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Cloud Cost Overruns a Concern for Businesses

July 09, 2012

Leave the lights on over the weekend and your company’s electrical bill goes up a few cents. Leave your rented public cloud cluster on, however, and you may find your business with several thousand dollars less.

That’s what happened recently to a software testing team renting a 250-server cluster, according to Information Week columnist, Charles Babcock. The team went home for a three-day weekend and forgot to turn off its cloud cluster. Even though the cluster was idle, the team accrued a $23,400 bill – 10 times the expenses for which the team had planned.

The cloud is billed as a cost-saving tool, among other benefits, but unexpected costs is a concern for the majority of cloud-service buyers. Roughly 60 percent of companies using or evaluating cloud computing say they’re concerned or very concerned about the possibility of runaway costs, according to a recent Information Week study.

Babcock noted that error, mismanagement or a distributed denial of service that floods a website with information requests are some of several potential culprits of cloud cost overruns.

“Cloud services provide a utility that can be turned on or off as needed,” said Dick Weisinger in a Formtek blog entry. “But almost anyone who has used a cloud service like Amazon AWS has experienced accidentally leaving a server running when it was no longer needed. The costs involved with a mistake like that may not be that big of a deal if you’re talking about just one or a few servers.”

But it also can be a disaster, as the example of the absent-minded software testing team illustrates.

“Amazon really launched the modern infrastructure as a service concept with its beta service in 2006,” wrote Babcock. “The management tools and IT practices used to control it show that inexperience. Also at many companies, cloud infrastructure is in a small-scale pilot that doesn't justify much spending on management tools, so the tool is a spreadsheet of what employees have said they plan to use. The technical term for such a system is ‘deploy and pray.’”

Another issue with cloud costs is the potential to bypass IT departments, Weisinger noted.

“These organizations often will face higher overall costs because of duplication of services across different departments and the loss of volume discounting that may have been negotiated if all activities had been centrally coordinated,” he said.

A crop of third-party service providers have cropped up to address the issue. These include the likes of Cloudability, Cloudyn and Cloud Cruiser. These services monitor cloud costs, provide intelligent usage insight and make sense of increasingly complex cloud billing.

Carpathia InstantOn Cloud offers a financial threshold alarm, for instance, alerting companies when planned usage is eaten up before the end of the month. Others provide cost optimization and advanced chargeback for the enterprise cloud.

The Information Week cost survey found that 53 percent of companies polled use or plan to use monthly reports for their cloud usage.

Right now, cloud bills look a lot like utility bills. Said Babcock: “Some account numbers, categories and total units of usage, but not a granular accounting to find the culprits for overcharges.”


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Edited by Braden Becker

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