Weighing up the cost of the Cloud

Organisations need more education about the real costs of cloud computing. There are, of course, significant benefits with cloud - speed of implementation and increased flexibility, for example. But there is also too much hype and with it...

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Organisations need more education about the real costs of cloud computing. There are, of course, significant benefits with cloud - speed of implementation and increased flexibility, for example. But there is also too much hype and with it important issues can be buried - such as how much does cloud flexibility actually cost you?

Traditionally, businesses have relied upon on-premise IT, which has required staying on top of capital expenditure and generally provided fixed costs. But the move towards cloud services is resulting in more payment options, so it is important that organisations pick the right one.

A lot of the talk around cloud at the moment is around the advantages of its pay-as-you-go model. This means organisations can pay for what they use and chop and change services as they go, providing greater flexibility. But such flexibility comes at a cost. And not just a financial cost, as there could be a price to pay in terms of performance. Within the cloud model, businesses have to share servers and bandwidth with other users. So, if a competing application or service is seeing high demand at a particular time this could take away from the performance of other businesses’ services.

Alternatively, businesses could consider a dedicated server environment as their ‘cloud’ solution. Organisations can run exactly what they want, when they want. I’ve seen organisations that chose this model, benefit from a dedicated resources at a fixed monthly cost, which often works out much more cost effective in the long term. Just as we’ve seen with mobile phones, monthly contracts seem to be the preferred, economically-viable option for many users and there is no reason for cloud computing to not go down a similar path.

Why? Because you can control costs and because vendors are prepared to give you discounts as you’ve committed to them for a period of time. You’d don’t have the flexibility to change, but if you aren’t expecting your requirements to go down, then why pay the premium for a pay as you go service.

When it comes to the cloud, organisations need to have a reality check. They should be asking themselves how frequently their business and IT requirements are going to change.

Once this is determined, they need to carefully evaluate and decide which payment option is really the best for them. I think that having greater awareness of the different prices and models available for the cloud, rather than just defaulting with pay-as-you-go, will mean businesses are less likely to receive unexpected costly bills. After all, you wouldn’t go out and buy a new mobile phone if you hadn’t looked at many of the tariffs available. At a time of tightened budgets, IT and business heads need to work together and think about which cloud will push their organisation to new heights.

Posted by Andreas Edler, MD at Hostway UK