The Cloud: Not as Cheap as It’s Made Out to Be?

Companies are becoming more comfortable with the cloud. But they’re also reporting a variety of issues, too.

A new survey from KPMG International suggests that as companies become more comfortable with the benefits of a cloud environment, they are reporting higher-than-expected costs, as well as challenges with implementation, operations and governance. The global survey found about one-third of respondents said the costs of moving to the cloud were higher than expected and a similar number noted significant implementation challenges.

“One of the most important lessons uncovered by this research is that business process redesign needs to be done in tandem with cloud adoption, if organizations hope to achieve the full potential of their cloud investments,” says Rick Wright, KPMG’s Global Cloud Enablement Program leader. “Simply put, executives have found that simultaneous process redesign is central to addressing the complexities that often arise in the implementation and operational phases of cloud adoption.”

According to KPMG’s analysis of the survey data, business executives are moving past cost savings as a final goal for operating in the Cloud. Wright explained that other long-term benefits can include more efficient overall processes, flexible operating models, and faster speed to market. KPMG’s survey noted that two of the top three cloud objectives identified by more than 20% of business executives were to enhance new market entry and drive business process transformation.

“When thoughtfully implemented, many providers could actually offer robust and resilient security measures and controls that could enhance overall security in the cloud,” says Greg Bell, a U.S. principal and services leader at KPMG LLP. “Functions that – until just recently – were considered too sensitive or complex for Cloud are now being put on the table.”

“We see time and again that the federal, state and international tax implications of various Cloud deployment approaches can significantly impact an initiative’s ultimate ROI,” says Steve Fortier, Cloud Enablement lead for Tax at KPMG. “Bringing the tax department into discussions early can help companies avoid missing out on cost-saving opportunities or inadvertently creating significant tax risks.”

“Considering a strategic approach is necessary to focus on core business goals while moving portions of the organization into a cloud environment, organizations should also look to leverage the opportunities for business transformation and change management that can occur as a result of a move into the cloud,” added Wright.