Sterling's slump in the wake of the EU referendum has seen US-based cloud services become relatively more expensive for UK firms, leading to widespread concerns that these costs could spiral out of control.
Large-scale consumers of US-based services could see significant additional costs, tightening their margins and handing an advantage to their competitors.
And in fact the price rises have already started, with Microsoft recently announcing that its Sterling pricing for enterprise software and cloud licenses will increase by as much as 22 per cent from 1st January 2017.
V3's sister title Computing asked its audience whether they are affected by these issues in a recent poll, and found that feelings in the industry are mixed, as firms struggle to get to grips with the implications of Brexit and sterling's sudden drop.
In the poll, 77 per cent of respondents said that their firms consume US-based cloud services, and many are already feeling the squeeze. Almost a third of respondents (31 per cent) said that these services had become "a lot more expensive" since Sterling's fall, with 30 per cent quantifying the cost increase as "a little more expensive." However, it seems that many providers have yet to bump up their pricing, as a further 39 per cent said they had yet to see any increases.
So will these price increases, and there will surely be more over the coming months, see UK-based firms move away from US-based services? 31 per cent of respondents said they would, with 54 per cent still making up their minds. The remaining 15 per cent were more bullish, stating that they wouldn't be switching providers.
Wherever firms decide to place their trust and their pounds, the industry seems fairly unanimous that it will be with cloud providers somewhere, with 77 per cent stating that they weren't considering using more on-premises services as a result of the exchange rate fluctuations. The remaining 23 per cent however stated that they are considering that alternative.
James Butler, CTO at IT services provider Trustmarque, explained that many firms will decide to stick with their existing services due to the difficulty of migrating between suppliers.
"Migration can be a difficult process, and only the biggest customers will find themselves in a solid bargaining position. In general, orgnisations should just try to keep a check on their current cloud consumption to shore up their negotiation credentials."
He also advised firms to consider negotiating fixed price cloud contracts, and to maintain a variety of cloud suppliers
"Some vendors do offer agreements that will protect against price rises for a period, but often only for one year," said Butler. "This is a sensible factor to investigate and consider as part of commercial negotiation.
"Firms should also consider having a local option as part of their architecture, which won't be as affected by exchange rates. Having a number of different providers already available as options is also a good way of spreading and reducing risk. The key consideration is that firms need to be confident that their data can be retrieved in any circumstance - which is the most basic starting point when switching provider," he argued.
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