Research from Sungard Availability Services finds that unexpected costs, integration challenges and keeping in line with data compliance are all contributing to a costly 'Cloud Hangover'
Dublin, Ireland: 30th March 2015 – Sungard Availability Services® (Sungard AS), a leading provider of information availability through managed IT, cloud and recovery services, today announces research which reveals that businesses are spending over €1bn each year on maintaining cloud services, and hidden costs and teething problems associated with their cloud computing projects. The research questioned 50 senior IT decision makers in Irish businesses with over 250 employees, with an average cloud spend of €1,099,265 in the last year.
Long considered a more flexible and simpler approach to managing IT, cloud computing has ushered in a new era of IT. However, the research reveals that organisations are now facing a large number of challenges in managing and operating these cloud environments.
Unexpected Costs in the Cloud
The research revealed that over half of businesses in Ireland have encountered some form of unplanned cloud spend (54 per cent). Not only is each Irish organisation paying an average of €202,000 per year to ensure cloud services run effectively, but have also an additional €200,000 bill over the last five years thanks to unforeseen costs such internal software maintenance (33 per cent), upgrade costs (37 per cent) and systems integration (37 per cent).
Worryingly, over two-fifths (44 per cent) of organisations have been stung by unplanned spending for costs around external maintenance for cloud software such as patching, recovery and data compliance.
Moreover, although over half of businesses (54 per cent) cited reduced IT costs as an expected return-on-investment in adopting cloud services, nearly half (44 per cent) believes this has not been achieved.
Learning from Other Regions
Interestingly, IT decision-makers from Ireland reported the lowest unplanned cloud spend of all respondents, citing just €200,000 compared with Sweden at €315,000, the UK at €372,000 and France at €599,000.
Commenting on the findings, Keith Tilley, Executive Vice President, Global Sales & Customer Services Management at Sungard Availability Services®, said: "This gap seems to point to the level of market adoption within the regions – with the UK and France rushing into cloud investment earlier on, while Ireland has taken a more sensible approach, joining the cloud movement a little later, where some key learnings have already been shared more widely across the industry."
Increasing Complexity and New Challenges
Despite being touted as a way to reduce IT complexity, 40 per cent of Irish respondents said that cloud had in fact increased the complexity of their IT infrastructure. Meanwhile, 80 per cent claimed that cloud computing added a new set of IT challenges – with interoperability between their existing IT estate and their cloud platforms considered by over quarter (26 per cent) as the biggest issue.
Keith Tilley continued: "When it first emerged, cloud was promised as a cure-all for any and every IT headache. However, as the market has matured, it has become clear that some organisations are now left with what we might call a 'cloud hangover'
"By getting caught up in the hype, some organisations were quick to adopt the cloud without linking it back to their wider business goals and failed to see the additional considerations such as interoperability, availability and the operational expenditure linked to cloud. Whilst organisations can indeed see incredible benefits from cloud computing including agility, flexibility and cost savings, the cloud needs to be deployed on a case-by-case basis in line with business goals and the nature of the application or the workload. This research shows that organisations no longer need the enthusiasm and jargon of cloud evangelists but require practical advice for building a reliable, robust and available infrastructure – in short, a cloud therapist!"
David Halfacre, Head of information Services at Fujifilm, Ireland, added: "Like many things in life, if it looks like it's too good to be true then it probably is! There is no denying that IT innovation can be exciting. However, the best IT decision makers are ones who can approach the cloud from a business perspective and using IT only as a way to support and achieve the overall strategic aims of the organisation. This is how the industry should be approaching cloud computing: as a tool to deliver business demands."
The full report is available to download here. For further research results and infographics, please visit: www.sungardas.co.uk/cloudhangover
*About the research
Interviews were carried out in February 2015 by Vanson Bourne on behalf of Sungard Availability Services®. 400 interviews were conducted altogether: 50 from Ireland, 50 from Sweden and 150 each from the UK and France. The research spoke to IT decision makers in businesses of over 500 employees in the UK, France and Sweden and 250 in Ireland across a variety of sectors – including financial services, business process management and retail.