As you’re shopping for a new cloud services provider, you come across a fantastic promotion – only $1xx for a “industry-specific” cloud package – everything you need to be up and running and with extras specific to your industry. But wait – hold the phone. WHO said that’s everything you need and WHAT is that “package price” going to cost you? It’s more than you might think…
Some marketers take an assumptive approach, pitching a one-size-fits-all recommendation that may or may not even apply to you, and then lure you with an easy packaged approach for the application or system you have chosen. It makes a compelling business case and a great draw but many an uninformed buyer locks themselves into an under-performing contract every day of the week.
The dangers of package pricing
Unnecessary line-items: The name of the game is to bundle flashy services that provide a huge margin to the cloud company. For example, an item as simple as “Monitoring” may offer zero value to you if that monitoring isn’t managed by professionals and providing critical services to your organization. And the lack of service means huge margins for the hosting provider. Watch for line-items in the bundle that you don’t recognize or need.
Irrelevant line-items: There could literally be thousands of examples for this one, but if you are looking for a cloud for your enterprise software, you may not want or need email hosting or an “Email router” included. Ultimately you’re paying for that even if you don’t use it.
Under-performing line-items: So it’s great that “all you need” is a single virtual server to run your whole application, but is the “included” 1 processor, 2 GB of memory and 20GB of hard drive space truly enough to deliver the performance your enterprise needs?
Expensive up-sells: Although you may know exactly what your requirements are today, always ask what various items cost to add. Many companies will throw in the first amount of Gigabytes for free but the next one will cost you an arm and a leg.
Misleading listings: “Backup is included.” Awesome. Check. Oh wait, what is being backed up, and how often? Is the backup being stored in the same building as the primary data? If there was a fire, that would be bad. Is the backup accessible or do you have to pay a hefty ransom to secure it if you need it. Oh, and how long does it take to get this “backup” when you do need it?
Missing items: In many organizations, the “cloud package” is created by marketing, not the engineers. This is not intended as a blanket statement, but it’s very easy to miss a critical requirement that may be necessary for your scenario and won’t be included in a packaged price. You may be dead in the water without a VPN, active-directory or the ability to access SQL. Or the package may not be specific enough when it comes to a security or integration requirement.
How to deconstruct a cloud promotion in 4 steps:
- The first step is to actually ignore the promotion and write down a list of your business requirements. If you’re technical, include technical details (for example how many jigawatts you need). If you’re not technical, include business details such as: my business cannot have any down-time of the application that exceeds 1 hour, my business needs to be HIPPA or SOX compliant or my applications must integrate with these other solutions.
- The second step is to interpret what is included in the package – and what do the line items mean. Cross-reference these with the needs of your applications and business. Bonus step: assign a monetary value to each line-item to determine the overall value of the promotion. For example, ask how much X amount of disk space costs on its own; then compare to the package.
- The third step is to push the long-term boundaries of the package – what does it cost to upgrade? What if you need to add a new virtual server or more users?
- Finally, cross-reference what you learned with the promotion. Does the package include everything you need? Does it give you enough growing room?
Some hidden “gotchas”
Here are some common tricks to look for:
- Shared resources: the servers may be shared with other customers and limit your security & compliance options (not to mention performance)
- Backups are included, but there is no guarantee of how fast you can access them in the event of an emergency, or if there is a fee to actually use the backup.
- Disaster recovery not included: it’s very common to not include a complete replicated instance of your cloud environment to a geographically diverse datacenter. This somewhat negates the primary selling point of the cloud: resiliency if the production site goes down.
- Support is limited: only a certain number of tickets included, scope is limited to certain items, or there is no guarantee of how fast a support request will be answered (what if it takes 5 days to answer your critical question?).
- Service Level Agreement (SLA) is stacked: your cloud environment may be able to be down for 3 different reasons on 3 different days and you would still not be entitled to any financial credit or allowed to leave your contract
Cloud promotions and packages are not all bad, but they can be tricky. And while it’s challenging to compare providers and associated packages and plans, a great cloud provider will ensure that all your requirements are met or exceeded. And many will contract a specific solution for you. Be sure to invest time and energy into a more holistic IT plan or cloud advisory services to ensure that you aren’t sacrificing in the long run.
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By Brian Sallee, Channel Sales Director, Concerto Cloud Services