Research from Sungard Availability Services® finds that unexpected costs, integration challenges and increased IT complexity are all contributing to a ‘Cloud Hangover’
Sungard Availability Services® (Sungard AS), a leading provider of information availability through managed IT, cloud and recovery services announced research which reveals that businesses are spending over £1bn each year on maintaining cloud services, hidden costs and teething problems associated with their cloud computing projects. The research questioned 150 senior IT decision makers in the UK in organisations with more than 500 employees, with an average cloud spend of £700,000 in the last year.
Long considered a more flexible and simpler approach to managing IT, cloud computing has ushered in a new era of IT. However, the research reveals that organisations are now facing a large number of challenges in managing and operating these cloud environments.
Unexpected Costs in the Cloud
The research revealed that the overwhelming majority of businesses in the UK have encountered some form of unplanned cloud spend (87 per cent) – slightly higher than the European* average of 81 per cent. Not only is each UK organisation paying an average of £200,000 per year to ensure cloud services run effectively, but also an additional £270,000 over the last five years thanks to unforeseen costs such as people to manage deployment (44 per cent), internal software maintenance (42 per cent) and systems integration (40 per cent).
Worryingly, over two-fifths (43 per cent) of organisations have been stung by unplanned spending for costs around managing their cloud service provider – suggesting that some vendors may not be being as transparent as they should during the initial consultancy phase.
Moreover, although over half of businesses (55 per cent) cited reduced IT costs as an expected return-on-investment in adopting cloud services, nearly a third (28 per cent) believe this has not been achieved.
Learning from Early Adopters
Interestingly, respondents from the UK and France reported significantly higher levels of unplanned cloud spend (£270,000 and £430,000 respectively) than IT decision-makers from Ireland (£150,000) and Sweden (£230,000) and only 54% of Irish respondents had encountered unplanned spend on cloud.
Commenting on the findings, Keith Tilley, Executive Vice President, Global Sales & Customer Services Management at Sungard Availability Services®, said: “This gap seems to point to the level of market adoption within the regions – with the UK and France investing in cloud services earlier on, while Ireland and Sweden have potentially joined the cloud hype phase a little later, where some key learnings have already been shared more widely across the industry.”
Increasing Complexity and New Challenges
Despite being touted as a way to reduce IT complexity, almost half (45 per cent) of UK respondents said that cloud had in fact increased the complexity of their IT infrastructure. Meanwhile, 70 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 42 per cent as the biggest issue.
Keith Tilley continued: “When it first emerged, cloud was promised as a cure-all for any and every IT headache. However, as the market has matured, it has become clear that some organisations are now left with what we might call a ‘cloud hangover’.
“By getting caught up in the hype, some organisations were quick to adopt the cloud without linking it back to their wider business goals and failed to see the additional considerations such as interoperability, availability and the operational expenditure linked to cloud. Whilst organisations can indeed see incredible benefits from cloud computing including agility, flexibility and cost savings, 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. This research shows that organisations no longer need the enthusiasm and jargon of cloud evangelists but require practical advice for building a reliable, robust and available infrastructure – in short, a cloud therapist!”
“Like many things in life, if it looks like it’s too good to be true then it probably is!” commented David Halfacre, Head of information Services at Fujifilm. “There is no denying that IT innovation can be exciting. However, the best IT decision makers are ones who can approach the cloud from a business perspective and using IT only as a way to support and achieve the overall strategic aims of the organisation. This is how the industry should be approaching cloud computing: as a tool to deliver business demands.”
John Turner, IT Director at accountancy firm BDO, commented: “As a business, one of the most crucial lessons we learnt is that cloud, while a vital tool for modern business, is not a ‘one-size-fits-all’. Cloud computing is not the end result, it is a method through which organisations can achieve their business priorities – whether this is growth, increasing flexibility, deploying a mobile workforce or streamlining control of overall infrastructure.
“Managed Services has been essential in helping us make crucial IT decisions for BDO. We need a technology partner that we can trust – not only to help us develop the correct strategy but also in explaining the best options available to execute those plans and ensure we achieve our desired business outcomes.”
Kate Hanaghan, Research Director, Infrastructure Services at TechMarketView commented: “Despite there being genuine interest and growing excitement in cloud services from buyers, we firmly believe the migration of large swathes of corporate IT into the cloud will happen over a period of years, not months. The meteoric rise of some cloud pure-players has led certain IT buyers to believe cloud is ‘cheap and easy’. In fact, for most organisations the transition to a hybrid computing environment is highly complex, and getting to that end point will require a great deal of help from experienced services firms.”
