The Hidden Costs of Cloud Computing

If you are moving to the cloud, you need to avoid losing money due to the hidden costs of cloud computing. Without an effective approach to resource procurement, you’ll find yourself paying for resources that you aren’t using. These costs aren’t hidden by your cloud provider, but it is possible to incur needless costs if you aren’t managing cloud resources efficiently.

The many benefits of outsourcing to a managed cloud services provider far outweigh the challenge of managing its costs. Overall, even small and medium-size companies can benefit from cloud computing. It saves them from employing a full-blown IT staff and reduces the cost of acquiring and maintaining their own infrastructure.

While some businesses need to consider colocation vs. cloud computing, many companies who don’t have an existing IT infrastructure choose to outsource.

How Do You Procure Resources From Cloud Providers?

When you start using cloud services, there are typically three ways that the cloud provider offers that service.

• Advanced Provisioning. You sign a contract with a cloud provider for specific resources and services, and you pay the provider on a monthly basis.
• Dynamic Provisioning. Your cloud provider assigns resources that fluctuate based on your needs. The provider scales up to handle spikes in usage and down when your needs decrease. You are billed for the resources you use.
• User Self-Provisioning. You use a credit card to pay for services you select using a web interface. Those resources are made available soon after your purchase.

It’s important to determine which approach will work best for you and your provider. You also need clear agreement on:

• Responsibilities. Who will manage infrastructure, applications, and data? Who will be responsible for business continuity and disaster recovery? Who will perform patches and updates to the infrastructure, software, and applications? Who is responsible for cyber security, and what form should it take?
• Metrics and Success Factors. How will you measure the success of the cloud operation? Who is responsible for gathering metrics and meeting goals?

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How Can Lack of Resource Management Cost Money?

Cloud procurement can be a challenging and complex undertaking. There are a range of provisioning tools that can assist you, but there are still challenges you’ll need to overcome.

1. Dependencies

Make sure you understand how your applications will use central cloud resources such as computing power, networking, and storage. If some of your applications have dependencies that you don’t take into account, your costs will rise unexpectedly.

2. Overprovisioning

Overprovisioning refers to buying more of something than you actually need. It’s common when companies move to the cloud. It’s easy to want more capacity rather than less “just in case.” But, that approach will result in pouring money down the drain.

3. Underprovisioning

When you don’t buy enough resources, it’s also easy to lose money, although you may not see it in your cloud invoice. Underprovisioning will result in applications that can’t be accessed or that can’t complete their tasks. Mission-critical operations that aren’t providing the data needed to run your business will have a negative impact on your users and your customers. Loss of business and lower profitability will soon follow.

4. Auto-Scaling

One of the benefits of cloud computing is auto-scaling. Your access to resources changes according to your needs. However, if auto-scaling is done improperly, you could end up with software problems that are costly to fix. For example, scheduled autoscaling could be set to reduce resources overnight, but if some users run background applications overnight, they won’t have the power they need to complete the job.

How to Avoid the Hidden Costs of Cloud Computing

The easiest way to avoid hidden costs of cloud computing is to choose the right managed cloud service provider. Make sure the provider has the expertise required to set up service level agreements (SLAs) that meet your needs and help you avoid hidden costs. Beyond that, here are some tips for solving hidden costs.

• Get the Right Plan. If your needs are variable, choose a plan that scales easily to avoid underprovisioning and overprovisioning.
• Deduplicate Data. Moving to the cloud is similar to moving into a new house. When moving, most people take the time to weed out the things they don’t need rather than recreating a storage problem in the new house. You should do the same when you move to the cloud by reviewing silos in your company to ensure that you don’t duplicate data.
• Use Automation. You can eliminate many repetitive and mundane tasks when you automate your procurement in the cloud. When you use procurement automation tools, you can improve efficiency and avoid human error.
• Minimize Idle Time. You can reduce costs and avoid overprovisioning by turning off resources that aren’t being used.

Moving to the cloud makes sense for companies of all sizes and in all industries. In fact, research indicates that cloud computing is 40 times more cost effective for SMBs as compared to using in-house IT systems.

The only caution is that you need to have the expertise to avoid the hidden costs of cloud computing and get a return on your cloud computing investment. If you have questions or need assistance, learn more about Access One’s cloud infrastructure service, or contact us anytime.