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.”
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
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
Last week, AWS announced their 42nd price reduction since 2008. This significant cut impacts many of their most popular services including EC2, S3, EMR, RDS and ElastiCache. These savings range from 10% to 65%, depending on the service you use. As you can see from the example below, this customer scenario results in savings of almost $150,000 annually, which represents a 36% savings on these services!!!
This major move not only helps existing AWS users but makes the value proposition of shifting from on-premise to the AWS cloud even greater. If you are not on AWS now, contact us to learn how we can help you take advantage of this new pricing and everything AWS has to offer.
As an AWS Premier Consulting Partner, our mission is to get you migrated to and running efficiently in the Amazon Web Services (AWS) cloud. The journey to get into the AWS cloud can be complicated, but we’ll guide you along the way and take it from there, so you can concentrate on running your business rather than your IT infrastructure.
2nd Watch provides:
- Fast and Flawless enterprise grade cloud migration
- Cloud IT Operations Management that goes beyond basic infrastructure management
- Cloud cost/usage tracking and analytics that helps you control and allocate costs across your enterprise
Yes, I know, everyone is tired of hearing about the Cloud. It seems like talk about the cloud happens all day, every day, and you know that it’s hit the mainstream when your mom asks you about it. The reality is that we’re still so early in “The Journey” (yes, we call it that because it truly is one.) that it can be impossible to distill the tremendous amount of noise that exists around the topic. Let’s spend a few precious moments identifying the cloud myths that are swirling about and try to myth bust a bit.
Legacy – I have too much invested in my legacy systems, tools and processes that makes moving to the cloud too hard or just not worth it.
That’s partly true. Many companies have a lot of legacy systems and infrastructure out there. So much so that it clouds (no pun intended) their view on what’s possible. It’s like quicksand; the more time and money invested in legacy systems and architectures, the deeper and deeper you get, and it just seems impossible to get out. There is a way out though, and the first step forward is actually to take a step back and understand where you are today. From there, we’d suggest taking stock of what’s in your environment and seeing what’s ready to move to the cloud.
Security – It’s not secure. I’ll be sharing my data with everyone else.
That’s absolutely not true. The public cloud is extremely secure. These environments have been built to adhere to the most stringent security standards on the planet. Cloud providers take an in depth approach, going above and beyond to ensure that security permeates throughout the environment.
Agility – What am I really gaining? There can’t really be as much benefit as people are saying.
When we talk to any business person, lack of agility is typically their number one challenge. Traditional legacy, or even co-location infrastructure, is designed and built so that it doesn’t allow for the flexibility companies need in the constantly changing world. The need to continually evolve and the ability to “fail fast” are so important to businesses today, and the cloud enables you to do just that. You can literally create a global infrastructure in a matter of minutes that runs only when you need it. The benefits are dizzying.
Cost – I hear that it will actually cost me more to run in the cloud.
There are tremendous economies of scale to be gained by building out the massive footprint that the existing public cloud providers have built. It’s enabled them to get such a head start that it’s downright unbelievalbe what you can do today at a fraction of the cost of doing it in a traditional IT world. There are a number of TCO calculators out there that will show you the cost of running infrastructure on-prem vs in the cloud. Take a look at the calculator we built for AWS and see for yourself by plugging in your own numbers.
Best of Breed – I can use any cloud provider. They’re all the same.
There is an entire body of knowledge dedicated to the cloud landscape, how mature each company’s offerings are and where they fit in the overall landscape. I am a firm believer that you build your company to be as agile as possible, trying to eliminate brittle and hard linkages. Please check out the following link for an independent analyst’s view of today’s cloud landscape.
Org Structure – I can use cloud as I see fit and keep things the way they’ve normally been internally.
True innovation is happening here. The industry is attracting the absolute best and brigh talent, and the pace of innovation will only accelerate. I’m not saying you need to stay ahead of it. The goal is to keep pace and not fall behind. We can help you do that!
-Mike Triolo, General Manager – Eastern US