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451 Research highlights cost benefits of taking multi-provider approach to cloud

Latest 451 Research cloud pricing report suggests buyers could get a better deal, if they're prepared to shop around

Users that take a multi-supplier approach to procuring cloud resources could get a better deal in the long run, compared with those that go all-in with one provider, according to the latest research.

However, the hassle involved with managing several suppliers to deliver one application means many users might prefer to take a single supplier approach.

According to 451 Research’s latest Cloud Price Index, users requiring cloud-based compute and storage resources to run their web applications could make “substantial savings” by using a patchwork of suppliers for these components, rather than procure them all from the same one.

The savings gleaned from taking a pick-and-mix approach to cloud procurement increase if users are willing to make a long-term commitment to their providers, the market watcher added.

Indeed, its findings suggest companies could save 58% on the cost of running a small web application using this approach, and around 74% for larger ones.

In the case of the latter, this could equate to a saving of up to $23,000 per web application over the course of three years, 451’s figures suggest.

These figures are based on a cost analysis of the cloud-based compute, storage, database and management resources needed to run a typical web server application.

As part of this, 26 cloud providers, making up 85% of the US cloud market, were surveyed by 451 Research’s Digital Economics Unit, and a list of those offering the cheapest web application components was compiled, along with the bandwidth costs required to run them.

Using this, the company created a series of pricing models to establish the cost of running an application using resources from one or more suppliers, which factored in the savings that could be gleaned from volume discounts and embarking on long-term contracts.

Owen Rogers, research director of 451 Research’s Digital Economics Unit, said that despite the cost benefits, users might find it easier to stick with one supplier.

“It is possible to achieve substantial savings by using multiple providers. However, we believe the complexity of dealing with various providers offsets any advantage at this time,” he said.

“Technically, there is no reason why applications can’t be architected across multiple clouds, but the potential challenges organisations face include latency between datacentres, managing different GUIs [graphical user interfaces] and APIs [application programming interfaces], invoicing, documentation, and support functions.”

In light of this, he said most users would be happy to pay more and use a single supplier, if it means side-stepping all the aforementioned issues, until a third-party emerges that is willing to manage them on their behalf.

“We believe we have identified a tremendous opportunity for providers to bring a retail-model discipline to cloud service selection and creation,” added Rogers.

“For example, providers could offer decision engines to help enterprises choose the best-value mix of services to suit their needs and then integrate and manage these services as a managed offering.”

Read more about cloud pricing changes

  • European cloud users should brace themselves for further price hikes, after Microsoft confirmed plans to charge enterprise users more to use its off-premise products from 1 August 2015.
  • Skyscape Cloud Services says the growth of its public sector business has enabled the company to operate at the economies of scale needed to roll out double-digit price cuts to its customers.

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