{"id":6942,"date":"2022-01-26T19:23:49","date_gmt":"2022-01-26T19:23:49","guid":{"rendered":"https:\/\/mailinvest.blog\/index.php\/2022\/01\/26\/why-cloud-costs-are-the-new-danger-to-your-business\/"},"modified":"2022-01-26T19:23:49","modified_gmt":"2022-01-26T19:23:49","slug":"why-cloud-costs-are-the-new-danger-to-your-business","status":"publish","type":"post","link":"https:\/\/mailinvest.blog\/index.php\/2022\/01\/26\/why-cloud-costs-are-the-new-danger-to-your-business\/","title":{"rendered":"Why Cloud Costs are the New Danger to Your Business"},"content":{"rendered":"<p> <a href=\"https:\/\/go.fiverr.com\/visit\/?bta=1052423&nci=17043\" Target=\"_Top\"><img loading=\"lazy\" decoding=\"async\" border=\"0\" src=\"https:\/\/mailinvest.blog\/wp-content\/themes\/breek\/assets\/images\/transparent.gif\" data-lazy=\"true\" data-src=\"https:\/\/fiverr.ck-cdn.com\/tn\/serve\/?cid=40081059\"  width=\"601\" height=\"201\"><\/a>\n<\/p>\n<div>\n<p><span style=\"font-weight: 400;\">The cloud is everywhere, and it doesn\u2019t come cheap. Organizations are quick to adopt the cloud without always realizing its financial implications. Many find themselves locked in with a cloud provider, paying more and more using complex pricing models they do not fully understand.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">In this article, I\u2019ll introduce cloud computing and its pricing, show how cloud costs can become a significant financial risk for any organization, and provide some critical considerations you can use to avoid the next financial crisis.<\/span><\/p>\n<h2><span style=\"font-weight: 400;\">What is Cloud Computing?<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Today\u2019s business climate is evolving. <\/span><a href=\"https:\/\/readwrite.com\/2020\/12\/15\/what-remote-work-looks-like-in-2021-and-beyond\/\"><span style=\"font-weight: 400;\">Employees are increasingly mobile<\/span><\/a><span style=\"font-weight: 400;\">, and need to access information wherever they are and via multiple devices. <\/span><a href=\"https:\/\/readwrite.com\/2021\/10\/30\/big-data-technology-success-cases-and-trends-2021-25\/\"><span style=\"font-weight: 400;\">Data volumes are growing<\/span><\/a><span style=\"font-weight: 400;\">, and organizations need to provide increasingly sophisticated digital services. Solutions to all these problems can be found in the cloud.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Cloud computing is a general term for various forms of computing services, including:\u00a0<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><b>Cloud storage<\/b><span style=\"font-weight: 400;\">\u2014services organizations can use to store files for day-to-day access or long-term backup and archive. Files can be synced and shared across devices.<\/span><\/li>\n<li style=\"font-weight: 400;\"><b>Disaster recovery<\/b><span style=\"font-weight: 400;\">\u2014the cloud makes it easy to store and remotely launch business applications in case of a disaster or cyberattack on the on-premise data center.<\/span><\/li>\n<li style=\"font-weight: 400;\"><a href=\"https:\/\/readwrite.com\/2020\/02\/17\/top-12-advantages-of-software-as-a-service-saas\/\"><b>Software as a service (SaaS)<\/b><\/a><span style=\"font-weight: 400;\">\u2014web-based software services such as Google Apps, Microsoft Office 365, and Salesforce CRM.<\/span><\/li>\n<li style=\"font-weight: 400;\"><b>Infrastructure as a Service (IaaS) and platform as a service (PaaS)<\/b><span style=\"font-weight: 400;\">\u2014solutions that allow organizations to host applications, servers, and even infrastructure services like networking and access control. Cloud providers can offer only the infrastructure (IaaS) or a fully managed solution the organization can own and customize (PaaS).<\/span><\/li>\n<\/ul>\n<h2><span style=\"font-weight: 400;\">The Big Three Cloud Providers<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Amazon Web Services (AWS), Microsoft Azure, and Google Cloud are known as the \u201cbig three\u201d cloud providers. All three of these providers today have hundreds of services and tools.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">AWS pioneered the cloud as we know it today, starting with the still-popular Amazon Simple Storage Service (Amazon S3) and Amazon Elastic Compute Cloud (Amazon EC2). Over the years, it added many more services from infrastructure hosting to databases and analytics, and improved the purchasing flexibility of its services.