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Saving Cost with Multicloud – Separating Myth from Reality

By Prangya Pandab - March 11, 2021 4 Mins Read

Saving Cost with Multicloud – Separating Myth from Reality

The IT industry is in a state of deep confusion when it comes to multi-cloud. Despite the pushback from cloud vendors trying to monopolize the industry, most enterprises now willfully pursue multi-cloud approaches. Even though cloud-native has become the standard, the IT industry is still in a state of confusion regarding multicloud.

Each year, more and more businesses move their operations to cloud-based services to attain better flexibility and advanced IT operations. As per the 2020 State of the Cloud report from Flexera, 93% of enterprise respondents reported having multi-cloud strategies.

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Even though cloud computing has been in the spotlight for more than a decade, many companies are still not fully aware of the benefits that the cloud brings to the table. If companies want to tap into the cloud’s full potential, it is essential they understand every aspect of cloud technology and the benefits it brings to the table. But at the same time, it is equally important that they don’t fall for the myths surrounding the cloud. One of the common benefits businesses will hear about multicloud is that it can be used as cost-saving strategy. Unfortunately, that is not the case.

Here are some myths and realities about saving cost with multicloud.

Myth – Better Rates from Cloud Providers

Quite often, business stakeholders claim that multicloud strategy helps in getting better rates from cloud providers. However, this is more of a myth in public cloud environments.

Cloud providers usually give higher discounts when the usage is higher. In the case of enterprise license agreements, most cloud providers provide businesses higher discounts based on how much consumption they can commit on their cloud. These commitment-based discounts are often known as commercial pricing discounts, pre-commit discounts, or volume-based discounts.

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When businesses distribute their overall cloud consumption across multiple clouds, the consumption in the individual clouds will decline, and their commitment-based discounts would therefore get lower. As a result, businesses end up paying higher for overall cloud consumption.

Myth – Multicloud Strategy for Lower Pricing

Another myth about saving cost with multicloud is businesses can use services from multiple clouds – where they are cheaper – in the same workload and then reduce the overall cost of cloud services for that workload.

Public clouds are in a very competitive market; hence cloud providers cannot afford to have higher pricing than their competitors. Therefore, there won’t be many services in the market with hugely different pricing. In fact, Microsoft has documented this on their pricing page – “Azure matches AWS pricing for comparable services.”

Reality – Leveraging Enterprise Level Relationship for Better Pricing

Some cloud providers provide public cloud services like compute, storage, network, and other services like SaaS, professional services, and software licenses. In comprehensive ELAs, they can combine certain services or licenses to provide enterprises with much better prices of individual cloud services compared to other cloud providers.

Reality – Aligning Multicloud with Business Objectives to Save Costs

Enterprises must understand their business objectives for adopting multicloud. Those objectives could be for better resiliency, flexibility, access to best-in-class services, data sovereignty, avoiding vendor lock-in, etc. Enterprises can achieve these business objectives by leveraging multiple clouds for one or more business and architectural outcomes.

For instance, companies often lose business opportunities to competitors as they do not have access to innovations or best-in-class services in different cloud providers. In this case, the cost of these lost opportunities can be much higher than the implementation cost of multicloud.

Also, in the case of a mission-critical workload, any outage or non-availability can cause damage of trust and substantial financial loss. In this case, enterprises may want to deploy that workload in multiple clouds for business continuity management (BCM). This can increase cloud costs for different reasons, such as developing or hiring new skills, managing additional complexity, etc. But, compared to the potential losses that can result from an outage this additional cost may seem insignificant. Therefore, expenses related to business continuity are often considered as insurance costs.

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Prangya Pandab

Prangya Pandab is an Associate Editor with OnDot Media. She is a seasoned journalist with almost seven years of experience in the business news sector. Before joining ODM, she was a journalist with CNBC-TV18 for four years. She also had a brief stint with an infrastructure finance company working for their communications and branding vertical.

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