News Feature | December 29, 2015

Cloud Price Index: Using Multiple Providers Can Save Money

Christine Kern

By Christine Kern, contributing writer

Cloud Price Index: Using Multiple Providers Can Save Money

It pays to shop around. The Cloud Price Index (CPI) update released last month by 451 Research compared costs for using one cloud provider for all cloud services with shopping for the best price for each cloud service or application. The cost savings by shopping around could save up to 74 percent for a large application, which could total $23,000 over three years.

To determine the lowest-price mix of services, 451 Research’s Digital Economics Unit surveyed 26 cloud providers, representing 85 percent of the U.S. 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. The analysis reveals making long-term commitments can result in substantial savings.

The U.S. Public Edition of the CPI takes a market weighted average of 70 percent of the market into account. It is a relative index, with October 2014 set at 100. The latest quarterly update shows that as of July 2015, the standard price index fell a little more than 2 percent to less than 98. The best price fell almost 12 percent to a little more than 88.

Your clients may be more budget conscious when it comes to cloud services. Research from Cloud Cruiser shows that although businesses are more often turning to public cloud for business applications, it’s difficult for them to have a clear accounting of how much specific applications and services cost, making those costs difficult to allocate.

The survey found that 46 percent of respondents leave applications such as enterprise resource planning (ERP), customer relationship management (CRM), HR, or email to public cloud providers — an increase from 38 percent last year — while 43 percent reported that they are more likely to rely solely on AWS for their computing needs, an increase from 27 percent last year. Interestingly, the number of businesses leveraging internal private clouds dropped from 38 percent last year to just 27 percent this year.

David Gehringer, principal at Dimensional Research, predicts cloud services providers will need to show usage and spend for each service as businesses demand greater price transparency.