Exclusive: China’s Huawei, reeling from U.S. sanctions, plans foray into EVs – sources
By Julie Zhu and Yilei Sun
HONG KONG/BEIJING (Reuters) – China’s Huawei plans to make electric vehicles under its own brand and could launch some models this year, four sources said, as the world’s largest telecommunications equipment maker, battered by U.S. sanctions, explores a strategic shift.
Huawei Technologies Co Ltd is in talks with state-owned Changan Automobile and other automakers to use their car plants to make its electric vehicles (EVs), according to two of the people familiar with the matter.
Huawei is also in discussions with Beijing-backed BAIC Group’s BluePark New Energy Technology to manufacture its EVs, said one of the two and a separate person with direct knowledge of the matter.
The plan heralds a potentially major shift in direction for Huawei after nearly two-years of U.S. sanctions that have cut its access to key supply chains, forcing it to sell a part of its smartphone business to keep the brand alive.
Huawei was placed on a trade blacklist by the Trump administration over national security concerns. Many industry executives see little chance that blocks on the sale of billions of dollars of U.S. technology and chips to the Chinese company, which has denied wrongdoing, will be reversed by his successor.
A Huawei spokesman denied the company plans to design EVs or produce Huawei branded vehicles.
“Huawei is not a car manufacturer. However through ICT (information and communications technology), we aim to be a digital car-oriented and new-added components provider, enabling car OEMs (original equipment manufacturers) to build better vehicles.”
Huawei has started internally designing the EVs and approaching suppliers at home, with the aim of officially launching the project as early as this year, three of the sources said.
Richard Yu, head of Huawei’s consumer business group who led the company to become one of the world’s largest smartphone makers, will shift his focus to EVs, said one source. The EVs will target a mass-market segment, another source said.
All the sources declined to be named as the discussions are private.
Chongqing-based Changan, which is making cars with Ford Motor Co, declined to comment. BAIC BluePark did not respond to repeated requests for comment.
Shares of Changan’s main listed company Chongqing Changan Automobile rose 8% after Reuters reported the discussions. BluePark’s shares jumped by their maximum 10% daily limit.
GROWING EV MARKET
Chinese technology firms have been stepping up their focus on EVs in the world’s biggest market for such vehicles, as Beijing heavily promotes greener vehicles as a means of reducing chronic air pollution.
Sales of new energy vehicles (NEVs), including pure battery electric vehicles as well as plug-in hybrid and hydrogen fuel cell vehicles, are expected to make up 20% of China’s overall annual auto sales by 2025.
Industry forecasts put China’s NEV sales at 1.8 million units this year, up from about 1.3 million in 2020.
Huawei’s ambitious plans to make its own cars will see it join a raft of Asian tech companies that have made similar announcements in recent months, including Baidu Inc and Foxconn.
“The novel and complicated U.S. restrictions on semiconductors to Huawei have slowly been strangling the company,” said Dan Wang, a technology analyst with research firm Gavekal Dragonomics.
“So it makes sense that the company is pivoting to less chip-intensive industries in order to maintain operations.”
In the United States, Amazon.com Inc and Alphabet Inc are also developing auto-related technology or investing in smart-car startups.
Huawei has been developing a swathe of technologies for EVs for years including in-car software systems, sensors for automobiles and 5G communications hardware.
The company has also formed partnerships with automakers such as Daimler AG, General Motors Co and SAIC Motor to jointly develop smart auto technologies.
It has accelerated hiring of engineers for auto-related technologies since 2018.
Huawei was awarded at least four patents related to EVs this week, including methods for charging between electric vehicles and for checking battery health, according to official Chinese patent records.
Huawei’s push into the EV market is currently separate from a joint smart vehicle company it co-founded along with Changan and EV battery maker CATL in November, two of the sources said.
(Reporting by Julie Zhu in Hong Kong and Yilei Sun in Beijing; additional reporting by David Kirton in Shenzhen; Editing by Sumeet Chatterjee and Richard Pullin)
Facebook switches news back on in Australia, signs content deals
By Renju Jose and Jonathan Barrett
SYDNEY (Reuters) – Facebook Inc ended a one-week blackout of Australian news on its popular social media site on Friday and announced preliminary commercial agreements with three small local publishers.
