Make your enterprise invaluable to an IaaS provider

When it comes to choosing an IaaS provider, don't be enticed by price drops. Your choice should be focused on partnering ability, not the lowest cost.

The most exciting enterprise applications for cloud are those that use Web-scale techniques, such as the massive scale seen at Netflix or with online multi-user games like Titanfall that allocate a server for each online user. And while enterprises should also look at offloading workloads with less business impact to the cloud, getting the right workload to the cloud isn't the only way to find value. Finding a vendor-partner is also critical.

Costs can change, forcing yesterday's hero CIO who moved these workloads to cloud having to explain why the dev-and-test environment costs are now skyrocketing.

In the early days of public cloud, test and development was the first logical step for enterprises moving workloads there. Within the data center, virtual servers were allocated for test-and-dev projects only to be abandoned soon after. Moving this to the cloud cleans up the on-premises data centers and transfers the cost to an expense-based model. And as long as these servers are turned off or de-allocated when not in use, IT reaps significant value.

But just how economically valuable is it for providers to host workloads that run only part of the time and can be offloaded to another cloud vendor when a more attractive price model is quoted? And what happens in the enterprise when the cloud vendor's race to the bottom ends?

Are IaaS price drops just a 'shiny object' for enterprises?

Moving workloads to cloud strictly because of cost reduction can be problematic. Costs can change, forcing yesterday's hero CIO who moved these workloads to cloud having to explain why the dev-and-test environment costs are now skyrocketing. It's important for companies to focus on workloads with high business value in the cloud. Vendors that understand the importance of partnering with customers are one key to success; a commodity mindset doesn't nurture that mindset.

The latest round of the Infrastructure as a Service (IaaS) price wars raised the topic of vendor margins and how low will they go. Currently, public cloud providers find it necessary to fly toward the ground with the hopes of sorting out profit margins later. And each round of price cuts, it becomes increasingly attractive for enterprises to move less-important workloads to IaaS.

Offloading low-impact workloads to the cloud might be a good first step for enterprises, but they need to continue moving forward toward something that offers real value -- and this includes workload and vendor choices. Choose a cloud vendor for its partnering ability. You need to be important to them and they have to be important to you. Their success needs to be tied to yours. What happens to AWS if Netflix disappears from its data center? You want to be your cloud vendor's Netflix.

About the author:
Mark Eisenberg is a multi-faceted executive with more than 20 years of experience and is current with latest tech trends, business development and sales, from startups to major corporations. He is an early champion of the cloud at Microsoft, yielding a unique ability to comment both on the high-level strategies and the specific technical issues on which companies should be focused.

This was first published in April 2014

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