The cloud is never cheap
I have repeatedly pointed out that cloud computing is marketed as a cheaper alternative to traditional on-premises deployments, but it is not and will never be cheaper. Anyone can figure this out with a calculator and a few minutes of time. That doesn’t mean cloud computing doesn’t offer businesses some advantages. One is agility, the ability to provision and change IT systems as needed. Another is the ability to rapidly scale systems through virtual services instead of having to stack servers in a data center.
But if you can’t find business value, the cloud may not be the best solution. In fact, as hardware prices have fallen, many enterprises and software vendors have turned to on-premise deployments that can cut costs by up to a third. This is a good choice if your usage is stable and your business doesn’t get much value from the agility and scalability of the cloud. For most enterprises, this is a key value driver.
The key question for enterprises is, “When will we use the cloud?” The key question for cloud service providers is, “What can the public cloud market do to provide more value to enterprises that currently run nearly 40% of their workloads on IaaS or SaaS?”
The evolving cloud landscape
Public cloud service providers often use the word “optimization” because they know what their customers are doing, whether it’s through feedback or complaints from customers leaving the cloud.
Cloud service providers have long touted improved service offerings to justify price increases. But in a market where enterprises have become more adept at managing multicloud deployments, this logic is no longer sustainable. Multicloud architectures and deployments offer many options for enterprises that want to go beyond traditional service providers.
Enterprises can navigate through various cloud environments more skillfully and choose more cost-effective solutions. Lowering prices for public cloud service providers is not only a strategic choice, but also an essential element to prevent market share erosion.
Enterprises are no longer confined to a single vendor, but can strategically distribute operations to optimize cost and performance. This multi-cloud mastery reduces dependence on a specific vendor and emphasizes the need for cloud service providers to provide competitive pricing along with strong service offerings. There are problems with the way cloud service providers respond to major markets.
The rise of alternative solutions
As enterprises explore other options, the appeal of on-premise solutions and smaller cloud service providers is becoming increasingly apparent. These alternatives, often called microclouds, offer tailored services and transparent pricing models that more closely align with economic objectives.
In fact, as interest in AI soars, companies are turning to microcloud service providers that offer GPU and storage capabilities tailored to the AI systems they want to develop, at a fraction of the cost and with greater accessibility than the massive public clouds.
Of course, large clouds have thousands of services on their platforms and can handle most IT needs, including AI, in one place. This is undoubtedly true, and many companies are using large public cloud service providers for this reason. Again, public cloud services are the path of least resistance when building, deploying, and operating most IT solutions, especially AI.
But this convenience comes at a cost. Corporate CEOs and boards are asking difficult questions about ongoing service charges. CIOs need better answers than “Everyone is using the cloud because it’s the best solution.”
Where Limited Funds Should Go
Remember, the money that goes to the big public cloud service providers is no longer available for the company’s R&D or market expansion. Corporate executives are aware of this limitation and will soon take action. For example, if they lay off employees as part of a cost-cutting effort, it would not look good if a significant portion of the savings were to flow to the cloud service provider.
The cloud computing industry is at a crossroads. To remain relevant in this competitive environment, major cloud service providers will need to adjust their finances. By recalibrating their pricing to meet customer demand, they will be able to maintain market dominance while also fostering growth in a dynamic digital ecosystem.
editor@itworld.co.kr
Source: www.itworld.co.kr
