What is Cloud Cost Management

Cloud Cost Management is Not Just About Switching the Platform

Switching to cloud services is often at least as much about cost management as it is about the flexibility offered by cloud infrastructure.

There are indeed many cost savings to be made by switching to a cloud platform. It is, however, also true that companies, especially SMBs may not really understand what this actually means in practice.

Cloud computing is basically about swapping capital expenditure for operating costs

Let’s create an analogy. If you buy a house, you have to spend a whole lot of money buying the house. Then, you have the responsibility of repairing, maintaining, decorating and furnishing the house.

Everything that needs to be done to the house comes out of your pocket. Now, let’s say you rent, you don’t have to find an upfront payment, just your monthly rent.

Likewise, anything to do with managing the house is your landlord’s problem not yours. This is basically the situation with swapping in-house data centers for cloud computing.

Of course, the analogy isn’t perfect, far from it. If you buy a house, you build up equity in it, which is a benefit. You can also expect it to increase in value over the long term.

Mainstream IT equipment, by contrast, almost invariably depreciates in value, often very steeply. It also requires a whole lot more maintenance than the average house.

The general point, however, is still valid. Moving to cloud services is not necessarily cheaper, but it is often a whole lot more cost-effective than running in-house data centers.

Three reasons why cloud platforms can be more expensive than you think

There are three main reasons why moving to cloud computing can work out more expensive than you think it should.

The first is, quite simply, that you don’t understand your usage patterns. This is vital to cost-effectively managing cloud services.

The second is that you waste your resources. In a data center, it doesn’t really matter all that much if you leave devices idling.

Yes, you use electricity, but you might use even more to power them down only to power them back up again.

In the cloud, there is a direct link between cost and usage. If you leave an instance “idling” when you don’t need it, then you are wasting money.

Similarly, if you fail to detach storage when you close an instance, you are wasting money.

Basically, you need effective cloud governance to ensure you only use what you need and do not waste the cloud resources for which you are paying.

The third is that cloud vendors will try to upsell services. Just remember, no matter how great a discount you’re getting, it only has value if you actually really need the cloud service or really want the cloud service.

You may get some good deals through upselling offers but resist the temptation to buy cloud services just because they’re at a discount.

Three unexpected ways the cloud could save you money

There are three indirect ways, the cloud could actually save you money and could work out cheaper than running your own in-house data center.

Firstly, you can get rid of any hardware you have on-site. You can then reassess your office space and may be able to put it to more productive use.

Even if you can’t, you should certainly let your insurance company know that the equipment is now gone. It may lower your premium. As a minimum, keep it in mind when you go to renew your policy.

Secondly, you no longer need to try to recruit and retain IT staff. For SMBs, this can be a huge benefit. There is a massive skills shortage in IT, especially in IT security.

This means that experienced IT professionals know they can command salaries way beyond anything the average SMB could afford.

Additionally, working for larger companies generally offers more opportunities for personal and professional development and in a fast-moving sector like IT, that can count for a lot.

Thirdly, switching to cloud services facilitates remote working.

As a minimum, this offers an obvious disaster-recovery strategy. In business terms, a “disaster” does not have to be something that makes headline news across the world. It just has to be something that disrupts your access to your habitual place of business.

Remote working can, however, serve all kinds of useful purposes. For example, it can be used to help staff manage their work/life balance.

This can be very useful for retaining them. It can also be used to address a lack of office space and/or a lack of local staff with the necessary skills.

The ability to onboard remote workers can also make it vastly easier to bring in freelancers for short periods, whether that’s a few hours a week long-term or when you need help in peak seasons.

See Also

Cloud Pricing