Organizations of all sizes are flocking to the cloud in the hopes of reducing costs, enhancing scalability, and improving disaster resilience through round-the-clock system backup. In fact, Gartner predicts that by 2020, the global spending for the cloud will surpass $1 trillion, driven by cloud-first strategies of companies.
However, a recent study by cloud benchmarking firm Cloud Spectator revealed that price changes are becoming increasingly common in the Infrastructure as a Service (IaaS) market — with one vendor even changing its prices 50 times since 2006 — making it possible for companies to overspend due to higher annual operating costs.
Citing Cloud Spectator’s 2017 Top IaaS Cloud Services Price Comparison report, IPC, an IT solutions provider and digital strategy consultant, reminds businesses that providers compute cloud cost differently based on certain factors so it is crucial for companies to review their contracts regularly and assess whether they are getting the best value for their subscriptions.
“It’s very easy to assume that the price of IaaS offerings are based simply on the quantity of computing resources but in reality, there are other factors that come into play such as performance levels, the availability of those resources as defined in the service level agreement (SLA), end user support, ease of use, and other critical, yet easily overlooked considerations. There are many differences between various cloud offerings and their value propositions, so how they are priced also varies,” says Niño Valmonte, IPC director for marketing and digital tnnovation.
The same report revealed that there are huge differences in pricing across different providers, despite offering what seems to be the same Cloud services. One key takeaway from the report is that Cloudsigma, IPC’s cloud infrastructure partner, offers more value for money than Amazon Web Services (AWS) & other big cloud providers, especially for large instances due to its unique pricing model.
Some considerations that Cloud Spectator noted about Cloudsigma’s services are its monthly subscription prices, the annual 10% and 25% 3-year discounts, and the affordable burst VM pricing calculations.
IPC explains two factors that have major effects on cloud pricing, according to the report.
The report revealed that the highest priced providers running their Virtual Machines (VMs) with Linux were up to 16.5x more expensive than the lowest priced providers; while the highest priced providers on Windows were up to 6.3x more expensive than the lowest priced providers.
“Compatibility is vital for cloud backup. That’s why we offer a service that can be easily integrated to a company’s system, regardless of the software the company is using. This helps reduce the total cost since businesses don’t need to invest in conversion software,” said Robert Jenkins, CEO and Co-founder of Cloudsigma.
Aside from the OS used, location also affects the price of cloud offerings, specifically because of the geographical distance and additional costs operating in a certain area entails. “Some cloud services are priced higher due to more expensive labor costs, as well as higher rates for electricity, cooling, and real estate,” added Jenkins. Partnering with a locally based company addresses potential data sovereignty and network latency issues.
IPC explains that the bottom line is for companies to conduct a thorough assessment of its own requirements so it can properly evaluate which cloud offering offers the best value for money.
To manage the costs related to compatibility, IPC recommends tapping a provider with systems that are compatible to any software. Its own CloudServers solution powered by international cloud partner Cloudsigma is one such service, being capable of running powered any x86-based operating system, including the most common ones like Windows, Linux, and UNIX.
“In light of the recently published report, it’s imperative for companies to diligently and regularly review their cloud subscriptions. To avoid overspending, companies need to strike the balance between performance and cost. One must consider the cloud service’s level of compatibility to the existing infrastructure, as this can become a main factor in cutting costs while sacrificing none of the value,” said Valmonte.