Look at cloud value first; only then look at risk

The most important challenge businesses encounter when it comes to adopting the cloud isn’t security. Yes, security is important; and it’s certainly true that cloud computing introduces new risks, but almost all risks can be adequately catered for. However, that doesn’t happen all the time, and that’s when expensive errors occur.

Recently, I heard from a Dutch company who had lost about a hundred grand in one week through a hack on their IaaS master account. The business model proved to be quite valuable to the intruder: convert 100K machine hours into 20K bitcoins. But these are only juicy details about incidents in the pioneering phase.

The main hurdle I see is the lack of broad vision on the desired benefits of cloud computing. And without a shared view of these advantages, an advance discussion of the risks is meaningless.

A common misconception is that cloud computing is cheaper. That may be so, but it’s a very mediocre driver of the business case. IT costs seldom decline due to cloud computing. Most of the time, there are missed opportunities.

The majority of the life cycle costs of an IT solution are usually found in the beginning: the implementation process. From then on, keeping an unchanged, existing system online is a limited cost when compared to the whole. Therefore, you can’t cut costs significantly in the final years of a system.  What is seen by the industry as high IT costs; is the cost of new IT. What looks like a simple adjustment or a simple new system to the customer, often proves to be an agony of cost overruns in practice. That’s less well understood, especially as more and more viable alternatives become available in the cloud. The real expected benefit of cloud computing does not involve lowering existing IT costs, but lowering the cost of new IT solutions. That’s how new business comes to life. The more new business is generated, the more new IT should be deployed.

Therefore, step one is about the desired benefits. Each advantage requires its own strategy. The best strategy for lower operational IT costs is often Infrastructure as a Service. The best strategy for faster new IT is mostly new Software as a Service. Only after this choice, should we start talking about risks.

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