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Google was the second primary provider, launching a limited cloud service based on its internal cloud infrastructure in 2008. Microsoft followed suit, launching the Azure cloud in 2010. scrambled to offer similar services, but to date, have not fully caught up with Amazon\u2019s breadth of offerings.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The big three now dominate the global cloud market. According to industry estimates, AWS now has 30% of the worldwide market, Azure 20%, and Google approximately 9%. In addition, other players like Tencent and Alibaba have emerged in China. In addition, Oracle and IBM built their own clouds and are trying to compete with the major providers.<\/span><\/p>\n<h2><span style=\"font-weight: 400;\">The Dark Side of Cloud Pricing<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Most cloud services are charged on a pay-per-use basis\u2014you pay only for the resources you use. The stated benefit of pay-per-use is to minimize IT expenses because an organization doesn\u2019t need to purchase and maintain physical infrastructure.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Pay-per-use also allows organizations to shift IT expenditure to operational costs rather than fixed, capital costs. This provides tremendous flexibility, letting organizations add or remove IT infrastructure according to changing business needs.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">However, organizations can easily overspend in the cloud. In addition, it can be challenging to track cloud service usage and the associated costs. Cloud providers and third parties offer <\/span><a href=\"https:\/\/cloud.netapp.com\/azure-calculator\"><span style=\"font-weight: 400;\">cloud calculators<\/span><\/a><span style=\"font-weight: 400;\"> to help you estimate your expenses, but these estimates are far from accurate. <\/span><\/p>\n<p><span style=\"font-weight: 400;\">Additional risks include failure to decommission idle workloads, data egress fees, and over-provisioning resources.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Cloud providers have complex pricing models with rates that change according to service, region, and many other parameters. When an organization doesn\u2019t fully understand a provider\u2019s pricing model, or how it will evolve with their usage of the service, it may incur unexpected, hidden costs.\u00a0\u00a0\u00a0\u00a0<\/span><\/p>\n<h2><span style=\"font-weight: 400;\">Why Cloud Costs are a Looming Financial Risk<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">In the wake of the COVID-19 pandemic, many employees began working from home, and organizations shifted products and services to digital form, primarily using the cloud. According to Gartner, global cloud spending <\/span><a href=\"https:\/\/www.gartner.com\/en\/newsroom\/press-releases\/2021-06-28-gartner-says-worldwide-iaas-public-cloud-services-market-grew-40-7-percent-in-2020\"><span style=\"font-weight: 400;\">grew by over 40%<\/span><\/a><span style=\"font-weight: 400;\"> in the year of the pandemic. By 2024, cloud costs will <\/span><a href=\"https:\/\/go.anodot.com\/hubfs\/WP,%20Guides,%20Reports\/2021-State-of-Cloud-Costs-Report\/2021-State-of-Cloud-Costs-Report.pdf\"><span style=\"font-weight: 400;\">grow to 14%<\/span><\/a><span style=\"font-weight: 400;\"> of enterprise IT budgets.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">However, as cloud usage grows and starts to dominate budgets, many organizations often adopt a reactive approach to cost management. Organizations tend to commit to pre-purchasing a designated amount of cloud services, a model known as reserved instances. <\/span><\/p>\n<p><span style=\"font-weight: 400;\">Pre-purchasing grants has deep discounts, but it also assumes the organization has a clear plan for its future use of the cloud. As a result, much of the prepaid capacity can be misused or wasted without a rigorous cost management cycle.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Another danger of the cloud is that self-service capabilities make it possible for employees to ramp up cloud usage on their own and spend more than the allowed budget. In some cases, staff provision cloud resources according to an approved budget, but fail to shut them down when no longer needed. <\/span><\/p>\n<p><span style=\"font-weight: 400;\">In either case, the organization unknowingly pays for unneeded computing resources. These hidden costs add up and can become a significant financial risk.