Focusing on the cheapest cloud price could cost you more

Amazon Web Services really leads the way in determining market price for cloud services, and the second-, third-, and lower-tier cloud providers try to price their cloud services below that of AWS to steal its business. That is, until AWS drops prices—again.

Enterprises that focus only on cloud usage prices are missing the big—and more important—picture.

For example, say that you move 100 applications and their linked data to a public cloud provider. It charges you a certain usage price for compute and storage, which is set at the time you provision those resources.

Your applications use those resources under specific patterns of use. That means they take a specific amount of compute for a specific amount of storage, and do so consistently until things change. The pattern of use includes network usage, security services, and other services that those applications also use.

No matter what your initial prices are for these services, your monthly bill will go up to run the same applications. What gives? The answer is that things are never consistent. There’s the natural organic growth of data, there are functional changes demanded by users, and there are the tweaks developers make while maintaining the applications. All those factors mean the pattern of use slowly changes, and your costs follow along as you use services more than expected, use the services in different ratios, and/or add new services.

That tendency to cost creep might seem like a good reason to focus on getting a lower price upfront. But a sole focus on price typically means you’re not doing the necessary work to establish cost metrics and cost governance. Those are where you control costs over the long term; focusing on the initial price and then letting the services just run will save you money only for a short time, and you’ll lose those savings as the cost increase.

Indeed, I get calls from cloud users all the time that are surprised by their cloud bills. Something changed, and they have no idea what changed or how it affected their cloud bills. They would have avoided that surprise had they established a cloud governance and cloud metrics program. That program includes software systems to monitor usage patterns and their direct impact on costs in real time. That program also requires that you have controls in place, which these software systems often provide via the ability to place limits on usage and automation that uses predefined cost policies to adjust the service mix on the fly to reduce cost growth.

By all means, look for the best pricing you can get. Just don’t stop there. Otherwise, you’ll get a nasty surprise later on.