One of the great flaws of the public cloud has been its overly complex pricing structure.
Considering that the technology has been pitched as being a great way to increase efficiency and cut costs, the inability to accurately price and budget for cloud consumption has been a major weakness that has resulted in cloud not fully realising its potential as a tool that brings cost efficiency.
This failing is particularly damning when the leading public cloud vendors have all been participating in a ‘race to zero’ when it comes to cloud pricing.
What this basically means is that the leading vendors, such as Amazon Web Services, Google Cloud Platform, Microsoft Azure, have all basically entered into a race to get cloud storage to cost zero, or as close to it as they can get.
Although these companies have all frequently slashed their prices, AWS has already cut its prices 52 times, the lack of transparency and ease of billing management has left many customers frustrated.
Firstly there is the issue of the race to zero, which it would seem that Microsoft is backing out of in light of its recent Brexit price hikes.
Although Mark Smith, Senior Director, Cloud and Enterprise Business Group, Microsoft UK, told CBR that, “If you look at our pricing it is on a level playing field with our competitors, we’ve recently reduced the prices of some of our services to align with the likes of Amazon.”
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While Smith said that the company has put down the prices for some of its Azure services, the headline is that the company will raise some UK prices by up to 22%, none of its competitors have done this.
The AWS pricing model differs from how other vendors do it.
Microsoft appears to be the only of the big three cloud vendors that is putting its prices up. Google is keen to argue that it is the cheapest cloud, as highlighted by its messaging during the Google Cloud Next conference in London last month, while AWS has spoken of more price cuts, and cloud challenger Oracle is also keen to be at least as cheap as AWS.
Oracle’s Depak Patil, VP, Development at Oracle and formerly of Microsoft where he spent 16 years, told CBR that Oracle realised that it couldn’t just be incrementally better than AWS and Azure it had to “leap frog them” in terms of pricing but also what the customer gets for their money.
The race to zero might not be for everyone but the cost of cloud is one of the core reasons why businesses look at the technology in the first place.
The majority of research over the past year from the likes of Forrester, or IDC, tends to point to cost savings as one of the core driving factors for moving to the cloud.
Patil said: “Cloud providers as a whole haven’t done a very good job of demonstrating to the customers the value propositions of cloud platforms around efficiency, cost efficiency and resource efficiency and so forth.
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The problem for these cloud vendors is understandable to different degrees. Firstly, cloud services are incredibly easy to deploy and this has helped to create a proliferation of shadow IT that is likely to shock businesses when the bill comes in.
Secondly, accurately billing and predicting consumption of cloud services is difficult, cloud is after all designed to be flexible in order to expand to higher than expected demand, so by nature it is going to be hard to predict how much the business will be billed.
Patil said: “We’ve had dozens of customer examples of customers saying they have no idea who is using cloud in my company. There is no central oversight, there’s no central mechanism or policies to control that.
“Even if each VM is cheap and inexpensive, a lack of governance makes cloud more expensive.”
While this is clearly a problem that businesses must deal with it is also one that cloud vendors have to play a more proactive role in dealing with. Should cloud vendors want to be seen as genuine enterprise tech companies, which they do, then it is their duty to provide solutions to this problem.
Some of the vendors have been making investments in to giving customers the capabilities to ensure governance and policy based capacity, location and centralised billing mechanisms that will allow them to keep track of cloud efficiencies, however, it is far from industry wide.
Microsoft Azure offers a pricing calculator, as does Google Cloud Platform and AWS, but with four in five firms using multi-cloud, according to RightScale, and these calculators typically focusing on the use of one cloud tend to fall short of providing a complete cloud pricing picture.
The GCP pricing calculator is one of the more rounded solutions available.
If the cloud vendors themselves are unable, or unwilling to provide these tools then a third party’s tools could be use, but this will likely provide more expense which isn’t ideal when the move to cloud is meant to be driven by cost efficiency.
Cloud pricing in its current format looks complex and distinctly lacking in enterprise credentials. While work is being done to improve this there remains a long way to go.
