Ideas to get your business on target

Ideas to get your business on target

An Approach to IT Costs

Tags: , , , Assess, Business, Strategy

One of the most compelling arguments for a transition to the cloud is transparency of pricing. The move from complicated internal charges for costs ranging from hardware depreciation to software license shares to the time of system admins all makes the simplicity of buying compute time direct off the network very compelling to a business consumer. The definition of a true cloud service being pay-as-you-go (PAYG in mobile phone industry jargon), buy what you need when you need it, gives the consumer scalability and choice at the best price…..at least in theory.

Is it really yet possible though to get a good comparison of unit prices in the cloud from different vendors? It is instructive to look at some of the issues faced by consultancies, such as ours, giving advice to customers on what to expect. The cloud marketplace is still evolving but it it is still acquiring the rigour of other marketplaces.

A true free market needs a set of standards to operate. The cloud marketplace is crying out to have a set of standards for consumption in the same way that the corn exchanges standardised trading weights and measures in the Middle Ages. The advent of the electricity utilities in the 1900s not only defined the technical access points (aka the electric plug and socket) but also the measures of consumption, aka the Kilowatt Hour. There are emerging standards in the technical arena for many of the services, but we also need to see some standardisation of the financial measures to allow a fair comparison of vendors, and the introduction of the marketplace disciplines needed. It is interesting to see the debate on other blogs such as http://cloudpricecalculator.com.

So, should this stop organisations moving until these standards emerge?  In a word – No. How many mill owners or manufacturers went out of business because they failed to adopt electricity instead of steam? As it became a utility at the turn of the 1900s turning local supply of power into a central on all the time resource?  The cloud is still maturing and it is not right for everyone right now, but ignoring it is not an option.

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