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Sungard Availability Services: Cloud gives French businesses a hangover and costs them over €1 billion a year

March 2015 by SunGard Availability Services

Sungard Availability Services® (Sungard AS) has commissioned a study in France, the United Kingdom, Ireland and Sweden to investigate what happens after the transition to the cloud, when many businesses encounter hidden costs and teething problems, causing IT professionals a ’cloud hangover’.

Long considered a more flexible and simpler approach to IT management, cloud computing has ushered in a new era of IT. However, the study reveals that businesses are now facing a large number of challenges in managing and operating these cloud environments.

The 150 IT professionals who responded to the survey in France reported average unplanned cloud spending of €597,700 per year. Respondents in all countries included in the study said they had encountered unplanned costs. In the United Kingdom, which like France is an early adopter of cloud computing, IT decision-makers reported higher levels of unplanned cloud spending (€375,300 per year) than their counterparts in Ireland (€208,500) and Sweden (€319,700).

Commenting on the findings, Keith Tilley, Executive Vice President, Global Sales & Customer Services Management at Sungard Availability Services, said: "This gap seems to point to the level of market adoption within the regions — with France and the UK investing in cloud services earlier on, while Ireland and Sweden have potentially joined the cloud hype phase a little later, where some key learnings have already been shared more widely across the industry."

Unexpected costs in the cloud

The study reveals that 90% of French companies have encountered some form of unplanned cloud spend, slightly higher than the European average of 81% (all respondents). The reasons for these cost overruns are numerous and include system integration costs (44%), internal maintenance costs (38%) and people to manage deployment (28%). Interestingly, the study also reveals significant costs associated with managing cloud service providers (22%) — suggesting that some vendors may not be as transparent as they should during the initial consultancy phase.

Unrealistic initial expectations

French businesses cited cost savings as the most important expected return on their investment in the cloud (48%), followed by increased security (45%) and a greater competitive advantage over their competitors (41%). Cost savings were also top of the list of expectations in the United Kingdom (64%), Ireland (62%) and Sweden (60%).

Not all companies have achieved these objectives to the same extent. While 47% of French businesses reported cost savings, 43% said it had not been achieved. Similarly, 53% reported an increase in security, compared to 37% who said the cloud had failed to deliver this. And 46% cited a competitive advantage, while 35% said it had not been noticeably achieved. However, other positive impacts of the cloud, not listed as priorities by French companies, have nonetheless been achieved. These include greater agility for 69% of businesses, whereas only 39% cited this as an expected return on investment.

Integrating the cloud into existing IT infrastructure was not a priority objective for French companies. 52% claimed that cloud computing added a new set of IT challenges, with problems of interoperability with their existing IT estate considered by 52% as the biggest issue. In addition, respondents said that integration issues had also led to additional stress (60% of French businesses, compared to the European average of 43%) and increased complexity in their work (29% of French respondents, compared to 31% in Europe). These difficulties underscore the vital importance of consultancy and support, both before and after a cloud project.

“This review of cloud projects also reveals that if French businesses want to achieve their initial goals of reducing IT costs and really benefit from the advantages of the cloud, in which they have already invested significantly, they will need to integrate cloud services into their existing IT infrastructure by adopting a hybrid architecture approach”, says Thierry Ghenassia, Sales and Managing Director, France, Belgium and Luxembourg at Sungard Availability Services.

Complexity caused by multiple providers and infrastructures

One of the most striking factors about the complexity of managing cloud infrastructures for French organizations is the variety of cloud services that they need to manage on a routine basis. 52% of French respondents said they have five or more cloud providers (29% in Europe), 32% have six or more (17% in Europe) and up to 14% have eight or more (8% in Europe), making France the European country with the highest number of different providers. The French cloud market thus appears to be more fragmented and more complex to manage. As a result, many companies disappointed with the cloud said they wish to regain control by returning to physical infrastructures.

Keith Tilley continued: "When it first emerged, the cloud was promised as a cure-all for any and every IT headache. However, as the market has matured, it has become clear that some organizations are now left with what we might call a ‘cloud hangover’. French companies said that they have shifted an average of 45.27% of their cloud infrastructures back to physical infrastructures, compared to an average of 25.45% for respondents as a whole.

"By getting caught up in the hype, some organizations were quick to adopt the cloud without linking it back to their wider business goals and failed to see the additional considerations such as interoperability, availability and the operational expenditure linked to the cloud," says Keith Tilley. "While organizations can indeed see incredible benefits from cloud computing, including agility, flexibility and cost savings, the cloud needs to be deployed on a case-by-case basis in line with business goals and the nature of the application or the workload. This research shows that organisations no longer need the enthusiasm and jargon of cloud evangelists but require practical advice for building a reliable, robust and available infrastructure – in short, a cloud therapist!"


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