I thought you said the Cloud was cheaper?

These are the words you never want to hear from your CFO/CEO/LOB. It means we have not done our job in setting expectations, cost estimation and requirements analysis. When you ask,  "is the Cloud cheaper?" The answer is really, "It depends." Remember at the end of the day the cloud is just a datacenter of raised flooring, racks, power, cooling, network, server and storage, managed as a single fabric. The costs are relatively similar to your datacenter. The difference is in the scale and efficiencies.

1st Principal of Efficiency - Right Size the images

Cloud providers want to operate their systems a much higher operational density than you do and build their pricing models to promote the use of the most efficient image (i.e. you can put a lot more t2 micros in the same space than you can m3 extra-large). You will pay a premium for large vm images as they create "big rocks" in the architecture and waste space. So, if you design your cloud deployments to use the minimum footprint of cpu, memory and storage, you can save money, maybe. Not all clouds are created equal and each has it's own unique way of sizing the standard images, some are CPU heavy others are Memory heavy. The trick to Right Sizing is to align your application deployment to fit into the standard image offerings. As with everything, customization comes at a price.

2nd Principal of Efficiency - One way toll road effect

So you've right sized everything and optimized for the standard images, but your CFO is still screaming about the monthly bill. Your issue might be your network charges. Most clouds work like one-way toll roads. No toll going in, you pay the toll going out. Before you put the application in the cloud you have to understand the traffic patterns and application dependencies. Cheapest applications keep all their communications within the cloud and only the user interface (post/response) pays the egress charges. Failure to understand intra- and inter-application dependencies will lead to unexpected network charges on your bill.

3rd Principal of Efficiency - Idle time = wasted $$$

The primary principal of the cloud is you pay for what you use, so every minute is precious. Unlike your datacenter where there's no extra charge if the server is idle or fully loaded. The way to truly save money is to turn it off when not in use through the use of automation and schedules. This is the hardest to achieve as it requires a change in behavior and culture on the part of the users and business leaders. If you run your application 7x24, at a fixed size and number, the cloud is no cheaper than your datacenter. Efficiency in the cloud requires the ability to auto-scale, auto-resize, and to hibernate when not in use. If you can't do this, prepare for a hefty bill that is all operational expense and not capital.

4th Principal of Efficiency - Keep a clean house

This is very similar to problem you can have in VMWare where you delete the VM but not the VMDK, eventually running out of storage and wasting valuable storage. In the cloud you can do the same thing if you use persistent storage for your VM's (which most of us do because it's easier than redeploying the legacy app every time). You need to ensure that as images are deleted the underlying persistent volumes are deleted or immediately attached to a new image. This problem will hide itself for a long time as storage costs are relative low in the cloud, but over time can build up into a sizable number. Be sure to design in a process to reap this waste and clean house periodically.

Sounds, like a lot of work? Yes it can be, but tools like RISC Networks CloudScape and CloudGenera can help and conducting a Cloud Readiness Assessment can be a valuable source of data upon which to make your informed decisions. The bottom line is the Cloud is not "Your mess for less". You are going to have to make changes and redesign some applications to achieve true cost savings and efficiencies in the cloud. If you just "lift and shift", all you have done is change the color of money from capital dollars to expense dollars.

Cloud Expense Right-Size Assessment