What is the real cost of SME cloud computing?

At a cloud computing conference held in New York in June this year, some speakers pointed out that cloud computing had already passed the hype stage and had already begun to offer tangible benefits to companies. It also improves flexibility and agility.

But migrating to the cloud also means an increase in the cost of enterprise IT operations, some of which may be unexpected, according to some enterprise IT managers who have deployed cloud services or are considering deploying cloud services.

While these unforeseen costs do not necessarily hinder the company from acquiring the true business value of cloud computing initiatives, it does affect the overall cost-benefit analysis of cloud services.

Mobile and data storage

Businesses will need to spend tens of thousands of of billions of dollars a year migrating large amounts of data to public cloud services and storing data in public cloud services for a long time. Many companies may not be aware of the huge costs involved in the process.

"A data migration costs $ thousands of trillion". Hernanalvarez, head of it and operations at Whitepages, said Whitepages is headquartered in Seattle, which provides online contact information for more than 200 million individual users and 15 million corporate users.

"Most of the unexpected costs come from the network bandwidth of migrating data--the cloud provider may charge the cost of uploading and downloading and other related costs, including internal human capital." People may think that using cloud computing has no labor costs, but when you need to deal with large amounts of work, managing a large number of clouds can be quite complex, like managing a large number of servers. "Alvarez said. Another big cost is the long-term storage of data in the cloud. "Imagine the growth rate of your business data, and the cost of data may be higher over the next three years." "Alvarez said. "As long as you store data in the cloud, you have to pay for it every month." ”

"If you don't fully understand the cloud model, using cloud computing can have many unexpected costs." "he said. "But if you take a closer look at CPU, capacity, and storage requirements and related charts, over time you can have a good understanding of the process costs and, if you understand it, make your business more cost effective." ”

Whitepages company explores the use of cloud services for data backup, but after a broad assessment of eight vendors, the company considered it too expensive, the cost of data backup within the enterprise three to four times times, Alvarez said. So the company decided to store the data for a long time in the private cloud within the enterprise.

However, in general, the purpose of using public cloud services is to eliminate the deployment and maintenance of related applications within the enterprise. The company has been using public cloud services for more than two years, and now uses 11 different cloud-based application services, including Salesforce.com, SuccessFactors, ADP, WebEx, and Yammer cloud services providers. This helps them save a lot of unexpected costs, Alvarez said.

Consolidating applications from multiple vendors

The Pacific Rim Construction Products Company, located in California State, Rancho Cordova, a building product provider, wants to deploy cloud computing and evaluate several cloud service providers. But the company still restricts its use of cloud services, the company's chief information Officer Mikeo ' Dell said.

One reason is the difficulty of consolidating application software from different cloud service providers, which, in fact, would drive up the cost of cloud computing for the company if it were to integrate itself.

For example, the company uses Microsoft's Exchange e-mail system and Cisco's unified communications system for voice mail, and wants to use two of its suppliers ' applications to cloud services. "At least our last attempt to integrate the two apps into cloud services failed," he said. "O ' Dell said.

cannot be consolidated, users will not be able to take advantage of the features they now employ, such as automatically deleting voicemail messages on their phones when they receive information via e-mail.

The same consolidation challenges exist in other applications, and are more complex, such as ERP systems, O ' Dell said.

"For the SAP side, if we're going to adopt cloud services, we're going to give up the functionality of SAP or spend more money on consolidation." "O ' Dell said. "Perhaps this is just an immature technology, but the integration has its hidden costs." If you do not realize this clearly, the final economic benefits will not make you happy. ”

Software Testing

Not every application is suitable for the cloud and can lead to an increase in cloud computing user costs.

"Our suppliers have charged us with applications that have not been tested and run in the cloud before." "Billthirsk, Vice president and chief information officer at the Maria Church College in New York," said Pokipushi.

