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How to plan for the cost of cloud computing

Choosing a multicloud solution can save up to 74%, if you review the cost of cloud computing first.

How much is that app you run in Azure? Or Amazon Web Services, Google, Rackspace or other cloud computing platform? As cloud app solutions fragment, with compute, storage, analytics and other services running in clouds from various providers with different pricing structures, getting a grip on the actual cost of cloud computing is no easy task. Yet, it can be done. Combine carefully chosen services with a long-term commitment and it's possible to achieve savings of as much as 74%. Like the 55-year-old song says, you better shop around.

"The problem is the complexity of dealing with multiple providers," said Owen Rogers, research director of 451 Research's digital economics unit. Though the technology challenges in building multicloud solutions have been largely conquered, it is on the operations side where obstacles still lie, including network latency between clouds, management of disparate APIs, the chore of keeping documentation up to date and costs associated with data transport.

In its recently released fourth-quarter 2015 Cloud Price Index, 451 Research concluded that businesses are, consequently, more likely to stick with a single-provider solution, even though it costs more. Yet, do the lengthy research, choose the right services and commit for the right length of time, and savings that range from 58% for a small application up to 74% for a large-scale solution are possible, said Rogers. In some cases, that could mean as much as a $23,000 savings over three years for a Web app, according to 451 Research.

Vendors not eager to offer comparison shopping

Adding to the complexity of assembling a least-cost app environment is the inability of providers' cost calculators to price a multiprovider option. Why open the door to the competition, after all? Omitting just one crucial item, such as the cost of extracting and moving information from a cloud-resident database to an analytics service located elsewhere, or to a software as a service (SaaS) system, can lead to heart-stopping sticker shock when the monthly bill arrives, especially as volumes grow and inevitably outstrip initial predictions.

Businesses pay when they begin to receive value, when the app is in production and users finally start using it. They do not pay a huge up-front fee.
Mark Troestervice president of solution marketing, Progress Software

While it's essential to know the cost of cloud computing, if any, for getting data into and out of a cloud, that's not the whole story, said longtime network and cloud researcher Tom Henderson of ExtremeLabs in Bloomington, Ind. "Ask if you can transfer data without incurring a charge," he said. "This is especially important in planning for backup and disaster recovery, replication across servers in multiple geographies for maximizing performance, and data sovereignty in the European Union, where data cannot cross international boundaries."

Price estimates based on assumptions made in one pricing calculator will never match those from another. According to Rogers, every pricing calculator is built to show a better value that favors that particular provider's strengths. It may be compute resources for one provider, storage performance for a second and API calls for a third. He urges anyone using cloud app cost calculators to study and understand the nuances of each and to pick up the phone. "You're dealing with significant complexity. Ask them to explain the results to your satisfaction."

However, the differences in costs should not imply that any given provider is fudging the numbers in a pricing calculator. "None of these is misleading, and I've used them all," said Richard Seroter, product vice president at CenturyLink, the multinational IT services company based in Monroe, La.

Comparing cost of cloud computing can become difficult, according to Seroter, because the components that constitute an entire cloud infrastructure will never be identical. "I can't just take the specifications of my app and quote them across multiple clouds," he said. "What works with three servers on [one] cloud may require five on another." Different cloud providers architect their infrastructures in different ways.

Wait for results

Not to be overlooked in cloud pricing is the cost of development tools. While many are now licensed on a subscription-based, per-seat pricing method, one company believes the meter on those payments shouldn't start running until those development tools yield demonstrable results in production.

Using a different sort of tool as an analogy, Mark Troester, vice president of solution marketing at Progress Software in Bedford, Mass., said when someone buys an electric drill, it's not about the hardware. Rather it's about the solution -- the holes. "The value is in the hole, not in the tool -- the drill in this case," he said. In other words, no one wakes up needing to buy a cloud platform. What they need to do is deliver value in the form of an application that works.

Among the company's database and development products is Progress RollBase, a low-code platform for creating SaaS applications. Conceived with an underlying philosophy of making development and deployment fast and easy, Troester said pricing was designed that way as well. "Businesses pay when they begin to receive value, when the app is in production and users finally start using it. They do not pay a huge up-front fee," he said. "We tie pricing to the value of what they are trying to accomplish."

Predicting price requires thinking beyond the norms

If there's one thing on which everyone agrees, it is that cloud application pricing is not an exact science.

Troester's advice is less about infrastructure and more about delivery. "File storage, bandwidth and computing power are all important, but you need to map pricing these variables to the value of the solution you ultimately deliver." He also notes multicloud integration can incur development and operations costs that are beyond the purview of pricing calculators. An integration that can be time-consuming and costly is that of dealing with an on-premises legacy application that is not cloud aware. In the long run, it may be more prudent to replace that app.

Henderson says planning for failure, especially of the unanticipated variety, must be part of any pricing exercise. When an August 2015 lighting strike caused a fire at Google's massive data center in Belgium, customers were left with no access to their data for up to four days. "What did this loss of access cost in terms of revenue and goodwill, what is the cost of recovery, and how does that compare to the cost of up-front replication for failover to ensure uninterrupted operation? You are not likely to find those items in a cloud provider's cost calculator," Henderson said.

Seroter believes calculating the cost of cloud computing should begin with a minimalist approach. In a traditional on-premises data center, standard practice was to plan for the maximum, asking for the "biggest boxes" and more resources than needed, because under-provisioning required a painful trip back to the CFO to ask for more, he said. "The cloud is a wonderfully elastic resource that lets you provision only what you need and flex when demand warrants. Plan for this correctly and you can save."

When it comes to pricing cloud applications, the only constant is change. With bandwidth and SQL prices down 3% and 10% over the past year, respectively, according to Rogers, calculating costs should not a one-time undertaking, but should be revisited periodically. His advice is succinct: "Experiment."

Cloud cost calculators abound

When it comes to calculating the price of signing up with a cloud service provider, there are many options. Amazon Web Services (AWS), Google Cloud Platform and Microsoft Azure are far from the only choices. Here's a quick rundown of just a few of the many costing calculators currently available online.

Next Steps

Learn about multicloud strategies

Figuring out multicloud management

Using a cloud service broker

 Evaluate the cost of cloud computing with cost monitoring tools

This was last published in December 2015

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