The Hidden Costs of Cloud

Addressing data egress fees and other cloud costs requires awareness and strategic planning

Dawn Howell
The Hidden Costs of Cloud

In spite of the performance, scalability and flexibility benefits of public cloud, IT leaders are increasingly realizing it’s not the answer for every challenge they face. This is reflected in the growing trend of cloud repatriation. According to one survey from 451 Alliance[1], 48% of respondents said they had moved at least one workload away from the public cloud within the last 12 months.

One of the key factors driving this trend is cost. In the early days of cloud computing, being able to shift from large upfront capital expenses (CAPEX) to spread-out operating expenses (OPEX) was one of the key selling points driving public cloud adoption. Now, it’s become clear that simply moving to public cloud isn’t enough to capture the promised cost benefits. Organizations need careful planning and a strategy to address the hidden costs of cloud adoption, including data egress fees, vendor lock-in, and overpaying for unnecessary resources and bandwidth.

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What are data egress costs, and why do they matter?

Data egress fees are simply what you pay to move your data from the cloud to any other location, such as an on-premises data center. The exact amount you’ll pay varies based on which cloud service providers you work with, how much data you’re moving during a given period, and where you’re moving it. If you’re not careful, what might seem like a minor inconvenience at first could easily add up to thousands of dollars in unexpected costs every month. The more data you move into the cloud, the higher your egress costs could be.

Leaving data in cloud storage simply to avoid data egress fees is shortsighted. After all, it’s your data, and your organization should use it to its full potential. This is particularly true at a time when groundbreaking technologies like artificial intelligence and machine learning (AI/ML) are turning data into business value in new and unexpected ways.

A hybrid multicloud approach is key to keeping data egress costs manageable while also capturing the performance benefits that drew you to the cloud in the first place. When creating your hybrid multicloud strategy, it’s important to look closely at where it makes the most sense to store your data. For many data sets, cloud storage may not be the answer.

According to the Hybrid Cloud Storage Maturity Model 2021 report from S&P Global Market Intelligence[2], 34% of enterprises said egress costs have impacted their use of cloud storage. Some of these companies have repatriated data to their on-premises data centers, while others have placed data with a colocation partner that also offers advanced interconnection services. Ideally, a colocation approach would enable organizations to take advantage of cloud-adjacent infrastructure—that is, placing data in the same facility as cloud on-ramps, so that you can easily take advantage of temporary cloud capacity on demand.

A vendor-neutral approach to cloud networking unlocks cost savings 

Organizations need careful planning and a strategy to address the hidden costs of cloud adoption…”

One of the core truths driving hybrid multicloud adoption is that different public cloud providers excel in different areas. This truth also extends to cloud pricing. Relying exclusively on a single cloud provider is a sure-fire way to overpay. According to 451 Research’s Cloud Price Index[3], companies that pick from multiple cloud providers based on price can save an average of 45% for simple applications like compute and storage.

Cost optimization is all about placing the right workloads with the right providers—or for some workloads, bypassing cloud altogether. Certain workloads may be especially well-suited to run on a particular cloud; in this case, it may make sense to pay a premium to work with that provider. It’s important to look at each workload individually, and make strategic decisions aimed to balance cost and performance.

You must also be careful to avoid proprietary offerings that could lock you in to a particular cloud provider by design. Instead, look for open-source solutions, such as Kubernetes or Terraform.

To avoid surprises, track cloud costs and adjust your architecture over time

One of the key challenges of cloud cost optimization is that the costs can feel more abstract than the upfront expenses involved with on-premises infrastructure. Keeping track of pay-as-you-go costs can feel like a full-time job, which is why it’s often easier to ignore them and just leave your existing cloud architecture running untouched.

Today’s cloud services and the network infrastructure that supports them make it easier than ever to set up new connections or virtual machines. However, it’s just as easy to forget about those components as your business needs change, leaving them to generate unnecessary costs in the background.

Working with the right networking partner can be essential to addressing this issue. An intuitive web dashboard makes it easy for businesses to both understand the full costs they’re racking up with their cloud environment, and easily remove unneeded cloud services to keep costs down.

Address the hidden costs of cloud with Equinix Fabric

Equinix Fabric™ is a software-defined interconnection solution that enables a more cost-effective approach to hybrid multicloud networking. It can address data egress costs by providing an alternative to cloud storage: colocation in an Equinix IBX® data center paired with direct, private interconnection across our global footprint. Equinix facilities offer on-ramps to all major cloud providers, enabling you to deploy cloud-adjacent infrastructure from wherever you are. For data you want to leave in the cloud, Equinix Fabric also provides more cost-effective egress than the internet.

Equinix Fabric is available in more than 50 metros across the world, with new locations being added often. This can help you unlock the cost benefits of a vendor-neutral hybrid multicloud strategy by ensuring you’re able to access cloud on-ramps for specific providers, when and where you need them.

Finally, the Equinix Fabric web portal gives you complete control over your cloud infrastructure and the costs it creates. Tracking pricing details all in one place helps you understand your total cost of ownership across all the providers you work with. The ability to remove or adjust connections with a few simple clicks means you can easily identify and remove unnecessary costs.

To learn more about Equinix Fabric and how it can support a cost-effective hybrid multicloud architecture, read the data sheet today.

 

 

[1] 451 Alliance, “Cloud Repatriation: Are Companies Moving Away From the Public Cloud?” Pedro Schweizer, November 2021.

[2] S&P Global Market Intelligence, “Data center interconnection faces cloud-native competition”. March 2022.

[3] S&P Global Market Intelligence, “Why 76% of companies are adopting multicloud and hybrid cloud approaches”. Jean Atelsek, 2021.

45%

Companies can save an average of 45% by picking from multiple cloud providers, according to 451 Research’s Cloud Price Index.

Dawn Howell
Dawn Howell Principal Product Manager, Equinix