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Multi-Cloud Solutions Can Reduce Computing Costs

The shift to public cloud computing continues to disrupt the traditional enterprise IT market, as more CIOs adopt the services that deliver numerous benefits gained from a managed low-cost hyperscale infrastructure.

In the latest quarterly update to the Cloud Price Index (CPI), 451 Research details the savings that public cloud buyers can achieve, by shopping around for the lowest-cost services for each part of their Web application.

Instead of using a single cloud service provider to deliver an application, buyers who combine services -- such as compute and storage -- from multiple providers can realize substantial savings.

Their analysis reveals that if cloud service buyers mix and match services and make long-term commitments to their providers, they can reduce their overall operational cost, starting at 58 percent for a small application.

Furthermore, for a large Web server application, the savings could be as much as 74 percent -- which, over three years, equates to a total cost saving of $23,000 per Web application.

The Cloud Price Index is made up of a basket of goods. It's a specification of the services required to operate a typical Web server application -- including compute, storage, databases, management, etc.


This latest CPI service is currently available in North America, and will be launched in Europe, Asia and Latin America in early 2016. The 451 Research analysis will also be extended to cover private clouds in 2016.

“The CPI shows it is possible to achieve substantial savings by using multiple providers. However, we believe the complexity of dealing with various providers offsets any advantage at this time," said Dr. Owen Rogers, research director at 451 Research.

Technically, there is no reason why applications can’t be spread across multiple clouds. That being said, the challenges include the latency between data centers, and managing the different provider APIs, invoicing, documentation, and support functions.

"Through this analysis, we believe we have identified a tremendous opportunity for providers to bring a retail-model discipline to cloud service selection and creation," Rogers added.

For example, public cloud service providers could offer decision engines to help enterprises choose the best-value mix of services to suit their needs, and then integrate and manage these services as a managed offering.

To determine the lowest-price mix of services, 451 Research surveyed 26 public cloud service providers, representing 85 percent of the U.S. market. For each service within its basket of goods, analysts chose the cheapest cloud provider and added costs of bandwidth, using data collected in October 2015.

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