6 February, 2017
Anatomy Of A Cloud Project Cost Overrun
A handful of areas in cloud integration projects produce cost ‘surprises’ with alarming regularity. Recognizing the pattern is the first step in solving the problem.
I recently conducted an informal survey of some cloud integration companies and found something deeply troubling. Aside from “cookie-cutter” or formulaic quick-start projects, more than 70 percent of cloud consulting engagements involving new customers resulted in either a 10 percent cost overrun or a change-order. The bigger the project, the more likely the overrun.
You can blame it on stupid consultants or bad estimation or nutty customers or sunspot activity, but blame does no good. Something is going wrong here, and it’s causing a lot of heartburn for customers and vendors alike.
In an earlier article on trends making the cloud consulting market treacherous, I mentioned that a root cause of any cloud overrun is mis-set expectations: customers believing that meeting their requirements will be simpler than it is and that it should cost less than it will. However significant that observation may be, it’s not particularly actionable. So let’s take the next step to understand the driving specifics, and what steps we can take.
The four horsemen of the cost overrun
In most cloud projects, several areas are nicely contained and are unlikely to cause significant cost surprises. If setting up a function is merely a matter of system configuration, there can’t be that many hours of mouse-driving involved.
We should be so lucky!
Here are the project areas where we see cost surprises on a regular basis: