Scalability of compute resource – bandwidth, storage, processing capacity – is one of the critical promises of cloud computing. This capability is practically impossible to replicate in an on-premises environment.
In the cloud IT infrastructure goes from being a capital expenditure to an operational expenditure, so the spending model changes. Therefore, whilst agility is a major benefit of the cloud, it does require attention from a cost management standpoint. Without checks and balances in place, due to the ease with which provisioning can be scaled upwards, costs can quite easily escalate.
Here are some considerations to ensure your organisation benefits from scalability in the cloud – particularly from the perspective of business applications – whilst optimizing costs:
If you are purchasing licenses for a new business application, and cost outlay is a concern, perhaps take licenses for a particular department first. Establish user adoption, create champions and then roll out the system more widely to other business units or departments. Should you periodically need to increase bandwidth for short bursts of time during times of high workloads, you will be easily able to do that – paying only for the increased bandwidth – which will be more cost effective in the short term than paying for both the larger number of licenses that may or may not be used and increased bandwidth.
This will also allow you to take a methodical approach to integrating the new application with other business systems. Today all cloud applications come with pre-built APIs making integration relatively simple.
However, it is important to note that whilst cloud allows the ability to easily scale the number of licenses, over the longer term, the total cost is likely to be higher. When starting with a small number of licenses, whilst the overall cost may be lower, the cost of the individual user licenses is likely to be higher than if you went firm wide. Also, application vendors are less likely to give discounts if you are taking a limited number of licenses.
Especially if you are starting small, you are in a lower cost band from a licensing standpoint. The downside of this is that whilst the cost of licensing may be lower, it may prove to be costlier if you need to increase the number of licenses in the short term. Often, due to the way vendor pricing models are designed, year-on-year cost increases can potentially be high. Therefore, take a reasonable longer-term view of business requirements. Hypothetically, if your business requirement is 50 user licenses, based on strategic growth plans, you may negotiate upfront the rate at which the number of licenses will increase year-on-year, say to reach 200 in five years’ time. So, essentially, you are securing a better rate over the five-year period, locking in the cost, and crucially, benefiting from cost predictability for budgeting.
Avoid duplicating data in multiple systems. Pick the right systems to start with and sync them so you have one source of truth. In this way, when you scale application integrations as you deploy more applications, you don’t increase the volume of data and unnecessarily pay for additional space.
You don’t use just one application in the cloud, but multiple business systems. Often, organisations make the mistake (inadvertently) of provisioning the cloud by business application. Instead, look at cloud provisioning comprehensively across business applications. Use of bandwidth can vary significantly by application, business unit and department. Additionally, it depends on how your cloud services are structured and costed – because cost can be based on data volume, compute cycles, the type and the number of features that are enabled or even the different types of users that access the various business applications.
Routinely review the application usage analytics to take a more holistic view of how your cloud compute resources are being used so that they can be better utilised. This will allow you to re-apportion resources rather than scale by default, thereby facilitating significant cost savings.
There is no one way of managing cloud resources and costs. The secret lies in understanding your organisation’s compute requirements, how it is typically used, where the usage peaks and troughs appear so that scalability-related costs are optimised.
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