Cloud Pricing: The Transparency Trend


Microsoft recently released its Windows Azure Pricing Calculator, adding to the growing list of simple, web-based pricing calculators for cloud platforms. Amazon Web Services, a public cloud pioneer, has had a pricing calculator in place since 2009. Of course, in true cloud fashion, it’s still in beta. Cloud hosting providers have also embraced the “transparency” trend, with Rackspace, GoGrid and Navisite all displaying public pricing on their web sites. Some have had this level of cost visibility in place for years; others are just now going public with their cloud pricing.

But it’s clear – the transparency trend is growing and it’s growing quickly.

The good news: IT leaders are gaining unprecedented visibility into how much it costs to run key parts of their infrastructure and applications in the cloud due to this trend. The bad news: cloud calculators don’t represent the real cost to operate in the cloud, and many IT leaders are finding this out the hard way.

It’s analogous to buying a car online. The base price looks extremely attractive, but when all the options, tax, title and license are added to the base price, the cost may be as much as 50% more. The same can be said for enterprise cloud. When you add in everything else you’ll need for a true enterprise solution – training your staff on how to re-factor apps for the cloud, re-working your authentication framework, and building in business continuity and disaster recovery solutions – the cost may actually be more than what you’re spending today.

All of this translates into cost, cost that is incremental to what you are spending at the cloud provider. For example, let’s say you’ve made a call to move an important line of business application from your data center into Microsoft’s Azure Platform in order to speed up your release cycle. While the Azure Pricing Calculator indicates it will cost “X” per month to run this app, you’re still on the hook to re-factor the app to take advantage of the scalability and redundancy of the Azure Programming Model, figure out how you’re going to authenticate to it since the application is no longer sitting behind your firewall, and, if you’re not 100% confident in Microsoft’s service levels, make sure that you have a very recent copy of the data somewhere other than its data centers.

Usage-based cloud pricing can be very attractive, and warrants serious consideration for enterprise-grade infrastructure and applications. However, it’s also very important to remember that cloud platform and infrastructure providers are in the business of growing revenue via these emerging services and are very adept at marketing and selling these platforms to IT leaders. One way they do this is by being transparent with their pricing using polished, easy-to-use web-based calculators; however, these calculators won’t give you a true “apples to apples” comparison. That’s why the pricing usually looks so attractive.

Key message: just because you’ve chosen to process and store your data in the cloud, don’t forget about the other costs inherent in your IT environment: your staff’s skills need to be updated, your authentication framework needs to be rock solid, and you need to be confident your business continuity and disaster recovery requirements are met. Cloud pricing calculators won’t show you these costs (yet).

TPI’s seasoned transformational sourcing experts can help your company define the right strategy through our experience, objective advice, industry knowledge and depth in all aspects of information technology and business process services. To learn more about how cloud computing can benefit your organization, or to find out more about TPI’s cloud computing strategy offerings, contact Stanton Jones.

About the author

Stanton helps enterprise clients maximize the value of their digital investments. He is also lead analyst for the quarterly ISG Index Insider, helping service providers understand how disruptive technologies are transforming the IT services market. Stanton is a recognized expert in emerging technologies and services, and has been quoted in CIO, Forbes and The Times of London.