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Cloud Hangover

Cloud Hangover Costs UK Public Sector Over £300 Million Every Year

22nd September 2015

Research from Sungard Availability Services finds that unexpected costs, integration challenges and increased IT complexity are all contributing to a ‘Cloud Hangover’  

Close to half (44 percent) of UK public sector organisations agree that the cloud has not met their expectations

London, United Kingdom: 22nd Sept 2015Sungard Availability Services® (Sungard AS), a leading provider of information availability through managed IT, cloud and recovery services, today announces research which reveals that UK public sector organisations are spending over £300 million each year on maintaining cloud services and on hidden costs associated with their cloud computing projects. The research questioned 45 senior IT decision makers in the UK in public sector organisations with more than 500 employees, with an average individual cloud implementation spend in 2014/15 of £390,000. The results are part of a wider study of 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.

Now considered as a more flexible and efficient way of managing IT, cloud computing has gained significant momentum across public sector organisations. Recent research from the Cloud Industry Forum (CIF) revealed that 78 per cent of UK public sector bodies have adopted cloud as a key part of their IT strategy[1]. However, Sungard AS’ research reveals that the public sector is now facing a large number of challenges in managing and operating these cloud environments.

Unexpected Costs in the Cloud

The research revealed that over three quarters of UK public sector organisations (82 per cent) have encountered some form of unplanned cloud spend. Each is paying an average of just under £139,000[2] per year on maintaining cloud services and an additional figure of almost £258,000[3] over the last five years thanks to unforeseen costs such as:

  • External maintenance costs for hardware (41 per cent)
  • Systems integration costs to ensure applications can share data (30 per cent)

Whilst 42 per cent of UK public sector organisations looked to lower IT team workload and 47 per cent looked to reduce IT costs, a similar amount (43 per cent are struggling with people costs to manage deployments.

Moreover, although more than half of UK public sector organisations (53 per cent) cited cost savings as a key driver for adopting cloud services, a third (33 per cent) believe this has not been achieved.

“Cloud computing has the potential to dramatically reduce costs across health, education, central and local government and much more, if it is deployed in the right way.”

— Keith Tilley, EVP Global Sales & Customer Services Management, Sungard AS

Public Sector Faces Greatest Complexity

Despite being touted as a way to reduce IT complexity, over half (55 per cent) of UK public sector organisations said that cloud had in fact increased the complexity of their IT environment. This compares to 45 per cent of organisations across the UK and 32 per cent within financial services and 29 per cent in manufacturing.

Meanwhile, 71 per cent claimed that cloud computing added a new set of IT challenges – with interoperability between their existing IT estate and their cloud platforms considered by almost half (44 per cent) as the biggest issue, making the public sector’s experience no different than that of other UK vertical markets .

Keith Tilley, Executive Vice President, Global Sales & Customer Services Management at Sungard Availability Services, said: “Cost and efficiency savings are top of the agenda for the public sector and cloud computing has the potential to dramatically reduce costs across health, education, central and local government and much more, if it is deployed in the right way. New strategies within the UK such as ‘Digital by Default’ and ‘Cloud First’ combined with the Government’s ‘Digital Marketplace’ are vital in helping ensure that the public sector continues to adopt cloud whilst reaping its many business benefits.

“However, there is no silver bullet for adopting cloud computing and it is clear that the public sector has faced some significant challenges including interoperability, management and operational expenditure. The very nature of the public sector also means that highly sensitive data such as patient data, defence or security records are not always suitable for particular cloud environments. Therefore, whilst the public sector can indeed see incredible benefits from cloud computing including agility (58 per cent) cost savings (58 percent) and increased security (53 per cent), the cloud needs to be deployed on a case-by-case basis in line with business goals and the nature of the application or the workload.”

The report “Digital by Design: Avoiding the Cloud Hangover in the UK Public Sector” is available to download here. For further research results and infographics, please visit: www.sungardas.co.uk/cloudhangover. To follow the latest news on Twitter, follow @SungardASUK or join the debate using #CloudHangover.

Sungard Availability Services will be exhibiting at the Central Government Business and Technology show on 30th September 2015 at the Hotel Russell, 1-8 Russell Square, Bloomsbury, London, WC1B 5BE. Print copies of the whitepaper will be available at the stand.

*About the research

Interviews were carried out in February 2015 by Vanson Bourne on behalf of Sungard Availability Services. 400 interviews were conducted altogether: 150 from the UK, 150 from France and 50 each from Sweden and Ireland. The research spoke to IT decision makers in businesses of over 500 employees in the UK, France and Sweden and 250 in Ireland across a variety of sectors – including 45 senior IT decision makers in the UK in public sector.

Note for Editors:

The abbreviation for Sungard Availability Services is ‘Sungard AS’ as cited above.  Please use ‘Sungard AS’ when abbreviating the name rather than ‘Sungard’ or ‘SunGard,’ which may confuse the reader with another separate company with a similar name.

[1] https://www.publictechnology.net/articles/news/public-sector-increasing-depth-cloud-engagement

[2] Actual figure is £138,840

[3] Actual figure is £257,730