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Preparing for the real costs of cloud computing

Bob Violino | Aug. 15, 2011
Plan ahead to avoid the gotchas that can make you blow your budget.

The college was moving a large-scale ERP system onto a private cloud, using servers that were not yet approved by the vendor. Marist uses its private cloud to provide online services such as registration and billing inquiries and payments to students, faculty and research organizations.

All told, Thirsk says, "99%" of the college's ERP migration activities "went very smoothly, and overall we saved hundreds of thousands of dollars by using a cloud configuration." But, he explains, "stabilizing the system within a cloud that already supported 900 virtualized servers gave us quite a challenge."

The added expense was to "untangle the maze of what versions [of] the operating systems and databases would work," Thirsk says. "It was [a] matter of changing some code. It took some time and effort to figure out exactly what lines needed to be changed."

Performance issues

Some applications might not yet be primed to take full advantage of the capabilities of cloud computing, and this can ultimately raise the price tag.

"In our case, we made the assumption that the ERP programming was sophisticated enough to take advantage of all the processors, memory, caches, storage devices and network connections that the cloud configuration offered," Thirsk says.

But it wasn't, and the college invested a "considerable amount" of application developer and systems programmer time to revise the software code. "So far, we have seen a 30% increase in performance, but it wasn't free," Thirsk says.

Rent and utilities

The cloud can introduce IT executives to expenses that normally don't come out of the technology budget. These costs might not be initially evident to IT organizations that are accustomed to having internally hosted systems.

"There are, of course, many costs associated with hosting a system internally, but not all of them, like power and rent, are paid out of my IT budget," says Jonathan Alboum, CIO at the U.S. Department of Agriculture's Food and Nutrition Service (FNS). "With cloud, these basic infrastructure charges are baked into the overall cost, so I'm now paying for some things that previously didn't come out of my IT budget."

FNS has been using a cloud service from Amazon.com since the summer of 2010 for an application that supports the agency's Supplemental Nutrition Assistance Program (SNAP), which used to be known as Food Stamps.

The program, called the SNAP Retailer Locator, provides an online map that helps people find retailers that accept SNAP debit cards. FNS opted for the cloud for this application because it allowed for a quick launch of the program and was highly scalable, among other reasons.

 

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