Can We Really Save Money in the Cloud?
Clearly the cloud is a disruptive technology. Companies are moving to the cloud at an accelerating pace, with quite a few going all in. They are taking advantage of the cost savings, agility, scalability, and many other benefits of cloud computing. But is it really secure? Will we really save money? Will it be reliable enough? In spite of the benefits of cloud computing, many companies have tough questions that compel them to take a slower path to the cloud. I’ve had many “tough questions” conversations with clients, and after answering many of the same questions over and over again it seemed sensible to write my answers in detail.
This blog post introduces a series of cloud-related “tough questions, real answers” posts. If you’re relatively new to the cloud I’d suggest reading my Cloud Primer post, which includes a brief history of cloud computing, as well as a quick level-set on cloud terminology. This “tough questions, real answers” series also refers frequently to another prerequisite post on the Top Reasons for Moving to the Cloud. With those prereqs out of the way, let’s discuss our inaugural topic, which is one of the most common questions companies ask when considering a move to the cloud: “Can we really save money in the cloud?” Future posts will cover other topics such as security, compliance, reliability & SLAs, performance, cloud provider lock-in, and more – with plenty of real world examples. The overall goal is to provide you with the information you’ll need to answer these tough questions for your company – and hopefully accelerate your move to the cloud.
The Question: Can we really save money in the cloud?
As [I hope] you read in my Top Reasons for Moving to the Cloud post, the short answer is “yes, but it depends.” Here are some of the top cost savings available with cloud computing, all of which correspond to “Top Reasons…” from the aforementioned blog post.
- Pay as you go
From a cost perspective, moving to the cloud is analogous to plugging into your local power utility. It’s compute as a utility – you pay for what you use. The fact is, there’s a lot of computing power that goes unused when you host your servers on-prem (or even hosted). You purchase servers or VMs to support your dev team’s various environments, and the devs will only use them 8 to 10 hours a day. Or you purchase a beefy cluster of production servers to handle the biggest possible load you think your users might generate, but they rarely ever come close to that load. You’re paying for computing power that’s mostly wasted.
Contrast that with the cloud. In the cloud you pay for what you use, commonly referred to as “pay as you go.” So if your dev team needs a dev environment, then stand up the entire dev environment as-needed, and shut it down when not. The same goes for your test environment, or stage, or whatever environments you need at various times.
This theme also applies to other cloud services. Need a database, or cache, or a queue? Stand them up and use them as long as you need, then tear them down when not needed. You’re only charged during the time you use them.
Similarly, there’s the whole scaling discussion from “Top Reasons…”. You pay for the scale you need. Scale up when needed, and then scale down when possible to save money. Once again, you’re
And then there’s the cloud agility topic. Your teams can be more productive and provide more value if they’re not waiting around for infrastructure, or tooling.
Take advantage of the many services available in the cloud without any major expenses up front. Use the tools that are optimized for your precise use-cases, deploy them at the scale you need, and pay as you go.
- Cloud-Enabled IT
Let your cloud provider take care of the grunt work related to installing and configuring all the hardware, networking, monitoring, services, etc. They do it far cheaper than you ever could. You just focus on what’s strategic for your business. This “Top Reasons…” topic isn’t so much cost-related; it’s about providing more value than you could without the cloud.
As you can see, you can definitely reduce costs in the cloud, as well as provide more value, quicker. It should come as no surprise that many clients ask “How much will I save in the cloud?” Unfortunately, that’s not at all easy to answer, but the honest and disappointing answer is “it depends.” First of all, how much cost are you saving from the various cloud benefits: “paying as you go”, scaling on demand, being more productive/agile, and focusing your team on high value work? It’s difficult to assign those a dollar value. Secondly, what are your current infrastructure costs, precisely? Most likely you have only a very rough guess. There’s the cost of hardware (servers, networking, etc.), your electric bill, your facility costs, your labor costs, your various licensing costs (e.g. operating systems and databases), and more. Not an easy answer. You can search online for various case studies comparing on-prem costs to cloud, and certainly some case studies document real savings. But there’s no guarantee those are representative of your situation. It would take a very thorough analysis of your on-prem and cloud costs to arrive at an accurate cost comparison.
While it’s difficult to calculate your actual costs, it’s worth mentioning one common but *less-than-optimal* way to save money in the cloud. That’s called “lift and shift.” I’ve worked with several companies whose goal was to move to the cloud as quickly as possible, and with minimal effort. They wanted to migrate their on-prem infrastructure and applications to the cloud with minimal change. No taking advantage of the various cloud benefits discussed in my “Top Reasons…” post, such as no standing up environments as needed, then shutting them down. No scaling up and down as needed. No consideration of the cloud’s overwhelming number of tools and services, particularly the PaaS and SaaS services that can offer some great features and cost savings. They usually say they plan to take advantage of those options eventually, but I can’t recall any of my “lift and shift” clients actually following through on that yet. Still, I really can’t fault them for lifting and shifting because in fact they do save money – a couple of them saved 40%, which is really awesome for the minimal effort. It’s just that if they followed some of the best practices mentioned here they could save a lot more.
Now, for full disclosure it’s important to note that taking advantage of the full power of the cloud does take some effort.
- Depending on your teams’ familiarity with the cloud, there could be a pretty steep learning curve to climb. You’ll have to learn the various IaaS/PaaS/SaaS services available, how to navigate the cloud portal, how to architect your applications in the cloud, how to follow cloud best practices, how to monitor your deployed applications/services, etc. There really is a ton to learn.
- If you want to take advantage of standing up and tearing down environments as needed, it’s best to write the automation to make that happen. Fortunately, the major cloud providers have pretty good tooling to help with that automation, and there are some very good open source options as well. Related to this, in Microsoft Azure there’s a very cool service called DevTest Labs, which provides a sort of playground for your development teams. It has built-in guardrails to control spending, and automation to startup and shutdown around your working hours.
- Similarly, you can scale up and down manually, but that’s not optimal. The preferred approach is to configure your various services to scale up and down automatically, whether on a schedule or based on usage/performance metrics. There are some pretty good built-in options to auto-scale various cloud services. If you need something more customized than the built-in options, then you can write an app to manage scaling, which not surprisingly takes more effort.
The question here is “…can I really save money in the cloud?” Yes, you can, especially if you take advantage of all the cloud has to offer, which takes some work. But even if you don’t leverage all the cloud has to offer, like with a “lift and shift” approach, then you can still save money.
Next post I’ll tackle another “tough question.” I have my own list of frequently asked questions to pick from, but if you have your own tough question feel free to email me.