Cloud computing has earned a strong reputation as a viable, secure environment for computing and doing business. As the cloud matured and grew, architectures became more stable and fast, and the question of on-premise or off-premise services became more complex as well. This, in turn, has made transitioning to the cloud more complex. Current business models are leaving people and businesses wondering what they are paying for and if the cloud is still a good deal in terms of costs.

The cloud was birthed at a period in time when IT costs were significant pain points for most companies. Businesses faced a never-ending cycle of buying hardware, deploying it, depreciating it, and starting the process all over again. With its pay-as-you-go model, the cloud meant minimal hardware expenditures and easily predictable monthly software rental fees. Many businesses with significant IT investments have expressed concern that cloud costs have been steadily increasing. Among a particular set of vendors and customers, that may be the case. It used to be possible to compare similar configurations from the three major cloud service providers pretty easily. These days, with reserved instances (AWS, Amazon Web Services), reserved VM instances (Microsoft Azure), and committed use discounts (Google), it is far more challenging to make a straight comparison and identify actual costs.

According to Frost & Sullivan in its Stratecast Predictions 2018, they noted that 53% of IT surveyed leaders said that “managing costs to run cloud workloads” was a huge obstacle. Over 50% of respondents indicated they have difficulty justifying the expenses of some public cloud workloads.

The cloud exists overwhelmingly for those small and midsize businesses that lack a huge IT department. Cloud providers thrive on a “high volume, low transaction cost” model, which was never designed to accommodate small and midsize businesses.

Today’s cloud is a vast ecosystem that includes thousands of vendors with offerings tailor-made for verticals and specific markets. Amazon and Microsoft are but two players within a very vast landscape.

How can small and midsize businesses find the right cloud provider when the industry makes it challenging to get a good education and information?  Although it is often tempting for companies to focus on the provider’s hosting quote, it’s essential to look at what is and isn’t included in that quote on a per-hour or per-month basis. Often the provider is giving you an arbitrary number. That number usually does not include the most essential charges- the cost of consulting, software installs, backups, restores, software management, adding users, and so on. Once a customer signs on with a provider, the costs that count come down to labor or engineering time and what level of support is included.

Every organization needs to understand precisely what it’s buying at the beginning. Depending on your business needs, you have options in terms of what services are provided. Some businesses may only require data storage, while others need an all-inclusive product that includes storage, backup, security, disaster recovery, and 24/7 support. When you start your cloud research, every business should ask the following questions:

  • What is the entire life cycle of the cloud provider’s environment from the very beginning?
  • What are the cost involved in adding storage, refreshing servers periodically, or adding applications?
  • Will you be charged for new Windows licenses every year or so, or will the software be priced on a rental model?

There are many situations where licensing costs can equal or exceed the price of the actual hardware. The smart move is to make sure these items are included and specified in a contract so you don’t encounter unexpected cost surprises down the road.

Cloud hosting isn’t a commodity business. Many cloud vendors emulate the big players in the market like Amazon in the quality of the environments they build and the kind of security, performance, software solutions, storage flexibility, and support they provide. It is still possible to deliver high function at modestly low costs, but it requires a deep understanding of business needs, expertise, and experience.

Cloud computing these days requires businesses to decide among many different options, but it is essentially an excellent value. Management concerns and choices don’t undermine that inherent quality. Those very concerns often help to enhance the value of cloud computing for business.

Dec 16 20
Christina Zumwalt
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