Cloud is beneficial, but wait, it has clauses as well

ROLLING MEADOWS, USA: Cloud computing promises low cost of entry and fast return on investment, but that ROI can fall short of expectations if hidden costs are left out of the equation.

A new white paper from global IT association Information Systems Audit and Control Association (ISACA), "Calculating Cloud ROI: From the Customer Perspective," points out that enterprises generally tend to overlook factors such as bringing services back in-house due to stricter data privacy laws, implementing measures to mitigate risk, initial migration of systems, loss of internal IT knowledge providing competitive differentiation and lock-in with cloud provider. These are the hidden costs associated with any cloud migration.

"Cloud computing makes it easy to offer the same self-service that people love when they turn on their lights or air-conditioning--it's on-demand and pay as you go," says Marc Vael, CISA, CISM, CGEIT, CRISC, international vice president of ISACA. "In reality, cloud computing is like every other innovation. Security, cost and complexity don't disappear -- they just need to be managed and accounted for."

One of the most difficult tasks for IT leadership is weighing the total cost of an IT service against its potential return. This challenge holds true (perhaps even more so) for cloud computing. A meaningful assessment of the benefits of cloud computing must encompass the short-, medium- and long-term views as well as termination costs.

ROI calculation is important for any new or existing investment and and the whitepaper offers tips to calculate ROI for cloud initiatives.

It is always important to balance the need to be accurate with the need to reach a decision before going for a cloud investment. Companies need to understand that cloud is not right for every organizational need. Along with ROI companies should ensure that other financial indicators are calculated as well.

The paper points out that multitenant models can degrade performance over time if capacity is not properly planned. Cloud vendors may not be able to guarantee agreed-on uptime. Internet speed can also negatively impact performance. Moreover, enterprises must implement controls to avoid overage charges incurred when systems stay connected after a demand spike is over.