For years, cost has been commonly cited as one of the key benefits of cloud – there’s no capex investment, you pay for what you use and it’s simple to scale up if you need to.
However, there are signs we’re at the beginning of a backlash against this idea.
Take DropBox, for example, who recently made the move away from Amazon Web Services (AWS) and invest in their own private cloud. Marketing software startup Moz did exactly the same thing a few years ago when they realised that AWS cloud was far too costly for their margins, claiming that they were spending “$6.2 million at Amazon Web Services, and a mere $2.8 million on own data centres”.
(Read our free guide about cloud hosting, written specifically for SMEs and startups.)
What’s more, subscription-based pricing puts companies at risk of price increases that can significantly affect total cost of ownership. A perfect example is Microsoft’s recent Azure price hike, which threw a spanner in the works earlier this year by increasing cloud prices by 22%. So, if your business plan is built around the idea that cloud infrastructure will only cost you X per month, you could find yourself in an unfavourable (and expensive) situation in the future.
Below, we explore the factors that may affect the cost of cloud server hosting and IaaS for your small business, and how you can ensure you get the best possible deal.
1. Pay-as-you-go vs reservation
A lot of fuss is made about the scalability of cloud, but do your research – it may be cheaper not to use a true pay-as-you-go option, where consumption is calculated hourly, but opt for a reservation-based pricing model with fixed monthly fees instead. While it may be nice to think you never need pay for more resources than you use, many businesses have sufficiently predictable consumption patterns for it not really to be an issue and can save money on a less flexible plan. (See more information on TeleData’s options here.)
2. Need for internal IT resource
Another commonly cited benefit of cloud is that it allows you to refocus your internal IT team on things that actually create value, rather than spending their time setting up, configuring and maintaining servers. In reality, however, a small but growing handful of cloud users have bought the dream only to find they still need in-house experts to manage their cloud effectively. So, if you’re cost-conscious, it makes sense to choose a cloud hosting service that’s easy to use and manage, and won’t force you to invest in additional skills and manpower. And on that note, if you feel that you’ll need some help and guidance in getting the most out of your cloud hosting platform, take the time to find out about the level and quality of support that your provider offers (whether that’s paid or included).
3. Cloud hosting support
Many cloud providers charge a lot for support, so it’s possible to be drawn in by an attractive service fee only to get stung a little later down the line when you need to pick up the phone. Some small businesses may even feel the need to bring in a third-party support company to help them run their cloud, which will also have implications from a TCO and ROI point of view. With that in mind, be sure to weigh up the cost of support against how much you expect to use it before choosing a cloud provider for your business.