Forrester report reveals true cost of cloud

Cloud computing is not as cheap as many think and analyst Forrester warns that some cloud applications may increase costs

The latest research from analyst Forrester urges CIOs to scrutinise the true cost of cloud computing to avoid costly charges.

In Forrester's Make the Cloud Enterprise Ready report, principal analyst James Staten assessed the cost of cloud computing over traditional hosting. 

In one example he noted: “Cloud services don’t play fair. Providers make their services look incredibly cheap by hiding the true cost of their services.”

The report uses Amazon Web Services (AWS) as an example to illustrate costs. Staten noted that since Amazon prices EC2 by the resource, by the hour, the cost is as low as $0.08 per virtual machine (VM) per hour.  

His analysis showed that this pricing worked well for a website capable of running on a single small VM most of the time, that had the facility to scale-up to 100 VMs during a traffic peak.

What makes a cloud service

Four key features of a cloud service:

  • Standardisation
  • Pay-per-use
  • Self service

"If that peak lasts no more than an hour, you only paid for 100 VMs for an hour; the rest of the time the bill was that same $0.08 for every other hour," said Staten.

However, on a different workload, such as with static applications, the VM would cost $0.08 times 24 hours multiplied by 30 days, or $57.60 a month. The report noted that the same VM could be hosted by 1&1 Internet for $49.99 a month.

Applications that experience elastic or transient work patterns are best suited to the pay-per-use economics of cloud computing, according to Staten. 

But not everything will suit the cloud, said Staten. There are many business processes, data sets, and workflows that require specific hardware or proprietary systems that cannot take advantage of cloud economics. 

"We’ll still have mainframes 20 years from now," said Staten.

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