As businesses actively consider ‘public cloud’ services – particularly as a vehicle for significant cost reduction – CPOs need to be aware of some of the key challenges associated with this innovation.
The fundamental commercial principle behind public cloud is standardisation, so most service providers have core principles that they are not prepared to be flexible about.
Aside from the considerable issues arising from where data might be sent and held, in my experience cloud contracting has included the following issues:
- Providers can’t yet commit to high levels of availability or no customisation of the service, for example client-driven down times
- Providers can’t yet guarantee rapid response and issue resolution times
- There is little independent assurance regarding information security and/or ability to confirm compliance for different regulatory regimes
- There are none or few service levels, other than an ill-defined availability level
- For major application services, providers required a contractual obligation for the customer to be current with specified technologies that enable the service – a real challenge for organisations with a large legacy estate
While the range of cloud benefits are certainly there to be had, the challenges above may limit the immediate adoption of public cloud for core services such as email or major business processes.
That said, private cloud (essentially managed service provision that all IT buyers are familiar with, but with a few technological changes) is definitely an option to consider. While potentially not delivering quite the same level of cost savings, it does facilitate many of the other benefits associated with the cloud model, such as flexibility, speed to market and rapid innovation.
As cloud services mature and buyers become more confident in the service providers’ abilities to deliver the level of service required, public cloud may well become as much of an option for service provision as the various models of private cloud.
Alaba Adedayo is director of performance improvement – supply chain & operations at Ernst & Young