<\/span><\/p>\n<h2><span style=\"font-weight: 400;\">7 Hidden Cloud Expenses<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">The cloud is often touted as a wonder that will improve efficiency and save costs for any organization. But, in reality, several critical hidden costs can surprise you in a cloud project:<\/span><\/p>\n<ol>\n<li><b>Cost per hour<\/b><span style=\"font-weight: 400;\">\u2014everything in the cloud is charged according to when you use it. So while capital expenditure is low, ongoing operating expenses can be higher than in your on-premises data center.<\/span><\/li>\n<li><b>Lack of predictability<\/b><span style=\"font-weight: 400;\">\u2014in an on-premise data center, if you purchased a server, it had a fixed cost and a well-known operating cost. However, you cannot predict its costs when you start using a cloud service like Amazon EC2. EC2 lets you run 100 or 1,000 servers for a specific period of time and shut them down. Staff can also run servers and forget about them, but you\u2019ll keep paying for them. This creates enormous unpredictability in cloud costs.\u00a0<\/span><\/li>\n<li><b>Complex pricing models<\/b><span style=\"font-weight: 400;\">\u2014most cloud services have multiple pages of complex price tables. They charge for multiple factors like time of use, data volumes, compute capacity used, data transfer, etc. These price factors change across numerous dimensions like cloud region, instance type, or overall data volume.\u00a0<\/span><\/li>\n<li><b>Vendor lock in<\/b><span style=\"font-weight: 400;\">\u2014once you transfer workloads to the cloud, you will find it complex to leverage additional clouds. Many organizations end up using only one cloud for many workloads, meaning they are locked into the pricing and features of that provider.<\/span><\/li>\n<li><b>Data access and transfer fees<\/b><span style=\"font-weight: 400;\">\u2014in most cases, cloud providers charge a small fee for transferring data out of their systems, and even for accessing or modifying the data. Unfortunately, this can become a significant expense, which most organizations don\u2019t factor into their budgets.<\/span><\/li>\n<li><b>Cost of analytics<\/b><span style=\"font-weight: 400;\">\u2014if you run multiple analytics jobs on the same data, you will pay additional fees for data use and access.<\/span><\/li>\n<li><b>Cost of managed services<\/b><span style=\"font-weight: 400;\">\u2014cloud providers offer a myriad of convenient services, which can reduce workloads for in-house teams, but come at a premium. In addition, costs are not always transparent, and it is difficult to determine if the overall price of the service is really lower than operating the same systems in a house.<\/span><\/li>\n<\/ol>\n<h2><span style=\"font-weight: 400;\">Critical Considerations When Planning Your Cloud Budget<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Take the following into account to avoid surprises in your cloud costs further down the line:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Consider what happens if you go over the limits stated in your contract (in terms of storage, computing resources, or data transfer).\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Prepare a business case for increased cloud usage 1-2 years into the future. Will the cloud still be an attractive option as your data volumes and workloads grow?<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Consider the costs of cloud migration, which is a large and risky undertaking.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Consider the cost of having in-house or outsourced staff to manage cloud systems, ensure they are secure, and interface with cloud providers.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Study your cloud provider\u2019s cost structure and discounts, and see how to take advantage of offers like reserved instances, spot instances, and savings plans.<\/span><\/li>\n<\/ul>\n<h2><span style=\"font-weight: 400;\">Conclusion<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">This article explained the basics of cloud pricing and showed why the cloud represents a significant risk to any company\u2019s financial management. Cloud services are inexpensive to start with but can become a substantial financial burden, due to unpredictable costs, complex and non-transparent pricing, and vendor lock-in. <\/span><\/p>\n<p><span style=\"font-weight: 400;\">As a result, a cloud can quickly become the new \u201cblack hole\u201d in your budget.