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Are you spending too much with your cloud provider?

Mon 11 Jul 2016
FYI, this story is more than a year old

Public cloud offerings allow IT to get out of the business of running data centers, where for years most of the budgets have been spent on hardware and software maintenance and upgrade. This provides an attractive value proposition because they are able to focus on innovation and looking for better ways to support the business.

Cloud-based Windows or a Linux server can cost approximately $1 per hour and even after a year the cost of that server is less than $9,000. If you consider the hardware, space, power, cooling and other costs that the cloud service is replacing, this is quite an inexpensive amount. This also applies to SaaS applications like CRM applications that cost about $65 per user per month. Why not move your CRM application to the cloud so you don’t have to worry about hardware and software maintenance or upgrades?

There is no question and no doubt that the Cloud services provide real benefits.

With Infrastructure as a Services (IaaS), you have the ability to only incur costs when you need to, which is great for test workloads – you don’t need to buy a permanent piece of hardware and have it sit idle.  You simply turn on the cloud instances (typically virtual machines) for the amount of time you need it.

When you turn the instance off, you stop paying for it. However, we are not accustomed to turning off these virtual machines and this means more than often companies pay for cloud services that they weren’t using. While the cost of this usage appears small, because a large organisation may have hundreds of thousands of these virtual machines, the dollars add up quickly.

For many production loads, the machines always need to be on – so, is there a way to save money here?  Depending on the Cloud provider, you may have access to subscription pricing that give you lower prices for ‘reserved’ instances. The savings compared to pure on demand pricing can be significant – 40-50% over time, so if you are running continuous production loads, consider looking for these pricing options.

Another way to save money, which is quite simple, is to ensure that you are using the right type of virtual machine. Although it’s often tempting to invest in the machines with the bigger RAM and CPU, we need to stop and think – do I actually need all that CPU and memory? If your CPU or RAM requirements suggest short time spikes in demand, look for instances that allow for scaling up because in the long term it will save the business money. If your company has reserved instances, make sure they are all in use before you subscribe to additional ‘on demand’ instances – utilise the capacity you have.

Of course, just getting an IaaS instance doesn’t mean you are completely free from costs. With IaaS, you get a virtual machine with an operating system but you are still responsible for installing your software.  It is here, that it is absolutely crucial for you to make sure that you are allowed to install software in the Cloud environment. For example, if you use IBM SoftLayer, you are not allowed to run Oracle DB in that environment, as it is only allowed on Oracle, Azure and Amazon cloud environments.  The terms also frequently change, so you will need to continue checking in as conditions are more than likely to change over time.

It is also important to investigate whether you should use your own license of the software, or perhaps, it is more cost efficient to use a cloud instance that includes that software license in its subscription.

The benefits of Software as a Service (SaaS) do seem significant because everything is contained in the subscription price; there are no upgrades, licensing concerns and you are subscribe to a capacity and simply use the software.

The challenges with SaaS come when vendors’ rules regarding software usage is examined closely because some vendors require that the same subscription level is purchased for all users. This is regardless of how much of the application is used and this can result in subscriptions being under-utilised by casual users. Even with the ability to have different levels of access, how do you make sure the right subscription level is associated with the right user? After all, there is a chance that users will complain if they don’t have access, but won’t let you know when they have too much access.

It is undisputed that Cloud services provides real benefits, but it is important for organisations to consider employing Software License and subscription optimisation processes and technology to optimise their investment in cloud software. These tools will help identify idle and under-utilised instances and subscriptions and will also identify license compliance issues. This has the potential to assist to maximise your return on Cloud services investment, whether in IaaS, SaaS or other types of cloud services.

Article by Steve Beards, Flexera Software

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