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Let’s begin with a cautionary tale about pricing: a friend hired a moving company as they quoted a very attractive price for a complex move. They lured her in with a low-ball price then added more and more “extras” to the point where their price ended up higher than many of the other bids she passed up. And to make matters worse, they are already two weeks late with delivery of the furniture and are saying it might take another two weeks. As for customer service – this company turned out to be merely a broker for other movers, so attempting to get any accurate data about anything is her ongoing living nightmare.
Imagine that happening to your data stored in the cloud? You need to recover and the cloud vendor you selected ends up charging you an arm and a leg to get up and running again – and it takes you a week instead of a couple of hours!
Unfortunately, this can and does happen. Here, then, are some tips to avoid this fate.
Be Duly Diligent
The most obvious tip is to not stint on due diligence concerning cloud storage pricing. Many users get tripped up by hidden or unforeseen charges, so it makes sense to educate yourself on how cloud pricing actually works.
Check out the Cloud Pricing Codex by 451 Research. It presents a rundown of billing attributes that shows the breadth of cloud charges organizations can expect to see on their bill and the typical metrics used to measure this consumption so financial obligations can be properly understood. It also includes a breakdown on how the various providers handle billing in order to make comparison easier.
“Cloud computing once promised simple, usage-based charging similar to other utilities such as electricity,” said the co-author of the report Dr. Owen Rogers, Cloud Economist at 451 Research. “The reality is far from this ideal.”
Trace Out Application Interaction
Rogers advises users to work out how an application interacts with different services around it. For example, how a virtual machine (VM) interacts with storage, network and the various other cloud services such as Platform-as-a-Service (PaaS) or Infrastructure-as-a-Service (IaaS). The way they communicate with each other and upload/download data can significantly add to billing rates in ways the user might not realize.
“Working out how an application interacts with these different services, and the related cost and value implications, is one way of estimating costs,” said Rogers. “If a web server, for instance, suddenly experiences increased traffic, how will this affect network bandwidth, attached object storage and databases? If VMs autoscale, how much will these cost and is a return on this investment likely to be realized through better revenue?”
Avoid Fixed Usage Rates
So what kind of fee structure should users avoid? Rogers recommended staying clear of fee schedules that are based on a fixed amount of usage, bandwidth or storage. What typically happens is that cloud users like its flexibility so much that they learn to ramp up and down their usage more rapidly. Some providers make it clear how they charge for this and facilitate it. Others punish you in a similar way to cell phone carriers with roaming and other wildcat fees.
“Any pricing structure which doesn’t account for variability in demand removes the whole benefit of cloud computing,” said Rogers. “Being able to grow and shrink capability as need dictates means the consumer can take advantage of new opportunities, without paying for resources they don’t need.”
Favor Flexibility
The fee structure that seems the fairest to both the enterprise user and the provider, then, would appear to one that locks in reduced prices for predictable requirements, while retaining the ability to purchase on-demand resources for any unexpected requirements.
“This approach to pricing gives the provider some capital to invest in hardware to support the anticipated capacity, while rewarding the consumer with cheaper prices without affecting flexibility,” said Rogers
Define Storage Requirements Carefully
Jim Stiller, Senior Consultant at Cloud Technology Partners, urges users to closely define their storage needs in the cloud so they get exactly what their environment demands. After all, once that storage is sent to the cloud, it is no longer under the full control of internal IT.
Upfront negotiations need to make it clear what kind of storage and performance you need for different tiers of data. Otherwise you could end up with everything on slower SAT disk when you need flash for certain key applications and SAS for others. Make sure this is laid out clearly in the contracts so you know what you are getting.
Dig into the Details
Depending on the storage type selected and the quantity of storage consumed, the cost can be as low as pennies per GB per month or can soar much higher. In addition to the actual storage, some cloud providers add charges for the number of I/O requests to the storage. The cloud provider may have additional charges for exporting data to another location or region. Consumers are also charged for the allocated storage, not the storage actually consumed. So if you allocate 100 GB of storage but are only using 10 GB, you will still be charged for the full 100 GB.
“Cloud storage can be an effective alternative to locally hosted storage, but the devil is in the details,” said Stiller. “In some instances, these add-ons can significantly increase the cost of public cloud storage.”
Beware Lowballing
Just as in the moving business, lowballing is alive and well in cloud pricing. Greg Schulz, an analyst with StorageIO Group, warned users to pay attention to services that have very low cost per GByte/TByte yet have extra fees and charges for use, activity or place service caps. Compare those with other services that have higher base fees and attempt to price it based on your actual storage and usage patterns.
“Watch out for usage and activity fees with lower cost services where you may get charged for looking at or visiting your data, not to mention for when you actually need to use it,” said Schulz. “Also be aware of limits or caps on performance that may apply to a particular class of service.”
Demand Enterprise Visibility
Suresh Balasubramanian, CEO of Armor5, noted that a medium-size enterprise could be using upwards of 100 cloud services. Without visibility into active usage across these cloud services by department, group or cost center, organizations are likely to leave money on the table.
While some cloud services provide some rudimentary activity information, many just provide login/logout. Without cross-cloud usage monitoring and auditing, it is difficult to accurately budget and avoid waste.
“Vendors that provide cross-cloud analytics and real-time active use data deliver insight into this blind spot,” said Balasubramanian.
