Weighing up the cost of the cloud

Many businesses are still unclear on how best to deploy Cloud services and to date have adopted a circumspect approach towards them. Recent research found that nearly three-quarters of SMEs don't use Cloud Computing and around half of those said they didn't know what the term meant. So, while there are lots of benefits such as speed of implementation and increased flexibility, for many organisations it is apparent more education is needed, particularly when it comes to its cost. 

Traditionally, businesses have relied upon on-premise IT, which has required staying on top of capital expenditure and generally provided fixed costs. But the move towards Cloud services is resulting in more payment options, so it is important that organisations choose the most appropriate option for their business. A lot of the talk around Cloud at the moment is around the advantages of its pay as you go model.

This means organisations can pay for what they use and chop and change services as they go, providing greater flexibility. But what many organisations don’t realise is it can actually end up more costly than they think. For example, if IT keeps indulging in add-on services without really accounting for the extra expense, they could find costs escalating out of control. The ease of paying for some Cloud services is evident as IT is able to pay for them on credit cards, rather than wasting time going through the usual IT procurement channels. Furthermore, within this Cloud model, businesses have to share servers and bandwidth with other users. Therefore, if a competing application or service is seeing high demand at a particular time this could have a negative impact on the performance of other businesses’ services.  

Alternatively, businesses could consider a dedicated server environment as their ‘cloud’ solution. Organisations can run exactly what they want, when they want. By opting for this Cloud model, it is possible to have dedicated resources at a fixed monthly cost, which can work out much more cost effective in the long term. Just like we’ve seen with mobile phones, monthly contracts seem to be the preferred, economically-viable option for many users and there is no reason for Cloud Computing to not go down a similar path. All that’s needed is greater awareness of the choices available.

When it comes to the cloud, organisations need to have a reality check. They should be asking themselves how frequently their business and IT requirements are going to change. Once this is determined, they need to carefully evaluate and decide which payment option is really the best for them.

Having awareness of the different prices and models available for the Cloud, rather than just defaulting with pay as you go, will mean businesses are less likely to receive unexpected costly bills. After all, you wouldn’t go out and buy a new mobile phone if you hadn’t looked at many of the tariffs available. At a time of tightened budgets, IT and business heads need to work together and think about which Cloud will push their organisation to new heights.  Read more