Becoming a smart cloud investor: Managing hidden egress costs

• Research shows that the biggest concern amongst organisations leveraging cloud is managing costs.
  
• Data egress costs can hinder adherence to cloud budgets as businesses are forced to pay thousands of dollars per year.
  
• High data egress costs are prevalent among OTT platforms, e-commerce websites and online education providers.
  

Cloud - the omnipresent and imperative catalyst of innovation has today become synonymous with a citadel ensuring business resilience for many organisations. Echoing this, Gartner predicts that the worldwide end-user spending on public cloud services will reach a significant $494.7 billion in 2022. Even with all the benefits, there are still some challenges and lack of understanding associated with cloud acceptance that makes many organisations hesitant, leading to delays in their cloud journey or a retreat to their monolithic traditional processes.

Amongst such challenges, the top spot is claimed by the inability to ensure excellent cloud economics due to unexpected fees or lack of planning and understanding. Even when organisations learn to map out an economical cloud journey, hidden costs creep up in arrears to disrupt their near- to-perfect approach. Research by O’Reilly also found that the biggest concern amongst organisations leveraging cloud is managing cost.

Mounting data egress cost

These hidden costs are especially alarming in today’s time when cloud isn’t just an additional business process but is the foundation for creating future-ready organisations. Enterprises are often hit with egress cost or data outbound cost as a surprise billed in arrears, preventing them from planning smart extraction of data in advance. This has globally become a significant hindrance towards ensuring adherence to cloud budgets, with some businesses paying thousands of dollars per year. Businesses of every size and in every sector find these costs unmanageable mostly due to lack of a prior understanding.

While smaller organisations may struggle with finding the budget, bigger ones with businesses across multiple countries and multiple regions find it challenging to track these costs, with many teams working simultaneously. Due to these hefty hidden costs, return on investment for cloud hosting comes down considerably, making it seem like a less efficient way of doing business.

Every business leveraging cloud will eventually move their data out in one form or the other regardless of the industry they are in, but a significant example of sectors caught in the egress whirlwind would be OTT platforms, e-commerce websites and online education amongst many others. These platforms have witnessed a massive uptick in recent times, causing them to move data at an unprecedented rate and resulting in significant data egress cost.

Even beyond this, any large organisation with business spillover systems running across multiple locations or at multiple data centres is bound to witness a huge egress bill as these systems inevitably need to interact with one another. For instance, an e-commerce platform is bound to interact with multiple external parties to ensure business is conducted smoothly, thus leading to excessive data input and output. In such specific instances, it becomes extremely difficult to predict egress costs as the organisations cannot forecast the number of users that are going to leverage their platform.

Even when organisations learn to predict the costs, they are presented with another challenge – a baffling cost structure. There are multiple tiers and complexities in calculations besides hidden clauses, making it a difficult task to effectively calculate the egress charges in advance. The baton must lie with the cloud providers to ensure that businesses–big or small–are able to effectively plan and understand any hidden costs well in advance. As we aim for a world where 100% of organisational processes are cloud-led, we may eventually witness a global slowdown on cloud acceptance with a domino effect if cloud investments begin to seem like an uncurbed burden. Such high egress costs will also eventually become a hindrance to ensuring innovation via an extremely beneficial multi-cloud environment, considering they can rack up excessive data outbound costs.

Navigating hidden expenses

As cloud becomes a necessity, organisations must leverage it but at the same time ensure superior cloud economics by learning to navigate these costs. The first step would be to find a cloud provider whose services don’t end at product delivery but start there. A cloud provider must be a strategic advisor that guides the organisation to receive an excellent return on investment. While the egress cost remains a huge source of revenue for cloud providers and therefore cannot be completely eliminated, businesses should try to find a vendor who has lowered these costs considerably, and also has an existing low standard billing and techniques in place that will help reduce costs further.

Ultimately, cloud today is not a choice but a necessity for organisations to sustain. Therefore, businesses must become smart cloud investors by choosing the right cloud partner. Cloud providers must also engage deeply with businesses and help them receive maximum returns on investment.

Shabeer Mohamed is Senior Director at Oracle Digital. The opinions expressed by the author do not necessarily reflect the views of Business Insider India.

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