Total cost of ownership plays into every enterprise technology decision, but many companies find that adopting cloud infrastructure can produce unexpected expenses. Highlighting comments from several experts at Cloud connect 2013, InformationWeek contributor Charles Babcock explored the reasons for extra costs in cloud environments.
Cloudyn CEO Sharon Wagner noted that many cloud applications are not optimized, and businesses lack visibility into the software they're running on third-party environments. This translates to underutilized resources. According to Cloudyn's data, 58 percent of organizations utilize cloud-based software in an "uncontrolled fashion." When an application is changed, many companies do not analyze the impact of the change or the effect on performance. Babcock reported some of the other usage data from Cloudyn, which includes:
- 80 percent of server instances are underutilized
- 15 percent of respondents overburden their instances
- A 15 percent over-utilization rate translates to an estimated 7 percent loss of business
Companies may also need to bring IT and business units in stronger alignment to bring total cost of ownership down while getting the most value out of their technology. In an interview with Forbes, Marquette Group/USMotivation CIO Duane Anderson noted that his initial responsibilities were IT-centric, but he focused on applying technology-centric decisions to the rest of the business. It was this disconnect that helped push Anderson into the role of COO for his company.
"It was really a mutual dialogue between our President and co-owner Eric Webb and me that started around owning certain business functions – more of a CIO-plus role," Anderson told the news source. "The tipping point that made it appropriate for me to take on the COO role came when we acquired a major competitor and had a fairly sizeable systems integration effort. The integration required an incredibly tight partnership between the IT and Operations teams and mutual accountability from both functions."