Conquering Cloud Costs: Part 1 
- Understanding Cloud Costs from A to Z

Post date: July 22, 2019

Cloud Operations Series

This is a 5-minute read and is part 1 of a 3-part blog series on better managing your cloud costs. If you are just getting started in cloud cost management, we welcome you to take a look. 


Why Public Cloud is So Popular

Public Cloud usage has grown tremendously since its inception around 15 years ago, and shows little sign of slowing down. Companies are continuing to move their services into the public cloud at a rapid pace. Whether it’s public, private, or hybrid, business leaders have seen the clear advantages of going all cloud, all the time. The benefits are significant: better data resiliency, increased scalability, and better security, to name a few.  For many, it's a matter of capital expenses (CapEx) versus operational expenses (OpEx) when it comes to costs. Cloud computing shifts IT spending to a pay-as-you-go model, like utility billing; you only pay for what you use, when you use it. For startups or new applications, this well-established argument is sound. Generally speaking, the spikier your computing demand (think businesses exposed to Black-Friday-type holidays, sporting events and other ticket sales, social media and other high-volume web-based sharing use cases), your datacenter investment utilization rates may periodically be very high, say 80-90%, while your average utilization over the course of quarters or years may hover below 10-20%. 

However, there is one decided disadvantage to utilizing some cloud services, as most CFOs know, and that’s cost. For most companies, the benefits outweigh the costs, but the problem is, costs for cloud keep increasing right along with the adoption of these services. Some estimations put the cost rise over the next two years at as much as 25%.

 

 

How Public Cloud Charges Work
Traditional cloud service costs, such as those provided by the top three providers (in order of market share: Amazon’s AWS, Microsoft’s Azure, and Google Cloud Services) can become very expensive, depending on what services you are using and how you are using them. Costs can range from less than a few cents per GB storage per month⁠—which is the initial allure after scalability⁠—to over a dollar per GB per month. 
In the basic TCO calculation, data centers servers are the largest expense followed by power and cooling, then networking. This is tactical in comparison to scale issues leading to downtime, upset customers, lost revenue, brand issues.

 

The Real TCO on Public Cloud

Big cloud makes a good case for arguments left out of TCO calculations whether strategic like faster time to market and financial benefits to innovation, or tactical like fewer capacity constraints and less painful IT skills gaps.

While removing overprovisioning as a pain and introducing auto-scalability is awesome, you are paying a premium in several areas - control over your stack - costs, governance, security, and strategically for a skills gap that will grow as your team loses focus on data center and private cloud management. (link to: sec/grc part 1 blog)

What You Need To Know About Cloud Pricing 

The most common big cloud pricing options are:

On-Demand
Discount: 0%
Pros: Availability with no commitment from you.
Cons: Highest cost

With on-demand, you pretty much can get a server at any time and there’s no commitment from you. At times of extremely high demand you may not be able to get resource though that is very rare.

Reserved Instances (RIs)

Discount: 40%-60%
Pros: 1-year or 3-year commitment from you with scaling discount.
Cons: Long term commit with little recourse on overprovisioning (instance waste). Increasing complexity in discounting including term, payment, day of week, AZ and much more. 

With reserved instances, you get the same instance hardware, but you pay less as you made a long-term commitment

 

Spot Instances
Discount: 60%-90%
Pros: Deeply discounted (as there is no commitment from AWS)
Cons: No commitment from AWS

With On-demand, you do not commit to AWS. With Spot, AWS does not commit to you. Many customers have seen these savings realized repeatedly.

You pay the lower market price, not the price you bid on. An example to help explain:

On-Demand price: $1/hr

The market spot price: $0.2/hr

Your bid price: $0.5/hr

What you pay: $0.2/hr

A genius move by AWS. 

 (link to: ankr pricing comparison)

Better use cases for Spot include fault-tolerant and flexible applications such as web servers, API backends, test/dev, continuous integration/continuous development (CI/CD), and Hadoop data processing. Workloads that constantly save data to persistent storage work effectively as well. Spot is not a good choice for sensitive workloads or databases.

What Other Web Services Providers Offer

Valuable infrastructure services, such as Kubernetes, have become much easier to  use in deploy by citizen developers, and are very popular as cloud services. And while the costs are coming down - AKS and GKS only charge for the visible services in use, vs EKS (from AWS) which charges for the whole stack - managing cloud service costs can become incredibly complex. AWS has over 70,000 pricing options! As a result, companies are looking for creative solutions to managing cost, and in some cases alternatives to what is not considered traditional cloud.  (link to: ease of use part 1 blog)

 

The Ankr Cloud Marketplace Vision
Our vision is that Ankr will become one of these alternatives. Ankr is rethinking cloud sharing and using data centers in new ways by working with trusted organizations and harnessing excess compute capacity. Ankr also empowers users to deploy, manage, and scale their clusters and workloads using K8s directly on the Ankr platform. Ankr automatically manages everything for customers invisibly in the background. The marketplace model allows Ankr Cloud Platform to offer users and customers high-performing, cloud computing and storage at lower rates than most larger public cloud offerings. The Ankr vision is to aim to offer customers a high-performing cloud option at a lower cost and with less code.


How To Make Cloud Monitoring And Management Easy

Ankr’s platform includes pre-built monitoring (Prometheus - link), logging (on the ELK stack- link), alerting, and other automation capabilities to help you manage more easily. Our simplified pricing 

Everyone involved benefits from this new sharing model for cloud; owners of data centers and mainframes around the world are able to realize profits by sharing their surplus power, while customers who need services are able to purchase that surplus cloud space at rates lower than big cloud service providers are offering. Hence the “Airbnb of Cloud” tagline.


Cloud Computing Cost Comparison

Ankr’s monthly plans are lower than most large cloud companies, for example, they come in at 20 to 30 percent lower when compared to Digital Ocean, and 50 to 75 percent lower than AWS, Azure and Google Cloud Platform’s monthly plan rates at the time of writing. These options and prices offer a very large savings and flexibility to customers - whether extending product offering, team resource, or even the business model.  (link to: ankr pricing page)


Summary

Ultimately, the vision for the Ankr Platform is to be better performant, more scalable, easier to use, and more

cost-effective than most big cloud offerings on the market. It is the emerging technology to adopt quickly. 

We invite you to learn more.

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