Buyer Beware: Hidden Costs, Vendor Lock-in

By Caron Carlson in FierceCIO covering Mikael Ricknas’ article in InfoWorld (also re-posted below).
As indicated in other blog posts, AIS encourages customers and prospects to evaluate new service options with eyes wide open, especially when it comes to the cloud.
The allure of better / faster / cheaper needs to be balanced with a healthy dose of reality. Buyer beware when it comes to cheap-and-cheerful (ahem, AWS)!
This is why smart, diligent, thorough customers are AIS’ best customers: expectations are aligned with commitments and deliverables.
I also encourage you to read AIS CTO Steve Wallace’s blog post on AWS vs. AIS BusinessCloud1, which discusses vendor lock-in among other considerations.
Emphasis in red added by me.
Brian Wood, VP Marketing
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Hidden Costs in the Cloud

To estimate cost of cloud services, factor in costs of migration and vendor lock-in.

It can look pretty cheap to sign up for cloud services, but the return on investment has to factor into a number of costs that aren’t necessarily apparent at first glance. To get a full estimate of the cost of a cloud service, you have to consider what it will take to migrate systems, adopt to regulatory changes down the road and get locked into a specific vendor, reports Mikael Ricknas of IDG News Service.
Moving applications to a cloud provider can require a lot of redesign and reformatting. If a cloud service has to be brought back in-house, because of new regulatory requirements for example, it can take considerable resources to extract data from the provider, according to a white paper from the Information Systems Audit and Control Association.
The security requirements of a public cloud system can prove costly, while a private or hybrid cloud option may be less so. What’s more, the risk of being locked in to a proprietary cloud system must also be factored into any move, notes the ISACA paper, “Calculating cloud ROI: From the customer perspective.” Some of the lock-in risks could be reduced by opting for infrastructure-as-a-service rather than software-as-a-service.

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Lock-in, Migration Costs Can Put a Damper on Cloud Projects

Enterprises must take hard look at all costs related to cloud computing to avoid surprises, says ISACA
Cloud services promise low cost-of-entry and rapid return on investment, but those advantages make it easy to overlook associated investments. To find out the true return on investment (ROI) of cloud computing enterprises have to dig deeper, according to a white paper from industry organization Information Systems Audit and Control Association (ISACA).
Calculating the total cost of an IT service against its potential return is always a challenge for IT staff, and that holds even truer for cloud computing, according to ISACA. A thorough analysis of cloud computing benefits must include short-, medium- and long-term views as well as termination costs, it said.
Hidden costs that enterprises may fail to anticipate when moving quickly to cloud-based services include the cost of bringing services back in-house due to regulatory change; unexpected expenses involved in the initial migration of systems; and lock-in with a specific provider or proprietary service model, according to ISACA.
To calculate investments needed to move a service back in-house — if new regulations or economic problems render the cloud impractical — enterprises have to take several factors into account. They include paying for extracting and validating data and the cost for recruiting IT resources needed to do the job.
Migrating to cloud-based applications and services also includes a number of different costs that need to be taken into consideration. Enterprises have to rewrite applications to operate in a virtualized environment and reformat data to suit software-as-a-service (SaaS) provider formats.
Enterprises also have to do their homework when it comes to the different cloud models that are available.
For example, they should consider if private, community or hybrid clouds would remove some of the security measures required for a public cloud, and whether choosing a platform-as-a-service or infrastructure-as-a-service over SaaS makes it more cost-effective to mitigate some of the lock-in risks, ISACA asks.
Each alternative should be analyzed to decide the most optimal cloud model for the circumstances, ISACA said.
Calculating cloud ROI is necessary to separate hype from reality, but enterprises should also be wary of making the process too complicated. Calculating ROI doesn’t need to be that because it’s only an estimate to support investment decisions, according to ISACA. Still, it is important to quantify the value of the return as much as possible and identify all potential costs when deciding to proceed with a cloud solution, it said.
The “Calculating cloud ROI: From the customer perspective” white paper can be downloaded from ISACA’s website.
This isn’t the first time this year ISACA has published tips on how to best take advantage of cloud services. Earlier this year the organization presented the six key considerations it feels are necessary when rolling out enterprise cloud computing strategies.
http://www.infoworld.com/d/cloud-computing/lock-in-migration-costs-can-put-damper-cloud-projects-199314