The role of the IT buyer in the Cloud.

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Now that the various public cloud providers are becoming commonplace, there will also be a need to purchase the resources within the Cloud as optimally as possible, and since the Cloud is an OpEx related service, monthly costs will increase as more services are purchased.This will also impact the role of the IT buyer.

This appears to be a well-known phenomenon because, after the initial fear of deploying Cloud Services, confidence in the Cloud provider is growing and there is a recognition that more and more services can be purchased without any obligations and delivery time while at the same time existing applications will be migrated to the Cloud.

Cloud providers see this happening and therefore provide discount mechanisms because they don’t want to be confronted with customers who have experienced a so called “bill shock” .

The discount models offered do not always seem easy to comprehend, without thoroughly studying them and analyzing the behavior around the Cloud.

The following article provides a good high level overview of the pricing models of the different Cloud providers.

http://www.infoworld.com/article/3150205/cloud-computing/cloud-compute-aws-azure-google-softlayer-compared.html

For AWS, for example, 5 variables have to be taken into account.

In addition, AWS has a number of services covered by the discount scheme, such as instances (the servers), databases, Marketplace services and the Content Delivery Network.In addition they are constantly enhancing their offer which provides more options for the customer to chose from.

Nevertheless, if the analysis of these variables from the statistics is done well and there is also consultation with the stakeholders, high savings are possible without really having to lose flexibility, as long as the rules of the game are clear to everyone.

In this way models can be built for the short, medium and long term.

In addition, an entirely new phenomenon can be used, such as a market place for reserved instances whose term has not yet expired and so-called “spot” pricing. In the latter case, simply being offered on an instance only the user does not know then when it is turned off due to a higher market price. Another possibility is to make an offer for a number of instances of so-called “spot blocks”, which can then be guaranteed to function for up to 6 hours.

The concept of multi-annual agreement should be understood more in the context of where the break is even point in time compared to an on-demand solution and what savings arise from its use.

A prerequisite for good cost control is that at least one person is involved in the contacts with the various stakeholders in order to steer the procurement of resources in the right direction.In other words close cooperation among the stakeholders, having the right metrics at hand which can be used to drive the cost control process, that needs to be done at regular intervals. One thing that needs to be done constantly is tracking the potential savings and discuss these with stakeholders. Afterwards the savings need to be monitored against pre-defined targets.

In addition, regular meetings should be held with the stakeholders in order to check the savings and understand the changing needs of the Business, which is of course already important for the IT buyer.

An additional advantage is that there is now a grip on the cost development (finops) which only has a reassuring effect.

This could be a further broadening of the current IT purchasing role in the Cloud Age, which can of course also be hired on a temporary basis.