Cloud Computing and the Basic Facts behind Price Hikes

By CIOReview | Tuesday, May 2, 2017
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In the current technological era where cloud computing is increasingly being adopted into every business operation and IT applications, cloud solution providers are on the gaining edge—controlling the entire landscape, both technologically and economically. According to expert Cloud consultants like Judith Hurwitz, the term cloud computing might even disappear from the IT vocabulary—as it might become ‘the only way of computing’. A situation at that end raises concerns about huge cost of cloud computing being run up by shadow IT projects.

Cloud emerged as an alternative to help enterprises that wanted to use services where they need not maintain their own hardware and software infrastructures in addition to the capabilities that cloud offers them to function from any locations across geographies. To this end, cloud computing is profitable and cost effective—provided that enterprises opt for just one instance of cloud application. However, enterprises need to add security, management, and many more features to keep running full fledged—and obviously, all comes with a price tag. For instance, Amazon Web Services (AWS) rollout numerous storage services, like Simple Storage Service, Elastic Block Storage and Amazon Glacier, where each services house multiple features for which clients need to pay. It is true that each individual cost looks cheap until enterprises start using them all together—this becomes expensive. It is one among the many laterals that cloud computing allures itself with regards to simplicity. Further, some packages may offer pushing data into the cloud as free, but enterprises might need to pay for getting them back. This means that even removing data gets charged.

Recently, Microsoft announced a pricing increase of 22 percent for Azure customers in the UK—reason, fall in the value of Sterling against the US dollar. However, Michael Owen, Head of Sales, Cloud9enterprise, says that Microsoft sales targets and group financials are ultimately in US$, pushing UK sales teams to either sell 22 percent more or charge 22 percent more. This is seen as an initiative to keep the Micrsoft share-price propped up. Alongside, Oracle has also increased its rates for enterprises that run Oracle software on Amazon Web Services—almost double compared to their previous offerings. Many of their clients cannot step out of the deal now as they previously have used proprietary Oracle features tightly coupling their critical applications to Oracle—typically a vendor lock-in situation. The same applies with Microsoft or Amazon where clients are struck with theses provider technologies and the prices attached to it.

Yet another lateral that casts biggest costs for cloud computing is data movement. As cloud computing is no longer an emerging technology and has become a key player in many of IT enterprises’ architectural considerations, data storage, processing, and movement are the biggest challenges from an expenses perspective. Every time an enterprise moves data from one site to another or one location to another, which is a common practice, cloud providers charge accordingly. Major players provide these services with a wide variety of applications assessed by month, use or volume and are apparent with the cloud storage. Depending on the volume of data stored, the regions, and the types of services opted—charges vary. This is one big catch for Amazon.

From a bird’s e ye view, cloud computing appears to be more of a cash-cow simply because of one big reason—enterprises are going to keep using the service, in fact, enterprise will need to keep using cloud because that is the way today’s IT is shaped up. This has a greater degree of lock-in as it is not easy to get out.

Bottom Line

Though the world is witnessing cost wars, with provider after provider slashing prices, enterprises need to be on the alert plain as, carefully observing, it appears the war never gets on to the bottom. Hidden costs keep running in between the allured packages. As a whole, prices are changing but not in the downward direction—that’s for sure.