As the maturity of cloud computing occurs, IT is seeking price that allows them to maintain value when their needs change.
Cloud computing has rapidly expanded as a major IT cost throughout the decade as improved ease of deployment, scalability, geographic availability, and improved security enabled Businesses use the cloud to use new computers, expand existing use cases of computing, and even replace on-premise data centers in some cases.
With cloud computing fundamentally doubling over the past few years and doubling by the end of 2020, the pricing of cloud computing resources has traditionally been based on either gigabytes or every minute to invoice. Amazon recently added this detail by providing an invoice for a variety of services, a payment change that Google Cloud quickly imitated. This payment model reiterates the traditional MIPS (million instructions per second) measurement used to measure computational costs.
Because IT is naturally focused on transactions, disk space, and processing cycles, it is clear why cloud computing will focus on these detailed units. This psychology reflects the fact that cloud buyers are often a business architect, project manager, or technology-based business focused on finding a suite of cloud-based services to support for a specific project or initiative.
This pricing model is useful for small projects because of the ever-increasing cost of short-term workloads in the cloud. And this model also works well with predictable peak periods, such as Singles’ Day, Black Friday, Christmas, where peak utilization is significantly higher than demand for activity standard. However, it also offers some challenges from a financial standpoint.
Those familiar with telecom expense management know the challenges of managing network traffic, data plans, voice minutes and daily management of assets assigned to employees, locations, departments and projects. Specific projects can be a challenging task of management and the opportunity to save millions of dollars by turning off overprovisioned locations and using non-optimized accounts when optimizing existing services. Perhaps the simplest way to think about this from a cost and accounting perspective is to data center and server purchases are being replaced by a cost model of telecommunications. Increasing accounting challenges will be combined with increased savings.
As the cloud began to shift from departmental support to enterprise-class technology and businesses began to see their cloud computing bills shifted from thousands of dollars to the cost of budget items. Many million dollars, the purchase mode for the cloud will change well. When these contracts are renewed, the cloud will begin to move from services that can be purchased and stopped under enterprise contracts that are compatible with the company’s procurement, IT-based service level agreement, and roadmap technology strategy.
As the maturity of cloud computing happens, IT is beginning to look for prices that permit them to maintain value as their needs change.All of this leads to what I believe is the most exciting change in cloud pricing today: Oracle’s universal credits will permit the use of credits to transfer Between Infrastructure as a Service (IaaS) of Oracle and Platform as a Service (PaaS) products. This flexibility serves several purposes.
Computational flexibility: First, these universal credits allow IT organizations to abstract their infrastructure and platform spending, which makes sense to consider that there is a change. Continuous distribution of computers and centers. Just as we have moved from the mainframe to the client-server computer and now back to the mobile cloud model, eventually will be the time when computing and storage edge back to more important. (This change will be driven by Internet of Things and Blockchain and close, but I think we have another 12 to 18 months before the real change is noticed by the mainstream.)
Financial prediction: Second, these universal credits help to provide more predictable IT spending. In the business world, predictability is worth more than spending unpredictably over time. Even when the final model is cheaper, there is no predictability and budget for these costs leads to the inability to plan and allocate budget appropriately for technical needs and other activities.
Employee Flexibility: Third, the flexibility of the infrastructure also helps companies who are employing and consulting randomly in their infrastructure. Easier to sort out resources and talent services based on current business needs. Although the “cloud” eliminates the need for server management and direct resources, but still involves management, analysis, development, end-user computing resources and management resources. Projects can be expanded or reduced depending on the current number and variety of IaaS and PaaS accounts currently offered.
Flexible contracting: Although Oracle’s cloud is relatively new to current market leaders such as Amazon, Microsoft, Google, and IBM, Oracle’s IaaS and PaaS features are a distinct advantage.If used as a sole provider for both IaaS and PaaS, IT procurement is likely to negotiate interconnected SLAs and be able to connect between the two sets of services to reach the level of support. Much higher than what can be expected from separate IaaS and PaaS providers. Since similar credits are being used for both IaaS and SaaS, customer IT expectations must be supported consistently across both services.
All this being said, we are talking about a price change and the contract may be imitated by other vendors. I expect that Amazon Web Services and the Google Cloud Platform will continue to work on the basis of details in a second charge, and may be deepened into milliseconds, megabytes or any given unit of added detail. Based on two decades of experience with my telecom billing and information technology on both providers and businesses, I think that cutting interest rates and raising rates will continue. These reductions, however, will reflect the increased efficiency of the scale that these suppliers have built and will not deliver substantial benefits. The price is based on attracting the initial business and income. But there is one reason Amazon Web Services has been the main source of revenue for Amazon for a while: cloud computing is profitable because it is priced, bought, and used. Amalgam Insights estimates that in the average enterprise cloud environment it has increased 2 years or more, 30% of existing services either do not use or represent unnecessary and unnecessary capacity. Not surprisingly, this is consistent with about 30% of the profits Amazon receives on Amazon Web Services.
Oracle is leading the way as the first cloud provider to offer real-world enterprise price options. I believe that Microsoft should follow, as it can compete in some respects and Azure customers need the flexibility to build more powerful and complex applications on Azure Cloud over time. It would make sense for Microsoft to support the need for flexibility for established clients. IBM should also choose this route with additional capabilities to extend credit to other products such as zSeries mainframes.
This split will lead to the first real supplier split in the cloud infrastructure, such as Amazon Web Services and Google Cloud, focused on technical developers and architects and Oracle customers. , Microsoft and IBM focus on business buyers who want to take advantage of scale shopping to achieve consistency and broad support. There may be both approaches when the cloud computing market begins to dominate the traditional data center market. Whether this happens or not, I have provided my views.
Regardless, Oracle has provided a real alternative to its competitors in providing a Global Approach through IaaS and PaaS. Although not an apple-apple comparison, I think fast moving companies understand their organization’s current position on the “edge and distribution” computer band that will be very suitable for working with Oracle and provides a broad cloud services toolkit. Although I would like to introduce to other cloud infrastructure vendors to follow, I believe the complexity of supporting this model will be very difficult to replicate in the near future.
As we all talk about the cloud, it is easy to forget that the cloud computing market is still relatively new. As providers begin to find out exactly what their business model is really about to provide customer satisfaction and success, my main recommendation for the IT department responsible for financing is according to the unit price. Price is a significant difference in the cloud, but the difference is less on understanding 2.63 vs. 2.64 difference in price and more on unit tracking, portability cession, and level of service on all relevant vendors are being considered.
In short, my main recommendation for CIOs trying to control the cost of cloud computing is: See how your cloud services are charged and decide if the price is right for the chip. Shopping and managing your favorite cloud or not. This business decision will distinguish CIOs from CIOs operating in cloud management. CIO-based cloud management decisions will end up creating the strategic importance of IT managers. Choose wisely.