When the conversation around cloud services really gets going, cost always comes up as a major concern.
The technology isn’t old enough for many to have a handle on the future cost savings or loss compared to other licensing and on-site models, and for most systems you’ll encounter you can find people on both sides of the cost-savings coin.
While you may not be able to predict the cost of cloud systems, there are a few steps that you can take to help mitigate costs and, at the very least, keep yourself from paying more heavily than you originally planned or were quoted.
The big issue around cloud services is that many are scalable and flexible, so they lower IT costs when not in use, but scale up in cost as your usage increases. This scalability is the main concern to keep in mind when looking at your existing and new cloud services.
The first issue is to include this scaling in your contract negotiations. Cloud service providers should be giving you a schedule around cost increases in relation to use increases. Get everyone to sign a copy of this and keep your eye on it. With that in hand, one thing to do before finalizing your agreement is to negotiate the details. A new study from the University of London has found that businesses are doing well with negotiations around cloud services and that these service providers are willing to haggle as well.
This conversation isn’t around core price, but around all the things that can happen in the cloud and all the concerns you can imagine. The big thing here is to get a very specific list of remedies around availability, uptime and downtime, and data loss. Their business is to keep this from happening, but downtime and outages are a part of doing business, so ask for remedies in these situations and aim to get the best deal for yourself and your contract. Also make sure to flesh out security issues, including what protections they provide for your data and intellectual property.
While the details may look good, before you start cutting checks verify that you’ve got a service the right size for your needs, both present and future. Businesses are still often looking at their immediate needs instead of to where they will grow. While cloud services are flexible, you pay more when you scale upwards. You can also pay more per service when you scale downwards. Compare the prices for both getting extra and less storage and support up front with how they look down the road.
Cloud services operate in a few different ways, so make note if the service will hit you with a flat fee if your usage changes by a certain percentage. If that’s the case, a bigger baseline may be a better call. If your service doesn’t, then most recommendations you’ll get from cloud experts will say to pay for what you need now and negotiate around the scale-up rates until you’re happy with it.
Hidden costs are in the cloud, so centralize the control and management of your operations. IT spending is easier to control if you’ve got one location that gives all the go-aheads. This will help your organization as a whole look for some of the sneaky cloud costs. The big things to look for and monitor are costs around additional backups, data transfers, continual customization charges, and maintenance or upgrades from the service provider. Centralizing your IT control helps to monitor all of these and not let departmental usage get too out of control or varied.
There are a wide range of cloud options and services for every part of your business. Most of their costs aren’t well projected for five to 10 years down the road, but the service they offer today can be very compelling. If you see a process that the benefits of cloud seem to make sense for, the best thing to do is be careful around all the secondary issues that sometimes get lost when the conversation turns to monthly costs. – Geoff Whiting
Commentary: Saving your wallet from the cloud
