Cloud Computing

ISG Insights Cloud Comparison Index™ - Avoiding Unnecessary Public Cloud Costs

What is Happening?

As explained in the upcoming Cloud Comparison Index™ (CCI) report for ISG Insights subscription research and advisory clients, enterprise IT organizations are not always aware and vigilant about factors that can yield unnecessarily inflated costs for using public cloud.

This latest CCI report compares the costs of a Web Content Management workload running in-house against projected costs for running the same workload in three public cloud offerings. This report illustrates: 1) the relationship between usage and cost; 2) the impact of in-house efficiency; and 3) the potential unnecessary costs due cloud provider pre-defined configurations.

Our findings indicate that the percentage of time that the resources are provisioned continues to play a dominant role in determining potential costs for using a public cloud. For example, of the 81 total scenarios we analyzed across three sizes of Web Content Management workload, three percentages of time the resources were provisioned, and three levels of in-house IT efficiency, 43 were more cost effective to run in the public cloud, while 38 were more cost-effective to run on in-house infrastructure.

IT efficiency also plays an important role in determining the relative how cost-effectiveness of public cloud. For example, in the 27 scenarios for a sub-optimized IT organization, 20 were more cost-effective to run in a public cloud.

Why is it Happening?

The typical enterprise IT organization operates as a cost center and is cost-constrained even as demands for new functionality and solutions continues to increase. Paradoxically, while public cloud is typically perceived as a path to reduced costs for IT infrastructure, IT organizations can find it challenging to demonstrate such savings due to:

  • More than infrastructure. The costs for public cloud include components that are beyond the costs typically associated directly with compute resources.
  • Beyond IT. There are costs in cloud-based offerings that are likely not part of the conventional thinking within IT organizations.
  • Usage-driven. The costs of using on-demand public cloud infrastructure are heavily influenced by the amount of time each month resources are allocated to a workload.
  • Projected vs Actual. The configuration of public cloud resources used for a production workload will likely deviate from the projected configuration due to factors such as variations in infrastructure performance.
  • Software costs. Software charges for running a workload on a public cloud infrastructure will likely vary from software charges running the workload in-house.
  • Unnecessary costs. Costs for any public cloud may be unnecessarily increased due to the cloud provider’s pre-defined configuration increments.

Net Impact

As we have advised clients many times previously, and as is illustrated in this report using current cost data, unnecessary costs result when the infrastructure components of the required configuration do not closely align with those in a pre-defined configuration.

The CCI report summarizes a series of recommendations from our research and from our work with CIOs to help clients continue to accelerate the cloud transformation, including the following:

  • Consider more than costs. Cost is only one factor to consider when evaluating public cloud; agility and responsiveness are increasingly important drivers for cloud adoption.
  • Be wary of estimates. Conducting a proof of concept before deploying the workload into production can help to validate costs estimates.
  • Minimize resource provision time. Terminating virtual images and ensuring workloads can dynamically request and release resources will help to manage costs.
  • Use cloud brokerage. Using a cloud brokerage or cloud analytics platform can help to normalize cost estimates and reduce time and effort required.
  • Minimize excessive configurations. Try alternative configuration requirements (e.g., reduce amount of local storage requested) to minimize excessive costs for unnecessary resources.

Looking for more insights and guidance? The new report contains much more detail than we are able to share here. Clients of ISG Insights may access the report by simply logging in and downloading a PDF of the report. Non-clients may obtain information about becoming clients by clicking here.

Associated Insights

ISG Insights Cloud Comparison Index – Infrastructure Cost Analysis Methodology and Considerations

ISG Insights Cloud Comparison Index - December 2016

Using Public Cloud? What You Don’t Know May Be Costing You

About the author

Charlie Burns researches the pragmatics of emerging technologies and trends such as cloud infrastructure offerings, converged and hyperconverged platforms, modernization of IT infrastructures and organizations to enable digital business transformation. He recently provided an objective review and recommendations for go-to-market messaging for a major international provider of private cloud offerings and helped a large international provider of IT services and cloud offerings identify market trends and determine new offerings and market positioning. Prior to ISG, Charlie worked for IBM for 26 years, then for Gartner and Giga Information Group, eventually becoming Gartner’s first Client Director and leading a worldwide sales team supporting the world’s largest IT provider to substantial sales growth. Charlie joined Saugatuck Technology in early 2005 as a Research VP to focus on emerging technologies including virtualization, SaaS and cloud offerings.