A look behind the cloud

Dave Paulding, regional sales director for UK, Middle East and Africa at Interactive Intelligence, discusses the hidden costs associated with the cloud computing model.

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A look behind the cloud Cloud computing certainly has far less costs than the traditional way of acquiring technology, says Paulding.
By  Dave Paulding Published  June 30, 2012

Dave Paulding, regional sales director for UK, Middle East and Africa at Interactive Intelligence, discusses the hidden costs associated with the cloud computing model.

Analysts forecast that over the next three to five years the market for cloud-based contact centre solutions will grow at a rate of about 18 to 20%. Compare that to the growth of premise solutions, which is in the low single digits and forecast to plateau or even diminish over the same period. It is therefore essential to be aware of what is hidden behind the cloud cover.

When cloud computing first moved on to the IT horizon, many of the headlines focused on how this future hosting option would save businesses money.

However, as with most things in IT, the picture became less clear the closer you got to it. In fact, as many businesses have since discovered there can potentially be a number of hidden costs to cloud computing that may lead to an overall increase in expenditure.

Cloud computing certainly has far less costs than the traditional way of buying technology. However, to reap the significant cost savings that cloud solutions can bring, businesses need to adopt a cautious approach when choosing a provider and be clear about every upfront and ongoing cost associated with it.

When a company signs up for a cloud computing service, the most common contracts are for a set cost per user per month, for a fixed duration. Ideally, any so-called ‘hidden costs’ that might be expected from a service should be included in this rate. Having a fixed manageable cost is a very attractive proposition for CFOs, the budget visibility makes it very easy for companies to predict their monthly IT spend and is ideal for today’s cost conscious businesses.

The industry’s most successful cloud computing providers are flourishing, not only because of the benefits of their products but because they offer a fixed financial model for organisations to take advantage of. The key is that providers still provide a known fixed price for any bespoke work.

This is one of the areas where many of the cost ‘surprises’ tend to creep in. It’s not about the usage costs – the hidden costs come in with any integration or development which may be required, in fact, any kind of customisation of the solution.

Some providers are not clear about such costs and these could be ongoing depending on the nature of the solution. True cloud based applications should allow the user to manage and administer any changes to cut out the never-ending developing, integration and adaptation costs.

Other common hidden costs which can fall outside of the normal monthly subscription fees could range from something as simple as telephone costs, which are determined by how the system is designed and how the business connects to the solution, to data retrieval, or to something more significant like purchasing additional bandwidth to increase internet traffic.

Cloud services obviously rely on fast and reliable broadband connectivity. A slow service could have a huge impact on productivity if employees are not able to access applications as quickly as they need to. Likewise, if connectivity is lost, then work is likely to come to a standstill. Both of these scenarios have to be considered carefully when looking at the service offered by an ISP and what they charge for the bandwidth required to use the cloud.

So clearly, the hidden costs that businesses need to be aware of are not just about providers offering transparent pricing, it is just as important to consider the impact the cloud service can have upon business operations.

The fixed monthly or yearly costs may be black and white but the cost for set up, implementation and customisation is still largely a grey area for several providers. Businesses don’t need this additional financial black cloud hanging over them.

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