Digitalization has already brought numerous changes to many companies. Some of the less visible ones are those in the company IT infrastructure. Physical servers have been replaced with virtual ones, i.e. with clouds. A question remains whether all those clouds are really as advantageous as they claim to be. Let us have a look at 5 areas that may give you an idea whether your cloud is a drain or gain.
Drain by Its Nature
Your cloud is primarily defined by your contract. The basic benefits of a cloud should be flexibility and reduced costs due to the fact that you do not have to purchase anything and that you do not make any commitment.
And here comes the first problem. Some cloud services, particularly virtual servers, look flexible at first sight. But only until you look at the price for the flexibility. The On-Demand or Pay-as-you-Go models, where you only pay for what you have used, are often more expensive in comparison with a commitment to use the service for a year or three years.
At the same time, you need to decide which service model you will be using, which means exactly the same lack of flexibility you had with physical servers.
The cloud should mean that you do not have to predict the needs you will have tomorrow, next week, next month or in the next ten years. The cloud’s greatest added value is that it should adapt to your needs that change in time. And if the cloud does not do that you end up in the same situation as with physical infrastructure – only your data will be somewhere else. So the advantage of a contracted service is nonexistent.
All We Want Is €0,00042 …
Companies often get cloud services from foreign providers which charge miniscule amounts in foreign currencies. It looks like a bargain but … the thing is that the figures seem to be attractive but they are actually misleading. As they say, a hundred times nothing killed the donkey.
It is because you cannot guess in advance where the decimal point will move in a given month. The problematic items may be a fee for data transmission or a fee for entering or reading a particular piece of information. For example, if you want to enter an item into your accounting system you will pay not only for the environment of the application but also for opening of your company’s directory and entering the amount as a new item.
Despite the very small unit price, every piece of information means that you will be charged. Your invoice will be an unclear tangle of items and values that are the exact opposite of transparent (unlike principle of charging expected from a virtual data center).
Choose Your Payment Model
We have touched this topic in the first part where we talked about how the fees are charged based on a contract. One issue we want to mention is that some providers overshoot prices of Pay-as-You-Go models to commit the customers.
Another issue is that if you want to choose the right IT for your company you will have to make an analysis to define the kind of IT you actually need.
In general, there are two payment models for cloud services – Pay-as-You-Go and fixed payment. However, it is impossible to decide which of them is better because it depends on each particular company and on the way it operates.
You may be surprised to find out that small companies and start-ups have a much higher demand for computation sources in comparison with e.g. some well established big corporations. It is simply because of the way the companies work. On one side there are companies, regardless of the size, with a stable demand for IT infrastructure and therefore a cloud for them will be a coherent environment which will change only sporadically or perhaps it may not change at all. For them the fixed payment method, i.e. monthly flat fee, is the ideal solution.
Some companies, however, have different requirements. For example, they may want to switch off their servers on weekends and use them intermittently. In that case the Pay-as-You-Go method is preferable since you only pay for the consumed services. Especially in situations when a company is planning to make a transition to a cloud it is recommended to analyze the situation with a cloud expert.
However, even if you want to change your cloud provider and the type of cloud environment, it is desirable to consult the solution with an expert because no clouds are the same. Our colleague Pavel is ready to go through your IT requirements and help you to find out which cloud would be the most appropriate and the most convenient for you.
Build-O vs. Barbie
You may wonder why we mention these two toys in connection with the process of selecting your cloud solution. Just think about what happens when you buy them. With a Build-O (or Merkur) construction set you will get everything you may need. You can use your fantasy while having all parts available and you will pay the price only once. After that you can build, rebuild, complete and adjust your products. On the other side stands a Barbie doll. If you want to create a nice home for Barbie, you need to buy her Ken, some kids, a house, a garden, a car and later perhaps even some neighbors or friends. Each of those is something to pay for and your bill will be very long.
The situation with cloud solutions is similar. If you choose a virtual server you are buying a Barbie doll. You will need to buy different modules and other computation resources as ready-made packages. If you opt for a virtual data center you will get the Build-O construction set. All you need for your company IT in one package; you may want to purchase some additional parts but the system will be customized to meet your specific needs.
The two different approaches to the cloud environment will be also reflected in the flexibility and efficiency of your solution (you can read more in this article).
Some cloud services use credits instead of money. It is up to you to decide whether the credit system benefits you or not. After all, the credits still represent your financial sources and as such they are blocked and you can only use them in a certain way. And we are back at the beginning – is the credit system or the contracted prepaid service efficient enough as a method of payment for cloud services? The question must be answered by you.
We have tried to explain in detail financial aspects of cloud services and you can now start thinking whether your cloud truly makes sense.