Customers have not updated their procurement models to adapt to the cloud, and are spending their cloud budgets too quickly as a result.
That is the opinion of Peter Wüst, NetApp's senior director of emerging solutions for EMEA, who claims that customer cloud usage is going unchecked, and procurement teams are exhausting annual cloud budgets too early as a result.
"In terms of sourcing and procurement, adapting to the cloud is not there yet. For the IT people in businesses the cloud is everywhere, it's omnipresent; but for procurement departments in Europe the cloud is still not a reality to them, which is a problem," he said.
"They are still used to selling something and deprecating it over a few years. And I say to customers' procurement teams: 'what are you going to do in October when your cloud budget is already gone, are you just going to switch it off?'
"You don't know when you are in the cloud exactly what your usage will be. It is not built into the procurement models."
Wüst explained that the challenge is exacerbated because it is no end users who are leading usage.
"Users are now dictating when they want to use a service," Wüst said.
"They don't ask IT, they just use it, and you pay the bill. You are not involved at all because the agility of the cloud is part of its appeal. But that also means that you don't have a service or ticketing request that you approve or decline."
Wüst claimed that NetApp "have come to the market with the answer".
"Working with a company we partner with in Israel, we've come up with a TORACOO model - the total revenue and cost of ownership. It's new and radical. The answer of most TCO models is that cloud is too expensive, which is misleading. [TORACOO] is beyond just the TCO typical model because it takes into account the digital transformation and new revenue streams which that brings to companies. We are providing workshops around this and it takes into account all the key components - the CIO, legal and procurement and the business leader all in the same room.
Adapting to the cloud has not been an easy journey for the California-based legacy vendor, Wüst conceded.
"It is a fact that we have been disrupted by cloud. We are open about this but we have adapted….We warn our partners and customers that if they move to the cloud they must not do so as if they are in kindergarten. Think about it. Have a flexible strategy, think about how you manage the data in all the clouds that you have access to," Wüst added.
"The cloud cannot be bought like something in the past."
Wüst also took the opportunity to take a swipe at NetApp's public cloud rivals.
"I should probably not say it but I'll say it anyway - the storage capacity inside the public cloud giants is 'old school'. They are not as sophisticated or enabled as we all expect. They have no efficiencies built in, it takes hours and days to clone and migrate data and it costs so much more money: double or triple.
"It's all stuff that enterprise vendors would never do on-premise. We have been challenged as a vendor for years now to be more and more efficient…Whereas with them [the public cloud giants] many customers see that they have very high bills after a few months because once you have your data sitting in the cloud, you can't switch it off. And that is exactly what helped inform our TORACOO model - trying to take all this into account."
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