Pay-as-you-go, on-demand computing model could be surprisingly expensive
Staff -- Manufacturing Business Technology, 10/1/2003 12:00:00 AM
A "pay-as-you-use" computing pricing model can help keep IT costs in line with the ups and downs of business cycles. It also can have negative consequences if it's not executed properly.
That warning comes from Lance Travis, a VP with Boston-based AMR Research. In a recently released report highlighting the growing demand for on-demand computing services, Travis cautioned that potential pitfalls could include:
-
Constantly increasing network capacity—and paying for those increases—because users are consuming the capacity even though there is no sound business reason for its consumption.
-
Business units taking actions that derail corporate goals because they are trying to "save on IT charges."
An example of the first consequence, according to Travis, would be telling a service provider to keep increasing e-mail storage capacity rather than forcing users to manage within current limits. Examples of the second consequence could be business units doing budgets on spreadsheets—and not reporting accurate numbers to corporate—because they don't want to be charged for use of the corporate ERP system.
To avoid these pitfalls, Travis advises making sure that any agreement for on-demand or outsourced computing services supports the company's business objectives, and that a strategy for dealing with potential unintended consequences is in place before contracts are signed.
