• News Banner - Main

Combating Cloud Sprawl

The cloud is supposed to make running a company less complicated, but many businesses haven’t connected their various cloud programs, and that’s slowing them down.

There was once a time when no one wanted to touch the cloud.

Companies were concerned about privacy, implementation costs, gutting their IT departments, and more. Many of those fears are now long gone: Software-as-a-service revenues will climb to $32.8 billion next year, up from $13.5 billion in 2011, according to Centaur Partners, while Computerworld found that 42% of IT decision-makers planned to increase spending on the cloud in 2015.

However, many companies that have truly embraced cloud computing are now facing an issue that none of them had planned for: cloud sprawl—when a company’s cloud programs are spread out across a business. For instance, maybe an IT department signed up to one content relationship management program, while an executive signed up to another, and the two programs are not being used in any coordinated fashion. This situation can be exacerbated by needlessly using too many programs.

Cloud sprawl is becoming a big problem for many operations. Consulting company Avande found that 61% of companies across the globe blame cloud sprawl for causing inefficiencies in their business. Birger Steen, CEO of Odin, a company that’s developed a solution to help partners reduce the complexity of the cloud, found that while small companies use an average of four cloud services today, that will grow to eight or 10 over the next three years. “We’re going to see increasing sprawl of disconnected services,” he says, “and that’s going to become a problem.”

An Uncoordinated Cloud

Having an uncoordinated cloud can cause a number of issues within an organization, and one of the most challenging can be the lack of communication between programs, says Steen.

To fully realize the efficiencies of the cloud, companies need to have their accounting software talk to their CRM programs, and so on—but if programs are spread out and siloed across an organization, it’s more difficult for that to happen. “The problem isn’t about having too many services,” says Steen. “It’s when there’s a need to integrate, but it can’t be done.”

Cloud sprawl is not just a technology issue, but also a governance issue, says Melanie Posey, research vice president of Hosting and Managed Network Services programs for IDC, a global research firm. She points out that it becomes difficult to keep track of everything and manage cloud inventory. “You’ve got different commercial arrangements with each of these different service providers, and that’s a problem from a financial and budgeting perspective,” she says.

One of the reasons why cloud sprawl is becoming a problem is that it’s not just the IT department that’s signing up for services these days. In many cases, others within a business—project managers, executives, marketing directors—can all use the company credit card to sign up for something. “People are now going off on their own and leaving IT out of the loop,” says Posey.

Sprawl-Reducing Strategies

We're going to see increasing sprawl of disconnected services and that's going to become a problem - Birger Steen, CEO of Odin

Cloud sprawl isn’t going to disappear—there will only be more programs and services to choose from in the future—but there are ways for companies to get ahead of the problem. One basic strategy is to put someone in charge of monitoring your cloud inventory, says Kevin Bellinger, COO at Telenor Cloud Services, a cloud broker that aggregates various software vendors and makes their services available to telecom clients.

That person doesn’t have to be the one who’s actually purchasing services—it just needs to be an employee who knows which cloud services are being bought, and when things come up for renewal. “Once you’ve put that responsibility on someone—and it’s not a huge responsibility—then you’ll be able to have a better view of what’s happening,” Bellinger says. “It’s about tracking what you’re using and then evaluating what people actually need, if you’re going to realize the true benefits.”

Evaluating the needs of a company, though, is often easier said than done. Many operations aren’t sure what they want. When Patrick Pulvermueller, CEO of Host Europe Group, a large web hosting company that operates mainly in Britain and Germany, meets with clients, he asks them to talk about three things: what they think they need; how they imagine their business evolving over time; and if they understand the current technologies they’re using. “If you ask these questions, it becomes much easier to advise customers, to help them get an understanding of what they have now and what they’ll need later,” he says.

Using Service Automation

There are also technological solutions to help combat cloud sprawl. Odin Service Automation, Odin’s flagship product, is a platform that allows companies to manage numerous cloud products in one place. Its main customers are telecoms, service providers, and other resellers that offer a white-label store of services to their own clients. A telecom, for example, can control which software and infrastructure services it offers its customers, while the client can quickly see what it’s using, add users to a program, or modify use of a service. Odin Service Automation also allows clients to build and promote bundles to their customers, so that they end up with complementary services and not a collection of uncoordinated programs.

It’s an ideal solution for a company like Telecom Italia Group—Italy’s leading ICT company, with operations also in South America—that has numerous small-business customers. Cloud sprawl isn’t as much of a problem in Italy yet, says Enrico Trovati, head of marketing for Business, Top and Public Sector clients at the Rome-based company, as cloud adoption is still lower there than in North America. However, he doesn’t want it to become an issue, and automation services help keep sprawl under control, Trovati says. Telecom Italia offers an extensive suite of business solutions to its clients, and, through Odin Service Automation, can quickly develop bundle offers that include cloud services. The company has improved and digitalized a large set of commercial processes.

“We have built a marketplace,” says Trovati. “Our customers leverage it to choose the right services and combine them to personalize their own service suites.”

All of these tools and strategies ultimately do the same thing: Simplify the complexity of the cloud. That’s the key to overcoming sprawl, says Steen; it’s critical to keep it simple. “That’s what we’re trying to do at Odin: Create an ecosystem that trickles down to the business, so they don’t have to be disconnected,” he says. “It’s about businesses having a clearer idea of what they’re using and what they need.”

Reprinted from the June 15, 2015 issue of Fortune

Download the complete Fortune Article

Download the full Fortune magazine article “Combating Cloud Sprawl” PDF now to learn how Odin Service Automation reduces cloud sprawl and learn how leading telecom company Telecom Italia Group manages cloud services while offering business solutions to its clients.

Download PDF