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Is the Cloud really more economical?

Why do French CIOs want to migrate their IT infrastructure to the Public Cloud? To save money of course! In any case, it is one of the main sources of motivation.

More and more French and international companies are deciding to migrate their IT infrastructures to the Cloud, with the aim of saving significant amounts of money. The Cloud has many advantages: flexibility, productivity, simplicity and, therefore, attractive costs.

Why is the Cloud cheaper?

This question can be answered in two ways. On the one hand, fixed capital expenditure has been transformed into operational expenditure, adapted to the needs of each company. It is then possible to easily upgrade your capacities and adapt your invoice according to your actual consumption, while spending more time on your product.

On the other hand, Cloud prices are continually pushed down by increased competition between major cloud providers (AWS, Google Cloud Platform, OVH, Microsoft Azure...).

In theory, the Cloud therefore offers many financial advantages, allowing companies to optimize their expenses and focus more concretely on their core business. To illustrate these advantages, Veolia's example is telling: the migration of its customer management application to AWS has enabled the energy specialist to reduce its operating costs by a factor of 10.

Saving by migrating to the Cloud: an obvious choice?

But, despite its apparent simplicity, cloud spend management can sometimes be quite complex. The main source of savings comes from the principle of invoicing on demand: resources are invoiced for each actual use. But this price flexibility is also a source of over-invoicing and over-consumption of resources. The multitude of enterprise cloud users and the complexity of provider pricing make it very difficult to achieve an accurate forecast budget. As a result, companies often face unpleasant surprises when it comes to paying their Cloud invoices.

How to understand your Cloud invoices?

To better understand your Cloud invoices, it is necessary to identify two workstations:

  • Capital expenditure (CAPEX) for the purchase of data centres, servers and other network equipment. These are the fixed expenses.
  • Operational expenditure (OPEX) related to the salaries of experts and the use of the Cloud itself. These expenses represent the variable part of the Cloud invoice. It is particularly here that unexpected and consequential costs can arise.

Identify unexpected Cloud expenses

The additional costs appear as soon as the cloud is integrated into the company's IT environment, since the company is often willing to pay much more than expected to ensure a successful migration.

The offer of Cloud services is extremely complex due to the heterogeneity of the offers of the different providers. When the contract is established, suppliers offer many storage options, making it difficult to choose and bringing out the first cloud service brokers today. The majority of organizations, due to excessive foresight and lack of advice, tend to take the most expensive data accessibility formula, for simplicity, when they often do not need it. They also overestimate the resources needed by employees (memory, power, space, etc.), so that resources are underused or even totally useless. Meanwhile, suppliers continue to bill for all contracted resources. This is a real waste of budget for many IT departments.

Cost estimation is therefore complicated by the pay-per-use system. Giving access to the Cloud administrator account is like giving access to the organization's bank account: each use increases the invoice. The difficulties of visualizing and understanding Cloud expenses lead companies to set up fairly complex security or filtering devices. In addition to all this, there is the considerable development of multi-Cloud, which further complicates the management of its expenses, as they are exploded between the invoices of the different Cloud providers.

Anticipate to better control your Cloud expenses

From the outset, it is important to protect against price changes from cloud providers and rising service prices. Indeed, the development of the Cloud is characterized by the explosion of uses at all levels of the company, the enrichment of products, the multiplication of metrics and a complexity of pricing policies.

While cloud integration is relatively simple, extracting and migrating data to another provider can also be a significant expense. It is important to have this in mind when signing the initial contract.

How to find your way around Cloud offers?

It is difficult to calculate the price of your infrastructure with the hundreds of services offered by suppliers. It is indeed necessary to take into account the type of invoicing (by the hour, the number of executions, monthly subscription, variable prices...), the difference in price between regions (some services are particularly expensive or are simply not available in a region), the bandwidth, the cost of support... More complex manipulations are possible as at Microsoft Azure, offering an instance booking of up to 3 years to reduce its costs by nearly 80%...

It is now also necessary to seriously consider Serverless (basing your infrastructures on virtualization rather than physical servers). This solution is indeed much cheaper and more and more developed, especially at AWS.

Generally speaking, all major suppliers offer free trial accounts for a period of 12 months: this remains the best way to explore their services. Azure goes even further by offering a 170€ credit to test its services for 30 days.

Three tools to control costs

Cloud providers offer three tools, essential to take control and optimize your cloud environment:

- Training and certification

Training for all employees is essential for an optimal migration to the cloud: videos, accreditations and training are available online for all customers (Amazon Web Services, Google Cloud Platform, Microsoft Azure). More advanced and specific training also allows strategic profiles to be certified and to control the environment and its costs. Some training is even essential to reach a level of partnership with the supplier in question.

- Training and certification

Suppliers have large networks of consulting and technological partners... If they represent an investment, FinOps or SecOps profiles in particular, offer a real opportunity to optimize your Cloud budget.

- Training and certification

These calculators allow you to give an estimate of your operating expenses (Amazon Web Services, Microsoft Azure, Google Cloud Platform). However, errors remain, and prices are generally underestimated by the suppliers themselves.

FinOps to respond to these new issues

The solution to these unpredictable and explosive expenses: FinOps, the real financial architect of the Cloud. This new player is positioned from both a technical and financial perspective to evolve the Cloud architecture with consumption and best estimate the price of the infrastructure. Optimization then becomes possible again.

Faced with the challenges of the Cloud, and to support the development of these new players, new solutions are emerging, in particular Cloud Cost Management platforms allowing the management of its expenses and uses Cloud and an optimization of these. The Cloud has not finished revolutionizing the daily life of organizations and presents a beautiful clear sky for the future. 

Would you like to discover our Cloud Spend Management platform for free and without obligation?

Chronicles of the Cloud Macaroon

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