Cloud Computing By The Numbers: Understanding The True Cost Of Cloud Services

With VMworld in full swing this week and Microsoft’s cloud-centered Windows Server 2012 launching soon after, your options for technology to build and deploy enterprise clouds is about to expand significantly. Meanwhile, Amazon continues to drop prices faster than your local Wal-Mart, introduce new cloud compute and storage services almost monthly, and has already gobbled up a trillion objects in S3. Is it time to start moving your workloads to the cloud?

Forrsights surveys show that companies are indeed moving to the cloud, primarily for speed and lower costs — but are the savings really there? The answer might not be obvious. Are you heavily virtualized already? Have you moved up the virtualization value chain beyond server consolidation to using virtual machines for better disaster recovery, less downtime, automated configuration management, and the like? Do you have a virtual-first policy and actively share resources across business units? If you run a mature virtual environment today, your internal infrastructure costs might already be competitive with the cloud.

To understand whether and when the cloud makes sense, you need to start with an honest assessment of your current infrastructure costs. Then you have to understand how the cloud’s variable pay-per-use cost savings vary depending on whether or not your applications can take advantage of them. Armed with this baseline knowledge, you can make a fact-based comparison between what you pay now and what you can expect to pay for a particular mix of cloud compute and storage services.

The Forrester Cloud Computing Playbook guides you through this process, with a structured set of tightly related research reports organized into four key stages: Discover, Plan, Act, and Optimize. Our objective approach to building your cloud business case is found in the Understand The True Cost Of Cloud Services report, part of the budgeting and planning chapter. Read this report to make sense of cloud pricing and to create your own internal cost model first based on Forrester’s proven Relative Cost of Operations approach.

We encourage both CIOs and I&O pros to not only read the report, but download the accompanying cost modeling spreadsheet tool. Learn why pay-per-use cloud services are indeed cheaper for most types of workloads. More important, learn how cost-efficient your existing IT operations are. Simplify and accelerate your cloud cost comparisons (which can be confusing and complex if you rely solely on cloud vendor TCO tools) with our straightforward and easily achievable process.

And please let us know what you discover. Andrew and I are eager to hear from Forrester customers who have downloaded the cost model and customized it for themselves. Are your virtual server ratios in line with our estimates? What’s your typical annual server cost? How do you allocate storage costs among business units? Has the model clarified your approach to cloud price comparisons?

For a detailed walk-through of both the report and the model, join me and my co-author Andrew Reichman for our Webinar:  “Will You Save Money In The Cloud?” on September 20th. We’re eager to hear from you.

Comments

When looking at cost, it

When looking at cost, it seems like actual (as opposed to hypothetical) efficiency gets lost. Cloud users need to genuinely maximize their cloud dollars -- effective cost visibility and control is essential. One (of many possible) example springs to mind: projected AWS savings are illusory if a customer purchases oversized EC2 instances or extensively purchases through On-Demand pricing. The same is true for all other AWS and cloud services.

Users need to have visibility into their deployment. They need to carefully analyze where and why they incur charges. This can be done manually or through the automated CloudCheckr tool. Look at it at www.cloudcheckr.com and judge for yourself.