Can Cloud Pricing Really Bring a Shower of Savings?

Dave Brown, Principal, Shared Services and Outsourcing Advisory, KPMG LLP ( US)

Information technology outsourcing (ITO) continues to push the capabilities of service delivery to buyers using more efficient and seamless interfaces. Cloud computing services begin to take the next step by attempting to hide the entire infrastructure and allowing you to simply pay for what you use on a unit of measure, for example, cost per email account.

Pricing structures have matured, but are not new or inherently different. What is different is the dedicated or shared set up of the infrastructure supporting the service. In the past, many buyers were reluctant to use shared environments due to data privacy or internal security issues. With some of these concerns decreasing over the years, service providers have gained the ability to offer larger savings due to the leverage of infrastructure shared across multiple clients, which is a fundamental advantage of cloud computing.

‘Paying by the drink’ is appealing to many buyers. But before you jump into any cloud computing initiative and its related pricing structure, you must understand not only your main business drivers but also what you are really paying for.  Establishing an appropriate and well considered pricing structure will help ensure your company gets its cloud initiatives right.

For further insights on this subject, including details of what buyers should look for in a cloud-based pricing structure, read my paper “Can Cloud Pricing Really Bring a Shower of Savings?’.

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