Is the Cloud as Cheap as People Think?

April 17, 2013 by Staff Writer
Is the Cloud as Cheap as People Think?
The success of the cloud (or cloud computing) is based on a simple premise - with the cloud you only pay for the resources you use and when you use them, so it must be cheaper. Of course, the other side to this enticing "pay-for-what-you-use" formula is, "the more you use, the more you pay", and there are a number of reasons why a company might use more in the cloud than with traditional IT approaches.

Possibly the biggest reason a company does not recognize any savings after migration to the cloud is there was no solid measure of IT resource usage before migration. The overwhelming sense that the cloud "must" save a company money is not always underscored by hard data. A full assessment of a company's IT requirements should be established before a move to the cloud is even considered. A proper assessment rather than a "back-of-the-envelope" analysis might establish that the cloud will not prove beneficial for particular organizations. And without real evidence, future cloud savings might remain a hunch and also prove elusive.

Key to the reasons some companies find hidden costs in the cloud is the overlapping of pre- and post-cloud corporate cultures. When companies were more reliant on traditional IT approaches (such as Managed Hosting), rather than paying for what they used and when they used it, they paid for the resources they thought they would need on a monthly basis. Estimations on requirements were invariably bloated, but with built in savings for accounts that purchased lots of resources, this was not considered a major issue. Companies were often happy to pay for more resources than they required (just in case there was an unexpected spike, etc.) and the result of this was indulgence was departments and staff who could afford to be wasteful.

Rather than selectively store data, companies stored everything - just in case. They stored duplicated data, and they stored data they did not need to store - again, just in case. This data often sat alongside movies members of staff had taken at the office party, and thousands of digital pictures of the office outing staff accessed from their PCs at will.

Store and access unnecessary data in the cloud, and your costs will increase. Unless a solid approach to saving server resources is implemented within a company, then it is unlikely the cloud will cost less than previous IT solutions. Company's must establish the correct corporate culture to benefit from the cloud's savings potential, and this culture must be continually monitored and enforced. Only store what you need and the cloud will pay off - avoid enforcing such an approach and maintain an undisciplined workforce, and costs will likely grow exponentially.

Another good example of where corporate culture must be changed for the cloud to be beneficial is software usage. Most companies are only just migrating from computer-based software to cloud-based software. In the past productivity, collaboration, CMR and similar software was bought and installed directly onto PC. Generally, as it cost no more than the initial investment, staff would leave this software active in a computer's background, and sometimes such software would only be turned off when a computer was powered down. If a company now accesses such software through the cloud, and it is paid for on a pay-for-what-you-use basis, keeping software on in the background could translate to a company paying huge additional monthly fees. Teaching staff to turn off software when they do not use it will, of course, pay dividends.

Other changes that are required in a company before the cloud can pay off are at the development level. Again, some companies utilize applications that were designed for in house use and which are a bad fit for the cloud. As previously mentioned, companies often used to have more resources than they needed, and applications where simply stored on a server and forgotten about. In the cloud, this approach could cost dearly.

Applications such as payroll solutions are predominantly used only a few days a month, and with traditional IT would simply sit on a server ticking over on a daily basis, eating up the resources that nobody would use anyway. Transfer this function to the cloud and the same apps sit in the cloud eating up resources which a company is charged for at the end of the month. When trying to avoid cloud costs, all the software solutions a company is using must be reassessed, and those which do not fit the cloud model should be operated from company servers. Applications must be timed to turn off when not used to avoid wasting precious resources, and future apps must be designed with the cloud in mind.

Another area where companies find hidden costs is compliance. Many companies that store sensitive data are subject to a range of different standards compliance requirements. For instance, companies in the USA that collect credit card data must comply with PCI Security Council standards. Of course, the standards issues generated by possible migration to the cloud must be addressed when considering the option, but changes in compliance procedure and requirements are difficult to plan for. Ultimately they represent a hidden cost. Some companies in some parts of the United States have recently been having difficulties proving that their data is not accessible outside their particular state - a requirement of some security standards which to some extent negates the flexible nature of the cloud. Clearly, storing data in the cloud and proving compliance to such a requirement might prove very costly for a company, and companies have to assess the likelihood of whether the intricacies of the type of data they store could mean it might be more subject to future legislation, both at a local and countrywide level.

Of course, cloud failure is a hidden cost no company can plan for, but then so was server failure. Without full control of data, however, restoration of data stored in the cloud can though take days to complete, and a simple 15-minute outage can cost a company hundreds of thousands, or even millions of dollars. To be fair, to date, the cloud has looked pretty reliable, and issues such as wastefulness and lack of discipline within a company might cost a company migrating to the cloud much more than infrastructure failure. Reeducating a workforce to use the cloud as effectively as possible and taking measures so everyone can see that efficiencies are taking place is without a doubt key to a successful cloud migration and continued cloud savings.

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