Cloud Computing's Confusion: Pricing
And when it comes to something as customized as a private cloud, a standardized price menu is unlikely. Instead vendors use pricing models to size up your company’s needs. Get ready for a fancy PowerPoint demo. “Asking what a private cloud costs is a bit like asking what a chunk of virtualized and automated IT costs,” says Gordon Haff, the Cloud Evangelist for Red Hat. “An IT vendor can certainly put a quote together for you given a set of requirements, but it's not going to be a matter of selecting a SKU from a price book.”It’s possible that fierce competition between cloud computing’s Big Three will clarify and stabilize pricing. While Amazon Web Services remains the big dog, Microsoft's Azure Virtual Machines and Google's Compute Engine are aggressively working to grab market share. Each understands that the time to get market share is now, in this Wild West formative period. Each is eager to use its vast resources to acquire cloud customers, regardless of short-term gain. While the three continue to posture about their relative feature sets and technologies, each has moved to offer pricing and packaging in a manner that is – more or less – comparable to one another. (With caveats about performance, service agreements, enterprise suitability, etc.) And so the three are making a much-ballyhooed “race to the bottom” on prices, attempting to undercut one another in this critical period. This will serve to flush out some of the smaller players who can’t keep up, small fries with their own creative ideas about pricing. So price clarity may be on the way. Or, it may not. Because if confusion about cost starts to clear, one concept keeps it a quagmire: the expense of switching cloud vendors. And undoubtedly, the cost of switching needs to be factored in. A company contracting with a cloud provider isn’t just hiring a consultancy or buying a new application. It’s outsourcing part of its data center. That’s a deep, symbiotic relationship, with tiered access decisions and a numbing array of confidentiality-security issues. Worse, what if you’re forced to switch? That is, what if your cloud vendor shuts its doors, as Nirvanix did recently. (And Nirvanix was no fly-by-night outfit; it was an IBM partner.) Vendor lock-in isn’t a new problem, but calculating the cost of avoiding it is truly problematic in the cloud era. Problematic because it’s virtually impossible to put a definitive price on it. There is one group for whom the confusion in cloud pricing is happy development: IT consultancies. Companies unsure about all the logistics and pricing models will more readily turn to a consultancy. The many variables in migrating to the cloud all but guarantee the need for advice. Should we migrate everything now, some now, some later? Private or public? Or hybrid? What should be cloud-based, what should remain in-house? And what about – oh goodness – compliance issues and security? And the answer to each of these questions rings up a new dollar figure. Adding confusion, most of the cloud variables are influenced by each other, so the variations in possible financial outlay are labyrinthine indeed. Yes, based on the cloud, IT consultancies should be doing a very, very good business for many years ahead. Photo courtesy of Shutterstock.
“What I do believe to be the case is that cloud is part of a big shift in IT to becoming more of a strategic broker of hybrid services,” he says. “Add in mobile, big data, and even social and there's a lot there for IT to navigate, so many organizations will need help either from vendors or consultants. But I'd argue that pricing complexity is a relatively small part of what makes it tricky to navigate the new landscape.”