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The True Cost of Cloud

Author: John Burke, CIO & Principal Research Analyst

Most organizations now use the public cloud: 62.6% use or plan to use IaaS in production; 53% for PaaS. However, although most organizations are using cloud, most workloads remain on premises. Of organizations using cloud, an average of 13.3% of workload is in IaaS, and 12% in PaaS.

Most organizations cite agility as the reason to move into the cloud. However, most companies also expect to save money—and that expectation isn’t always met.

Many organizations do save money. Most don’t. Why? For one thing, most IT workloads are not designed to take advantage of the great money saver of cloud: pay-as-you-go elasticity. Non-cloud-native workloads typically expect an “always on” infrastructure, which means technology professionals need to configure the cloud infrastructure to handle maximum load.

Moreover, IT professionals often don’t understand how quickly cloud-related services can add up. It should be straightforward to estimate the costs of operating in the cloud (providers have excellent quoting tools). But to do so accurately, IT professionals need to know each workload’s requirements for compute and storage resources, the data flows it will generate, how it fits into the overall web of service interdependencies, and its demand curve over normal business cycles. Comparing across providers is hard, since providers all use different models for sizing resources and assigning costs, and estimating for a whole portfolio of applications (without redesign) is enormously more complex.

Looking past the basic infrastructural costs, there’s the cost of staffing for cloud. Successful organizations enhance their staffs to include cloud architects, cloud solution architects, and cloud security specialists—all of whom are necessary, but can add millions of dollars in staffing costs.

There’s also the cost of ancillary tools. Many organizations use migration tools, including cloud management platforms, cloud service brokers to manage job placement, and increasingly, Cloud Access Security Brokers (CASBs) to improve both visibility into and control over cloud systems use.

So, is cloud cheaper? As should be clear by now, the answer is “it depends.” The typical organization in Nemertes 2017-2018 Cloud and Network Research Study spends nearly 10% more to run enterprise workloads in IaaS, and nearly 25% more to run in PaaS.

That said, the most successful organizations in the study (versus the typical ones) wind up spending significantly less, as little as 50%. To be successful financially as well as functionally, organizations should:

  • Redesign/rearchitect as they migrate
  • Staff for successful migration
  • Deploy tools to assist with migration, management, and integration across clouds
  • Layer on security such as a CASB for both visibility and control across environments

Table of Contents
  • Executive Summary
  • Pennies From Heaven
    • Saving Money is Not a Given
    • Workloads Matter
    • It’s Complicated
  • Staffing Up for Cloud
  • Operations and Security Add Costs
  • So…Is Cloud Cheaper?
  • Conclusion


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