The Ugly side of Cloud Computing

Cloud isn’t everything that it’s being made out to be. After over a decade down the road, the global industry has had a good dose of cloud and its capabilities, and the horror stories are slowly trickling in. Out of Australia, there are reports of companies that gave cloud computing a go a few years back, and are now trying to back out of it.

If there are other countries going through the same thing, it’s either being swept under the carpet, or below the radar.

It isn’t that the technology isn’t working. It is.

But, along the way, business instincts began to kick in and went into overdrive, and at least the big cloud vendors, had devised “creative” ways of selling more cloud to their customers.

And, as all of this is happening, in Malaysia at least, there is nowhere that customers who have been burnt, can turn to.

It’s a business ethics issue, a governance issue, an enforcement issue and a lack of customer protection issue. Equally pressing, is the perception issue, as one CIO observed that IT heads who do not adopt the cloud, are deemed as backward or not able to save money for their businesses.

“It’s interesting, the amount of brainwashing that goes on,” he said.

The media, for the most part, have been granted a view of only one side of the coin. There is a whole lot more that is happening, on the other side, however.

Here goes:

A whole lot of bill shocks

Bill shocks happen because of perception, as well. Many companies buy into the “few cents an hour” image of cloud computing, and fail to take into account several other factors like outbound data transfer – AWS and Azure charge for outbound data transfer, for example.

So, organisations are not doing a good enough job of estimating the costs of running workloads in the cloud, or they scope the workload inaccurately, incurring more costs than necessary, for the job that needs to be done.

But, in some cases also, vendors have taken the opportunity to rake up the bill, by ‘neglecting’ to inform customers of the right way to license their software, on-premise.

Take the case of Oracle software licensing on VMware. From as early as 2011 (and maybe even earlier), it was highlighted in the news that Oracle requires licenses for all servers in a cluster; this is because of a VMware feature called VMotion whereby a virtual machine hosting Oracle’s database software could dynamically move to all the other server nodes in the cluster.

Not only is this very costly, but it becomes extremely unfair if all the other servers in the cluster, have nothing to do with Oracle software.

This matter surfaced again in 2015, when customers felt Oracle was unfairly instigating audits of their licenses and demanding more money, as well as push more sales of Oracle products.

It is unclear whether the higher-ups at Oracle allowed this audits, or whether it was just sales taking advantage of the vagueness in licensing requirements, to drum up more sales. A source close to the matter shared that Oracle has since, clamped down on these practices.

Unfortunately, it isn’t just Oracle that does this, as the industry also points towards IBM, Websphere, Informix and more. Microsoft does the same with their Software Assurance practices.

A whole lot of frustration

Several IT heads in Malaysia, have expressed frustration.

With so much misperceptions about cloud and its supposed benefits, these folks are *expected* to move to the cloud, no questions ask.

But, there are many questions, just too many questions. And no answers.

One CIO said, “Please don’t get me wrong, I do use Saas and Iaas when it suits the needs of the business. But one should not do things just because it’s cooler or easier.

There are other factors to count in, not to mention the cost of technology in this country has gone up.”

The latest cost to add to the bill, is the 10-percent witholding tax that is levied upon local companies that use foreign SaaS or buy software licenses from foreign software vendors.

One other CIO pointed out “The promise had been, that it would get cheaper.”

Today, this couldn’t be further from the truth, especially when all the individual license costs of ‘features’ of a cloud service, are factored in.

To make matters worse, big vendors like Microsoft have drastically increased on-premise licensing costs of their latest server operating system, by charging on a core-basis, instead of a processor-basis.

Generally speaking, this new licensing change drastically increases the cost of virtualising Windows Servers with VMware’s vSphere, so that customers would switch out in favour of Microsoft’s version of vSphere which is Hyper-V.

The thing is, while Microsoft was aiming at VMware, users ended up being casualties instead, having to bear the burden of 125-percent more expensive licensing cost.

No wonder, this move is also being pegged by CIOs as an artificial method to make remaining on-premise, seem more expensive. One also observed that commission structures have changed for these vendors’ traditional partners and also their own sales, so it ends up they earn more when they sell cloud, instead of on-premise solutions.

A whole lot of Doubt and Questions

So, is cloud computing helping to reduce cost for the company? In most cases, no!

One IT head observed, “Vendors are starting to charge us more and more every year, by building FAT apps!”

When a single vendor controls all the variables of a service – infrastructure, platform, application, AND all the memory and processor requirements of that application (this would be case when they offer a complete cloud service from Infrastructure all the way to Software), things start to get very interesting.

“When we CIOs run an application, we want it to be efficient and responsive, hence we add memory and processing power. We are already paying for hardware, operating system and processing power; just because Intel is helping the industry by adding Cores to a socket, you software providers take advantage of this and make money by making your apps processor-intensive!”

These are just a few of the going-ons in the cloud industry at large, that is mostly kept below the radar. But just these few examples, raises these all-important questions, for now:

Are these big cloud vendors, willy-nilly changing the structure of licensing costs, to be able to pocket more?  Are they purposely witholding information, or leaving things vague and unclear, and then sending out their sales army, in the hopes that users who don’t know any better, would just hand over their money?

Maybe more importantly, why isn’t the cost of SaaS going down over time? How can one avoid signing general terms and conditions that lock customers into unfair terms, especially the terms that state vendors reserve the right to change any time they want?

One CIO who is also a cloud customer, said, “Although the cloud is moving ahead and does provide solutions to IT challenges, governing bodies in my personal opinion, should look at governance, policies, protection, software licensing practices, customer protection, cross-border legal discourse, and many more aspects!”

Because, it isn’t the technology that isn’t working, but the environment within which it exists, that is setting its users up for a whole lot of doubt, confusion, and frustration.