2. Cost Benefit Uncertainties
Cloud computing initially emerged as primarily a cost containment strategy. But experience taught the industry that although cloud could often lead to reduced expenses, this was not universally the case. While the cloud can be an effective cost reduction tool, as well as a good means of moving costs from CAPEX to OPEX, colocation, managed services, and sometimes even on-premise solutions can be more economical based on scale, the duration of need for the service, and other factors. "Customers don't always realize that higher levels of service will cost more," said Russ Young, executive vice president of LTech, a Bridgewater, N.J. solution provider. "I can give you five-nines of reliability in the cloud, but it will cost more." Since customers are well-accustomed to sales pitches that promise rapid payback, they sometimes approach them with skepticism.