When the expected cost does not match the actual cost in cloud

In the relationship between customer and business, expectations are everything

In a lot of ways, the shift to cloud computing has evened the playing field for what is expected in terms of cost, responsibilities, and the services exchanged between IT customers and providers. With cloud services, customers can experience far more of a service before buying it, see a clear unit price from the outset and understand the constraints of the service-level agreements. However, uncertainty still lingers in the exact specifications for many solutions, as the complexity of the design and variability of the actual utilization continue to make accurately predicting real-world cost for cloud solutions difficult for many customers.

While there is still typically a difference in cost between on-premises IT deployments and cloud, the unexpectedly higher cost of cloud projects impacts the market in several ways. Highly efficient and mature IT organizations can often use their own internal resources to compete with the price points delivered through public cloud options. For those customers, cost overruns make cloud deployments more expensive, rather than slightly more cost-effective, when compared with utilizing internal resources. Beyond those marginal customers, however, cost overruns universally wreak havoc on internal budgeting processes, which depend on predictable cost structures. Particularly compared with more stable internal IT funding, variability on a monthly basis puts serious stress on the finance function. Lastly, cost overruns impact other IT project decisions, serving as a deterrent to new and expanded cloud projects. In this respect, this unpredictability is bad for all cloud vendors, providing motivation for these providers collectively to further clarify the customer’s financial expectations.

 

This special report is part of a series driven by TBR’s Cloud Customer Research reports, for which TBR conducted more than 50 interviews and 200 surveys. These special reports will highlight key trends and topics impacting the cloud industry.

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