The moves reflected easing tensions between the U.S. company and the Australian government, a day after the country’s parliament passed a law forcing it and Alphabet Inc’s Google to pay local media companies for using content on their platforms.
The new law makes Australia the first nation where a government arbitrator can set the price Facebook and Google pay domestic media to show their content if private negotiations fail. Canada and other countries have shown interest in replicating Australia’s reforms.
“Global tech giants, they are changing the world but we can’t let them run the world,” Australian Prime Minister Scott Morrison said on Friday, adding that Big Tech must be accountable to sovereign governments.
Facebook, whose 8-day ban on Australian media captured global attention, said it had signed partnership agreements with Schwartz Media, Solstice Media and Private Media. The trio own a mix of publications, including weekly newspapers, online magazines and specialist periodicals.
Facebook did not disclose the financial details of the agreements, which will become effective within 60 days if a full deal is signed.
“These agreements will bring a new slate of premium journalism, including some previously paywalled content, to Facebook,” the social media company said in a statement.
The non-binding agreements allay some fears that small Australian publishers would be left out of revenue-sharing deals with Facebook and Google.
“It’s never been more important than it is now to have a plurality of voices in the Australian press,” said Schwartz Media Chief Executive Rebecca Costello.
Facebook on Tuesday struck a similar agreement with Seven West Media, which owns a free-to-air television network and the main metropolitian newspaper in the city of Perth.
The Australian Broadcasting Corp has said it was also in talks with Facebook.
Google Australia managing director Mel Silva said in a statement published on Friday the company had found a “constructive path to support journalism”.
She thanked Australian users of the search engine for “bearing with us while we’ve sent you messages about this issue”.
Facebook and Google threatened for months to pull core services from Australia if the media laws, which some industry players claim are more about propping up ailing local media, took effect.
While Google struck deals with several publishers including News Corp as the legislation made its way through parliament, Facebook took the more drastic step of blocking all news content in Australia.
That stance led to amendments to the laws, including giving the government the power to exempt Facebook or Google from mandatory arbitration, and Facebook on Friday began restoring the Australian news sites.
(Reporting by Renju Jose and Jonathan Barrett; Editing by Richard Pullin and Jane Wardell)
China’s factory activity growth likely moderated during February holiday lull – Reuters poll
BEIJING (Reuters) – China’s factory activity likely grew at a slightly slower rate in February as factories closed for the Lunar New Year holiday, a Reuters poll showed, although growth is expected to remain firm, buoyed by an early resumption of production.
The official manufacturing Purchasing Manager’s Index (PMI) is expected to dip marginally to 51.1 in February from 51.3 in January, according to the median forecast of 20 economists polled by Reuters. A reading above 50 indicates an expansion in activity on a monthly basis.
Chinese factories typically scale back operations or close for lengthy periods around the Lunar New Year holiday, which fell in the middle of February this year.
However, the resurgence of COVID-19 cases in the winter had prompted local governments and companies to dissuade workers from travelling back to their hometowns, giving a boost to the earlier-than-usual resumption of production at many factories, analysts say.
“Although government COVID-19 prevention measures may constrain some manufacturing activities in the near-term, the fact that a majority of migrant workers stayed in their workplace cities for the holiday should facilitate an earlier resumption of business activity following the holiday this year,” said analysts at Nomura in a note to client on Thursday.
Wang Zhishen, a migrant worker from Gansu, told Reuters that his factory, a manufacturer of logistics boxes in the manufacturing hub of Dongguan, only closed for three days during the holiday, thanks to overwhelming businesses. Lured by the 1,500-yuan cash subsidy his factory offered, he chose to work through the holiday.
The Chinese economy has largely shaken off the gloom from the COVID-19 health crisis, with consumers opening up their wallets after months of hesitation. Growth is now set to rebound sharply this quarter, also helped by the low base effect of a year ago.
The country has successfully curbed the domestic transmission of the COVID-19 virus in northern China, with the national health authority reporting zero new local cases for the 11th straight day. Cities that were on lockdown have since vowed to push for a work resumption at full speed.
The official PMI, which largely focuses on big and state-owned firms, and its sister survey on the services sector, will both be released on Sunday.
The private Caixin manufacturing PMI will be published on Monday. Analysts expect the headline reading will dip slightly to 51.4 from 51.5 in January.
(Reporting by Stella Qiu and Ryan Woo; Editing by Sam Holmes)
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