Cloudonomics: The Business Value of Cloud Computing, + Website

Is the Cloud Less Expensive?

As Lori Mac Vittie, cloud evangelist with F5, a computing and networking company, said, it’s called “cloud computing, not cheap computing.”2 She advised that whether the cost-benefit-risk equation favors the public cloud is ultimately unique to each customer. Further confusing things is the challenge of separating arbitrary costs from inherent ones.

Therefore, an apples-to-apples, “all-in” cost comparison can be challenge. James Staten, research vice president and principal analyst at Forrester Research, observed that apparently low costs per employee per month can add up as more employees use software as a service, and low costs for infrastructure per hour also accumulate as more infrastructure is used on a regular basis, including charges for additional services, such as data transport, load balancing, and security. Moreover, in what Staten called “the uneven handshake,” all enterprise costs don’t drop to zero just because the cloud is used; as in any partner-based initiative, there are ongoing costs for architecture, integration, testing, monitoring, governance, and the like when using the cloud.3

This handshake may be uneven in the other direction as well. Lew Moorman, president of Rackspace’s Cloud business, has argued that there are many hidden costs that enterprises incur when they build and manage their own infrastructure: evaluation of new technologies such as solid state drives and liquid cooling, design, architecture, testing, and integration. ...