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By Dave Paulding, Regional Sales Director for UK, Middle East and Africa, Interactive Intelligence
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. Experts and vendors alike touted the potential savings that cloud solutions could offer to companies.
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 acquiring technology - for a start, it removes the range of expenses associated with on premise and IT communications systems. 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 on-going cost associated with it. Choosing the right service is vital to not only save costs, but also to improve their visibility and predictability.
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.
Cloud fixed price solutions can bring surprises
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 organizations 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 - when a company wants to change its contract, whether it is moving premises or increasing or decreasing the number of users, or expanding and adding more services. 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 customization of the solution.
Some providers are not clear about such costs and these could be on-going 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.
One way of doing this is for vendors to limit the amount of customizations and changes to the system to keep costs down and therefore ensure that the cost passed on to the customer is lower. It makes it easier to maintain multiple customers on the same hosted platform. If they've all got different, unique requirements it is inevitably more complex and costly to manage.
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.
Businesses may face the cost of a slowed service
Cloud services obviously rely on fast and reliable broadband connectivity.
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