The Cloud Experience: Enterprise Benefits and Pitfalls

Spend Matters would like to welcome Heather Barclay, Senior Sales Executive at NPI Financial for a post on some of the considerations enterprises should take before adopting cloud computing.

While startups have readily adopted cloud, well-established organizations understand the immaturity challenges associated with a cloud vs. existing architectural approach. In those cases, many companies have decided to focus current cloud adoption efforts on critical, yet fault-tolerant capabilities including R&D, QA and test environments. This has created a mutually beneficial solution for many enterprises and vendors. Often, enterprise-class cloud providers will offer these solutions at reduced or no cost in exchange for feedback and increased exposure to portal interfaces, thereby increasing both vendor and client comfort with cloud environments. Organizations are able to prototype and explore decoupled computing architectures, and explore novel approaches to DR.

But, challenges remain for large companies adopting cloud computing. It's clear that the transition to decoupled architectures will provide numerous benefits, including the ability to self-provision compute power, storage and bandwidth through a portal where you can pay for what you use, when you need it. However, the ability to realize these benefits will require significant investments in eliminating the inter-dependency between enterprise-class applications, the hardware they reside on and the data centers in which they reside. With this come several critical issues companies should be aware of as they invest in cloud computing initiatives.

Key considerations such as pricing and cost remain unclear for numerous reasons, not the least of which is the capital investment required to migrate current enterprise application architectures to a cloud environment. Another major cost consideration is the sometimes limited support levels for cloud computing from software providers.

Moreover, contrary to the imagery of "cloud," many enterprise cloud environments are physically provisioned in particular geographic areas. This has resulted in pricing disparities between well-subscribed areas and those that have been newly established, lack an anchor tenant and/or are in an emerging market for the specific provider. For example, a cloud-based data center subscription for a New York company may actually be located in California, which creates significant cost and latency issues. Conversely, data centers housed in close proximity often seek the same price point as those far away, even though the cost to serve is significantly less.

Next, there is still a lack of maturity in cloud-based DR solutions. Datacenter providers are admittedly uncertain how cloud will affect their existing lines of business, including managed and collocation environments. While the message may be "get off the floor and into the cloud," much realignment within the vendors remains. While incented to increase their market share through new cloud customer acquisition, vendors fiercely protect the higher revenues they earn from non-cloud/traditional DR subscriptions and managed High-availability environments.

Finally, before leaping into a cloud DR initiative, it's important to make the necessary investments to ensure your applications and vendor contracts are "cloud-ready" (i.e. designed to realize the value associated with this type of setup). Engaging datacenter and cloud pricing experts to help guide you through the complex considerations and options available to you can result in reduced financial exposure as well as substantial savings.

Like any new IT initiative, cloud computing presents both benefit and complexity. Yet, the complexity isn't just a technical challenge -- it's a business challenge that can create long-term cost repercussions without proper consideration.

-- Heather Barclay

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