Monday, April 05, 2010

What Cost The Cloud?

First, let me start by saying that we have some clients using cloud services, some clients not interested in cloud services, some using cloud services without realising it and some who are not interested in cloud computing in any way.  And although I can see that percentage changing a bit, I can't see it going all one way or another.  And it hasn't been all one way for quite some time now!

There are certain services that lend themselves well to being cloud based (or what used to be known as "hosted") and these include mail filtering, eCommerce and general web sites as well as mail hosting.  Services such as email can be hosted (like they have for years, even decades, such as when you use an ISP for your email account, or if you're using a mail hosting facility) or onsite and depending on your needs, both - or a mix - can work well.  The same goes for websites - sometimes it makes sense to have these on-premise, but more often than not they are hosted at a location with a faster Internet pipe than you can afford in your office.

Some services may work well in the cloud in a number of cases, but may work out a lot more expensive in many others - such as hosting your Windows Domain Controllers, Terminal Servers and/or SBS in the cloud.

Now, there's Internet connectivity to throw into the mix.  In your office, if you have your email/groupware and data all on-premise, then if the Internet connection goes down for a few minutes here and there (or more often, as is the case often here in Australia, especially for SMBs who tend to shy away from the multiple thousand dollar/month Internet connection options) then it is really no big deal - the email will sit for a few minutes and then be sent/received.  But if your data is up in the cloud, well, when your Internet connection goes down, so does access to your data.  This can be helped by redundant Internet connections, but this will cost more money/month than the old ADSL2+ connection you used to have.

And when your IT provider goes bust (or you no longer wish to work with them), you call another one in.  How does that work when the data's on someone else's servers in some data center somewhere?

In good times, companies generally buy hardware and software that will last them 3 to 5 years or so.  Even a subscription model, renewed annually, can be changed easily in many cases.  So, say you spend $30k on an SBS network when times are good, then you go through a slump.  You can often talk to your IT consultant and ask whet can be done to reduce costs (at the expense of regular upkeep) during this lean period and more often than not you can work through it with only a bit of labour as an expense.  If you're hosting your network services in the cloud, you'll have a minimum monthly fee that must be paid before upkeep/maintenance is even considered - and this monthly fee can be significant at times.  You will need to take this monthly hosting fee into consideration when comparing the cost of a hosted solution to that of an in-house solution.  Will your cashflow outlay that's budgeted in good times be able to be sustainable when times are lean?  Remember, this is for services such as email and line of business applications that you cannot often survive without.

So, not only is the initial outlay needing to be considered when comparing in-house and cloud based solutions, Internet connectivity, increased monthly minimum outgoings and the reliability of the cloud provider all need to be taken into consideration.  Just because you're moving a CapEx into an OpEx doesn't mean that all's going to be rosy when you find yourself in a spot of financial bother!


The Outspoken Wookie

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