Managing Public Cloud Costs

Public Cloud services caught fire when COVID hit. All over the world, companies needed to shift their employees to remote work and needed to do it quickly and easily. Luckily, those are two of the top benefits of public Cloud services – they’re simple to use and fast to get up and running. This low technical barrier to entry paired with zero capital expenditure to get “spun up” makes public Cloud an attractive operating option. What is often not accounted for, however, are its costs over time.  

Public Cloud’s variable expenses can become volatile and are often underestimated. Public Cloud is often seen as the lower risk, lower cost option when compared to more permanent solutions like private Cloud, but that cost difference often compares capital expenditure to operational expenditure – you can read more about Cloud types and their benefits in this recent blog. In the short term, public Cloud is the cheaper option. Month-over-month though, that is not the case; this year alone, end-user spending on public Cloud services is expected to rise 20.4% in 2022 to $494B, compared to $411B in 2021 according to Gartner. Over months or even years of higher unpredictable OpEx costs, investing in a more stable private Cloud build often outweighs the agility-focused benefits of public Cloud. 

These benefits offered by public Cloud providers are focused on short-term benefits, and often have short-term pricing models to match them. In some scenarios, pay-per-play makes sense; for example, at the beginning of the pandemic when there was not the time nor resources to get the entire world up and running on their own private servers at the same time. Public Cloud stepped in and was a fantastic replacement for more durable private Cloud options. After 2.5 years though, the message has become clearer than ever – remote work is here to stay, and companies of all sizes should be shifting to more mature Cloud models to stabilize costs and build out more reliable infrastructure. So, is your company still relying on a variable cost, one-size-fits-all public Cloud service?

The Cost of Public Cloud

If your company is utilizing public Cloud services, especially those that prioritize agility and operational speed above all else, public Cloud is a fantastic option. For other companies, the potentially high costs incurred on a public Cloud platform might not be in alignment with organizational goals. Let’s look at some pain points to consider when conducting a cost-benefit analysis of your organization’s Cloud spending. 

Pay to Play

Things like Infrastructure as a Service (IaaS) are offered by companies like Microsoft to inherently help manage the underlying hardware layer and offer basic governance controls. They don’t even require dedicated IT personnel or hardware investment to get set up – with the simple click of a button, you can be up and running on a public Cloud server from a company like Google, AWS, or Azure in minutes. Desktop as a Service (DaaS), which allows users’ desktops to be operated from a Cloud environment, further enables companies with high turnover or seasonal employee spikes by hosting employee desktops in the Cloud, rather than a dedicated workstation or laptop. This alleviates an incredible amount of IT support needed to build out infrastructure, maintain security posture, and stay in compliance. 

Each of these services comes at a price, however – usually a per-head or per-kilobyte cost for usage. In the short term, those costs might be worth it – say when a global pandemic hits. In the long term, however, do those costs align with their value?

Irregular Monthly Costs

Rather than paying for your infrastructure setup and maintenance, public Cloud services charge for storage space and overall traffic. Need to spin up a custom app and share it with your team for testing and debugging? It’ll be easy to get up and running, but you’ll be paying per KB for storing it and for each user interacting with it – which can get very pricey, very fast. 

At the end of each month, public Cloud costs need to be meticulously reviewed and their benefits weighed. If the costs of transacting on the public Cloud do not align with a company’s agility goals, there may be more money going out the door than there is opportunity for further funding or buyout. 

Why Private Cloud?

The costs of private Cloud are predictable, and the environment is designed to meet your specifications. Rather than a recurring operating expenditure to use the service, companies can expect a one-time capital expenditure for setup and onboarding that is paired with a much smaller, predictable maintenance and/or access fee. 

Predictability

Using the same example as above, spinning up an application on a private Cloud server would take a bit more time, and would need to be provisioned manually. However, once that application is up, there are no additional costs associated with accessing and running it. 

No Financial Management Overhead

Does the overall capex spend align with the long term benefits your company will experience from a dedicated private Cloud infrastructure?  If the answer is yes, then no further resources need to be allocated to reviewing that decision. Choosing to work with a partner to build out your private Cloud infrastructure can be tricky, but the results at the end of the day will consistently outperform what can be done in the public Cloud in the areas of cybersecurity, customizability, and overall user experience. 

Thinking about moving some or all of your infrastructure to the Cloud? Let one of the experts at Thrive walk you through the benefits of all Cloud types to choose what is best for your business.