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BLOG: The great cloud computing pricing debate

Bernard Golden | Nov. 29, 2011
A continuing controversy in cloud computing is its putative cost benefits; specifically, whether public cloud computing can provide cost advantages over computing carried out within a company's own data center.

To my mind, this "let's give the home team a shot" approach verges on irresponsibility. Senior IT executives are entrusted with the responsibility of making crucial IT decisions on behalf of their companies. Making a decision on the basis of wanting everyone in the organization to feel good does not meet that responsibility.

Certainly, at a minimum, if one does not feel completely confident in the internal capability of the organization to implement a real cloud computing environment (and not the barely plausible "token project" Leong alludes to), it is critical to proceed with an external cloud initiative in parallel with the internal one. Failing to do so risks finding oneself two or more years behind peer competitors.

Public Cloud or Private Cloud: Which Is Right For You?

So what should you do to address this environment, where the future pricing of public cloud providers is not certain, and the reliability of internal cloud efforts is lower than required? Here are some suggestions:

Avoid the tyranny of the spreadsheet. Just because some bright spark demonstrates in Excel that putting an application up on Amazon is more expensive than running it internally, don't stop there. Evaluate whether the decision would be different if the external pricing were 30 percent lower. Or 50 percent lower. If your costs drop every year, don't you think your external competitor's do too? Part of every deployment decision in the future will be the economics, and you should include different external cost assumptions in your evaluation criteria.

Don't set a low hurdle because of familiarity. Just because one of your subordinates is telling you that an internal cloud is the right way to go, as a senior executive your job is to assess the likelihood of the success of your initiatives and make decisions based on that assessment. If you're not confident your organization can pull a complex infrastructure project like an internal cloud off, don't go forward just to make your staff feel good. Set criteria for success. Put parallel initiatives in place, one internal, one external. Don't worry about competition. Competition serves customers—in this case, you—well. Your charter is to achieve the highest possible results, and if some hurt feelings ensue, that's the price of your position.

Put real governance in place. The real decision criteria regarding placement of an application is not going to be cost; it's going to be privacy, security and compliance. For you to achieve everything you need with cloud computing, you can't have deployment decisions held up for manual review by your compliance expert. You need automated systems that apply policy to achieve compliance, security and privacy—in other words, you need governance. This needs to be implemented near the start of your cloud initiative, because the assumption that it's not really needed since all applications will run in the internal cloud is going to break down early.


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