Can cloud savings just evaporate?

We've been at the SharePoint conference this week and I was thinking about Google in the session about using the FAST search engine in SharePoint, in terms of the tweaks administrators can do to refine results and wondering if the Google search appliance offers more controls than it used to (Google's answer used to be along the lines of 'you don't need controls because it works so well' and given that the search algorithm was the secret sauce, the source stayed secret).

I've been thinking about the Sidekick data story on and off for a while too, more in terms of governance and out-sourcing accountability and SLAs than in a technology sense. I often think about cloud services in terms of the tension between lower costs and less control, but I'm not sure if the cost savings always add up. Efficiencies of scale yes, free electricity no. And then I spotted the debate in LA about whether to switch the city government to Gmail and Google Apps bringing up some really interesting points (especially at the LA Times blog).

The contract is for $7.25 million contract; that's a small proportion of the LA city IT budget, but it's not a small contract. The city had 15 proposals (the LA Times says seven of those are from Microsoft; I'm going to assume that's different proposals from Microsoft and partners across on-premise, hosted and cloud solutions with a mix of Exchange, Office and SharePoint, with different features and prices).

Some critics have wondered if the email for the LA police should be in Google servers at all, for privacy reasons. I hope LA is thinking about availability and support issues as well as security and geolocking. But the big argument is, of course, about the money.

Google told the LA Times they have a "dramatically lower cost solution" and the city's Information Technology Agency said that the Google system would save millions of dollars. But then, says the paper " a recent city analysis found that, instead of offering clear budgetary savings, installing and running Google Apps would actually exceed the cost of the current Novell system by $1.5 million over the five-year life of the contract."

To get such different figures means they're measuring different things. I keep saying most companies don't know what their IT costs them or what value it has for them. We have to get more instrumentation and better cost analysis - or working out what saves money and what costs money can cost more than you'd save by changing in the first place.

-Mary