By now, most people know the benefits of the cloud – elasticity, flexibility, scalability, on-demand resources. But how does moving from traditional on-premise IT infrastructure to the cloud affect your business financials? For a good overview, check out “The Financial Impact of Cloud.”
Wired Innovation Insights published a blog article written by our own Chris Nolan yesterday. Chris discusses ways you can save money on your AWS cloud deployment in “How to Manage Your Amazon Cloud Deployment to Save Money.” Chris’ top tips incude:
- Use CloudFormation or other configuration and orchestration tool.
- Watch out for cloud sprawl.
- Use AWS auto scaling.
- Turn the lights off when you leave the room.
- Use tools to monitor spend.
- Build in redundancy.
- Planning saves money.
Cloud has been positioned as the panacea for all of the ills in the world. The hype often leaves experienced IT professionals skeptical of the benefits of leveraging public clouds. The most common objection to public cloud I hear is, “Wait until you get your first bill from (public cloud).” I can understand the fear and consternation of suddenly having a huge monthly bill that no one budgeted. However, there are great 3rd party tools available that allow you to forecast and track your budget and usage, like 2W Insight, which make that uncomfortable situation avoidable.
With the recent price cuts by Amazon Web Services, Microsoft and Google, the TCO argument from the traditional hardware manufacturers is losing steam. When is the last time any major hardware vendor cut its prices to its customers by 40-60% overnight? There is no better time to begin evaluating and leveraging the cloud, and a great place to start is with a TCO analysis.
2nd Watch has a services practice that can assist your organization in building an accurate monthly forecast of your estimated cloud costs while also providing a full TCO analysis.
-Matt Whitney, Cloud Sales Executive
Read The Wall Street Journal’s “A Price War Erupts in Cloud Services” to see how Amazon, Microsoft, and Google users reap benefits of price cuts while the companies battle over costs. 2nd Watch EVP of Sales & Marketing, Matt Gerber, also weighs in on the recent price reductions and what it means for customers.
Cloud computing continues to redefine itself as more customers begin their “Journey to the cloud.” There are many value propositions between different cloud providers, including, but are not limited to; agility, cost savings, time to market, increased security, flexibility, elasticity, economies of scale, a more effective support model, and the list continues.
As we start to understand the cloud provider landscape and take a snapshot into who is going to be the market leaders in the future, it is easy to see that Amazon Web Service (AWS) will be amongst that leader board. AWS is not only defining the IT infrastructure as a Service market, but it is also changing the consumption model for IT.
Due to the drastic changes in the procurement process of infrastructure, more business level executives (CFO, COO, CEO) are being pulled into the strategic decision making process of acquiring infrastructure as a service. For those executives that are not familiar with cloud services, I would like to offer a few tips that will not only support your overall corporate goals, but will allow you to make informed decisions in this highly evolving landscape of cloud computing.
- Train yourself on the new model – Changing your company’s IT spend from a capital expenditure model to an operational model can be challenging. Consult with your AWS account manager on best practices. Discuss your goals with a Premier Partner within AWS’ ecosystem. Converse freely within your company to understand how you can address potential roadblocks before they happen. The procurement department and the finance teams within your organization will have great insight on how to help with this process.
- Be cautious of jumping in with two feet – Many organizations are starting their journey with a hybrid model (on-premise + cloud). Test/DEV, disaster recovery, or non-production applications are all great candidates for moving to the cloud. Your ERP system and your mission critical applications may still have some lifecycle on their existing infrastructure and should remain on-premise until an evolutionary plan can be developed. Start small, think big and enable your staff to learn the technology, while still supporting your organization’s goals and business objectives.
- Leverage the free tier – AWS offers a free usage tier and has no restrictions on your particular use-case. Spin up a new application, train your engineers on the new platform, or simply an existing application. The choices are yours to make, and it will not affect your bottom line.
- Reserve Instances – For the applications that are running in a steady state or have a consistent operating floor, purchase reversed capacity. This will immediately give you cost efficiency between 40%-70% off your on-demand billing.
- Get rid of excess capacity – Many organizations are accustomed to procuring IT infrastructure that has been over provisioned to meet the demand of peaks and spikes in their business. With cloud computing, you do not need to allocate excess capacity. With the proper architecture, it will be waiting for you when you need it. Optimize your environment(s) and leverage one of the grea advantages of cloud computing.
- Tiered Pricing – For heavy users of cloud services, AWS offers tiered pricing to customers that consume web services up to certain thresholds. Review these tiers and forecast your roadmap to meet these levels before reporting deadlines (fiscal year ends).
If you follow these guidelines, your business will be sure to reach cost efficiency in the cloud.
-Blake Diers, Alliance Manager