Pick 'n' Mix - Why businesses should shop around when it comes to cloud services

"We believe we have identified a tremendous opportunity for providers to bring a retail-model discipline to cloud service selection and creation."

Cloud buyers can save money by shopping around for the cheapest services for each part of their Web application, suggesting the multiple cloud provider method can provide tangible business benefits in return.

In the latest quarterly update to the Cloud Price Index, analyst firm 451 Research suggests that instead of using a single cloud provider to deliver an application, buyers who mix services such as compute and storage from multiple providers can make “substantial savings.”

The analysis reveals that if cloud buyers mix and match services and make long-term commitments to their providers, they can make substantial savings, starting at 58 percent for a small application.

For a large application, the savings could be 74 percent, which, over three years, equates to a total cost saving of $US23,000 per Web application.

Designed to give enterprises and service providers insight into the cloud pricing landscape, 451 Research’s Cloud Price Index is a specification of the services required to operate a typical Web server application including compute, storage, databases, management and more.

“The CPI shows it is possible to achieve substantial savings by using multiple providers; however, we believe the complexity of dealing with various providers offsets any advantage at this time,” says Dr. Owen Rogers, Research Director, 451 Research’s Digital Economics Unit.

“Technically, there is no reason why applications can’t be architected across multiple clouds, but the potential challenges organisations face include latency between data centres, managing different GUIs and APIs, invoicing, documentation, and support functions.”

As a result, Rogers believes most users would prefer to “pay a premium” for an integrated solution from a single provider.

“Through this analysis, we believe we have identified a tremendous opportunity for providers to bring a retail-model discipline to cloud service selection and creation,” Rogers adds.

“For example, providers could offer decision engines to help enterprises choose the best-value mix of services to suit their needs, and then integrate and manage these services as a managed offering.”

To determine the lowest-price mix of services, 451 Research’s Digital Economics Unit surveyed 26 cloud providers, representing 85 percent of the US cloud market, as part of its regular quarterly pricing update.

For each service within its basket of goods, 451 Research analysts chose the cheapest cloud provider and added costs of bandwidth, using data collected in October 2015.

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