A cloud discount is not always a saving
I was at a networking event where a new contact was telling me about her challenges in selecting a cloud platform for their major expansion. The issue she was experiencing was to decide between two cloud services that were offering significant discounts and included services for the migration and implementation. However, a cloud discount is not always a saving. Like many other sales tactics of discounts for new customers, the seller is willing to take a loss on the first year, if it means that you will be locked in to their service for future expenditure.
Cloud microservices and micropayments
With cloud using Microservices, each with their own payment structures, it is easy to lose track of how costs can snowball. A microtransaction of a few cents for a service can quickly grow out of control when it is consumed by multiple systems in your cloud portfolio – and this can be compounded when you select a service that has a “free” or discounted model for the first few months or transactions. Once the discounted period expires, then you will get the cloud bill shock that so many people are hit by when they first transition to cloud services.
Consider the overall cost structure
For those of you moving from hybrid to public, or completely vacating a private / co-located datacentre, the costs of cloud need to be considered in context. Remember that you are moving costs from a capital expenditure model with operational costs, to a purely operational (consumption-based and variable) cost model. When doing a cost projection, of course the operational costs are easy to compare – year 1 expenditure against the previous year’s operational costs may be easy to do, and comparing the project transition costs against a generous first year discount will be possible, but there are other costs to consider.
Other cost recovery
If you have an on-premises datacentre – will the space that was consumed be able to be re-used for other business purposes? Will the reduction in electricity cost be able to off-set the cloud costs (was it from the building facilities budget instead of IT’s budget?) Can CRAC equipment be re-sold? Can the depreciating assets be written off for a saving on the balance sheet?
