Cloud's Big Caveat: Runaway Costs

Amazon offers a Simple Price Calculator to help customers figure their monthly bills, and the calculator itself is easy enough to use. But behind it sits a complex pricing structure that includes on-demand, reserved, and spot instance classes, a wide variety of server sizes and types in each class, and charges for other services such as caching, load balancing, and data transfer. These prices also vary from one Amazon data center to another. Amazon and other cloud vendors will offer human assistance if you're a big enough customer. Otherwise, the public cloud's pricing is based on customers figuring its out themselves from automated systems.

The bill predictability problem is persistent enough that a cottage industry of collecting and interpreting cloud bills has started to address it. 6Fusion, Uptime Software, Cloud Cruiser, and the cloud server configuration management service, Puppet Labs, offer more detailed and sometimes more real time billing information.

Uptime says it doesn't need user names and passwords to provide such billing insight; it can use the Amazon API that allows read-only access to server stats to figure out bills. Going beyond Amazon bill tracking, Uptime can tag an account with extra identifiers so that the buyer knows not only is the human resources department over its planned budget for the month but which employee's account is responsible. With its detailed information, UptimeCloud can compose a near real-time picture of a company's bill at any time of the month.

But these services will leave some companies uneasy, since it offers a third party a close look into how much computing capacity the company is using and possibly for what applications. That might be more information than a company wants to share. Plus, it adds costs.

Carpathia InstantOn Cloud offers a financial threshold alarm, so that a company is alerted when it uses up the planned hours before the end of the month. 6fusion says its Cloud Resource Meter can indicate whether it's cheaper to run a VMware workload on premises or in the cloud. The company sells a management platform for both on premises or public cloud, with bill per use pricing, but it works with VMware virtual servers, not Amazon AMIs (Amazon Machine Images, a proprietary version of Xen) or Carpathia InstantOn Cloud XenServers.

Another source of billing information is a third party, front end management firm. RightScale--a server commissioning, monitoring, and management service--is one of the few that can track and summarize bills at any time of the month from multiple cloud providers. That as-you-go tracking of costs during the month isn't information RightScale gets directly from all the cloud suppliers, though. "We had to develop bill tracking ourselves," said CEO Michael Crandell in an interview.

Amazon and other leading cloud vendors are aware of the problem and working on providing greater visibility into cloud charges, during the month as well as at the end of the month. At the same time, Amazon has dropped the price on its popular small Linux server offering twice in three years, from 10 cents an hour to 8.5 cents to 8 cents, or by about 20%. Microsoft has likewise recently dropped prices. Cloud customers, regardless of whether they can see all the details they want, see per unit charges headed in the right direction.

As a new type of service, the public cloud industry in many areas has brought a new level of transparency to IT operations. Its price list is posted for anyone to see, and a service failure results in public notices and postmortems explaining what went wrong, all of which is then dissected in online analysis and tweets. But the public cloud has yet to achieve an adequate degree of transparency that would make it easy for would-be customers to predict monthly bills. It's a feature that in the rush to expand cloud services seems to have been overlooked so far. If public cloud is going to take over more large-scale, enterprise IT workloads, tools that allow that kind of predictability will be essential.

Cloud Pricing part 1: Cloud's Thorniest Question: Does It Pay Off? Cloud Pricing part 2: Cloud Pricing: Amazon, Microsoft Keep Cutting Cloud Pricing part 3: Why Cloud Pricing Comparisons Are So Hard

SMBs have saved big buying software on a subscription model. The new, all-digital Cloud Beyond SaaS issue of InformationWeek SMB shows how to determine if infrastructure services can pay off, too. Also in this issue: One startup's experience with infrastructure-as-a-service shows how the numbers stack up for IaaS vs. internal IT. (Free registration required.)