By Chris Harding, The Open Group
IT costs were always a worry, but only an occasional one. Cloud computing has changed that.
Here’s how it used to be. The New System was proposed. Costs were estimated, more or less accurately, for computing resources, staff increases, maintenance contracts, consultants and outsourcing. The battle was fought, the New System was approved, the checks were signed, and everyone could forget about costs for a while and concentrate on other issues, such as making the New System actually work.
One of the essential characteristics of cloud computing is “measured service.” Resource usage is measured by the byte transmitted, the byte stored, and the millisecond of processing time. Charges are broken down by the hour, and billed by the month. This can change the way people take decisions.
“The New System is really popular. It’s being used much more than expected.”
“Hey, that’s great!”
Then, you might then have heard,
“But this means we are running out of capacity. Performance is degrading. Users are starting to complain.”
“There’s no budget for an upgrade. The users will have to lump it.”
Now the conversation goes down a slightly different path.
“Our monthly compute costs are twice what we budgeted.”
“We can’t afford that. You must do something!”
And something will be done, either to tune the running of the system, or to pass the costs on to the users. Cloud computing is making professional day-to-day cost control of IT resource use both possible and necessary.
This starts at the planning stage. For a new cloud system, estimates should include models of how costs and revenue relate to usage. Approval is then based on an understanding of the returns on investment in likely usage scenarios. And the models form the basis of day-to-day cost control during the system’s life.
Last year’s Open Group “State of the Industry” cloud survey found that 55% of respondents thought that cloud ROI addressing business requirements in their organizations would be easy to evaluate and justify, but only 35% of respondents’ organizations had mechanisms in place to do this. Clearly, the need for cost control based on an understanding of the return was not widely appreciated in the industry at that time.
We are repeating the survey this year. It will be very interesting to see whether the picture has changed.
Participation in the survey is open until August 15. To add your experience and help improve industry understanding of the use of cloud computing, visit: http://www.surveymonkey.com/s/TheOpenGroup_2012CloudROI
Dr. Chris Harding is Director for Interoperability and SOA at The Open Group. He has been with The Open Group for more than ten years, and is currently responsible for managing and supporting its work on interoperability, including SOA and interoperability aspects of Cloud Computing. He is a member of the BCS, the IEEE and the AEA, and is a certified TOGAF practitioner.