Cutting cloud computing costs

Increasing emphasis on a la carte pricing allows companies to purchase only the level of service they need at reduced rates.

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The recent news that Amazon Web Services, the market pioneer in infrastructure-as-a-service (IaaS), has built a cloud computing platform designed to cut the cost of storing financial data is a clear indication that the cost of cloud computing is on a downward spiral.

This is good news for would-be cloud service subscribers who must also be buoyed by Microsoft's cut in prices for Windows Azure, the compute and storage pay-as-you-go services. It's no secret that these two organisations are moving to expand their market share in the face of growing competition in the cloud from Google and other players.

Companies are realising the benefits linked to purchasing tailored cloud environments.

Martin May is regional director at Enterasys Networks.

One of the trends now evident is an increasing emphasis on a la carte pricing by cloud service providers, allowing companies to purchase only the level of service they need at reduced rates.

In addition, most Web hosting providers are offering 'packages' incorporating the most popular cloud computing services, such as scheduled backups and upgrades, in highly marketable bundles.

Increasingly, companies are realising the benefits linked to purchasing tailored cloud environments complemented by a range of choices that scale to meet current and future needs.


For customers willing to sign up for a period of two to three years, service providers now appear keen to lower the cost of a continuously available IaaS by as much as 30% from listed prices of just a year ago. The notion of purchasing in-house hardware and software is quickly being forgotten as these ever-cheaper leased services appear on the market.

Sceptics point to the falling IaaS prices as a sign of over-capacity in cloud storage and related hosted services, but I don't believe this to be the case, particularly as global telecommunications providers are poised to enter this potentially lucrative marketplace with even more enticing offers.

These and other newcomers have clearly done their homework and identified the needs of early cloud service adopters. Now, thanks to the ongoing economic downturn, they are ready to erode the standing of the pioneers of hosted services who are under pressure to improve their performances in order to compete effectively on national and global stages.

This means reducing costs and increasing efficiencies; two areas in which cloud computing specialists should know a lot about. It's time for them to eat their own dog food.

While the Amazons, Microsofts and Googles of this world compete for the attention of the large multi-nationals (soon to be joined by some telecoms giants), other, perhaps less high-profile, cloud hosting providers have been quick to identify market niches among smaller user organisations, developing low-cost data optimisation services designed to reduce cloud storage and other costs for their clearly defined segments.

On trend

With falling cloud service costs now a definite trend, business development specialists have estimated that even smaller organisations can realise savings of over 60% on storage and other enterprise resource optimising systems by implementing them through the cloud, as opposed to buying and installing the necessary hardware and software systems.

In fact, cloud computing is regularly identified among the top technologies for both cost reductions and growth for SMEs in marketplace surveys. This is due not only to falling cloud service prices but also SMEs' general lack of discipline in terms of maintaining and upgrading in-house systems, and their reticence to meet burgeoning budget demands for training and retaining the specialist staff needed to oversee them.

As a result, business managers are putting aside earlier concerns about security in the cloud, spurred by increases in online consumer transactions such as online banking and shopping, which do a good job of demonstrating the security associated with today's modern cloud implementations. As one noted business consultant says: “Once you see how cloud computing works, the mistrust goes away.”

While it will still be important to verify the capabilities of any proposed cloud service provider, it's becoming evident that the competitive nature of the marketplace - complemented by increasingly favourable economies of scale for the successful players - is weeding out the under-performing and boosting the more visible, brand- and image-conscious organisations.

Clearly this is working for members of the Open Data Center Alliance. It reports that its 300 enterprise members will triple their cloud deployment in the next two years, an adoption rate five times greater than it previously predicted. This is a trend worth noting.

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Martin May

Regional director (Africa) of Extreme Networks.

Martin May is the regional director (Africa) of Extreme Networks. The author of the book: “Everything you need to know about networking”, he is a leading authority on infrastructure security using NAC, IDS/IPS and other network-based technologies. With experience gained in Russia, Germany, UK, the US and various parts of Africa, he is directly involved with system design and implementation at enterprise level. His emphasis is on the evolution in network architectures brought about by the concept of cloud computing. May hosts regular workshops assisting South African dealers and resellers to understand the implications, complications, opportunities and international trends surrounding the cloud. A proponent of social networking for business, he is active on Facebook and makes extensive use of YouTube.

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15 Aug
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