What is the purpose of a cost parameter in cloud computing

What is the purpose of a cost parameter in cloud computing?

Introduction to Cloud Cost Management

Cloud Cost Management is the idea of managing your cloud expenses efficiently. It includes understanding the costs related to your cloud, removing the unnecessary ones. It means finding the most cost-effective ways to maximize your usage at the lowest price possible. It involves managing memory, storage, network traffic, instances, and several other expenses.

There are no shortcuts when it comes to managing costs in this arena. You have to make proper plans, get the basics right, and involve your staff to ensure they understand its importance. There can be multiple reasons why you must know what it is and how to get it right. In this article, we will discuss cloud cost management and have a look at why most are failing at it. Let’s fasten your seatbelts.

Why do we need Cloud Cost Management?

For anything decentralized, cost management can be a headache. More often than not, the cloud follows a decentralized management approach. It means that the cost visibility is less, and we face difficulty in understanding it. Cloud cost includes a lot of components, all of which need separate handling.

Cloud waste is enormous and is growing prodigiously. There are several reasons due to which cloud waste occurs, and most of it is due to poor management. If we want not to let the cloud spending takes a toll on our health, it is time that proper strategies must be in place. cloud computing services providers called for an efficient cloud cost management which can take care of its diversity while not losing out its benefits.

You must be willing to put in extra efforts to be able to cut incessant spending that has tormented one and all. It is not just about managing the costs; surveys indicate that we waste around 35 percent of our cloud. It calls for getting your instance size right, shutting down unused capacity, and scheduling your VMs right.

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“By 2020, a staggering 83% of the company workload will be stored on the cloud.”

– Forbes

That is an intriguing fact to note. Today, several associations and organizations have started utilizing Cloud Computing applications and stages as the go-to IT framework to uphold the establishment of their new and built up computerized organizations.

According to research, this pattern is probably going to keep on influence the IT showcase in the coming years. We are experiencing a progress time of Cloud Computing today.

The potential of Cloud Computing appears to be tremendous and it is being viewed as the following enormous thing, to the extent IT services for distribution and shared computing are concerned.

Cloud computing has turned into a trendy the expression now and following Points will uncover how beneficial is Cloud Computing -

-Exceptionally Cost Efficient

-Fastest Way to Meet Business Demands

-Propelled Data Security

-Versatile and Flexible

-Disaster Recovery

In many cases, cloud computing isn’t really as profitable to the service provider as it is to the customer.

Costs involved for the service provider -

The service provider’s location plays an important role in deciding the costs involved. In general, the infrastructure operational costs are higher in Tier-I cities than in Tier-II cities, but scaling becomes an obstacle in Tier-II cities because of the limited talent pool.

Other costs include the costs of connectivity (leased lines), CPUs, RAMs, cores, physical servers, periodic hard/software upgrades and storage costs. While these are obvious costs to be considered, the costs of regulation, licensing, compliance, safety, cooling, power, wiring, contracts are others to be considered — again, these depend heavily on the location.

Component costs vary too. For instance, in 2400 lbs TRIPP 42U cabinet would cost about $950 in the United States, while the same would cost at least ₹75,000 (≈$1150) in India, transportation excluded.

While these are the CSP’s costs to be maintained. The fields under cloud computing are dominated by the biggies (AWS, Microsoft, IBM, etc.). Unless you’re not offering something exclusive at competitive pricing, a client is more likely to go with one of the biggies.

Amazon leads the market. They may have lost the crown to Microsoft in terms of revenue but stands like a mountain when it comes to worldwide market share. Others, including Google and IBM, still have a long race to run.

This is where your profit substantially decreases.

The biggies are fighting among themselves. There’s a war going on, the war for lowest pricing, more than satisfactory services, and for bagging the highest of market shares.

The reason is simple — the one who leads The cloud services industry will lead the future.

While cloud-dependent apps and platforms are already becoming an integral part of our day-to-day lives, presently evolving technologies like AI and IoT will be heavily dependent on the cloud as well.

This is the reason why these companies are burning billions of dollars today, to make folds in the future.

Between this war of the mammoths, small enterprises and startups are getting crushed while the customer gets the highest benefits.

A study of Nebula’s downfall should help understand this better. The startup built its platform on OpenStack and was seen as a contender who’d give the biggies a run for their money. They raised millions of dollars, even got investors like Ram Shriram (Google early investor/founding member) to put their money in.

Sadly, they failed to maintain costs, ran out of money, and had to close down in a couple of years from when it was included in the list of ‘10 Hot Cloud Companies to Watch’.

All-in-all, here’s your recipe to make a profitable business out of cloud computing -

Analyze your regional market. Don’t go worldwide overnight, start locally. How many CSPs are already in your region? How many companies are would require your services? Attend seminars, meet people from the IT industry, know what services they have been using already and the pros and cons.

It’s about surviving at the start. Setting up your own infrastructure will not only require huge investments, but also a vast amount of time and resources. Unless you don’t have connections in the industry already, finding your first few clients will be a tough job. Prepare a solid business plan, don’t get eaten up.

Choose the location carefully. Of course, you don’t want your data center to be gone with a quake. Choose the location strategically, disaster preparedness should be the foremost point while selecting one. Do consider power outages, especially if you’re from a developing country where blackouts can be of hours.

Don’t get locked out. Your business should never depend on one or two clients. No matter how lucrative your services are, your clients are always looking for someone who’d do the same job for a lesser price (that’s how it works, isn’t it?). Also, always map the actual server utilization.

Become a reseller. If you don’t have any experience in the field or lack the financials, it's better to become a reseller rather than an actual infrastructure owner. This is your easiest way to get into the industry, make good connections, make good money. You’ll get a grasp of the demand in your region.

Before cloud computing, if you wanted to host a mail server, DNS server then you would have to purchase 2 physical servers and perform os installation, licensing and Software configuration.

These servers need physical space, cabling, electricity and system administrators.

Now by using the cloud, you can install any hypervisor on a single physical server and create small virtual servers to host mail, DNS, DHCP,firewall, etc. You can manage everything on single UI, increase/decrease resources on-demand, create backups/templates.

Be it service provider or end-user, the cloud is beneficial for both

Happy Learning!