Myths vs. Facts: Cloud Computing Cost
Myth: The cloud is more expensive
This myth is rooted in the idea that while cloud computing providers offer low prices up front, the actual costs for service are actually far higher. Opponents point to extra fees for security, data portability, and the ability of providers to raise their prices at any point in the billing cycle, subjecting businesses to a constantly-fluctuating, stressful cost environment.
Data to support this myth usually comes from the cloud’s lack of maturity when compared with other network technologies. Because public cloud options are still in their infancy and private clouds can include anything from on-premise hardware to offsite, highly secure servers, opponents worry that the technology will evolve significantly in the next few years, in turn forcing higher costs for users. In addition, proponents of the local server stack or virtual machine (VM) make a valid point: the initial costs of a cloud computing option typically outweigh those of a private server.
Fact: Cloud costs often decrease over time
Discussions of IT costs center around two concepts: capital expenses and operating expenses. Capital expenses include purchasing or upgrading physical hardware, such as servers, while operating expenses refer to the costs paid each month to keep the servers running: power, heat and maintenance.
Running a local server stack is almost entirely a capital expense; companies must buy and maintain each of their physical machines. Cloud computing, meanwhile, requires only operating expenses, since companies aren’t actually purchasing any physical hardware. When first setting up a cloud, business IT pros often notice the operating costs are far higher than those required to maintain their local servers, which gives a false impression of greater cost. But over time, as a company fine-tunes its use of the cloud, and local servers need to be replaced, this balance shifts.
It’s also important to note that the cloud is scalable, meaning a company only pays for services used. Increasing the amount of service requires no extra hardware, or special permissions from a provider; monthly costs will reflect total usage. Local servers, meanwhile, offer a fixed amount of computing power. If more power is required, a new server must be purchased. The flexible nature of cloud computing, along with decreasing expense over time, often makes a public, private or hybrid solution equal – or better than – a local server alternative.
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