When calculating the total cost of ownership, organizations often forget to include ongoing cloud maintenance costs. Because cloud storage is an intangible product, it can be easy to forget to include, but it is essential to remember it as a significant expense. Additionally, companies are globally overpaying for cloud services. According to Business Insider, companies are overpaying an average of 36% more for cloud services than they should be. And more than 80% of in-house data centers have more server capacity than is necessary - meaning that most companies are overpaying for storage that they are not fully utilizing. The primary reason for this misused spending is that most businesses do not consider all of their options when paying for cloud management services, but many options can lower your costs and better fit your needs.
Understand Your Baseline Cloud Computing Costs
It is crucial to understand what you're paying for any significant expense, and the easiest way to manage costs is through visibility and oversight. If you are switching from on-premises to cloud computing, determine the payment method that will work best for your organization’s budget, whether that means paying monthly, quarterly, or annually. Costs vary with your method of payment, so you should understand the cost difference between various options. For example:
- Paying month-to-month: It is less costly for some providers to pay month-to-month, but this may not be the best option depending on the services that you are utilizing.
- Duration of Use: Establish how long you need to use certain services, decide the range of time that best works for you, and discuss your provider's associated cost. Longer term agreements may be more cost effective in the end.
- Usage: It is important to acknowledge that your usage may fluctuate month to month. As a result, costs will too - don't be caught off guard if there are changes but take the time to understand these variations and monitor them closely.
An excellent tool for fluctuating costs is to set an alert that notifies you of any monthly charges, and you can set a stop to certain payments if they grow beyond your budget so that you can reassess any unexpected costs. Not only will these alerts help you budget for cloud management, but it will make relevant departments aware of the costs of these services and allow for discussion of how to stabilize and lower future spending. Many cloud providers offer cost calculators so that you may easily factor these prices into your TCO. Some options to consider are the AWS TCO Calculator, which provides users with simple and easy to understand answers, or the NetApp Azure Calculator, providing quick estimates using both basic and advanced input options.
Another great practice is to perform regular service audits to keep your budget in check. Regular audits ensure that your organization will be aware of all payments made and make sure that you're only paying for what you are using. This will allow you to assess what specific features you utilize most so that you can substitute or terminate any services that are no longer necessary in the future.
Additionally, some providers have the option of automating their hours of service. Cloud services typically run 24/7, but not all companies require constant usage. Setting a start/stop feature during on and off-hours can significantly reduce expenditures and only pay for services while your employees are actively using them.
There are various budgeting methods for cloud management systems, but one of the easiest is to shop around when determining your provider and the services you require. Many organizations automatically partner up with cloud giants like AWS, Azure, and Google Cloud, but they may not be the best fit for your company. CostStorage.com is a useful tool for comparing cloud storage prices between up to six providers.
Besides shopping between providers, your organization should decide which cloud service model best suits your needs. Two of the most common models are SaaS and PaaS, each carrying its own costs and benefits.
- SaaS is the most popular cloud computing service but it tends to cost more on a per-user basis. However, not investing in any infrastructure or on-site management can significantly lower IT administration overhead costs.
- On the other hand, PaaS may be more beneficial for developers looking to avoid spending extra on needed platforms to complete projects. This allows your cloud solution to be scalable and cost-effective.
With the platform you choose, you can also decide between the size of the machinery you use for cloud services. Determining the correct size virtual machine for your organization and uses can help reduce costs as long as it is the best fit for your needs. Determine this by analyzing the recommended system requirements and growth estimates of your project. Specific cost-reducing machines may include containers and serverless architectures, which significantly reduce the virtual machine (VM) footprint of an enterprise cloud architecture. Additionally, these may make better use of VM resources while cutting down on licensing and software expenses. Overall, it is key to focus on budgeting during the design process to choose the most economic formatting for your organization.
It would also help if you considered utilizing a nearshore cloud expert for cost-effective options. While many organizations choose to work with offshore experts, there is growing popularity of nearshore experts that can offer superior service at a reduced cost to you. In addition to lowered costs, one of the most significant benefits of a nearshore expert is talent proximity. By utilizing local intelligence, you will be able to work with experts aligned with your time zone and familiar with your culture's business practices and policies.
Nearshore experts also have the advantage of having access to agile teams and cost-effective resources, alleviating some of the work from your organization’s teams and supplies. Because these experts are equipped with cloud specialization, you will also receive a lowered and more consistent budget. With expertise comes experience, and these experts will be able to provide you with labor estimates and quotes more accurately than a company unfamiliar with regular cloud mitigations.
Cost of Transition
Once you decide the best course of action for your organization to take regarding cloud management, it's time to make the switch. Having understood the baseline costs, you should also recognize expenses associated with the migration to cloud computing, such as labor and maintenance costs. There will be a transition in roles from those who managed your previous system in terms of labor, so it's crucial to account for the onboarding expenses of training current or new employees to manage your new system. For maintenance, this includes consistent updating and managing of your cloud system in addition to preparing for troubleshooting and help desk support to ensure a smooth transition. Utilize the TCO calculator available from your provider and take advantage of experts in your area to budget for these additional costs.
Overall, the best way to budget for cloud management is to consider your options and plan carefully. Do your research on the choice of providers and services that best cater to your organization’s needs and create a designated budget for cloud resources. It is vital to be aware that expenses could fluctuate over time with maintenance, upgrades, and growing service needs. You should also acknowledge the possibility of your needs changing and prepare to reevaluate your budgeting plan accordingly. Using this information, determine which provider, service model, technology, and payment plan best suit your budget and needs.
Learn More About Intertec's Cloud Solutions:
Intertec’s teams have hands-on experience in developing, migrating, and managing applications on leading cloud platforms. In addition to offering design and development support, we provide a complete range of application testing, deployment, and ongoing support services which includes the management of your physical infrastructure and offering you outsourced DevOps teams. Click here to learn more. Rather have a one-to one consultation? Schedule a meeting with us here!