Touted as the best choice for IT deployments due to its TCO benefits, cloud computing is gaining notoriety as being “too expensive”. We break the myths and suggest how to achieve the perfect balance to your cloud enterprise in order to get maximum ROI.

The cloud

According to findings from Tariff Consultancy, the average cloud costs for enterprises has dropped by two-thirds since 2014. Tariff found that an average entry-level cloud computing service instance is currently valued at 12 cents per hour for Windows users, with cloud computing services now employed by enterprises across a range of crucial applications.

The cloud is being considered for all types of IT solutions, including databases. The specific characteristics of databases are affected by cloud infrastructure in general, and you also have the option of deploying a database to different levels in the cloud. These levels have an impact on the benefits and limitations you can realize from your deployment. Understanding the real benefits and cloud costs of implementing the cloud, as well as selecting the appropriate cloud level for your implementation, will optimize the benefits you realize from your database in the cloud.

Common mistake

The cloud, unfortunately, is not magic, but many organizations start with beliefs that lead to disappointment. Most organizations find that moving to the cloud does not necessarily create significant cloud costs benefits over time. Saddling your move to the cloud with expectations of large cost savings can cause you to skimp on essential management and oversight functions required for any successful deployment, which in turn can end up in disaster.

Increasing Productivity

Resource utilization
Resources that are sized to handle peak loads are under-utilized at off-peak times. Also, in many enterprises, servers are dedicated to specific functions or departments, and can be under-utilized. It is commonplace for departments to request new servers for new projects, even though other departments have capacity.

Cloud computing enables resources to be shared by different loads, and thus improves utilization. The sharing can be between enterprises, with public or community cloud, or within an enterprise, with private cloud. The rewards can be high. As an indication of what can be achieved, enterprises that have adopted private cloud as a solution are reporting server consolidation ratios of as much as 12 to 1.

Usage based Pricing

Usage-based pricing translates the higher utilization achieved by providers into lower costs for consumers. The benefit to enterprises is not that they are using lesser resources, it is that they are paying for lesser resources. Their cost curve follows their resource utilization, resulting in a lower total than that for a dedicated, under-used system. Traditional licensing associated with ownership, number of users, support, and maintenance costs and services leads to capacity-utilization gaps similar to those for hardware resources.

Specialization and Scale
In addition to the advantages of load sharing, cloud computing can result in lower IT costs because of skill specialization and economies of scale. A large cloud provider – or private cloud division within a corporation – can be much better at providing IT services than a small IT department. And it can amortize the cost of problem-solving over a larger user base: the problems experienced by one user can, once they have been solved, be proactively fixed for all the other users of the cloud service.

Improve speed of operation

The major way in which cloud computing contributes to ROI is through improved speed of operation.

Cloud computing provides an increase in provisioning speed, which enables enterprises to acquire the resources they need faster. And, because resource configurations are visible, it speeds up the choice of multi-sourced resources, which can dramatically cut the time to deployment of new products and services. This applies to application and platform resources, as well as to physical infrastructure.

Increased speed of execution has a positive impact on lifetime cost models. Typically, cost is reduced over the lifetime of a product or service as the depreciation cost of purchased assets decreases and as efficiencies are introduced. The speed of cost reduction can be much higher using cloud computing than traditional investment and divestment of IT assets.

Along with accelerating business process execution, cloud computing also speeds up the process of IT asset management.

It is advisable that you consider the cost holistically. That means working up a well-thought-out TCO model that considers all aspects of the cost of moving to the cloud, such as people, migration, security, operations, and testing. You need to then balance that cost with the value of agility and time to market, which are typically huge for most enterprises. Moving to the cloud is more cost-effective than leaving the applications and data in your data centre.

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