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Cost battle: Cloud computing vs. in-house IT

Brandon Butler | March 13, 2013
The answer varies depending on individual customers and use cases but there are some general rules of thumb.

Then there's the issue of hidden costs. The cost of a public cloud service is not just the VM per hour price, or the per-gigabyte of storage cost. Data egress and network bandwidth expenses are "gotcha" costs, Burns says, that many customers overlook. In Amazon Web Services' cloud, for example, it's free to upload data to the cloud, but the company charges to take data out, and the network resources that go along with that. Basically, cloud providers want to make their services sticky.

Still, the cloud is a good deal for many workloads, says Mike Pearl, a consulting partner at PricewaterhouseCoopers, who leads the organization's cloud unit. Having a cloud -- be it a public one or a behind-your-firewall private cloud -- will usually yield savings for a company because of the efficiencies gained with having on-demand, elastic resources. "Moving to a cloud architecture has demonstrable benefits around cost and efficiencies," Pearl says. "The bigger question is should that be built internally or in a public cloud? That's where more analysis is usually needed."

The overall point is highlighted in another report from Forrester by cloud expert James Staten, titled "Cloud computing is not the future of IT." In it, Staten argues that the cloud is essentially another tool in the IT administrator's toolbox; it's good for some use cases, but not ideal for others. The key is knowing when to use it for what, and choosing the right platform and provider. But cloud isn't replacing traditional IT: that will always be around.


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