The cost of cloud: what you need to know
Some of the bigger cloud providers have a hold over much of the cloud market. This often begs the question: “Why should we use your cloud?” It’s a good question, to which we have a very good answer: cost. OVHcloud’s Startup Program offers a range of unique features – such as personalised support, 100k free credits, and access to the market and funding. Moreover, OVHcloud products are interoperable, reversible, price transparent, and compliant. But many start-ups and scale-ups increasingly view cost as their top priority. As this blog indicates, many companies have overspent on cloud in recent years due to a lack of understanding regarding vendor pricing models. Cloud pricing can be complex. It is therefore difficult to compare pricing across providers and products.
The bottom line is that unpredictable cloud pricing is affecting the valuations of listed software companies significantly. This is stated in an article by the well-known Silicon Valley venture capital company, Andreessen Horowitz. The article is titled: The Cost of Cloud, a Trillion Dollar Paradox. The article highlights the incredible value that cloud – specifically, Public Cloud – offers. In the early stages of growth this is most obvious – where flexibility and scalability play a key role in replacing large upfront capital expenses with more manageable operating expenses. The article goes on to explain that as these scaling companies progress into later stages the cost of cloud grows to become a significant portion of their total cost of revenue. This starts to affect public company valuations to the order of $100 billion across the 50 top public software companies. In short, the reduction on margins from cloud can start to outweigh the benefits and because companies are only considering this issue later in their development, reversing their infrastructure decisions can become very difficult.
The good news is that companies like Dropbox are shifting cloud workloads and experiencing significant cost savings. There are also now flexible, scalable Public Cloud alternatives that can be considered in the later stages of company development. Where providers like AWS, Azure and Google Cloud focus on providing Public Cloud, OVHcloud offers a number of cloud solution options that include Public Cloud, Hosted Private Cloud and Bare Metal or Dedicated Servers. You can read more about these three cloud solutions in another blog article here!
In summary, while Public Cloud offers the flexibility, scalability and managed services at a price premium, Dedicated Servers provide the customer with access to dedicated hardware and, by that, I mean that the customer is the only customer using that machine, but with fewer managed services. This comes with price benefits and provides the most opportunity for performance and customisation which can be a very useful way of managing cloud costs as your company develops.
The article also provides some suggestions to deal with the paradox of the benefits and the cost of cloud. One suggestion is that infrastructure spend should be a business key performance indicator. That way a business can act early, stay on track, and incentivise the right behaviour with IT teams.
In the next article we will look deeper into the cost of cloud topic by doing some cloud cost comparisons across various cloud solutions and cloud providers. But here are some key takeaways for now:
Plan you cloud future
For start-ups and scale-ups, use the flexibility and scalability of our Public Cloud in your early stages but work with our engineers as early as possible to start thinking about how you could move future workloads to more sustainable infrastructure like our Bare Metal or Dedicated Servers.
Track your cloud spend
For start-ups and scale-ups, but also for Start-up Program partners or those working with start-ups and scale-ups (VCs, business incubators, accelerators). The message for them is to make cloud spend a key performance indicator. If it is measured it is easier to act when expenses blow budgets or look unsustainable.
Check your cloud provider
Cloud users need to carefully consider that their cloud provider has the necessary short, medium, and long-term cloud solutions for them to have transparent, predictable pricing models. This way the cost of cloud can be easily and accurately predicted and measured. Because sustainable cloud costs ultimately may mean moving significant amounts of data, bandwidth cost implications should also be considered. The adoption of open standards is a great approach as it usually provides greater interoperability and reversibility when infrastructure changes are needed.
Accessing the Benefits
As a start-up or scale-up, one of the best ways to benefit from the cloud is to join a cloud provider start-up program. These programs will often offer credits to access cloud solutions, as well as support. OVHcloud is a leading European cloud hyperscaler and has been a cloud and infrastructure provider for more than 20 years. Not only do OVHcloud offer a well-recognised start-up program, we have some of the best cloud price/performance ratios on the market. We also offer zero bandwidth costs and adhere to an ‘open-standards’ approach.
OVHcloud are very happy to help you with your short-term cloud needs but also your long-term needs and save you a huge amount of money and boost your valuation in the process. Join the OVHcloud Startup Program to access free one-on-one time with an engineer. Plan and action your current and future cloud needs now by applying here.