Strategic Service Performance Management
Service Catalog, Service Portfolio, and IT Financial Management Experts
"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 services.

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 those limitations.

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