The college was about to migrate a large ERP system to a private cloud, using servers that had not yet been approved by the vendor. The college uses its private cloud to provide online services to students, teachers and research institutions: online registration and billing inquiries.

Thirsk said: "In short, the college ERP system migration 99% of the work has been very smooth, through the adoption of cloud configuration, we have saved a total of hundreds of thousands of dollars." However, to stabilize the system in cloud computing, supporting 900 virtual servers poses great challenges for us. ”

"We have to increase the cost to address the compatibility of different versions of operating systems and databases," Thirsk said. We spent a lot of time and effort studying how to modify the code. ”

Performance issues

Some applications may not be ready to take full advantage of cloud computing, which may eventually lead to higher prices.

"In our case, we assume that ERP is mature enough to be fully compatible with all the processors, memory devices, caches, storage devices, and network connections that cloud computing has configured." "Thirsk said.

But that is not the case, and the college's application development and system programmers have invested a lot of time in modifying software code. So far, we've seen a 30% increase in performance, but it's not free. Thirsk said.

Rent and Utilities

Migrating to cloud computing often makes IT managers less likely to spend more on budget. These costs may not be apparent when it companies initially adopt an internal hosting system.

"Of course, part of the cost is indeed related to the adoption of an internal hosting system, but it does not all cover all the related costs, such as electricity and rent, which are beyond my budget." "Chief information Officer Jonathanalboum of the Food and Nutrition Service of the United States of Agriculture (FNS) said. With the cloud, these basic infrastructure costs are included in the total cost, so a significant portion of the costs we are paying now are not covered in our budget. ”

FNS has been using Amazon's cloud service application since the summer of 2010 to support the agency's Supplemental Nutrition Assistance Program (SNAP), known as food stamps.

The plan, known as the snap retailer Positioning System, provides online maps to help people who need help quickly find retailers who receive food stamps. FNS Select this cloud application because it can quickly start programs and be highly scalable.

Alboum says he needs to make sure he has the money he has at his disposal to pay for the new monthly fee. "In general, cloud services can be controlled to reduce government costs in a comprehensive way." "he said.

This is not a problem in which the cost of using cloud services is lower than the cost of hosting the internal hosting. I think it's a matter of cash flow. Alboum said. "If I need to pay the relevant services on a monthly basis, I will need to have a discretionary budget to cover these costs." In the traditional mode, I can make a one-time budget for the hardware and related services I need to buy. The new model may be relatively inexpensive, but it requires a way to change the budget. ”

Pilot programme and installation costs

It is important to be aware that the pilot programme of cloud services can quickly translate into cost.

"Many vendors offer a variety of free experience services, but they will automatically turn them into paid services later." "said Frankridder, vice president of Gartner Research. But the time frame for these free experiences is very short.

Companies should negotiate with suppliers on minimum discounts and all other contract terms prior to any experience project, Ridder said.

The cost of the cloud

Installation costs are another area that you must pay attention to. "Customers are often attracted by the price of cheap services, but they do not see the high cost of switching, the cost of consolidation, and so on." "Ridder said. such as email services, these costs can easily rise from 10 dollars to 30 dollars, he explained.

Cloud computing is still relatively new technology, with experts saying that companies assess the costs and potential benefits that cloud services need to consider. In the April 2011 Cloud Services Report, Gartner noted that IT managers "should take decisive steps to manage the inherent risks and contingencies in the cloud services revolution". ”

Cloud services are "immature, full of potential dangers." "The discontinuity of cloud computing presents exciting opportunities and expensive challenges," says Ridder. Businesses need to understand these changes and update their cloud procurement strategies and contracts in a timely manner in order to reduce risk.

The life cycle of the procurement project for cloud services includes four key elements: sourcing strategy, supplier selection, contracting, management and maintenance, he said.

The lifecycle is a key area for planning and management, whether the enterprise delivers IT services through internal or external resources. "Ridder said.

(Responsible editor: admin)