Economic

Interesting findings emerged from the analysis, revealing somewhat agreement that economic benefits existed more subtly. As the various caveats of cloud computing could quickly endanger the financial aspect, organizational would need to maneuver the cloud with caution to reap economic benefits. One precondition was to adopt an action plan and comply with the rules of the game, tracing a parallel to readiness as critical to succeed:

“If you do it right, commit, and adapt, you can reap the benefit of both speed and financial benefits at the same time.

The cost will come into play as long as you play by their rules and the rules are different between the players. As long as you adhere to the rules, you can win and do the right things, but it requires investment.” (Interviewee G)

Other perceptions evoked no inherent money savings unless knowledge about the cloud was present:

“The cost is secondary. The cost is the cost, and that should be something that you think about after finding the correct place for your services. The focus should be on what kind of services you would like to run? How much computing power would you need? How fast would you like to enable new services? If you have a team that can do that with your localized services and has a bargaining agreement with a hardware vendor, that’s fine. Still, I know that Amazon, Microsoft, and Google, and now many other companies are competing for this information. They have a price strategy that is very particular and competitive. If you don’t have a clue about your utilization and haven’t optimized your services before entering the cloud, it will be costly.” (Interviewee H)

“Cloud is not necessarily the cheapest way. In the public cloud, you pay for flexibility to turn things on a Monday and off on a Tuesday. Some of these vendors are focused on products. They deliver a whole range of services that you can sign off on, more or less in microseconds, or seconds or minutes. Others are more focused on providing the experience of fewer products but way cheaper. So you get the basic product, IaaS or VM’s, very cheap. And you need to know that before you jump into it with both legs because you might sink to the bottom.” (Interviewee G)

These affirmations were also somewhat nuanced about contextual factors that could reduce cost:

“They are paying us a monthly fee to have servers up and running, but if you are using public azure, you can use the same time, and you will be paying by the hour. If you are a customer working 9-17, you can turn off the VM after 17 and having it spun up again before the workday starts, and that can help you save money in the long term.”

(Interviewee C)

“The financial edge is there, but you really need to know what you are doing, and not just do a one-time audit when you set it up, but you need to revisit it at least every month. There are thousands of products released on Amazon every year. There are products and pricing updated almost every week. You can save 60percent straight up if you switch to AWS's CPU architecture. If you’re running a web software written with a modern web language, you don’t have any problems, but in other cases, you have to rewrite your software to reap those benefits, but it’s 60percent.” (Interviewee G)

“The flipside to on-demand services is, for example, reserved instances, where you pay upfront or commit to paying for an instance for a very long time, three years, for example. So that can save you 60percent straight up, but again you need to know what you are doing.” (Interviewee G)

However, a general tendency among the findings revealed cloud computing solutions being more expensive compared to traditional IT systems:

“In cloud systems, you either pay by transaction volume or number of users. It’s generally very predictable because you pay a fixed price, and someone else keeps the system upgraded and running. So you know what you are going to pay.

Whereas in the old days, the system would crash, you needed consultants to upgrade and all those unpredictable costs.

Customers would mostly experience positive things with the cost structure. With that said, the cost can be higher by going to the cloud. The system can be costly compared to the license you used to pay for your old Visma system. We constantly see that when we start comparing and our prices are three times what they used to pay.” (Interviewee D)

The surpassing costs emerged among one interviewee as an incentive for providers to mitigate cost liabilities and alleviate the negative publicity around cloud solutions incurring enormous costs:

“A few of these cloud providers have figured out that all of these stories popping out stating that cloud is so expensive because we did X and here is the bill we got, doesn’t benefit them. So they have started reaching out to customers and telling them. “Hey, we see you have this usage pattern. Here is what you should do to lower your bills. They send those

e-mails now, which is interesting. There is also data based on the fact that if you screw up once with the big players and rip a huge bill, they will reimburse you for that one time and say,” yeah, we know you played and screwed it up, fine don’t do it again.” (Interviewee G)

Moreover, the findings revealed organizations misconception of the price of using cloud computing technology:

“Some companies are very price-oriented. They have in mind that they need a new system, ERP, CRM, any system.

They reach out to a bunch of vendors and say, “Hey, how much is it going to cost if we want to replace our CRM system?” That depends, right? How many people are you, what problem are you looking to solve? Are you looking to address sales, marketing, both? Service? I think many customers get hung up on the price in the beginning but then, not all customers, but most customers, later on, realize that it may not be as important as the impact of solving their business problems. If the return is great on solving them, price is irrelevant. Price is always going to be an important element obviously, but less important.” (Interviewee B)

“It’s a matter of what you are getting for the money. You can shrug away your old hardware. You can expect savings in other areas, such as on the people's side. We are assuming process improvements. That’s is the world we are telling them they are coming into. You have four people doing manual tasks on a system, entering data. You don’t have to do that anymore because the system has intelligence that can do it much better. In other words, you will save those four people or at least three of them, and that would rationalize it. It might still be a higher cost to it, so what we are saying to them is that yes, you are paying a higher cost, but you constantly stay on top of the technology.” (Interviewee D)

The following table summarizes the findings:

As the findings show, organizations might have particular inclinations and perceptions that might be detrimental to their transition to the cloud. Therefore, the need to assess critical success factors to reap benefits is of high value. The next chapter seeks the discuss these findings.