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December 14, 2016
How about this for holiday cheer
By: Michael Liebow

My present to you. Unit pricing for cloud services is declining annually at about a 10-20 percent clip according to a recent analysis by Deutsche Bank. This is great news for the newly cloud converted that roam your halls with a jingle in their step.

And while services have proliferated largely through non-stop innovation, adept cloud administrators can solve the puzzle between price and function to optimize a cloud estate and realize increasing value.

But beware.  One problem is that pricing is becoming increasingly complex so you do need some sort of Rosetta Stone just to figure it all out. An industry source says that one provider’s pricing schedule has reached the stage where there are now 72,000 price points. That’s a lot to consider. Do you want to pay per year? For a three-year contract? Or do you want to pay “by the drink”—meaning, per minute? Or do you want to pay as compute is available? It mostly depends on your company’s appetite for cloud-based change and your needs.

Like a reindeer with a bright nose, start-ups and boutiques have sprung up just to help companies wend their way through the cloud-pricing fog. Even though the price points are all published, the report notes that “there are so many variations that we get ‘obscurity through complexity.”

This ever-changing landscape is nearly impossible to navigate alone. Companies need to look for platforms where these complexities have been resolved with instrumentation or best practice in a centralized cross-provider ecosystem and management plane. 

Pricing ain’t the only factor

Here’s one final kicker: Pricing isn’t the only complexity that companies need to worry about when selecting providers. According to the report, “Some [research sources] tell us that price wasn’t a top three factor and that other advantages (premium services, flexibility and agility, enterprise support, richness of the ecosystem) were even greater [considerations].”

So, following on from that, here’s my second holiday gift to you: greater functionality. Even though price declines are coming, providers are now focused more on building out the breadth and depth of their functionality and services. Given a relatively low cloud market penetration around the world, the future could be bright for cloud providers and service providers who are focused on extending their functionality and value.

All this means is that for all you nice, not naughty, kids out there—prices will continue to fall as feature and function continue to improve—making for a very merry time.  Ho. Ho. Ho.

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