The Cost of Cloud Computing a Trap for the Unwary, Says New Lontra and Comsci White Paper
IT Cost Transparency Controls Costs, Prevents Skyrocketing Usage, and Enables Companies to “Audit the Cloud”
New York, NY, USA. March 23, 2010 --
A new white paper written jointly by Lontra and Comsci warns that cloud computing - the use of Internet-based computing resources, applications, and services - can expose companies to skyrocketing and potentially unlimited IT costs.
“Cloud computing presents organizations with an opportunity for significant cost savings, if it is done right. It also represents an opportunity for runaway costs and skyrocketing usage, if it is not managed properly,” said Bob Svec, president and CEO of ComSci. “Bringing IT cost transparency to cloud computing enables organizations to track, control, and predict IT expenses across the entire organization.”
“Lontra's research shows that IT organizations that manage their demand are considerably more successful with cloud computing than those that only manage costs from the supply side,” explained Boris Pevzner, president of Lontra. “IT cost transparency allows all IT costs - whether on the cloud or off -- to be shared back to the business customers, helping them understand how the expenses affect the profitability of the overall business.”
Lontra is a leading provider of IT Financial Management education and consulting services that help IT and shared services organizations “run themselves like a business.” ComSci, LLC, specializes in Technology Financial Management (TFM) solutions for IT cost transparency and chargeback.
The Four Critical Requirements
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. The white paper highlights how IT cost transparency and TFM can address these requirements:
Financial Transparency - Issues such as accuracy in billing, reconciling costs across multiple providers, assigning costs back to business users, and understanding the total cost of ownership for both internal and external IT resources are essential for a successful cloud computing initiative.
Compliance - The virtual nature of cloud resources can put companies out of compliance with laws that require tight controls on the movement of data across international borders.
Demand Management - Cloud computing costs are demand-based, so companies must manage demand to manage their costs.
Governance Policy - Cloud resources are virtually unlimited, so to control costs companies should set limits on what can be done and then enforce those limitations.
Even if an organization's entire IT infrastructure has been pushed into “the cloud,” business customers are still using IT services and the organization still needs to provide full cost transparency for the consumption of these services. IT cost transparency is also an important element in addressing the cost complexities arising from compliance issues or the economics and budgeting of demand management.
Auditing the Cloud
IT cost transparency helps organizations audit and even benchmark their use of cloud-based resources. Few organizations work with only one cloud provider. With cost information coming from so many different sources, it is hard to get the true picture of the enterprise-wide costs of cloud computing. Lontra's cost modeling methodology can help organizations pull the costs together into a single multidimensional cost model, and Comsci's TFM solution can then help them “operationalize” this model. The result is that business users are presented with a uniform bill that ensures an apples-to-apples comparison.
By aggregating and integrating all this data, organizations gain the ability to audit the cloud. The aggregated costs can also help determine the total cost of ownership (TCO) for both internal and external IT services, enabling organizations to benchmark their costs to ensure that services are being sourced from the most cost-effective provider.
“Cloud computing is a new way of paying for the use of technology, so the most important requirement for a successful implementation is to manage the costs of cloud computing,” concluded Svec. “If you do not understand your true costs - in the cloud or not - you will never know if you have truly been successful in reducing your costs. IT cost transparency is a way to compare costs no matter what the location or what service is involved.”
Lontra and ComSci's new white paper, Managing the Cloud: An Even Greater Need for IT Cost Transparency, is available for download here.
ComSci delivers Technology Financial Management solutions that empower organizations to implement more effective IT financial governance. Through decades of experience and a suite of web-based tools, ComSci helps IT organizations enhance technology transparency and visibility, which in turn enables business units to understand and optimize demand and utilization of technology resources. ComSci is headquartered in Iselin, New Jersey, and was founded in 1971.
Lontra is a leading provider of IT Financial Management education and consulting services that help IT and shared services organizations “run themselves like a business.” Lontra consultants are ITIL, service catalog, service portfolio and service costing experts. Since 2003, Lontra has helped some of the world's largest IT and shared services organizations to develop their service portfolios, define services, determine true unit costs, plan for future demand, optimize the IT budget, and improve service delivery.
We offer practical document templates and hands-on workshops that will translate into immediate success for your IT organization's Service Management and Financial Management efforts without breaking the bank. Use your training budget wisely, and purchase one of Lontra's unique and effective offerings today!