Despite its growth in recent years, many people still wonder how Cloud Computing can help their businesses. Inarguably, one of the biggest (if not the biggest) barriers to Cloud Computing adoption in companies is the cost of this technology.
Before we continue, I can assure you that at no point will I be affirming that Cloud Computing is cheap or that it should be adopted willy-nilly.
Quite the opposite: the central idea of this post is to show that, if used effectively, Cloud Computing can save you good money at the end of the month.
To do this, I will divide this post into two distinct parts:
- Part one is directed towards those who have already adopted the Cloud and think it is a little too pricey;
- Part two is for those who have not yet started using the Cloud.
If you already use the Cloud
For those who are already in the Cloud, an interesting fact: according to Gartner, most of Cloud Computing in Brazil is used as IaaS (Infrastructure as a Service).
This is different from the large centers (USA and Europe), which use Cloud much more as PaaS (Platform as a Service) and SaaS (Software as Service).
Of course, this is largely due to the maturity of the use of Cloud Computing in these centers in relation to Brazil. Most times, companies decide to take the first step and go to the Cloud through Lift-and-Shift.
This basically means moving the application (most often legacy) to the Cloud the way it is and starting modernization afterwards — this modernization is also known as Cloud Native Architecture.
It turns out that, since these other countries have started using Cloud Computing some time ago, they have moved to this second step. Brazil, for its part, is still in the first phase, more often than not.
This is exactly the point that ends up elevating the cost of Cloud applications. Therefore, migrating to the Cloud thinking about reshaping the application to take advantage of everything it can offer is as important as the migrating itself.
Let’s finish this first part with two real examples to better illustrate what I mean.
Free application in the cloud?
Imagine a scenario in which you have done the Lift-and-Shift of your application to the Cloud. In it, there is an application that works only as a Job that performs a certain action at a specific time of day. This is very common in many applications.
So, how can we save on this scenario? One solution would be to use Azure Functions in the consumption plan, which guarantees 1 million free runs every month. Thus, we can say that you simply would not have costs related to your Jobs.
It is worth mentioning that, depending on the complexity and runtime of the Job, Azure Functions may noy be the ideal solution for you. Still, the central idea is: Lift-and-Shift and go to the Cloud, but then start modernizing your application as soon as possible, because this is when the savings will actually happen.
Governance is more important than you think
Another scenario that also generates a totally unnecessary expense is the lack of governance in the Cloud. Governance in the Cloud is much more than just controlling spending, it mainly helps us maintain data compliance and security, manage risks etc.
The lack of governance, however, can be a problem from the start, since, without it, it is quite common for there to be wrong provisioning of resources in the Cloud.
This scenario usually happens when we don’t fully grasp resources in the Cloud we are using and the application (or applications) that it offers.
Instead of searching for and fixing the root of the problem — an application memory leak, excessive logs etc. —, we increase the available service layer and the bill shoots up.
When we do not have a full picture of the application, another common reaction is to put it in a layer much more expensive than warranted. In both cases, you will unfortunately only see the damage at the end of the month, when you get your invoice.
If you don’t use the Cloud yet
In the previous section, we talked about when an application is already in the Cloud and needs to be optimized. In these cases, the application may require modernization to take advantage of what the Cloud can offer or is without any governance.
Now, let’s move on to the second part of the post, which I usually say is spikier, since the people in this scenario tend to be more resistant. Here, the Cloud has not yet been adopted. We’re still doing the math to see if buying the server is better than “renting” a server in any public Cloud.
Don’t despair, I’ll help you square the math.
The first point is that, usually, the math is done in the wrong way. I will explain why: whenever we add it up, we tend to put only the cost of servers versus the “rent” of the Cloud.
However, the bill is not that simple, since we have to consider several aspects that, in fact, make the costs of on-premises options extremely high.
Some factors to be considered are:
- Hardware depreciation;
- Server cooling services;
- Servers security (and I’m talking security about their physical security too!);
- Electricity costs.
The latter deserves special attention, since it is the main expense that ends up being invisible to many.
Why does the cost of Cloud services seem so high (but actually isn’t)?
Since it is difficult to consider all factors involved in moving to the Cloud, they are often left out of calculations. Luckily, Microsoft provides us with a free calculator to help see the fuller picture.
The TCO Calculator (Total Cost of Ownership) is used to compare the costs of on-premises services and Cloud services over a configurable period of time.
Since it belongs to Microsoft, its calculation is based on Microsoft Azure. However, you can see the difference Cloud migration can make in a business, especially over time.
In the example above, we have a simulation done on the TCO calculator. It encompasses only one application server, one database server, and one storage unit, with the ability to scale the application in up to 3 instances if necessary.
As we can see, the costs with the Cloud option are lower from the start. Although the numbers may be different for case to case, we see that on-premises costs tend to grow in a much larger proportion.
In this simplified case, we have a savings of over 300k reais in the period of 5 years. This difference can be even greater in more mature businesses, bringing even more return on the initial investment.
In this post, we can understand the two main scenarios in which Brazilian companies are in the process of migrating to the Cloud. We also saw how we can save with cloud computing in each of them:
- In the first, refactoring a legacy application to take better advantage of the cloud or just deploying proper governance across resources can generate significant savings;
- In the second, the Cloud can often be “cheap” in relation to setting an entire on-premises structure, contrary to what many still believe.
Thus, while still in early stages in Brazil, Cloud Computing has become an integral part of many solutions and platforms around the world. This move must continue to evolve overtime, so it is essential to start understanding Cloud migration and how to optimize its use.
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