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What is the Cost of the Cloud?

cloudOne of the basic assumptions that we tend to make about cloud computing is that it’s going to save us money. Nearly every vendor and industry analyst is out there telling you that virtualization and cloud computing technologies are going to provide you a substantial payoff over the long term. Yet, the fact of the matter is that these technologies aren’t always as cost-effective as we think they might be. Beyond that, however, you need to be able to determine which business units are using which resources, so that they can be correctly billed.

Only through specific cost tracking and analysis methods, taken over the life cycle of a particular cloud computing solution, can we determine whether or not we’re really seeing the kinds of savings that we want to see. It also allows us to see what solutions and business units are using which amounts of cloud resources. Accordingly, there are four ways you can go about calculating the cost of the cloud:

1.    Consumption. One way to look at cloud costs is based on consumption or activity. You look at the overall IT cost, and divide them out across a fixed number – such as the number of users, a volume of transactions, or a number of servers. The consumption method works as long as you have clear tracking and analysis, but you also have to account for unused capacity.

2.    Tiered costing. Sites, business units, or branches of the business that don’t require significant cloud resources, bandwidth, storage, or support can be charged a lower rate than business entities that are more demanding in their resources. You can also provide a “discount” to those units that provision or manage their own virtual servers.

3.    Infrastructure and service differentiation. This method of accounting for the cost of the cloud allows you to separate out baseline infrastructure costs such as the WAN or the data center from application-specific resources and costs. This lets you provide base costs to the business units for infrastructure, while having tiered or variable costs based on all of the specific resources demanded by a given application.

4.    Weighted. This is a more indirect way of dividing costs of the cloud services that you provide to your company. It might calculate a business unit’s overall percentage of the company’s operating budget, or perhaps its headcount, and then divide your cloud costs that way.

Find out about Unitiv's Cloud Ready Infrastructure solution and Cloud Ready Assessment.

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Unitiv, Inc., is a professional provider of enterprise IT solutions. Unitiv delivers its services from its headquarters in Alpharetta, Georgia, USA, and its regional office in Iselin, New Jersey, USA. Unitiv provides a strategic approach to its service delivery, focusing on three core components: People, Products, and Processes. The People to advise and support customers. The Products to design and build solutions. The Processes to govern and manage post-implementation operations.