Joe McKendrick| Forbes

The business case for cloud is compelling. Even after all the numbers for the obvious things get crunched, one has to ponder what “gotchas” could result in higher costs than originally planned. Business interruptions and outages are obvious risks, but there’s an even more insidious set of issues that could drive up costs.

A couple of years ago, I helped conduct a survey of e-commerce application managers, and one of the key questions we asked was how they find out about slowdowns or glitches that customers may be experiencing. The answer, overwhelmingly, was that these managers didn’t find out about web glitches at their sites until a customer phoned in or emailed a complaint. When you get hung up at a website, the people at the other end usually aren’t aware of your troubles.

So, as organizations move more and more operations to the cloud, the situation gets even more complicated. And, potentially costly to the business. It’s well known that consumers won’t stay at a site too long if it gets hung up — they’ll go to a competitor’s site.

These are some of the costs that concern many CIOs. Rather, they are concerned about a range of hidden costs that may only surface after things are up and running — such as poor performance, or issues with service availability. What happens when the service runs slow, and transactions back up?  What happens when end-user customers get frustrated at slow Website performance? (Again, many will bolt to a competitive site.) How much does it cost for staff to sit by and wait while you get on the phone with the providers’ technicians to sort through an issue that arises on their end?

Some of these hidden costs were explored in a new survey of 468 CIOs, conducted by Research In Action and underwritten by Compuware Corporation. There’s no question a lot of money is going into cloud projects — two-thirds of the respondents say that  cloud is their top investment area for 2013. Many have crunched the numbers for the up-front costs of cloud computing, which typically include subscription fees, combined with some level of staff time required for set-up, user training and integration.

The study found that the majority of CIOs (79 percent) actually think a lot about potential hidden costs, and what they may mean to the business.

From a management perspective, the top cloud computing concerns are:

  • Poor end user experience due to performance bottlenecks (64 percent). This goes right to the customer end-user experience as well, since e-commerce is the leading cloud application area, the survey finds  – 78 percent of respondents are already using cloud resources to support e-commerce.
  • The impact of poor performance on brand perception and customer loyalty (51 percent).
  • Loss of revenue due to poor availability, performance, or troubleshooting cloud services (44 percent).
  • Increased costs of resolving problems in a more complex environment (35 percent).
  • Increased effort required to manage vendors and service level agreements (23 percent).

Of course, these costs are difficult to quantify and measure. An outright outage or system failure is easy to quantify, and can be relatively simple to address. But a slowdown or partial glitch somewhere in the process is more challenging; and can eventually add up to real money lost.

The survey also finds that 73 percent of companies are still using outdated, or even manual, methods to track and manage cloud application performance. The most common metric used to track application performance in the cloud is simple availability or uptime, rather than more granular end-user metrics such as response time, page rendering time and user interactivity time.

In a related white paper, the study’s authors make some recommendations for preventing hidden cloud computing costs from slowing down business transactions. (Bear in mind that Compuware is an application performance vendor, so the survey was intended to make their case). Key is the ability to monitor applications and run analytics to measure their performance, as well as provide visibility to what end users are seeing and experiencing. It doesn’t make sense to wait for the phone calls to come in.


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