Why a Cloud Solution Might Not be Right for You

Everything is now referred to as cloud; software, hardware, hosting, even your Windows PC is a cloud enabled tool according to that annoying advert where a woman is uploading a photo to a social network to a jingle of "to the Cloud". Cloud is much misunderstood at the moment and also means different things to different people. Therefore, for the purposes of this blog, I will concentrate on Infrastructure as a Service or IaaS. In this situation cloud means that you can buy hosting resources either OS based or storage based (without an associated OS) without a contract and simply pay for what you use.

One of the first practical problems of this is that customers get a different bill each month and find it very difficult to budget over the course of a year for how much these services are going to cost. We have, in the last year or so, come across many customers' accounts departments that refuse to authorise this type of payment, saying instead that they need a projected fixed cost over the next 12 months and invoices on a monthly or quarterly basis that are the same amount each time. In other words, many finance departments have yet to grasp the concept of "pay as you go", or the concept of getting larger invoices in busier times. This means that often the business wants to purchase on a cloud based flexible billing framework but the finance department will not sign this off.

The second issue with providing Infrastructure as a Service is that many companies (including Memset) charge more to split out and itemise your costs in terms of bandwidth used, storage space consumed and how much power you have used. These costs are higher, not simply for us to make more money, but rather because intelligent systems have to be built or bought and worked into complex billing systems to present a transparent invoice with a breakdown of what has been consumed at the end of each month. Hosting companies also have to invest in intelligent hardware such as power bars that can report power usage on an hourly basis. For most companies their usage is pretty steady throughout the whole year as very few businesses have heavy spikes at certain times in the year. Such a company would pay more money for a "PAYG" service than for a fixed package with a fixed monthly cost when using the same amount of resources.

The other complaint I have heard is that for some services such as Amazon, which are all web based, you have to login to your account and turn on services or upgrade disk space, RAM or compute units. It is only human nature for us to forget what we have added, turned on or upgraded and then be shocked when our next bill arrives, only find out that due to forgetfulness we have been paying for something that we never used.

Cloud services are also often complex and if we don't understand how it works, or the framework of what we are being charged for, we always run the risk of being overcharged or obtaining things we don't actually need. KISS is the key phrase here (keep it simple stupid).

Cloud hosting has its place, but only when you have a finance department that is ready to embrace ad hoc invoices for different amounts and only when your usage demands flexibility and your requirement will go up and down throughout the year. Additionally you need to completely understand the framework of the charges and remember to turn off services when you don't need them and also to downgrade servers when you no longer need the additional resources.

Posted January 2013 by Nathan Johnston , in Marketing and Sales

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