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">By all means, use the cloud. But use it responsibly. Build your business case and put measures in place to monitor and control your costs. At least once per quarter, conduct a review of your actual cloud costs and how they compare to the original plan. There will be deviations from the plan, and they will be big. <\/span><\/p>\n<p><span style=\"font-weight: 400;\">Catch them in time and work with operational teams to ensure that you only spend what you intended and get everything you expect.<\/span><\/p>\n<p><em><strong>Image Credit: Joslyn Pickens; Pexels; Thank you!<\/strong><\/em><\/p>\n<div class=\"about-author\">\n<div class=\"author-info\">\n<div class=\"author-avatar col-md-2\">\n<img decoding=\"async\" alt=\"\" src=\"https:\/\/mailinvest.blog\/wp-content\/themes\/breek\/assets\/images\/transparent.gif\" data-lazy=\"true\" data-src=\"https:\/\/secure.gravatar.com\/avatar\/ff310c5c932753f6bc7c8d8fe14af022?s=125&amp;d=mm&amp;r=g\" data-srcset=\"https:\/\/secure.gravatar.com\/avatar\/ff310c5c932753f6bc7c8d8fe14af022?s=250&amp;d=mm&amp;r=g 2x\" class=\"avatar avatar-125 photo\" height=\"125\" width=\"125\" loading=\"lazy\"\/><\/div>\n<div class=\"author-description col-md-10\">\n<h3 class=\"author-title\"><a href=\"https:\/\/readwrite.com\/author\/gilad-maayan\/\">Gilad Maayan<\/a><\/h3>\n<h5 class=\"author-role\">\nTechnology writer<br \/>\n<\/h5>\n<p class=\"author-bio\">\nI&#8217;m technology writer with 20 years experience, working with the leading technology brands including SAP, Imperva, Check Point and NetApp. Three time winner of international technical communication awards. Today I lead Agile SEO, the leading marketing and content agency in the technology industry. <\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<iframe data-lazy=\"true\" data-src=\"https:\/\/www.fiverr.com\/gig_widgets?id=U2FsdGVkX18x7XQvttUTrv1oEqmGNGTgvvCUiUoJ\/AP4z\/UyMz8lXGOLpu15jIMxBbTR0gmD5uBoFvhC4KWeALQRp3h\/X\/AwcVD0K8Wj9H\/ZzYKzcCNHosB9oS4SCJJFWiN85P9ICAc4OgCoE\/wHKIY7CDkf2\/DQ1vqGvk4smVe5cRDEmrLPCWi4FC8p40VUhSmWQ5udCm0zoJtorgWv3vbDQw0kKYkwn39ozAnQXDe+YvWMxkLFWA+O3TFwkJvdkIK+\/AUSnRssPKt5WHY0FhNOxnSPcLslEL4G4\/RfP95ve99U+kRnDy3X+KtzdQLY+u935ghON\/o3UE4IMv9oN6JX9RnxzL\/LRcOgnHigxStSGPKsZYtnz8RWNVT\/rOLAibqiWJadC5MYHRbekF3eg6FOGrQGkXYbsn0+a5aovnlLCbLwIqY9fcS17UX8J235iQ6cdmHNbrPeS84CMm34RA==&affiliate_id=1052423&strip_google_tagmanager=true\" loading=\"lazy\" data-with-title=\"true\" class=\"fiverr_nga_frame\" frameborder=\"0\" height=\"350\" width=\"100%\" referrerpolicy=\"no-referrer-when-downgrade\" data-mode=\"random_gigs\" onload=\" var frame = this; var script = document.createElement('script'); script.addEventListener('load', function() { window.FW_SDK.register(frame); }); script.setAttribute('src', 'https:\/\/www.fiverr.com\/gig_widgets\/sdk'); document.body.appendChild(script); \" ><\/iframe>\n<br \/><a href=\"https:\/\/readwrite.com\/why-cloud-costs-are-the-new-danger-to-your-business\/\">Source link <\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>The cloud is everywhere, and it doesn\u2019t come cheap. Organizations are quick to adopt the cloud without always realizing its financial implications. Many find themselves&#8230;<\/p>\n","protected":false},"author":1,"featured_media":6943,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[7],"tags":[],"class_list":["post-6942","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-tech-universe"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.6 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Why Cloud Costs are the New Danger to Your Business - mailinvest.blog<\/title>\n<meta name=\"description\" content=\"Technology is forever changing, and there are always new pieces of technology to replace obsolete ones. Tons of people enjoy reading tech blogs on a daily basis.mailinvest.blog tracks all the latest consumer technology breakthroughs and shows you what&#039;s new, what matters and how technology can enrich your life. mailinvest.blog also provides the information, tools, and advice that helps when deciding what to buy.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/mailinvest.blog\/index.php\/2022\/01\/26\/why-cloud-costs-are-the-new-danger-to-your-business\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Why Cloud Costs are the New Danger to Your Business - mailinvest.blog\" \/>\n<meta property=\"og:description\" content=\"Technology is forever changing, and there are always new pieces of technology to replace obsolete ones. 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