Businesses may pay too much for cloud, warns Claranet

Do some organisations really need to pay for applications and services on demand?

It won't come as news to some that the flexibility of pay-as-you-go may cover up increased cost - and that's just what Claranet's latest poll on cloud adoption has suggested.

Michel Robert, managing director of Claranet UK, said its poll of 300 IT decision makers across a range of businesses has found that organisations are adopting an incremental approach to cloud adoption - but they are also inviting unnecessary complexity and potentially paying over the odds.

"Many organisations and their IT chiefs face increased demand from the business to provide applications with high availability on a 24/7 basis," he said.

"Just as they need to ensure the service they take is suited to their needs, organisations must make sure the payment model they choose is appropriate to the way they will use their cloud services."

Robert said that predictable usage requirements are often better served by a fixed-rate payment model than pay-as-you-go. Yet some respondents in the survey may have chosen inappropriate payment models.

The poll, the third annual cloud adoption survey by Claranet, found that 34 per cent of respondents from large organisations with 3,000 or more staff that were using cloud services were taking them from multiple providers - and being tied to more than one payment model as a result.

Payment models cited included flat-rate subscriptions and diverse on-demand options.

"Eighty-seven per cent of organisations surveyed cited flexibility of compute resources - ability to scale up or down - and access to applications as a key objective when migrating to the cloud. Yet 75 per cent said that their compute usage was predictable," Robert (pictured) said.

He said that pay-as-you-go may be good value if a customer is using the "burst" capability frequently, but it may end up costing more if the particular workload is more predictable. The flexibility so often used as a selling point in cloud may in fact not be so critical for the particular workload.

"In most circumstances, it should be possible to anticipate your requirements and put in place a payment model that reflects this level of productivity and delivers genuine value," Robert said.

Vanson Bourne performed the survey in September. Twenty-six per cent of the organisations surveyed were from professional services; 21 per cent from financial services; 20 per cent from retail, distribution or transport; and 14 per cent from media, leisure or entertainment.

Twenty per cent were identified as "other". There was a roughly even spread of company sizes from small businesses to large enterprises.