Steel yourself for the cloud hangover

Naïveté and inadequate planning have made many large enterprises unhappy about the cloud deployments and the ROI they’ve gained. But this too will pass

A poll of 250 IT decision makers across North America conducted by managed services provider Softchoice that polled found preparation for cloud initiatives is on track. 83 percent of those polled said they had assessed existing applications to determine if they were ready for the cloud, and 82 percent had modernized their data centers in preparation for cloud. Moreover, 72 percent internally communicated the business impact of a cloud strategy.

But there were some surprises in what companies discovered once they move to cloud:

  • 57 percent of those polled admitted they had exceeded their cloud budgets at some point. What’s more, 43 percent said they had trouble knowing how to create an effective cloud management and ops strategy.
  • The bigger the company, the more difficulty it had in seeing ROI from the cloud. About half (48 percent) of IT leaders at mid-sized firms strongly believed that moving to the cloud had helped the business, versus just 36 percent at large enterprises.
  • Only 36 percent of repsondents strongly agreed they were confident about their cloud security policies, which is a bit concerning.

The long and short of it is this: Reality bites! We’re at what I call the hangover phase, where a night of cloud-hyped indulgence has led to many self-administered pats on the back, which obscured the reality that transitioning to the cloud is a harder than people originally thought. But the effort is still worth it.

The budget overruns are no surprise, given that not much cost planning takes place during initial large cloud computing projects. Indeed, these initial projects fail to illustrate the true costs of using a public cloud, and if you look carefully you can see that the private clouds many such initial efforts focus on are just new cages of servers in data centers that cost more than the old cages of servers. Moreover, people costs are always higher than expected, and few enterprises plan to run both cloud and on-premises systems—but the reality is that you need to.

What troubled me is that only 48 percent of the mid-sized businesses and only 36 percent of the large enterprises agree that cloud actually improved the business. I suspect that those who do not see the value have yet to complete a project’s successful journey to the cloud. But still, this figure should be higher.

The underlying lessons are:

Most businesses are just not there in their cloud journeys. Initial naïveté is exacting its price. Inadequate planning (by both IT and the business) has made many enterprises unhappy with their own performance after the first few tries at cloud computing.

This situation is nothing new. We had the same kinds of hangovers with the rise of the PC and the rise of the internet. Now we see it with the rise of cloud computing. And because cloud computing is a much more systemic change, I suspect the hangovers will be worse. Bt when the hangover ends, it will be fine.