How Organizations Can Plan for Cloud Computing Costs

May 2017
9

How Organizations Can Plan for Cloud Computing Costs

 
Manager with currency symbols above his head

If you’re an organization that either uses the cloud, or are considering migrating services to the cloud and are confused about the costs…you are not alone. The costs associated with the cloud are confusing and without proper management and monitoring cloud computing costs can add up quickly leading to your next bill being significantly more expensive than you budgeted for.

Here are three scenarios you’ll have to consider when factoring cloud costs.

If you use SaaS Based Applications (Office 365, Salesforce.com and G Suite)

Instance #1: In this instance you will be billed on the number of resources. The problems that companies may run into is when they over-provision. Choosing appropriate resources within these apps take time, and by choosing too many resources that are most likely not relevant to your business results in inflated costs.

Instance #2: SaaS based providers also charge pay per use or pay as you go. A common misconception is that users are charged per device (i.e. tablet, laptop and smartphone), however charges are based on the number of administrators. SaaS based providers charge in a tiered structure (based on a specified number of users) and once that threshold is capped you’ll be charged when more admins are added as opposed to how many devices you add.

Solution: Perform regular system audits and do thorough research to determine which resources and how many system administrators you actually need.

If you use IaaS/PaaS Based Applications Services (Amazon Web Services and MS Azure)

Both of these platforms boast strong PaaS and IaaS capabilities, but are their billing modules are not the easiest to understand.

Amazon Web Services (AWS): If you use AWS, charges are based on the services you are using, however there are several different variables which can lead to additional costs. These services include: databases, deployment, management, application services, network, storage and how content is delivered. In addition to these major charges, there are three additional service charges based on the location of your data centre, volume and the performance level. Additional features such as VM’s, memory, operating system choice, web service calls to their technical support/customer service departments will all be added on to your bill.

Microsoft Azure: When using Azure, they bill you based on usage, storage, storage transactions and data transfers on a pay as you go pricing model. Here’s where the complexities arise…as long as you have an application instance hosted on Azure, you will be paying a monthly minimum (roughly 80 US dollars), whether you still actively use that app or not. Another factor to consider is data transferring and the charges associated with that. Example: think of your data usage on your cellphone. Once you’ve hit your threshold of data consumed (for example 5 GB/month), you will get a notification from your service provider letting you know that you’re approaching your limit (or in some cases they may even block your data usage to prevent hefty bills). You then have the choice to stop using data or accept the overage charges. Azure works in a similar framework, if your organization is constantly doing data transfers and exceeds their monthly GB limit, your monthly bill will be higher than expected as Azure does not have a GB threshold cap.

Solution: Use the data from previous years to be able to forecast costs for the upcoming year. These services both offer calculators to predict costs, so if your organization’s projections are accurate, the monthly bills won’t be shocking.

Costs Associated with MSPs, Monthly Bills and the Cloud

  1. Moving/Migrating to the cloud: There will be a large upfront cost associated to moving to the cloud, whether that’s a onetime move or done incrementally. Network bandwidth accounts for much of the cost of moving data and cloud providers might charge upload and download fees. Even though data and systems are being hosted off-site, there are internal labor costs that you’re billed for, depending on the workload, instances and number(s) of servers being migrated.
  2. If you store data in the cloud: There are often different pricing tiers of storage which will be added to your monthly bill. Your organization should think carefully when storing data and work with your MSP to decide on the storage tier that is best based on the amount of data that you will be storing.
  3. Fees allocated with testing: You’ll have to test all software and apps before migrating to the cloud to ensure that all systems integrate properly. Depending on how long this testing takes you will see either incremental or drastic costs added to your bill.
  4. Costs associated with rent, utilities and power: This cost is often overlooked and unexpected. Most data centres are offsite and because you’re data is taking up space in the data centre, organizations will be billed accordingly, which can also increase your bill.

Solution: Choose an MSP that is forthcoming with costs and services they can provide, can quickly respond to business demands, reduce costs, manage complexity, keep abreast of industry standards and adopt all facets of technology.

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