Navigating the world of cloud computing can sometimes feel like decoding a complex puzzle, especially when understanding the true cost behind the cloud. There are many elements to consider when discussing cloud computing such as pricing, strategies, and services. Here we will discuss these topics as well as highlights and challenges some agencies may face.
The Promise of Cloud Computing for Government
Cloud computing offers numerous advantages for federal agencies:
- Scalability: Agencies can scale their resources up or down based on demand, ensuring they only pay for what they need such as the pay-as-you-go pricing model.
- Flexibility: Agencies can pay as you go and only pay for the resources they use and not have to purchase capacity upfront. Agencies can reclassify IT as an operating cost and can better align costs to outcomes/objectives using CSP tools.
- Cost Savings: Agencies can get out of the business of running data centers and focus on its core mission and not spend money maintaining aging or obsolete facilities.
However, to fully understand the significance of these benefits, one needs to understand the various cloud costs associated with them and how to manage them effectively.
Understanding the Components of Cloud Costs
Cloud costs can be separated into foujr different categories, and each category differs based on the agency usage, providers, and the needs of the agency:
- Compute Costs: Cloud compute costs refer to the expenses incurred for using virtualized computing resources hosted in the cloud. Pricing can vary based on usage patterns (e.g. pay-as-you-go vs. reserved instances). Optimizing workloads and right-sizing instances are key strategies for managing and reducing these costs.
- Storage Costs: Cloud storage is typically billed based on the amount of data stored and the type of storage (ex: object storage, block storage, file storage). Additionally, some providers charge for data retrieval, especially when your data is stored in low-cost, long-term storage options. If this is the case for your agency, it may be worth looking into providers who may be willing to negotiate this price/any additional charges you may incur.
- Network Costs: Transferring your data between two different cloud providers or even from on-site storage to the cloud environment can be costly. It is important to discuss the quantity of data you have and what budget you have allocated for any operating costs.
- Licensing and Subscription Fees: Many cloud services, such as software-as-a-service (SaaS), involve licensing or subscription fees. These fees can add up, but you should consider it if you are using multiple services or require enterprise-level features.
Challenges in Managing Cloud Costs
Cloud pricing is paramount and should be taken into consideration when choosing what is best for your agency.
- Complex Pricing Models: Cloud storage providers offer a variety of pricing options, including pay-as-you-go, reserved instances, and spot instances. Understanding which model best suits your agency’s needs can be challenging. Some factors one can consider when deciding include, but are not limited to integration with other services, backup recovery, and performance.
- Unpredictable Usage Patterns: Usage-based pricing is when costs fluctuate based on demand. Specifically for federal agencies, this type of pricing may not be feasible due to the unpredictability especially when determining budget for the fiscal year. Agencies that have spikes of activity during specific times of the year or are starting new projects with unpredictable growth will need to plan accordingly so they can utilize various pricing schemes/models to limit cost overruns and maximize cost efficiency.
- Dealing with Protected or Regulated Data: Certain data that the US Government manages is protected by law or regulations like PII or HIPAA. Depending on data handling requirements, this could incur mandatory costs in storing, accessing, and processing that data. This should be taken into consideration as storage costs could determine if that data should be on-premises or in the cloud.
- Shadow IT: It is paramount that agencies utilizing cloud services have a proper management framework and governance regime to manage access and control of cloud resources. This is vital to prevent cybersecurity and fraud events as they could lead to catastrophic security failures and a data breach which could cost millions in damages and loss of reputation.
Strategies for Optimizing Cloud Costs
To optimize cloud costs, federal agencies should consider the following strategies:
- Conduct a Cost-Benefit Analysis: A cost-benefit analysis is when one weighs the benefits of a certain course of action and subtracts the associated costs with this action. When it comes to the cloud, an agency should consider both direct and indirect costs, savings, the cost of switching to the cloud, and ongoing upkeep.
- Optimize Resource Usage: Agencies should be evaluating their cloud usage regularly. By doing this, one can identify underutilized or over-provisioned resources. Some action items one can do include rightsizing instances, automating scaling, and adopting serverless computing to help reduce costs.
The world of cloud computing can be a great opportunity if used correctly and one has the right provider. It allows agencies to enhance their IT capabilities while controlling costs. By adopting the right tools, practices, and strategies, federal agencies can demystify cloud costs and ensure they maximize the value of their cloud investments.
This blog article was published in partnership with Carahsoft Technology Corporation as part of Hitachi Vantara Federal’s Storage Heroes resources.