Cloud computing has been championed for its cost-saving potential, with many smaller firms able to take advantage of the system to level the playing field with larger competitors. However, the market also has potential pitfalls and additional costs that firms must be aware of if they’re not to endure a nasty surprise.
For many businesses, cloud computing can save a lot of money. Instead of having to buy physical servers and data centre equipment, companies can simply tap into an existing virtual space to store data and access solutions. Aside from the obvious savings, maintenance fees and IT staffing costs can also be reduced, saving a lot on infrastructure expenses. However, there are several cloud pricing models available, and many cloud providers are also offering competitive discounts.
One of the better options for firms is to use an on-demand feature that allows the purchase of services as and when they’re required. Alternatively, reserved instances are available. These work much like other invoices, where a company forecasts the number of services and data centre usage they’ll require and pays upfront, normally for a quarter or a year. There’s also a spot pricing model where cloud providers sell off any unutilised processing power, often at a discount.
Forrester Principal Analyst Dave Bartoletti said that Google offers one of the purest cloud pricing models. “With Google, you really just pay for what you use, and you get more discounts the more you use,” he said, adding that Microsoft and Amazon have a “slightly different approach.”
However, although these firms are keen to undercut one another and therefore offer businesses great savings, once initial running costs are paid, unforeseen expenses can arise. For example, companies moving to the cloud might run a little test scenario, opening accounts, trying out billing options and building new solutions. Although each cost looks cheap, it soon adds up. It’s also wise to consider that as time goes on, data storage costs will increase due to the larger amounts of information being held.
541 Research Director of Research Owen Rogers explained: “It’s a bit of a cash cow because you’re only going to use more and more of it as time goes on – it’s a lovely, constantly- reoccurring revenue, which also has a degree of locking-in because it’s not easy to get out of.”
Cloud computing it unlikely to disappear, and the many features will benefit companies for years to come. However, particularly for smaller firms, understanding the ongoing management costs and the likelihood of growing expenses is essential to keep budgets under control.
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