AWS rolls out unique cost-control option, but vendor remains pricey

Cloud & Services Home IT Asset Management Management

by | November 18, 2019

The cheaper and more flexible a service, the more allure for executives weighing cloud provider selection and commitment.

As infrastructure as a service vendors reach technology parity, billing emerges as a battlefront in the cloud wars.

IaaS and platform as a service spending are taking a larger role in IT spend as companies shift from on-premise investments. In a survey of more than 300 IT executives, software and IT cost management solutions provider Flexera found 86% of respondents plan to increase IaaS/PaaS spend.

Cloud-based investments are a significant shift from capital expense (CapEx) spending models companies traditionally relied on. In response, cloud vendors are trying to make budgeting simpler with pricing calculators, cloud billing APIs and utilization maps.

It’s a competitive space. The cheaper and more flexible a service, the more allure for executives weighing cloud provider selection and commitment.

Last week, AWS introduced Savings Plans, allowing companies to make dollar-based usage commitments for one to three years and save “up to 72%” for Amazon EC2 and AWS Fargate services.

Rather than on-demand usage, companies can promise to use $10 worth of services per hour, for example. Anything above the commitment is charged as “regular on demand rates,” according to AWS.

The Savings Plan is a bit unique across clouds.

AWS’ next-closest competitors, Microsoft Azure and Google Cloud have discount offerings too, but they’re not measured in dollars, according to Scott Chancellor, chief product officer of Apptio, a technology business management software company. If this model is successful for AWS, it might extend across the rest of their services.

For Azure, companies have to think of commitments at a resource level, Chancellor told CIO Dive. Google has “committed use discounts” where customers commit to certain levels of CPU or memory in exchange for a discount.

It’s a likely space for other vendors to follow AWS. As a recurring need, businesses want to make commitments to spending a specific amount for a discount. It’s a transition from how the company used to calculate ROI.

Customers are willing to sacrifice some of the savings they would get in exchange for simplifying the discount process, Chancellor said. They just want to know that if they reach a certain threshold they’ll obtain a discount, and easily understand where that discount was applied.​

But that doesn’t take away the need for companies to understand the inventory of cloud usage, he said. Unless all cloud usage lies in EC2 or Fargate, “it’s not as simple as I think some of the pundits are suggesting it is.”

How spending compares across clouds

When acquiring technology, decisions can come down to price, especially when services closely compare. It’s a competitive advantage, but not one AWS can boast.

AWS is “absolutely not the best price,” said Kim Weins, VP of cloud strategy at Flexera, in an interview with CIO Dive.

“They’ve actually stopped saying that,” she said. “For a while they really used to emphasize the best price and then several years ago Azure came out and said ‘hey, we’re going to match their compute prices.'”

Across 67 cloud computing scenarios, AWS offers the lowest price in only one instance, according to Flexera research. It had the highest price in 31 scenarios.


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