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Cloud Computing Cost And Budget

Cloud Computing Cost And Budget – This is the third part of a three-part series on working with Infrastructure as a Service by Jo Maitland, Executive Editor of

Even if cloud control and security issues were suddenly resolved, cloud pricing would still be a challenge. Although cloud providers like to tout the simplicity of their services, IT managers have discovered that pricing cloud services is anything but simple.

Cloud Computing Cost And Budget

Cloud Computing Cost And Budget

Pricing structures are based on a variety of factors, from the storage space required to the clock cycles used for monthly traffic allocation, and that’s not all. Some service providers have additional fees hidden deep in their service level agreements (SLAs).

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In order to determine the total cost of a cloud service, users need to understand the individual elements of the service that the provider charges and how those costs are calculated. For example, does the provider charge based on traffic, storage space required, server CPU time, or a combination of these factors along with other elements?

Another critical factor in determining the actual cost is the type of service needed. For some, this service may be little more than a hosted dedicated server to run applications in the cloud. For others, the service may be cloud backup or business continuity or basic hosted storage.

Perhaps the easiest way to break down pricing is to focus on the primary services offered. Most cloud service providers divide their services into three main areas: cloud servers, cloud storage, and cloud websites and applications. Everyone follows their own pricing formula.

Cloud servers come in two forms: virtual and physical. In other words, you can buy time on a virtual server (where the physical hardware can be shared with others) or time on a dedicated server (where you are the only “tenant” on that server). Table 1 shows the price breakdown:

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Price comparisons are only part of the big picture; each provider listed above includes additional services and features for an additional fee. In addition, prices may vary depending on the length of the commitment, total bandwidth needs or total amount of storage required, and in most cases prices and packages can be negotiated with the merchant’s sales representatives.

Not all cloud service providers are created equal, and this becomes clear when you take a closer look at the differences between providers and how they meet customer needs. For comparison purposes, we have selected three of the well-known cloud infrastructure providers:

Looking at the simpler concept of cloud storage services, the differences in pricing structures and the way vendors build their bulk storage packages (see Table 2). Again, price comparisons are only part of the picture. And like other cloud services, pricing is affected by the length of the commitment, total bandwidth requirements, or total amount of storage required. And as with other cloud services, there is plenty of room for negotiation.

Cloud Computing Cost And Budget

Ideally, pricing cloud services should take little more than selecting features and determining the required storage and server processing power. In reality, most IT managers will find that ideals don’t apply here, and must carefully consider both “hidden extras” and standard pricing to price services.

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The biggest challenge is translating the “technospeak” about cloud service pricing into something that people with wallets can understand and bringing those individuals into the loop to negotiate pricing and terms and conditions as well as SLAs.

The trick is to get all estimates in writing with clear, concise language explaining what the total cost will be over the agreed period: a written confirmation is the only way to see apples-to-apples pricing models and determine actual budget amounts.

A recent study from the University of New South Wales in Australia, in collaboration with researchers from NICTA (National ICT Australia) and the Smart Services Cooperative Research Centre, spent seven months stress testing Amazon EC2, Google’s App Engine and Microsoft’s Azure cloud services.

The analysis simulated 2,000 concurrent users connecting to services from each of the three providers, with the researchers measuring response times and other performance metrics. The results were less than stellar, with response times varying widely depending on the time of day the services were made available. In addition, the study revealed a lack of monitoring tools that would allow organizations to check whether a service is meeting their SLAs.

This Figure Shows The Cost Breakdown Of Public Vs Private Cloud…

Clearly, cloud providers have some work to do when it comes to simplifying pricing models, strengthening security, and offering SLAs that guarantee better reliability. The market is evolving rapidly and today’s dominant players may be history in two years. Just one catastrophic privacy breach can destroy a brand and potentially slow down the market for a decade.

Hopefully cloud providers are listening and their customers will be willing to keep pushing for what they need.

Jo Maitland is an executive editor in the Data Center and Virtualization media group at . This article features additional reporting by Christina Torode, senior reporter for the CIO media group and .

Cloud Computing Cost And Budget

Editor’s Note: This chapter on Infrastructure as a Service is the fourth part of a cloud computing e-book that also includes chapters on CIO strategies for the cloud, development for the cloud, and Software as a Service. Your cloud computing budget is probably based on your best estimate of future costs. Use these steps to make your prediction as accurate as possible.

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Build your cloud budget with these 8 steps to accurately predict cloud costs

Accurate and fair budgets make everyone in the company happy. Engineers love to build products that make companies money, managers love to see good, wide margins, and finance departments celebrate when everything goes according to plan.

But keeping a reasonable budget for cloud computing can seem like a lofty goal when your company’s cloud spending seems to be changing with the wind.

The trick to creating a reasonable cloud budget is to understand how your architecture and customer usage affect your cloud bill. You need to take a closer look at the unit economy like never before.

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The steps below will guide you through the process, but remember: if you get stuck, a team of experts is just a few clicks away. We are happy to help you with your unit financing strategy.

The most successful SaaS companies understand with fairly sharp precision how much each product costs to run.

You’ll want to break down your costs for each product you offer to see how each product compares to the others.

Cloud Computing Cost And Budget

Maybe product A costs a lot more to develop but has the potential to bring in enough revenue to offset those costs, while product B is cheap but has less long-term revenue potential.

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It’s common to have multiple versions of your software running in the cloud. In addition to the main production instances, many companies have production environments, quality assurance environments, and development environments.

The list of instances or environments will vary. Still, the idea is to track every dollar associated with a given product in a specific environment, such as:

Similarly, you can break down each product into its sub-functions and determine the cost of each function. Remember, the deeper you go and the more detailed your vision, the more accurate your predictions will be.

Above is an example of how you can adjust your cloud consumption by cost per function, product, environment, customer, team, and more.

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If possible, break down functional costs by environment—just as you would with product costs—and see how much you’ve spent on research, development, support, and other relevant production phases.

It often seems logical to focus mainly on factors directly under your control, such as product and feature development costs. However, it is important to understand how customer usage affects your costs.

Understanding customer usage lets you understand what’s good and what’s troubling about cloud infrastructure growth

Cloud Computing Cost And Budget

When you break down your costs for each customer, patterns can emerge before you even start predicting the future. Ideally, you should be able to break down customer costs into segments such as enterprise customers and small businesses, or free-tier and premium-tier.

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You also learned how much it costs to deliver one unit of value to the end customer in some cases. Over time, you can do this for every product, feature, and customer. These are the numbers you want to base your forecasts on.

If you know how much it costs to deliver product A to customers W and X and product B to customers Y and Z, you’ll be able to make an educated guess as to what might happen if you made specific changes.

You will have a relatively good idea of ​​the impact this may have on your cloud account. Or, if you’re planning a significant addition of new features, you can evaluate the costs of similar existing features and come up with a prediction of what you’ll end up having to spend on the new features.

If your new feature is still six months out, it’s probably not practical to try to arrive at an exact number. But you can watch

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