Traditionally cloud contracts have been delivered on a subscription basis, locking in end-users for several years to a contract that might no longer be fit for purpose after a short while. The principle issue with any subscription based scheme is that regardless of underusing the storage, processing power or software licenses the end-user is charged the basic rate. The need for additional power, storage or licenses pushes the bills up as would traditionally be expected, but this is not the case when the services are being underused.
“We are used to paying for what we get in our everyday lives so why shouldn’t this be the case when we work with a cloud provider? The subscription model and associated vendor lock-in is an outdated system that doesn’t have a place in our fluctuating demand structures,” says Doug Rich, VP of EMEA at HyperGrid. “Many organisations try to position leases and subscriptions with other creative payment plans to deliver the impression that the end-user is only paying for what they use. This is especially true of vendors still peddling legacy infrastructure as they hope a new payment structure will make it seem innovative, new and flexible.”
With many organisations using a hybrid cloud approach, keeping some applications on premise while others are sent to the cloud, the need for a flexible approach to cloud costings is crucial. Many users regularly transfer data between the cloud and on premise infrastructures, fluctuating the usage of power and storage requirements. For those large organisations, this can make crucial savings that can be reinvested into the business.
“By deploying a consumption based pricing model, users can effectively manage their cloud costs and help reduce or re-purpose their IT spend to areas of innovation and business growth. With the continued growth in hybrid cloud estates and the desire for greater flexibility within contracts and providers, consumption based pricing models are likely to grow and become the new norm,” concluded Rich.
