- Forrester Councils
- Councils Overview
- log in
Posted by James Staten on March 25, 2014
Usually when a product or service shouts about its low pricing, that’s a bad thing but in Google’s case there’s unique value in its Sustained-use Discounts program which just might make it worth your consideration.
Google isn't a leader in the cloud platform space today, despite a fairly early move in platform as a service (PaaS) with Google App Engine and a good first effort in Infrastructure as a Service (IaaS) with Google Compute Engine in 2013. But its capabilities are legitimate, if not remarkable. When you are good enough, and potentially on your way to providing more sustainable unique value, it’s hard to get customer attention. So you can’t blame Google for using price and claims of performance to lure you in. But both price and performance are fleeting differentiators in the cloud platform market. Rarely is there a technological or operational advantage that can sustain these deltas for long. Even volume and capacity advantages are weak when competing against the likes of Microsoft, AWS and Salesforce. So I’m not too excited about the price cuts announced today. But there is real pain around the management of the public cloud bill.
Any client who uses our Cloud Playbook knows that the economic model of cloud platforms is fundamentally different from how we normally acquire technology and as such, platforms fit best with applications that can activate this economic model. But in doing so, you inevitably will have application components that don’t exhibit significant elasticity or transiency and thus just sit there racking up hourly costs unabated. And if you have a sizable portfolio of the right applications running on the cloud, they collectively will give you a sustained footprint - and thus sustained cost. Microsoft and AWS have approached this problem with unique discount programs but both burden you with forecasting your sustained consumption. AWS’ Reserved Instances plan makes you go so far as forecasting down to the type of instances you will use. And the discounts are predictably tied to how much you are willing to commit. Lengthen the time commitment, double-down on the committed capacity and you’ll get a bigger discount. These are great values when your business is predictable but, let’s be real - you’re business is moving in the opposite direction.
Predictability is going down. In the now Age of the Customer you have to change your Systems of Engagement faster not slower; you have to try new means of engagement not knowing ahead of time how successful they will be. And you have to do more analysis, more often on larger sets of data to really understand customer behavior and how to improve your value and relationship with clients. And isn’t the flexibility to try more things, more quickly and with more data the whole point of cloud services?
Google’s new Sustained-use Discounts returns that value to customers without the hassle of forecasting or predicting your forward cloud use. It’s a simple and highly compelling value - if you use more, you get a bigger discount, automatically. Hard not to like this value as you can now use more without worrying if you will be hit by the shock bill so many cloud pioneers have faced.
The automatic discount applies only to compute resource consumption on the platform, however (as does AWS Reserved Instances). While this is typically the biggest cost on the cloud bill, we can hope they will extend this program to storage, bandwidth and other services over time (like the Microsoft Azure commitment plans).
Google’s other announcements are either competitive catchup (support for RHEL and Windows Server 2008; big price cuts and usability improvements for BigQuery) or help bridge their PaaS and IaaS services. Managed virtual machines are a nice way to break out of the higher level abstraction of Google App Engine, when you want more configuration control. You can move a VM the other way too but this can be trickier.
Will these moves change Google’s fortunes in the cloud platform market? Not by themselves. Google still needs to expand the breadth of higher-level services it provides for developers and better linkages between the platform and the rest of the Google goodness. For that we’ll have to wait until summer and the Google I/O confernence.
Lead BT Transformation
Develop customer-obsessed strategies to drive growth »
Forrester's CX Index
Predict how actions to improve CX will affect revenue performance.
Measure the customer experiences that matter most »