The hidden cost of ‘free’
If you were reading this in 1985, “free” software wouldn’t even exist. At best, you would be able to find some shareware on the front of a computer magazine that might be useful if you could load it off the 3.5″ floppy disk. Everything was just a little more amateur back then, especially when things were free.
Today, we are faced with a massively different situation. Free no longer means poor, lacking, or amateur; instead, it has become the norm for many businesses around the world, delivering quality products that support hundreds of thousands – sometimes millions – of users. The freemium model, whereby software is available for free, but additional support and functionality is available for a fee, has become a de facto business model for start-ups around the world. But despite the more professional approach, the profusion of software comes with both benefits and risks.
It’s easy for businesses to become enamored with these free solutions, creating a service mash-up in which they use many different services, each focused on a different business need. On the outside, this may seem like a low-cost, high-functionality plan that could only benefit a business, but be careful: there are hidden costs to this approach. Here are just a few of the places where those hidden costs lurk.
Three places to look for hidden costs
Governance is one of the most boring words in the business lexicon, but it’s also a core component of modern business. The compliance regulations that business must abide by, wherever they are in the world, underpin a chunk of our activities.
It’s easy to overlook governance requirements when taking free services onboard. You can save a lot of cost by bringing in a service instead of building it yourself, but don’t forget to model the potential pitfalls, too. In taking on a service, you will be agreeing to the terms and conditions for that service, which are defined by that company in its interests, not yours. If those terms are not as stringent as yours, you could be looking at a regulatory shortfall. If that causes an audit issue within your organization, the costs could be much higher.
At LeWeb 2013, which took place in Paris last week, Brad Garlinghouse, CEO of Hightail, spoke of “deals taking longer to close since the revelations of June 2013, it’s ‘The Snowden Effect.'” This is an extreme case, but shows how important it is to know exactly how your data is being used, stored, and controlled. Make sure that you have a clear understanding of the governance being applied on your behalf before signing up to a service.
Cloud services provide great opportunity for outsourcing work, especially around the support and maintenance of IT solutions. Where in the past you would have a team dedicated to keeping the lights on and running, this can now be managed by a much smaller group with less specialist skills. AirBnB, for example, has only five people in the organization tasked with keeping the 1000 cloud servers up and running, compared to the 300 or so dedicated to product development and customer experience.
Mark Shutterworth, founder of Canonical and part-time Russian astronaut, summed up the challenge neatly when he stated (also at LeWeb 2013), “One of the big challenges for cloud adoption is, with smaller support teams, how do we deal with things when they go wrong? Do we actually have less ability to roll back from issues when they occur?”
This issue around support becomes more worrying when it applied to freemium services. Although you are essentially accessing the same support team as paying customers, you won’t have the guarantees around service level as they will have.
As a case in point, this user of a well-known cloud storage product got caught in this trap. It wasn’t that the support was not there; the company simply had a greater focus on the paid accounts over the free ones.
Before bringing in a free service as part of your corporate solution, make sure that you have the right processes and support in place to deal with any emergencies.
Good integration is the rarely talked about but fundamental element of using cloud services. It takes two forms, both of which are equally important: integration with on-premise applications and integration between individual cloud services.
The introduction of cloud services often heralds a change in business working practices, but it doesn’t take away the necessity of that process needing to work with all the other processes and systems in your organization. This is often where all in one cloud services, which cover a broader set of functionalities, can have some benefits; the integration can be simpler, whether it is a manual process or automated through an API or other connector.
Having multiple services can exacerbate the situation and increase the level of risk. A lot of services will connect with common platforms, such as Box or SFDC, but you are still relying on this working in a consistent and timely manner.
Integration isn’t a new problem; it’s been prevalent within on-premise software installations for a long time, but cloud services do provide a new twist, one where you may not have as much control as you would like.
If you’re going to use multiple services, make sure you plan integration up front to help save money and time later on.
Realizing the benefit
There’s no doubt that freemium and free services have changed the business landscape. The ability to bring in services quickly and easily, and to realize performance benefits because of it, can give a company the edge in a competitive world. However, you can’t bring these services on-board blind. Without due consideration for the underlying terms of these services, and without looking at the potential complexities introduced through using multiple services, you may not be making the strides you anticipated. Often, to bring these services in alignment with expectations you will have to end up paying, either for increased support for the service or for external resources to help you integrate them. It’s not as ‘free’ as it might look. Make sure you have looked at all the options, both free and paid, before making a decision.
The best advice, as always, is to stay focused, stay simple, and plan ahead. If you do that, then you will get the most out of your investments.
Are you currently using a “mash-up” approach? Have you realized productivity benefits – or has the lack of control turned around and bitten you? Let us know your thoughts in the comments.