Some companies shoot for reduced costs only to find unexpected expenses drive up the cloud computing bills. Do any of these problems lurk in your company?

Beth Stackpole, Contributor

May 25, 2012

5 Min Read

Amazon's 7 Cloud Advantages: Hype Vs. Reality

Amazon's 7 Cloud Advantages: Hype Vs. Reality

Amazon's 7 Cloud Advantages: Hype Vs. Reality (click image for larger view and for slideshow)

While the promise of the cloud is more cost-effective IT, the reality is that once companies move beyond simple deployment into a wholesale enterprise architecture shift, they often bump up against unanticipated expenses that threaten the cloud's principal value proposition.

It could be a development team that spins up hundreds of servers for load testing that they then forget to switch off, or a marketing team reserving dozens of new server instances to run a specific campaign when there are untapped enterprise resources they could otherwise deploy. Whatever the case, the 'aha moment' around the cloud's hidden costs typically presents itself along with a hefty bill that can leave some CFOs questioning the long-term viability of the cloud as a cost-effective platform.

"It's the shocking bill problem--that's when the pain first gets raised," said Sharon Wagner, CEO of Cloudyn, a provider of an automated cost management solution for analyzing cloud spending.

It's a scenario many early cloud adopters are just now confronting as their cloud usage and infrastructure expands as, conversely, their direct visibility and control over usage patterns shrinks. Unlike days past, CIOs are unable to maximize cloud resources because they likely don't know what applications are running, where they are running, how much they are consuming, and what the cost implications are.

[ Allocating costs across the enterprise has always posed problems, but cloud computing brings new complications. See Cloud's Tough Enemy: Chargeback Pushback. ]

Experts say it boils down to a simple visibility problem, yet there aren't a lot of simple answers at this point in time. Most cloud management tools, which are in themselves still evolving, address the nature of workflow, providing visibility and management capabilities around things like capacity, provisioning, and utilization of resources, but not necessarily total cost of ownership (TCO). While tools like Cloudyn, CloudCruiser, Cloudability, and a handful of others are tackling the cloud cost-management problem, they are in the early stages of adoption, and most companies have yet to confront the cost issue head on.

"Too many companies, until recently, only deal with the problem when they run into overages," said Mat Ellis, CEO of Cloudability. "TCO is the new security for the cloud. People are starting to take this seriously because they are now starting to spend serious amounts of money on the cloud."

According to Ellis and other cloud experts, these four scenarios account for cloud's most common hidden costs:

1. Runaway VMs: One of the key tenets of the cloud is self-service, making it easy for users to gain access to compute power wherever and whenever they need it. Often what happens, though, is users are so empowered to spin up compute resources that they overprovision or go over budget because there are no guidelines or caps in place to limit their usage. "One of the ironies of the cloud is you create a self-service portal to make it easy for users to stand up virtual machines (VMs) thus you make it [too] easy for users to stand up VMs," said Dave Zabrowski, founder and CEO of CloudCruiser.

2. Zombie VMs: This is something Zabrowski refers to as the "living dead" concept. Think back to the group of developers who spun up a bunch of clouds for load testing, which they never brought down, or even a handful of licenses for a software-as-a-service (SaaS) application purchased on credit cards by a lone business group, which after a period of brief usage lies dormant. While individually these expenses may not account for much, cumulatively they can add up, especially if there's no visibility for tracking, and months, even years, go by without turning off the spigot.

3. Choosing the wrong pricing model: Cloud providers price their services differently and often, the costs are a moving target. Many organizations will opt for more expensive on-demand pricing because they don't want to make a long-term commitment to the provider, but they do so without having the proper context. "By having enough information on how long the application will be running and which users are accessing it, you could potentially take a long-term commitment, get dedicated resources, and pay a lower price. But [without proper visibility], you don't know that," Cloudyn's Wagner said.

4. Maintenance costs: A move to the cloud means support and maintenance comes off of IT's plate. Well, that's the idea, but not necessarily the reality. "People think a move to the cloud cuts maintenance costs by 50%, but they're wrong because you still have some servers and resources that need to be supported," Wagner said. Also, all of the groups that have tapped cloud resources on their own (so-called shadow IT) come calling on IT, not the support folks at the Amazon cloud, when something goes wrong.

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