Sungard Availability Services (Sungard AS), today announces research which reveals that financial services (FS) organisations are spending nearly £300 million each year on maintaining Cloud services and hidden costs associated with their Cloud computing projects. The research questioned 66 senior IT decision makers in the UK, Ireland, France and Sweden in organisations with over 500 employees and an average cloud spend of £700,000 in the last year (part of a wider study of 1,400 interviews with IT decisions makers which revealed that the 'Cloud hangover' is costing European businesses an average of more than £2 billion per year).
Long considered a more flexible and simpler approach to managing IT, cloud has ushered in a new era of IT. However, the research reveals that FS organisations are facing numerous challenges in managing and operating cloud environments.
Financial services experiencing highest unexpected costs in the Cloud
The overwhelming majority of FS organisations in the UK, Ireland, France and Sweden have encountered some form of unplanned Cloud spend (89%), with this sector being significantly higher than manufacturing (74%) and public sector respondents (75%).
Worryingly, overall cloud spending - whether for maintenance or unexpected costs - is considerably higher within FS than other verticals: each FS organisation paying an average of more than £277,000 per year on maintaining cloud services; compared to a European average of £200,000.
Regarding unexpected costs, FS organisations are experiencing almost double the European average (£270,000), with each organisation spending an additional £570,000 over the last five years due to such unforeseen costs as systems integration (54%), people (34%), and integration (39%).
John Turner, IT Director at accountancy firm BDO, commented: "One of the most crucial lessons we learnt is that cloud, while a vital tool for financial services organisations, is not a 'one-size-fits-all'. Cloud computing is not the end result; it is a method through which we can achieve our business priorities - whether this is growth, launching a new product or service, increasing online capabilities, or streamlining control of overall infrastructure."
"Managed Services has been essential in helping us make crucial IT decisions for BDO. We need a technology partner we can trust - not only to help us develop the correct strategy but also in explaining the best options available to execute those plans and ensure we achieve our desired business outcomes."
Increasing complexity and new challenges
Despite being touted as a way to reduce IT complexity, 32% of respondents said cloud had in fact increased IT infrastructure complexity. 53% claimed cloud added new IT challenges - interoperability between existing IT and their cloud platforms the biggest issue (44%).
Keith Tilley, EVP, global sales & customer services management, Sungard AS, said "Financial Services organisations have been quick to adopt the cloud to help streamline operating costs and processes and most importantly, continue to innovate and provide new digital services to meet customer demands for contactless payments and mobile banking for example.
"However, by getting caught up in the hype, some were quick to adopt the cloud without linking it back to wider business goals... Whilst they can indeed see incredible benefits from cloud including agility, flexibility and cost savings, cloud needs to be deployed... in line with business goals and the nature of the application or the workload.. financial services organisations no longer need cloud evangelists, but practical advice for building a reliable, robust and available infrastructure - in short, a cloud therapist!"
For the full report and more, please visit: www.sungardas.co.uk/cloudhangover