IT chiefs warned over cloud's hidden costs

By Gareth Morgan
19 May 2011 View Comments
Laptop cloud computing image

Analyst firm Gartner has warned IT chiefs to beware the hidden costs of cloud computing as increasing number of businesses look to switch their models of IT delivery.

While many cloud service providers promise lower up-front costs and switching costs, IT chiefs need to be mindful that the risks associated with cloud computing are often unclear or overlooked in contracts, said Alexa Bona, an analyst with Gartner.

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Many cloud offerings today are based on unsophisticated models – essentially offering enterprises a bare-bones deal on processing capability or storage for a fixed price.

“Many cloud providers appear reluctant to negotiate contracts as the premise of their core model is a highly leveraged approach,” said Bona. “The starting point contractually often favours the vendor.”

IT chiefs should ensure that critical issues such as uptime guarantees, security, business continuity and disaster recovery are adequately addressed in the contracts.

Such issues have been in the spotlight after a recent systems failure at Amazon’s cloud services resulted in scores of its customers losing data.

Meanwhile, a new report from analyst group TechMarketView underscored the appetite for cloud services within the UK.

TechMarketView predicts that UK firms will increase their spending on business process services by seven per cent between 2010 and 2014 – with adoption of cloud services fuelling that spending.

The shift towards cloud services will cement the move away from the “out-dated lift and shift” IT infrastructure outsourcing model, said John O’Brien, research director at TechMarketView.

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