While cloud offers many benefits to organizations, like more flexibility, it comes with some potential liabilities which can result in cost overruns. Though freed from physical technology limitations, organizations migrating to the cloud without a well-defined plan will often find themselves pulling on resources and unintentionally contributing to overruns. In this blog, we’ll discuss some of the fundamental root causes of cloud cost overruns to help organizations better understand the pitfalls. In our next blog, we’ll provide more insight into how organizations can avoid these common, yet costly, pitfalls by leveraging the management capabilities essential to a corporate technology expense management program.
Organizations that are considering cloud delivery platforms often find themselves in one or more of the following four decision paradigms:
Unlike traditional technology investments that were once governed and managed by a centralized IT department (in conjunction with Finance and the respective Business Unit), organizations are finding that the procurement of on-demand cloud services are now being facilitated in a decentralized holacratic manner. In this sense, the authority and decision-making are distributed throughout a holarchy of self-organizing teams spread across the business units.
Another paradox is that it is fairly common for business units to be more aggressive in embracing cloud services (i.e. cloud first), whereas the IT and Finance departments retain a more conservative approach (i.e. cloud last). Therefore, IT and Finance often find themselves reacting to unplanned problems that result from a lack of coordinated efforts in deploying cloud services. The diagram below illustrates the comparisons between the traditional structured methods of procuring premise-based technology versus the much higher frequency of decentralized on-demand cloud service activations and changes.
As cloud services become mainstream, successful IT organizations are quickly transforming into more strategic roles – corporate technology fiduciary agents. Business units that fail to establish a strategic collaboration with the technology experts for procuring cloud and managing cloud services, often find themselves mitigating unplanned costs. Some of the top root causes of cloud cost overruns can be traced back to:
Cloud Services are a consumption-based service. Therefore, organizations need to be continually monitored and measured in order to take corrective action within a timely manner. Some of the most common mistakes organizations make when they fail to implement appropriate governance and near-time active management oversight are summarized below.
COMPUTE:
NETWORK:
STORAGE:
MANAGEMENT OVERSIGHT:
In the next blog of our cloud expense management series, we will provide insight into how the consumers of cloud services across business units derive value from an effective cloud expense management program. Missed any in the series? Catch up below.
Cloud Services Require New Approaches To Expense Management
Connecting the Dots Between Telecom and Cloud Services Expense Management
Becoming a Strategic Enabler for Cloud Requires IT Leaders To Orchestrate Holistic Near-Time Insight
Managing the Cloud – The Next Evolution in IT Business Service Management
While cloud offers many benefits to organizations, like more flexibility, it comes with some potential liabilities which can result in cost overruns. Though freed from...
While cloud offers many benefits to organizations, like more flexibility, it comes with some potential liabilities which can result in cost overruns. Though freed from...
While cloud offers many benefits to organizations, like more flexibility, it comes with some potential liabilities which can result in cost overruns. Though freed from...
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