"Managing the Cloud: An Even Greater Need for IT Cost Transparency" White Paper
Managing the Cloud: An Even Greater Need for IT Cost Transparency
Cloud Computing also presents significant challenges in managing costs
long-term. Lontra's work with clients in implementing IT Services Costing and
discussing Cloud Computing has led it to identify four critical requirements
for using Cloud Computing effectively.Without these, your company is setting
itself up for trouble. These requirements focus on:
Financial Transparency - Cloud Computing is a new way of paying for the
use of technology, so it only makes sense that the first and perhaps most
important requirement is to manage the costs of Cloud Computing. Issues
such as accuracy in billing, reconciling costs across multiple providers,
allocating costs back to business users, and understanding the total cost of
ownership for both internal and external IT resources are essential to success
with Cloud Computing. If you do not understand your true total costs, you
will never know if you have truly been successful in reducing your costs.
Compliance - Cloud Computing can be a legal trap for the unwary. For
example, in the EU, certain types of data are required by law to be kept in
Europe; there are stiff penalties for those who transmit data across borders
improperly.With Cloud Computing, you may not really know where your
data resides or where it is sent, which puts you at risk for non-compliance.
Cloud providers are responding to this need with services that are bound to
a particular geography, but you are likely to pay more for these services
and it certainly complicates the deployment and management of Cloud
Demand Management - The ugly truth behind Cloud Computing is that it
requires an even greater vigilance in the management and allocation of IT
costs. If all your costs are demand-based, then it is imperative to manage
demand. Cloud Computing removes the physical constraints of storage
space, compute power, email mailboxes, etc. Each of these items can be
scaled without limit. However, the cost of Cloud Computing grows as these
resources are consumed, which means that your potential exposure to
unexpected costs is also without limits.
Governance Policy - Along with demand management, a good governance
policy can help control costs. The Cloud may allow users to have unlimited
storage in their email accounts, but is that necessarily a wise thing to do?
Through governance, you set limits on what can be done and then enforce
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