Lately we have seen a rise in cloud customers reliance on widely available online tools that purport to help an enterprise calculate everything from pricing, usage workloads to TCO. Some of the primary tools often cited are:
- Azure Pricing Calculator
- AWS Pricing Calculator
- AWS Total Cost of Ownership
- Oracle Cloud Workload Estimator
- Google Pricing Calculator
We are here to confirm what your likely first instincts are when attempting to use these tools, which is they are wrong, a futile exercise, and probably biased, given the hundreds of data points and variables in every cloud environment.
First, they are wrong. Always. Maybe it’s a case of garbage in / garbage out, or bad assumptions, or something wrong with the pricing, or the tool algorithms, but we’ve never yet run a forecaster and compared it to actual and had them match even in the same ballpark. When you consider that ‘every’ Client is different, we could put in the same numbers for three different customers to Oracle’s tool for example, but you will still have three very different requirements.
Given the hundreds of data points and variables, it’s likely a futile exercise using these free tools because:
- They do not address application demand modeling, which will correlate application volumes with cloud resource utilization.
- These tools also take a blunt approach, and don’t investigate in depth more sophisticated pricing models, such as reserved and spot instances.
- They don’t consider savings plans, enterprise discount programs, etc., and all the cost and term commitment implications thereof.
They also don’t address subsequent (and often quite quickly) need to right size and right buy after you’ve made your deployment based on these cost estimations. Who does that really serve? Certainly, a sub-optimized environment serves the vendor, not the customer.
We would also argue that it encourages “lift and shift” behavior with Clients modeling their current on-premise footprint in a cloud equivalent model (think AWS, Azure, etc.) or capacity. Not necessarily the best approach. Can lead to cost overruns and doesn’t take economic advantage of possible cloud resource efficiencies.
Last but not least, is the very subtle way that ‘add-ons’ and packs added that may not be needed, but you will certainly pay for it.
Forecasting Based on the Past – No
Lastly, we’ve also experienced Clients and third parties who have attempted to use forecasting models based on past consumption. This, too, has turned out in most cases to be way off course and sub-optimized. There are too many ‘assumptions’ used in most forecasting models that don’t consider the possible efficiencies to be gained with a more in-depth analysis.
In summary, cost transparency (i.e. published cloud pricing) and “pricing calculators” are not a substitute for astute capacity planning. Before you make any budgetary decisions based on results gleaned from any of the above tools, please call us to review first.
For a full view of your CCO (Cloud Cost Optimization), you really need:
- Real time views into consumption and usage
- First-hand market knowledge of pricing for all cloud suppliers
- Comprehensive understanding of all cloud products and capabilities
- Analysis of your current agreements in full context of the above
NET(net) can assist with any or all these cloud optimization categories. Contact us today to arrange a conversation with a subject matter expert.
Founded in 2002, NET(net) is the world’s leading IT Investment Optimization firm, helping clients find, get and keep more economic and strategic value. With over 2,500 clients around the world in nearly all industries and geographies, and with the experience of over 25,000 field engagements with over 250 technology suppliers in XaaS, Cloud, Hardware, Software, Services, Healthcare, Outsourcing, Infrastructure, Telecommunications, and other areas of IT spend, resulting in incremental client captured value in excess of $250 billion since 2002. NET(net) has the expertise you need, the experience you want, and the performance you demand. Contact us today at firstname.lastname@example.org, visit us online at www.netnetweb.com, or call us at +1-866-2-NET-net to see if we can help you capture more value in your IT investments, agreements, and relationships.
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