Unexpected Cloud Spend Spurs Hangover for IT Leaders
Sungard AS study uncovers the true cost of the cloud: IT investment, maintenance and staff expenses
Wayne, Pa. – November 10, 2015 – Most companies that move to the cloud expect to achieve cost savings associated with promised information technology efficiencies. But a survey of nearly 250 IT leaders from enterprise companies by Sungard Availability Services® (Sungard AS), a leading provider of information availability through managed IT, cloud and recovery services, reveals that many who rushed to the cloud have been blindsided by unexpected costs following implementation. For instance, 74 percent of respondents spent $30,000 or more in monthly cloud maintenance fees in addition to their initial investment.
The Sungard AS survey outlines where unexpected costs arise and arms IT business leaders with the information needed to deploy a successful cloud strategy that likely consists of a hybrid solution of physical and cloud technology.
Lack of transparency in the buying process, the need for additional specialized staff and ongoing maintenance fees are all sources of unanticipated cost and complexity. The survey identified that unless those concerns are addressed and the appropriate cloud strategy partner is engaged, organizations will continue to struggle with unforeseen cost and implementation challenges, concludes Sungard AS.
"Businesses are experiencing a 'cloud hangover' from the unexpected expenses and market perception that indicated all workloads can easily move to the cloud." said Chris Ortbals, vice president of services product management at Sungard AS. "For many enterprises, the cloud can bring great efficiencies for the right workloads. We work with our customers from the outset to identify what can be optimized by shifting to the cloud and what may be best suited to perform best in a hybrid approach. Sungard AS, by design, is not a cloud-only provider but can tailor a solution that meets the customer's needs today and in the future."
Organizations have been drawn to cloud computing with the belief they will achieve economies of scale, reduce spending on their technology infrastructure and capital costs, streamline processes and improve accessibility. In fact, 39 percent of IT leaders said they adopted cloud solutions to increase business agility and 38 percent wanted to increase their competitive advantage. But survey respondents proclaim it has cost much more than expected in terms of their initial investment, day-to-day maintenance and to assemble the staff to manage the new technology.
The survey identified three specific areas of unanticipated cloud costs:
- Execution: In 2015, 63 percent of surveyed organizations spent $150,000 or more implementing cloud services, up from 53 percent last year and 50 percent in 2013. Most IT leaders anticipated upfront costs, but did not realize the potential additional costs associated with transitioning to the cloud.
- Maintenance: Making the switch to the cloud is a long-game strategy even though organizations expect to reap rewards of their cloud investments once they're operating. A full 80 percent of IT leaders surveyed said they now pay more to ensure their IT environment remains integrated. Considering many will continue leveraging a hybrid solution, these expenses are important to an integrated environment and should be considered long-term financial investments with real-time benefits of agility and flexibility.
- Unplanned spending: Organizations cited hidden costs that don't materialize until cloud services are operating. Key drivers of these expenses are upgrade costs (36 percent); customization (35 percent); internal maintenance costs for patching, data recovery and compliance software (35 percent); consultancy costs (34 percent); and the cost of staff to manage deployment of the cloud (33 percent). Seventy percent of the respondents said they spent at least $150,000 in unexpected costs.
Identifying a cloud services provider that focuses on transparency during the purchase, execution and post-deployment process of cloud services eliminates unexpected costs and decreases the complexity of the transition, thus mitigating the potential of a "cloud hangover."
The survey results are based on 247 U.S. interviews that were carried out in August 2015 on behalf of Sungard Availability Services and completed by SurveyMonkey Audience. The research spoke to IT decision makers at enterprise businesses across a variety of sectors – including financial services, business process management and retail. The survey focused on uncovering insights into organizations' experiences with cloud environments, including current investment, expected future investment, vendor management and, ultimately, satisfaction.
About Sungard Availability Services
Sungard Availability Services (Sungard AS) is a leading provider of critical production and recovery services to global enterprise companies. Sungard AS partners with customers across the globe to understand their business needs and provide production and recovery services tailored to help them achieve their desired business outcomes. Leveraging 35 years of experience, Sungard AS designs, builds and runs critical IT services that help customers manage complex IT, adapt quickly and build resiliency and availability.
Sungard Availability Services is a trademark or registered trademark of SunGard Data Systems or its affiliate, used under license. The Sungard Availability Services logo by itself is a trademark or registered trademark of Sungard Availability Services Capital, Inc. or its affiliate. All other trademarks used herein are the property of their respective owners.
The abbreviation for Sungard Availability Services is 'Sungard AS' as cited above. Please use 'Sungard AS' when abbreviating the name rather than 'Sungard' or 'SunGard', which may confuse the reader with another separate company with a similar name.