Cloud computing is a relatively young and rapidly developing technology, and it’s also a brand-new business model for businesses. Cloud computing allows businesses to buy only what they need in terms of technology and only pay for what they use. Several factors influence the adoption of cloud computing. Businesses may not be moving to the cloud to save money, but many are surprised to learn that it may cost more than on-premises processes. “The number one surprise is, ‘Why are our costs increasing?'” asks Morgenthal of DXC Technology. According to him, one key issue is that most companies don’t have the same sophisticated techniques for protecting public cloud data centers as they do for on-premises data centers. It is advised to take one of the many best cloud computing courses available online.
He says that moving apps to the cloud entails relying on services and figuring out how to take advantage of the “economics of the cloud.” He claims that if you have a monolithic program on the cloud, you may end up paying more than if you run it on-premise.
What are the different types of cloud cost models?
Because supply and demand fluctuate, cloud cost models are dynamic in nature. These are auction-based, time-based, or cost-based and depend on various factors. Subjective (value), objective (truth), and market-based cloud pricing models are available. The market-based cloud model is driven by an equilibrium of supply and demand, whereas the value-based cloud model is driven by supply.
Moving from pure cost-based cloud cost modeling to both value-based and cost-based cloud cost modeling presents research problems. All problems are moving from stateful to stateless pricing, changeable to immutable pricing, and designing cloud cost models that entice cloud clients. According to this research, sixty different cloud cost models have been identified.
- Costing Model Based on Services
With tangible product-oriented pricing, it stresses value delivery. Banking, airline, travel, legal consultant, insurance, hospital, and other industries employ service-based cost models. The value of the service-based approach is assessed in terms of levels, tiers, per device, user, and priority. This model’s worth can be determined and projected.
- A Cost Model Based on Performance
According to M. McNair, it is a system in which the seller is compensated depending on the actual performance of a cloud model or service. It is linked to the client’s business results based on specific performance metrics. Telecom services such as mobile apps, multi-party video conferences, and satellite connectivity are examples of this model’s applications.
- A Cost Model Based on Customer Value
It determines pricing based on a client’s subjective viewpoint and the client’s value delivery. Perceived value, feature, psychological, and hedonic-based cost models are the four types of value-based cost models. Perception, sociology (big environment), psychology, and economics are all used to build these models (utility). The customer value-based cost model maximizes profit and market share for the company.
- Cost Model: Free Upfront and Pay Later
As the demand for cloud services grows, so does the rivalry among cloud service providers. Many cloud service companies use free upfront and pay later pricing methods to get more consumers and benefit from premium clients by leveraging their products with basic functionality. Three pricing models are available: free product cost on advertising, freemium, razor, and blades.
- Cost Model Based on Retail
It is based on a small number of clients who purchase goods from physical stores. The B2C (Business-to-Consumer) model is affected. Discounts and allowances, product mixing, promotional, and discriminatory pricing are the four subcategories of the cost model.
- Cost Model Based on Expenditure
The cost of a central component is determined using the application as a unit of charge. Cost models are divided into three categories: cost-plus, goal return, and percentage cost.
When moving on-premise systems to the cloud, Paul Gomez, vice president of enterprise delivery at Columbus Global (a technology service and consulting firm that helps firms upgrade their operations digitally), encourages manufacturers to consider seven cost concerns. These elements are listed below.
- The extent of Migration. Manufacturers must understand, according to Gomez, that they do not have to migrate their entire business to the cloud at once.
“A meeting of the minds with the stakeholders in the firm to establish the optimum chronological order of migration,” Gomez suggests once companies have progressed past the earliest stages of cloud migration.
- Challenges in Deployment Because most manufacturers employ a combination of older and modern apps, the older ones frequently need to be updated in order to run in the cloud. Some may even need to be replaced, which is why Gomez advises recognizing these issues before deciding on a budget, taking into account the time and resources they would demand. “There is no one-size-fits-all solution,” Gomez says, adding that manufacturers must examine the longevity of their current applications. Moving apps to the cloud should be prioritized based on which applications are “growing costly or inefficient, or applications that don’t “play well” with others.”
- Support from a third party. Because transferring systems to the cloud isn’t easy, most businesses engage a third-party consultant to assure a secure data transfer, a smooth transition, minimal downtime, and optimal cloud performance once they’ve launched. “These services add to the expense,” adds Gomez, “but they might be critical to success”; Gomez recommends looking at firms that are comparable to yours to see which third-party technology companies they work with, while looking for the right third-party advisor to assist with the transfer. “The more niche a company is, the more true this is,” he argues.
Gomez also emphasizes the importance of not overlooking the talents of the team currently in place at your organization when evaluating third-party providers. Examine whether they are capable of handling migrations, upgrades, and/or maintenance. Consider whether handling those activities is worth your staff’s time, in addition to their talents.
- Cloud-based services There are a lot of cloud service possibilities; some you’ll need, some you won’t, and others you might want to test out for a while. Gomez recommends piecing together products and services with a tool like Microsoft Azure’s pricing calculator to establish your prospective monthly rate.
Moving, integrating, and testing are all things that need to be done. According to Gomez, moving any system to the cloud entails numerous crucial processes that necessitate dedicated security measures and competent management. “Data must be moved safely and securely, apps may need to be modified during integration, and the infrastructure must be thoroughly tested before going live,” he explains.
- Actions that are currently underway. Of course, the cost of your cloud migration will continue after you’ve launched. Several ongoing costs should be factored into your budget, such as educating staff on cloud products, doing extra tests, adding new workloads, scaling services, and maintaining a secure environment.
- Time has been spent. All of these influencing factors have a temporal component. According to Gomez, if you do not factor labor costs into your budget, you will risk underestimating by a large amount.
The Secret to Success in the Cloud
- It’s not about saving expenses when it comes to moving to the cloud; it’s about figuring out what’s best for each application and the company.
- It’s also not a case of all or nothing. You can use the cloud while keeping the majority of your workloads on-premises.
- The priorities of suppliers or analysts cannot determine your cloud strategy. Rather, your cloud options should be driven by your business needs and desired outcomes.
- The idea is to build a long-term cloud strategy that will position you for new development models and the software-defined enterprise. Applications will no longer be tied to specific infrastructure and will be able to roam between cloud environments in a federated architecture in the future of IT. Learn cloud computing with a good online course.