• 03/19/2014
    9:00 AM
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Cloud Services And The Hidden Cost Of Downtime

IT managers must factor in potentially crippling cloud outages when calculating the true cost of a cloud service.

As any networking professional knows, downtime costs money. However, few know exactly how much money downtime costs. Estimates, calculations, and incidentals are all open to interpretation. This creates a lot of uncertainty.

Cloud computing is a good tool to use here. Many IT pros are turning to cloud-based technologies to mitigate the cost of downtime. However, is the viability of a cloud migration backed by facts or based on suppositions?

The assumption that cloud services can reduce downtime is founded on the belief that third-party providers deploy all sorts of continuity technology that all but guarantees uptime. That belief, coupled with service-level agreements (SLAs) that make promises about limiting unscheduled interruptions in service, can give you a sense of security. The real question becomes whether that sense of security is false or justified -- and, more importantly, whether a value can be assigned to it.

To determine that, one has to delve into some complex calculations to reveal the true operational costs of the cloud -- how much it costs when it works and how much it costs when it doesn't. Those costs have to compared to an equal scenario for non-cloud services. Of course, operational costs and intangibles also must be taken into account.

For example, IT operations have to take into account the costs of a facility, the staff, and everything surrounding it and then correlate the value the facility offers to the enterprise. That's a very complex calculation. On the other hand, a cloud service can be calculated down to the fees charged and any related incidentals: internal support staff, connectivity, etc. Though it seems simpler to calculate the cost of the cloud, the numbers can be easily skewed by overlooked elements, contractual price changes, changes in scale, and so on.

Read the rest of the article on Network Computing.


Sadly, many hidden costs

Some great points.  Not to mention the added costs associated with brand damage due to services being unavailable, the increased loads on front line support as customers start flooding the phone with questions about why they can't access their services, lost internal productivity for any hosted services that are business critical.  

Negotiate an SLA that reflects true costs...but what are they?

Frank makes many good points here. Near the end, he says, "The trick here is to understand the true costs (of a service outage) and use that to negotiate effective SLAs that protect the business." And for many IT organizations, it's hard to know the cost of a single application, or set of applications. Which makes knowing what to negotiate in an SLA still hard. Terremark and Savvis will give you the SLA that you want, but it will cost you. Amazon won't, and it won't cost you-- at least as long as there's no outage. Take your pick. The Amazon uptime track record is actually very good, IMHO.

Re: Negotiate an SLA that reflects true costs...but what are ...

Another side of this coin, at least from government CIOs I speak with, is the fact that enterprises are still not sure how to forecast demand.  With fixed assets and licenses, and a track record of useage, they have a pretty good handle on projected demand. But with cloud services, it's harder to predict where the demand will come from, how it will take shape. If agencies are paying as they go, it shouldn't be too challenging, but it's harder to fold that into SLAs.


Re: Negotiate an SLA that reflects true costs...but what are ...

Excellent point.  Also if a group has too much flex, what happens to accidental or out of control demand? 

Re: Negotiate an SLA that reflects true costs...but what are ...

J._Brandt, you also raise some good points.  One other unknown is how many people will reach out on their own to secure web services.  Interesting article just posted on our site from former NASA CTO Chris Kemp:

Will BYOD Become 'Bring Your Own Cloud?'



Apps That Take Advantage

Some good points I agree.  There is also the issue of whether your applications are maximized to take advantage of all the "third-party providers" "continuity technology."  Some of those technologies are more costly to have and link into.