Cloud Computing: Uncovering the Hidden Costs of the Cloud

Cloud Computing can offer significant advantages over traditional on-premise computing, but those benefits don’t always come as cheaply as they might appear on the surface.

Some ‘hidden’ or unanticipated cloud computing costs include the following:

Bandwidth costs and limitations – Successful cloud computing relies on fast, reliable and cheap broadband communication.  Slow response times from applications mean that employees aren’t as productive as they could be.  You’ll need to consider what you need to pay your ISP for broadband usage.  You’ll also want to check fees related to  transfer data to and from the cloud — SaaS applications sometimes charge more once  data transmissions exceed a specified threshold.   High-activity applications will be most affected by these costs.

Data Storage Costs – You’ll need to pay for the storage space occupied by your data in the cloud, whether or not that data is being actively used.  For SaaS applications, very often data storage costs will be charged in addition to standard application usage fees.  If you don’t have that much data, there may be no additional charge, or the charge may be very minimal, but if you have a lot of data, you’ll most likely see monthly billings for the storage of that data.

Lost Depreciation Write-Offs – Companies with on-premise hardware are able to claim hardware depreciation, something which you can’t do when the applications run in the cloud.  That’s an extra reduction in the cost of running in-house applications that is often overlooked when comparing the costs of in-house versus cloud computing.

Customization Costs – Maybe this cost is not that hidden, but remember that once your data is in the cloud, any plan to retrofit or customize the application to better fit the way your business works can be expensive.

One-time Migration Costs – Moving an application to the cloud means that your existing data will need to be migrated and uploaded into the target destination.   The costs involved in migration can vary dramatically depending on how easy it is to map the data from the existing repository to the new one.

Integration Costs – If you want or need to be able to integrate your new cloud applications with other applications, you may need to pay for the integration between those applications.  Costs to do this will vary widely depending on the extent of the integration which you plan to do.

Backups – Don’t forget backups and disaster recovery planning.  There may be additional costs involved in getting your cloud data backed up on a regular basis.

Exit Plan – Spend the time to know how you would be able to migrate from a cloud service if it doesn’t work out for you.  Make sure that an exit strategy is possible.