79% of CIOs Are Concerned About Hidden Costs of Cloud Computing

Cloud computing has gained leverage over the last decade as businesses are compelled to migrate to this new platform. Virtualization has capitalized on cost efficiency as its main strength for any industry. However, recent revelations has uncovered that there may be hidden costs that cloud providers are not showing.

Loopholes that may have been missed by cloud fanatics are the concerns of power shortages and security issues. These potential glitches can actually bring up the costs for any company. It is also expected that as more companies force into the cloud, heavy traffic becomes a likely incident.

The issue now is not just the cost, but unsatisfied customers that will scout for competitor providers. CIOs are also concerned that when things are running smoothly, this may be the time when issues of performance, security or service availability may arise.

These concerns were explored in a study conducted by Research In Action from Compuware Corporation last December 2012, which gathered 468 CIOs from Asia, US and Europe as respondents. The study was created to look into the top investment priorities and IT projects of 2013. Perspectively, the study showed that 79% of the CIOs thought of the potential hidden costs of cloud computing. The costs here can be anywhere from subscription fees, system and staff setup and training. Here are the detailed concerns they have of cloud computing migration:

Performance Bottlenecks – (64%) Respondents believe that cloud resources and e-commerce will experience poor performance due to cloud application bottleneck usage.

Poor End-User Experience – (64%) End users may end up dissatisfied with the cloud performance due to heavy traffic from application usage.

Reduced Brand Perception – (51%) Customer loyalty may greatly reduce due to poor experience and poor cloud performance.

Loss of Revenue – (44%) Companies may lose revenues as a result of poor performance, reduced availability or slow technical troubleshooting services.
Increased Costs – (35%) As problems become more multifaceted and evident, business cloud solutions may become more costly.

High maintenance – (23%) As system troubles become more complex, vendor management and service agreements may begin to require more effort of control and management.

“With cloud adoption topping the list of priorities for CIOs, companies are clearly seeing a benefit to the agility, flexibility and time-to-value that cloud services can deliver. But CIOs are right to carefully consider the impact cloud and third-party services can have on end-user experience. The dynamic and remote characteristics of cloud-based applications require a new, smart and automatic approach for deep, proactive monitoring that not only identifies end-user experience problems but also provides deep diagnostics for problem resolution,” said Bernd Greifeneder, CTO of Compuware’s APM business unit.

The same study also revealed that 81% of the CIO respondents are already using e-commerce to leverage their business cloud platforms and critical applications. For those who have not fully migrated into the cloud, they intend to do so in the next 12 months. The research also showed that 73% of the companies are still operating using traditional methods to control and manage application performance.

Thomas Mendel, managing director at Research In Action said, “The cloud is increasingly being used to deliver business-critical applications, so it is quite shocking that most companies are just waiting for problems to occur and then firefighting. The fact is that most traditional monitoring tools simply don’t work in the cloud. Effectively monitoring and managing modern cloud-based applications and services requires a new approach designed to work in today’s complex, hybrid and dynamic environments. Failure to do so could have a hugely detrimental impact on reputation, customer loyalty and revenues.”

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