Skip to main content

The cost of cloud computing is sneaky, yet it’s understood as the de facto way to start building IT infrastructure for many startups. It’s fast, seemingly convenient with low upfront costs wherein you only pay for what you use. But many businesses succumb to sticker shock after the first round of scaling up the business, and eventually reconsider the way they structure the data. As a company grows, on premises data storage and hosting application in-house starts to make a lot of sense.

There are at least eight ways cloud computing costs can get out of control. I’ll paraphrase them as identified by enterprise networking consultant Andrew Froehlich1.

  1. Over-Provisioning – When administrators overshoot on how many resources are needed to run applications in the cloud.
  2. Under-Provisioning – When too little compute or data is purchased and application performance lags. Easy to spot, but difficult to remedy with any level of efficiency.
  3. Errant spin-ups – When cloud administrators spin up a VM or server instance and forget about it, and then forget to audit cloud usage.
  4. Poor storage choices – How accessible does your data need to be? How much do you want to pay? Many times companies err on either side.
  5. Overages on the ‘Free’ tier – Cloud providers will not hesitate to turn on the juice if you surpass usage limits on free-to-a-point services.
  6. Appliance charges – Packaged deals wherein cloud providers ‘rent out’ virtual network and server instances (load balancing, VPN concentrators, pre-loaded configurations, et cetera) get complex, and it’s hard to gauge what you need right out of the gate.
  7. Exit fees – When you decide to leave a cloud provider of course you will to take your data with you. Some may hit you with sliding scale extraction fees—buyer beware.
  8. Troubleshooting woes – Issues with cloud providers add a layer of complexity for trouble shooting; miscommunication and finger-pointing between in-house staff and cloud support engineers is not uncommon when trying to resolve issues.

For the reasons above and surely others, SMBs might grow to realize life in the cloud has its share of drawbacks. Moor Insights analyst Jimmy Pike predicts that 2017 is the year when many companies figure that out and rethink the proper way to rollout their IT. “The real question is the economics of private, public, or hybrid solutions,” Pike writes in Forbes2. “Not [all SMBs] are seeing the savings materialize [from using cloud-based infrastructure].”

Cloud computing costs: Not a one-or-the-other affair

To “cloud or not cloud” is not the question. The answer is both—to what degree a business utilizes public cloud vs. on-premises solutions varies; each scenario is different, but in every case there are some types of data that belong in the cloud, and some that ought to be hosted in on-premises server hardware.

For example, a business under 25 seats might find Office 365 Professional attractive upon startup. You do not need to have hardware to spin up instances for a small staff, which saves the company initial costs on an e-mail server and an e-mail exchange server. O365 adds flexibility and convenience, too—users may have access from five different devices, and by virtue of Microsoft Software Assurance, you always have the latest version of the applications.

Here’s a breakdown of the Office 365 tiered offering:

Sounds great, right? Why would a SMB opt for Office 2016? Many NeweggBusiness customers do—more than you might imagine. “Some are not confident turning over control of their e-mails and files to something off premises,” says NeweggBusiness software & licensing manager Yusef Mirza. “They will eat the upfront hardware costs so it’s over and out of the way in the first year; it’s a matter of preference.”

There are numerous reasons that a company would want to store e-mails, files, and data on premises. Whether that’s for compliance with regulatory mandates like Sarbanes-Oxley, or simply because files represent hours and hours of manpower and have enormous value to the company, companies like the privacy, security, and control that on-premises hosting delivers.

Hybrid infrastructure and 3-2-1 backup rule

For sensitive or valuable work data, it doesn’t have to be a one-or-the-other affair, nor should it be. A company backup plan typically involves one cloud copy, and two physical copies—one of which is stored remotely. There are a variety of ways to achieve the 3-2-1 rule for backups.

Say a company subscribes to Office 365. They have e-mails and files stored in the cloud with the subscription. For physical copies, they would regularly perform backups to an inexpensive file server or NAS solution and manage the process using backup utility software. That’s a smart and safe move that protects against data loss if a user accidentally deletes an important e-mail, or if a cybercriminal does this maliciously.


Click to compare NAS solutions for SMB and up

Conversely, a company that spins up applications on its own on-premises servers will want to put important data in the cloud in addition to the physical copies it is ostensibly making on its servers. Companies have a slew of options for cold-storing data in the cloud. Most providers charge on a sliding scale of volume and availability—choose accordingly.

The Office 365 versus Office 2016 comparison is a simplified microcosm that offers a convenient illustration of how companies host applications and store data. It is apt because basically any company uses those types of Office productivity applications. As you drill down into the various flavors of SMB and the applications they use, things get more granular. A law office setup will have different needs than a small engineering firm, which looks different how an advertising agency mitigates its hybrid solution, and so forth.

1 Cloud Computing: 8 Hidden Costs. 5 August 2015. Information Week.
2 Server CPU Predictions for 2017. 10 January 2017. Forbes

Final thoughts

Ultimately, the onus is on management to assess cloud computing costs and liabilities connected to the type of data they work with, and deploy appropriate solutions that fit the company best.

Keep Cloud Costs at Bay with Hybrid Storage
Article Name
Keep Cloud Costs at Bay with Hybrid Storage
The cost of cloud computing is sneaky, yet it’s understood as the de facto way to start building IT infrastructure for many startups. To “cloud or not cloud” is not the question. The answer is both--also known as hybrid storage. See how it looks.
Newegg Business Smart Buyer
HardBoiled | NeweggBusiness
Adam Lovinus

Author Adam Lovinus

A tech writer and Raspberry Pi enthusiast from Orange County, California.

More posts by Adam Lovinus

What's your take?