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Cloud: Financial Challenge

In the new world of cloud computing operations mangers and CFO’s are waking up to a new set of challenges. Having committed to cloud computing and allowed innovation to flourish they are finding the draw backs. The variable cost of cloud usage and more importantly the value achieved with that usage!

To explain let’s consider the cost model of cloud. It comes in the form of two charges; a fixed price for simply spinning up a resource and a per unit usage cost based on the actual CPU ticks or data byte flow. So the challenges are simple:

  1. Do we have fixed price resources hanging around we are not using?
  2. Do we have badly designed solutions wasting resources hand-over-fist?

The cloud vendors learning from the mobile phone companies are offering up a pay-as-you go approach where you pay for what you consumed that month. With Microsoft Azure you can cap that spend but it does mean your solution stops working – not the ideal. The second offered approach is that of buying an agreed block of cloud resources with the ability to go over this should the need arise but with the bonus of a discount on the main purchase. This is a little more like the monthly contract mobile approach and requires management to not over spend. 

The problem with the manner in which we must pay for our cloud is it is still unpredictable. In the old world once I bought the computing asset, the fact it lay ideal in the corner did not really have a financial implication.  Treating a cloud resource this way does.

Managing the Challenge

Managing the financial challenge starts before the first cent of resource is consumed and pervades through out the life of application utilising cloud.

Design Where the story begins. Any application utilising cloud resources must be designed in such a way that maximises and limits the use of these costly resources. A ‘just-in-time’ approach to resource usage must be adopted. As with all software development it means experience and a full understanding of the vendors product is paramount in developing solutions that are not just technically excellent but financially prudent as well. Simply migrating a ‘working’ on premises solution to the cloud with out this consideration can be less than optimal and very costly in the long run.

Build in Management It is now very important that developers build in resource management tools or at least make provision for management of resources in the design of solutions. This means the resource usage can therefore be monitored as it is used rather than relying on the vendors bill.

Operational Management Strangely many operations departments feared the arrival of cloud as their control and power would be greatly diminished. In fact just the opposite is true their role in the monitoring, stopping and starting of cloud resources is key to the financial well being of the use of cloud. The ops team need to be well practised in the art of predicting the expected usage of cloud resources and monitoring the reality. Obviously one of the joys of cloud is the ability to scale and shrink as required, for the financial impact of this to be realised good management and monitoring is required.

Cloud Development Companies help meet the Challenge

Whilst the innovation cloud fosters is highly attractive to companies the on-going financial challenges brings can be a shock. This is where experience, understanding and a friendly partner can pay dividends of the TCO of your cloud projects. Designing and architecting the best solutions is their business and as such considerations around the financial challenge figure highly in the approach taken. So confident are we of this ability at Solidsoft we have even taken the worry away completely by building the cloud usage costs into the support costs for a number of cloud projects.

The experience of working on many different and varied cloud projects day-in and day-out should not be under estimated and as such working with a partner with these qualities should always form part of any plans for exploiting cloud.

Posted on Tuesday, January 29, 2013 7:32 PM | Back to top

Comments on this post: Cloud: The hidden cost gotcha!

# re: Cloud: The hidden cost gotcha!
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This is a great post!Cloud computing operations are very useful especially for companies but you have to extent of your network in order to work on a cloud computing platform.
Left by Claudia Hover on Feb 06, 2013 7:51 AM

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Cloud computing is being used in many companies as it is a great choice for data storage.It helps us to share information on a safety system and protects our database from sensitive networks.
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