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Long-term cloud investments are more cost-effective for users

7/22/2015 2:23:49 PM

Many organizations are using cloud solutions on a short-term subscription basis, but it turns out this might not be the most cost-effective strategy available to them. On-demand payment plans are proving to be the most costly type, especially since most subscribers keep the cloud services for long periods of time. According to recent research, businesses are losing money by passing on long-term contracts with providers. 

Subscription-based plans are proving to be less cost-effective
Computer Weekly contributor Caroline Donnelly cited statistics from 451 Research's cloud price index which showed a disparity in the cost-effectiveness experienced by cloud users depending on the payment terms they choose. The study found that while prices of cloud services have gone down overall, those who reported signing long-term contracts saw more significant decreases - on-demand pricing has gone down 2.25 percent since October 2014, while users with longer contracts saw price reductions of 12 percent in the same period. 

Committing to the cloud can lead to long-term benefits - most notably, saving money. Committing to the cloud can lead to long-term benefits - most notably, saving money.

Further evidence confirms that committing to a cloud service saves money over time. The cloud price index noted that a typical cloud application costs subscribers $1.68 per hour to use, while contracted users only pay an average of $0.95 an hour, culminating in savings of 44 percent. 

Donnelly spoke with 451 Research's Owen Rogers, a senior analyst with the organization, who noted that an on-demand plan is a smart way to test the waters for most first-time cloud users. He praised the low risk associated with such experimentation, but also pointed out that once a company determines whether or not a cloud service fits its needs, it makes fiscal sense to invest in the solution on a long-term basis. 

Lack of knowledge about cloud pricing is hurting organizations
Stratecast published research regarding the apparent misunderstanding that many enterprises have when it comes to the cost-effectiveness of their cloud solutions. Compared to other IT infrastructure services, the report found that many businesses simply do not accurately quantify the amount they spend on the cloud - nor do they have any particular inclination to find out what they could be paying with a different provider. 

"Many businesses do not accurately quantify the amount they spend on the cloud."

Since many in the IT field are still relatively inexperienced with the cloud due to its recency, executives tend to lean toward mass market cloud vendors due to a belief that they can offer lower prices, Stratecast found. However, the source said that this does not always prove to be a prudent business move, as in many cases enterprise-grade providers can more adequately address cloud users' needs due to their more specific offerings. 

Implementing new systems can be challenging for IT decision-makers - especially when a relatively new technological advancement, like the cloud, is involved. Contact Apptix, an application discovery software provider, to become familiar with the plethora of cloud options available to your business. Apptix has 20 years of experience in providing expert IT consultation, and can offer tools to prepare your staff for cloud integration. 


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