The pricing is transparent: you know just how much it will cost to run a server per hour. The pricing is posted, so there's no surprises. And if you decide to change something, you can calculate what the new pricing will be, unlike outsource contracts where change orders are seen by outsourcers as a margin bump opportunity.
The pricing is fixed you can calculate what the total cost per month will be. Don't underestimate the attractiveness of certainty. Most of us buy mobile plans that overprovision us with minutes of service; we do this because we prefer knowing just now much each month's service will cost us.
Purchase is easy: you need nothing more than a credit card to get going with Amazon. No need to endure visits by sales people, create RFPs, buy machines, etc., etc. The period from decision to do something to actually getting to work is minimized, enabling organizational agility.
And really, the pricing is cheap: I don't know what electricity costs where you do your computing, but in Silicon Valley, where I live, I think the cost just to power a machine is not much less than $.10/hr; add in the cost of the machine itself and all the other costs, and Amazon may well be cheaper on a per-hour basis.
So what should you do if you want to get going with Amazon but are concerned about being cost-effective? Here are some tips:
1. Don't overprovision system resources: unlike internal machines, where the penalty for under-provisioning is often a wasted server and an additional outlay for a new, bigger server, with Amazon it's easy to upgrade the capability of the system. So start smaller; if you need to upgrade, do so.
2. Look for applications that leverage Amazon's ease of use: EC2 instances can easily be brought up and quiesced; it's not necessary to keep an instance up and running 24/7. Unlike a data center, where once a server is installed it's easier to keep it running than to power it up and down, Amazon is ideally suited for applications that are used in a transient fashion, or even a temporary fashion. For example, one company I worked with had an application where it needed to test a system with 100 simultaneous browser instances. The company fired up 100 Amazon EC2 instances, ran a browser script on each one overnight, and completed the test the following day, whereupon it shut down the instances and discarded the systems. It accomplished all of this over a period of three days. Imagine how long it would take to do this in a traditional IT environment. Even better: the total cost for the simulation: $100.
3. Prove the financial case for yourself: Take a low-importance application, migrate it to EC2, and figure out what it costs. Use the app as though it were in your data center. Evaluate how much it costs on EC2 and compare it to running the system internally. That's the best way to calculate internal vs. cloud costs.
It's a mistake to evaluate cloud computing's cost in isolation. Assessing the overall cost of delivering a server's computing capability is the right yardstick, and there the putative cost disadvantage of cloud computing is much less clear.
Bernard Golden is CEO of consulting firm HyperStratus, which specializes in virtualization, cloud computing and related issues. He is also the author of "Virtualization for Dummies," the best-selling book on virtualization to date.
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