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Common online service costs and how to manage them By Terry Storrar, Managing Director of Leaseweb UK

Companies of all sizes are choosing to roll out new online services to take advantage of low development costs and the wide range of options available. The sheer variety of online services, ranging from internal HR self-service platforms and customer-facing solutions to Software as a Service and media platforms, means there is something that appeals to almost any business.

But while online services can appear attractive, compelling even, companies should take a long hard look at the operational costs of managing them before they take the plunge.

For example, if the back end is involved, what are the costs of using or managing the hardware? Has that been included in the scope? If the cost has been included, does the scope provide a clear cost breakdown or is it just a broad-brush estimate?

No one wants to pay over the odds for any service so if you want to avoid overpaying for the costs of managing online services, there are a number of common issues you should be aware of that are worth keeping an eye on.

Do you need an ‘always-on’ online service?

One of the big selling points of online services is they are ‘always-on’, but do they need to be? Most businesses don’t need an online service that is available every hour of every day of the year. In many cases, the online service will only be used during office hours even if it remains on standby at night. But you still pay for the standby hours. The cost of those standby hours, even if they are never used, can mount up and can come as a very unwelcome surprise when the bill arrives.

If you are thinking of using a cloud provider to host applications or deliver online services, it’s worth considering whether you need those services to be available all the time. You may well decide your organisation doesn’t need an ‘always-on’ service. If that’s the case, you should get the cloud provider to give you a clear calculation of what the savings would be if you opted not to pay for standby hours.

If you are already using a cloud provider to host applications or deliver online services, it might make sense to revisit your agreement to see what savings you could make by reducing or eliminating the standby hours in your contract.

Businesses frequently overlook the price of continuous availability for their online services but if they don’t need it, it gives them the potential to make near immediate savings in the cost of those services.

How realistic are you about usage?

Many businesses find it difficult to realistically assess the numbers of users and the data they require from online services and hosted applications. The formula might seem simple: the more data you use, the higher the cost. But are you clear about the data usage level you require?

It can be easy to make a broad brush calculation of the data you require based on a given number of users but what happens if you experience spikes in usage? How does your contract account for unexpected surges?

Cloud providers make great virtue of their ability to spin up and spin down capacity to meet changes in demand, but there is a cost to that, especially when data usage goes up. Do you want to pay that cost? Might it be better if your cloud services were based on a realistic calculation of your data usage? Does it offer a sensible option for future growth?

Have you achieved an effective balance between cost and return? If not, how can you employ your experience of online services to adapt your data usage and user levels to fit the business better going forward? How flexible are your arrangements with your providers? Nobody wants to be confronted with an unexpected surge in costs because they failed to accurately predict their data usage.

Are you getting the right service levels?

One of the great perceived benefits of hosted applications is the level of support and management included with the service. You are not just paying to use the infrastructure.

There is a comfort in knowing online providers are also fulfilling the management and support requirements for their services. But that should not stop your business from assessing the service levels being provided on a regular basis. Are you receiving the right support? What support and management are you paying for? Do you need all of the support you are paying for? Are the service levels set too high for what you realistically need?

As with all things cloud, when it comes to costs it is advisable to be as much aware of what is included in the price as what isn’t. If you find you’re paying for something you never use, there should be an option to stop paying for it.

Does it make sense to run everything in the cloud?

Online services are cloud-based but that doesn’t mean you have to run everything in the cloud. Building, testing, running and optimising online services and apps requires a number of steps and not all of them are better off in a cloud environment.

Putting everything in the cloud can quickly become costly if processes are not run in their optimal environments. You could also compromise your data sovereignty, compliance and security. It might make more sense to select an on-premise solution for highly sensitive data stored in your online service platform. This should give you tighter control over your security, continuity and costs.

What is your Total Cost of Ownership?

Total Cost of Ownership (TCO) is a critical metric for any organisation seeking to get a clearer picture of how much it is paying for a solution or service. Unfortunately, many service providers are guilty of providing only a simple estimation that is hard to verify accurately. This gives them the ‘flexibility’ to include additional costs, for items such as ‘start-up’ and ‘development’, that you cannot control or challenge.

To keep a tighter grip on these hidden or unexpected costs, always ask for your full TCO statement and scrutinise it closely. Challenge items of expenditure if you are unsure what they are for or what benefit they bring to your business. This will enable you to build a more realistic picture of your TCO and provide the weapons for you to challenge unnecessary costs.

It pays to talk

One of the best ways to ensure you are not paying over the odds for an online service is to maintain an ongoing dialogue with your service provider. If the service provider is negligent or uninterested in addressing your concerns, it will become very clear, very quickly.

If the service provider is a reputable partner, it will engage with your organisation and address your concerns to ensure the service it delivers is best suited to your needs. Regular communication will help give your provider a clearer view of your priorities, such as cost-saving and platform optimisation, and how it can improve the services it delivers to meet those objectives. When it comes to trying to save costs, silence is not golden and talk is much cheaper.

Leaseweb is an Infrastructure as a Service (IaaS) provider serving a worldwide portfolio of 18,000 customers ranging from SMBs to enterprises. Services include Public Cloud, Private Cloud, Dedicated Servers, Colocation, Content Delivery Network and Cyber Security Services. With more than 80,000 servers under management, Leaseweb has provided infrastructure for mission-critical websites, internet applications, email servers, security and storage services since 1997. The company operates 20 data centers in locations across Europe, Asia, Australia and North America.

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