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Cloud adoption is trending massively up and to the right. Yet many managers and CFOs are still wary about becoming heavily dependent on cloud technologies, mostly due to questions around cost, security, and the challenge of managing many disparate accounts.

Fears of the cloud are not unfounded. Take a horror story shared by John Boutelle of Slideshare. One day, the company was testing prototype code on Amazon Web Services (AWS) and had fired up over 50 servers to speed the testing. Suddenly Slideshare’s main site went down due to a glitch and all the engineers shifted their focus to that. The 50 instances ran through the weekend before anyone realized it, and Slideshare ended up with a bill $5,000 over budget.

Recently, we had the pleasure of joining other cloud experts on a webinar about concerns facing cloudaphobes. It was a lively discussion between industry veterans including Boutelle of Slideshare, Ben Kepes of Rackspace CloudU, Jesse Anderson of Intuit, and Luke Kanies of PuppetLabs, and Mat Ellis of Cloudability.

Below is a recap of five big areas of concern that were posed by moderator Adrian Cockcroft of Netflix.

Cost barriers

Problems around spend come down to organizational discipline, and reining in rogue IT. There’s often a lack of clear visibility between the IT department and accounting. Cloud computing can become a problem when you have multiple developers turning on accounts and servers that management may not know about until they show up as expense claims.

Resist the instinct to make it more difficult for employees to use the cloud: you risk losing the number one benefit of the cloud—agility. Offer them training on internal cloud use and tools to make cloud accounts easy to track and manage. Try consolidating your cloud accounts into a centralized account and take advantage of discounts and deals on your total spend. The more you spend, the cheaper it is, and consolidation also allows you to track all accounts across your organization.

Showing ROI

Be realistic about cloud use within the organization (yes, it’s happening) and what your employees need to get the job done. The cloud can save time and money, including infrastructure costs, recruiting, training and other business considerations. Break expenses down by cost-per-unit. Consider the cost savings on the cloud in the way of quality of service, the quality of the servers you can access, and scalability.

Spot market vs. reserved instances

Spot instances can lower costs by up to 60% in many cases. However, they can be taken away at any time, which is the main reason they are so much cheaper. To protect yourself, take a portfolio approach, and ensure you have a few instances reserved ahead of time for when the spot market goes crazy.

Reserved instances generally have better availability, allowing you to scale on demand even when there are short-term capacity constraints. Go for larger reservations, which are generally better value than several smaller reservations. Despite the upfront outlay, reserved instances can actually improve medium- and long-term cash flow thanks to their lower unit pricing.

On-premise vs on-cloud

Whether you should go with on-premise or on-cloud services depends on your operations team. Do you want access to infrastructure services through the likes of Amazon, Rackspace, or SoftLayer? Or are you more attracted to platform services like the hosted PHP, Java, or Node.js services that AppFog, Heroku, or DotCloud offer?

With the right operations team you can handle heavy automation in-house. But most companies don’t have awesome development and tech-ops teams and prefer building applications over infrastructure. It can take up a lot of precious bandwidth recruiting and retaining operations engineers that could be used to hire more people to improve your own products.

On-premise cloud hybridization

In most companies there will be a significant amount of on-premise infrastructure for the foreseeable future. So what’s the best course to plot?

Think about how to make your systems, your code, and your applications more efficient. Start by doing a few minor projects on the cloud. Once you have demonstrated the value of the cloud, use the natural upgrade cycle of existing apps in the course of normal business to move services to cloud compatible architectures even if they remain on your on-premise infrastructure.

Traditional cost models may not apply the same way as in-house hardware operations, but over time most companies will easily see the value of moving select services to the cloud within 3 to 6 months.


Don’t abandon your internal infrastructure completely, but keep in mind that the cloud can offer a level of quality and scalability that you may not have access to on your own. Know how much cloud use is actually happening within your company — you may be surprised. Manage cloud use by making it easier for your employees to use the cloud, thereby making it easier for you to manage accounts and instances, reduce cost and improve security throughout your organization.

Once companies have a clear view of cost, cloud computing — or some hybrid model of it — will generally show maximized ROI over the long term.

J.R. Storment (@stormental) is Co-Founder and Chief Customer Officer of Cloudability, where he leads the company’s product marketing and customer initiatives. He has more than 12 years experience in product management, web development, and go-to-market strategy for startups.


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