During a time when businesses are counting their pennies, every conceivable cost needs to be factored into forecasting models. Hidden expenses are never a welcome surprise, but they are particularly unwanted now. Cloud service providers can try to make the costs seem clear cut. However, CIOs and other IT professionals should know that $100 per user per year is only the beginning of the budget. When making a massive technology transition and managing a new system, the costs associated with people, processes, and architecture are equally important to consider. The mystery is how much these costs amount to in the unfamiliar realm of cloud computing.      

To help uncover the hidden costs of cloud computing, answer the following four key questions:

1. What are the viable paths to move (or replace) legacy applications into the cloud?
2. What architectural changes are required to integrate cloud and non-cloud applications?
3. How should we change our technology and operations processes to take advantage of different   procurement, provisioning, and management models?
4. How will a private cloud—built for the sole use of one enterprise—give us more flexibility than current  hosting or public cloud models? What are the cost trade-offs?

Answers to these questions will change the mindset from leveraging cloud-based applications to managing complex systems, which will help to reveal the true costs of making the switch. When the focus of the conversation shifts to systems, it prompts other questions that will sharpen the picture:

1. How do we make sure all of the customers in Salesforce.com are synchronised with those in our     customer management application, our billing application, and our six product systems?
2. Should we add custom application logic into Salesforce.com to validate customer and company information against our master list? Or should we do it externally and integrate the resulting systems and processes?
3. What kinds of skills and other organisational considerations should we make for the IT staff that support our customer systems?

Many companies across industries are still working on getting beyond the usage costs for cloud computing to understand the complete costs of migrating, implementing, integrating, training, and redesigning the surrounding and supporting people, processes, and architecture.  In fact, three examples from companies that we are working with demonstrate how different details can lead to the same conclusion: uncertainty about the hidden costs of cloud computing.

A managed IT services vendor is interested in moving some of its in-house help desk applications into the cloud for its clients, but the company is taking its time before moving past market surveillance. An industrial products company is evaluating new technologies and approaches, but the company is also taking a measured approach to see where the chips fall. A financial services company that deals in very small and extremely high-speed transactions is not yet convinced that any of the cloud computing service providers can provide the processing horsepower within their service-level agreements and security requirements that would be necessary for the investment to pay off. In these three examples, not knowing the potential hidden costs of cloud computing has stalled the decision making process.

So as cloud service providers roll out their spiel, ironically, CIOs and their IT departments need to pick holes to have a clear picture of the overall bottom line. Remember: it’s deceptively easy to get burned on a cloudy day, if you’re not protected.

Chris Curran is Diamond Management & Technology Consultants’ chief technology officer and managing partner of the firm’s technology practice. He writes the CIO Dashboard blog at www.ciodashboard.com, and can be reached at Chris.Curran@diamondconsultants.com or @cbcurran on Twitter.