New Year – New Cloud Budget

Posted on December 17, 2019 Cloud

With all the hype about the benefits of cloud computing and storage, it’s not surprising that many companies are jumping in before completing their due diligence research. Unfortunately, too many of them take on big cloud contracts and then are shocked at the costs they’ve incurred when the first bill arrives. Fortunately, your company can gain all the benefits of cloud computing and storage without also assuming any big-box price tags when they use NETdepot’s cloud services, including their 3S cloud object storage service.

Why Most Cloud Storage Costs are Sky High

There are many great reasons for accessing cloud services:

  • they reduce hard- and software investments;
  • they flex as demands ebb and flow;
  • they offer agility that can’t be matched by most on-prem systems, and
  • they’re (supposed to be) less expensive than building your own internal computing/processing system.

If these attributes are met, then customers can count on receiving excellent services at a reasonable price.

Big Three: Big Expenses

However, many customers of the ‘Big Three’ cloud services providers (Amazon Web Services [AWS], Google Cloud, and Microsoft Azure) are experiencing sticker shock only after they’ve signed on to significant contracts. And they’re not at all happy about it.

On the one hand, stiff competition between the Big Three has kept their on-boarding costs competitive. Each is careful to price their base packages within a reasonable range of the others, and all three offer (with some distinctions) similar versions of comparable services. On the other hand, though, it’s only after the contract is signed and users are making their migration that the real cost of using the big-box services becomes apparent.

Too often, customers have been dismayed at how the actual cost of their service differs significantly from the estimated price they thought they were going to pay. Amazon Web Services (AWS) offers a good example. In a 2019 study by Dao Research (sponsored by Oracle), AWS customers were frank about their expectations and realities after migrating to the AWS cloud. They were unnerved by the complexity of the pricing strategy and genuinely flummoxed when their monthly bills began escalating.

  • Most signed on with the web giant because of advertising that promised a ‘pay-as-you-use’ plan. The ability to scale up when necessary and down as needed suggested an opportunity to reduce costs by using fewer resources. However, their reality was that they needed significantly more compute and storage capacities to match their legacy on-prem systems, so they spent more than they budgeted just to achieve what they already had.
  • Many were also confused by the service providers’ pricing system. AWS uses a complex pricing strategy that doesn’t necessarily include all aspects of the application development process. For example, users found they had to order additional resources because what they thought they had purchased didn’t meet their needs. Not only that but the received bills weren’t sufficiently detailed to support multi-client environments, forcing businesses to add the cost of manual oversight to sort out and properly bill their own customers.
  • Another unexpected cost was incurred by having to manually decommission resources that were not necessary but had been migrated within the larger migration process — having to pay for that extra human oversight added unexpected costs to the overall cloud computing bill.
  • Not least distressing to many customers was the high cost of AWS support. Good support is invaluable, but AWS prices their support based on the underlying value of the computing services; as that rises, so does the expense for support services.

As an example, in 2018, Pinterest was compelled to spend and extra $20M over their $170M budget to obtain the excess capacity it needed over the holiday season, and the price for those additional services was higher than their contract price, to boot.

How to Set Your Cloud Budget

Lack of transparency, lack of knowledge, and lack of research all contribute to the confusion around the cost of accessing cloud services. Too many companies go into the process without a strategy and pay the price for that gap. However, a comprehensive assessment can help your company avoid accruing excessive and unexpected costs in its cloud services purchases. Consider these steps as you plan your cloud services contract and budget:

  1. Assess your entire IT environment to be sure you know which departments will or should be consuming the most cloud resources. In many cases, end-users will go over contract limits without knowing it, which increases those costs without appropriate authorization. Tracking potential cloud usage every day will help you limit those extra expenditures. It will also help you make better decisions for future cloud service agreements.
  2. Bring your whole organization into the cloud acquisition process. IT decisions – especially cloud IT and service decisions – should be made with inputs of the entire team, from the C-Suite and finance department to remote end-users. It’s only after you’re fully informed about how your enterprise will use the cloud resource that you can estimate both the volume and cost of the services you need.
  3. The assessment should also reveal where purchased assets are unused (get rid of those if you don’t truly need them), or are obsolete (programming gets old, too. Purge what you can). Many companies keep all their data from the beginning of the enterprise and then pay to store those unused, aged assets. In most cases, it’s safe to get rid of a significant proportion of obsolete information, which also reduces your data storage costs.
  4. Recognize that the cloud processes things differently. Simply migrating existing apps to the cloud isn’t often the best use of that investment. Instead, retune your applications, processes, and practices to maximize the values that the cloud can bring, and that which you can’t create in your on-prem systems.
  5. Shop around. Not all cloud providers are expensive, and many can offer the same service as the Big Three at a much lower price. Plus, smaller retailers are often more transparent in their pricing (because that’s just good business), so customers don’t get surprised with the bill comes in.

Avoid the Big Three: NETdepot Offers Big Service For a Small Price

Data storage can be a big ticket item with the Big Three providers, but NETdepot provides comparable 3S data storage service for up to 80% less. NETdepot also offers backup and disaster recovery services, too, including support for reducing damages caused by malware such as ransomware. These services are and will remain critical for all businesses as the rate of cybercrimes, both internal and external, continues to rise.

  • Ransomware continues to threaten all businesses, but small businesses are the preferred targets for most ransomware attacks, accounting for 71% of all corporate victims.
  • The threat posed by external criminal activity is also growing as more end-user devices are added to network systems.
  • And internal threats are also multiplying. Accenture’s 2019 Cost of Cybercrime study reveals that employees cause more damage than hackers because of intentional activities (exploiting passwords, etc.), but mostly because of inadvertent errors (inappropriately sharing data, for example).

Today’s global marketplace is highly competitive, and keeping costs down while maintaining a competitive edge is harder to accomplish than ever. The cloud offers exceptional values for those who are careful to choose the right provider to meet their needs and their budget. NETdepot can provide your organization with the flexible cloud computing and storage services you need at a price you can afford. Call today. at 1-844-25-CLOUD to see how they can service you today.

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