as their top investment. If we were to look at cloud investments as a whole (including private and hybrid cloud initiatives and SAP in the cloud), 65.6% of respondents indicated cloud as a top investment area for 2013.

Looking ahead in the next five years, more companies will continue to invest into cloud technology and it will become the number one area of investment followed by mobile IT, business analytics, Big Data and n-memory computing. Respondents identified full cloud integration (public, hybrid, private) as the most important trend in cloud computing over the coming five years.

On the local front, cloud computing investment in Malaysia is expected to reach RM2.8 billion by 2020, a significant rise from the RM140 million recorded in 2012. On a global scale, spending on cloud computing services is expected to grow to RM509 billion by 2020, according to a Forrester Research Forecast.

Investment Priorities

As major players in the technology space continue to shift their core business to the cloud, it is important to note that while cloud computing is something to look forward to, companies will eventually need to weigh the pros and cons in investing into the cloud. After all, the cloud continues to be more expensive to maintain.

Most companies today are able to grasp the benefits of agility, flexibility and time-to-value that cloud services can deliver. It is clear that cloud adoption has become mainstream.  This results show that cloud is a highly significant area of IT spending, and the range of services that are being delivered through the cloud is expanding.

Moreover, companies are moving towards a more sophisticated cloud environment, with a mixture of private, public and hybrid technologies and using them to deliver more business-critical functions.

Growing Complexity in the Cloud

Research from the survey also highlighted specific cloud services that are currently in use or planned for use over the coming years. eCommerce came out on top of the list of services that incorporates cloud-based services. Additionally, 78% have responded that their companies are currently using it, while 47% intend to use hybrid cloud services over the next 24 months. The integration of public, hybrid and private clouds makes managing and monitoring the IT environment more challenging. Add outsourcing to the mix and it becomes clear that there is a need to monitor these information exchange points more closely.

Approximately 79% of the survey’s respondents are concerned about the hidden costs associated with cloud services. The same group of respondents also expressed concerns about the impact poor performance in cloud services on their revenues. For the management team, the top three key areas of concern in relation to management of cloud services were: poor end-user experience due to performance bottlenecks; the impact of poor performance on brand reputation and/or customer loyalty; and loss of revenue due to availability, performance, or troubleshooting cloud services.