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A major benefit of using the cloud is the potential for big cost savings. On-demand services provide exceptional value for use cases that requires periodic use of computing resources.
Estimating the costs of cloud computing can be tricky. Just because you’re using the cloud doesn’t mean that you’ll be saving money over other ways to do the same thing. Use cases, for example,that require cloud machines to be kept running 24×7 show less of a cost benefit and actually may be more expensive than using on-premise or other dedicated hosting options. It’s also important to be able to match the right cloud service to the task at hand. Estimating the type and number of servers needed to perform a service or run an application can be complex.
But, as with almost anything, there are dangers of unexpected costs. Cloud services provide a utility that can be turned on or off, as needed. But almost anyone who has used a cloud service like Amazon AWS has experienced accidentally leaving a server running when it was no longer needed. The costs involved with a mistake like that may not be that big of a deal if you’re talking about just one or a few servers.
Charles Babcock at InformationWeek relates a story of one Engineering team that did just that, but in their case they forgot to shut down a cluster of 250 servers over a weekend — a $23,000 mistake since the servers were idle during that period. Babcock also gives the example of a marketing group that decided to run analysis on data collected in the cloud on their local servers — after downloadeding 10 TBs of data, they racked up $1000 dollars in unexpected data transfer fees.
An InformationWeek survey of IT professionals on cloud computing and ROI found that cost overruns is high on the minds of many cloud users. There are concerns that mistakes or hidden fees and costs may greatly overrun planned IT budgets. 22 percent say that they are very concerned about cost overruns, 38 percent have concerns, and 30 percent are somewhat concerned.
The ease of getting started with cloud computing is also prompting many departments and groups to by-pass IT. But one problem with departments making an endrun is that, without central coordination of all computing activities, these organizations often will face higher overall costs because of duplication of services across different departments and the loss of volume discounting that may have been negotiated if all activities had been centrally coordinated.
As a business begins to increasingly use the cloud and more employees have the authority to spin up servers on demand, management of cloud activity becomes complex, and the likelihood of mistakes or mismanagement becomes greater.