In general, though, using public cloud computing for purposes other than storage eliminates the need to deploy and maintain applications internally. WhitePages has been using public cloud services for about two years and now uses 11 cloud-based applications from Salesforce.com, SuccessFactors, ADP, WebEx, Yammer and other providers. This has led to savings that greatly outweigh any of the unexpected costs, Alvarez says.
Integrating apps from multiple vendors
Pacific Coast Building Products wants to start using cloud computing in a big way and has evaluated services from several vendors. But the Rancho Cordova, Calif.-based provider of goods and services to the construction industry has limited its cloud usage so far because the economics are not quite there yet, says CIO Mike O'Dell.
Two reasons for this are the difficulty of integrating software from disparate vendors in the cloud, and the fact that Pacific Coast would incur added costs if it tried to handle the integration on its own.
For example, the company uses Microsoft Exchange for email and Cisco's Unity Unified Messaging for voice mail, and it's interested in using both of those applications as cloud services. "Integration between [Exchange and Unity] in the cloud, at least the last time we looked, wasn't there," O'Dell says.
Without integration, users wouldn't have some of the capabilities they have now, such as automatic deletion of voice-mail messages on their phones when they receive the messages via email.
The same sorts of integration challenges exist with larger and more complex applications, such as ERP, O'Dell says.
For example, "for us to put [SAP] in the cloud means we'd have to give up features or spend a lot of money on integration," he says. "Maybe it's just a matter of immature technology, but the integration side is where the hidden costs are. If you don't look at this right out of the gate, you might not be as happy with the economics at the end as you thought you would be."
The need to test software before migrating to the cloud can also result in unforeseen costs.
"We bumped into some expense that we did not expect for testing and debugging a vendor app that had not been run in a cloud configuration before," says Bill Thirsk, vice president of IT and CIO at Marist College in Poughkeepsie, N.Y.
The college was moving a large-scale ERP system onto a private cloud, using servers that the vendor hadn't yet approved. Marist uses its private cloud to provide online services such as registration, billing inquiries and payments to students, faculty and research organizations.
Thirsk says "99 percent" of the college's ERP migration activities "went very smoothly, and overall we saved hundreds of thousands of dollars by using a cloud configuration." But, he adds, "stabilizing the system within a cloud that already supported 900 virtualized servers gave us quite a challenge."
The added expense was to "untangle the maze of what versions [of] the operating systems and databases would work," Thirsk says. "It was [a] matter of changing some code. It took some time and effort to figure out exactly what lines needed to be changed."
Hidden costs can also crop up if applications aren't primed to take full advantage of the capabilities of cloud computing.
"We made the assumption that the ERP programming was sophisticated enough to take advantage of all the processors, memory, caches, storage devices and network connections that the cloud configuration offered," Thirsk says. But it wasn't, and revising the software code required a "considerable amount" of application developer and systems programmer time. "We have seen a 30 percent increase in performance, but it wasn't free," he says.