Becoming a Smart Cloud Investor: Managing Hidden Exit Costs


  • Research shows that the number one concern for businesses using the cloud is cost management.
  • Data egress costs can get in the way of adhering 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.

The cloud, a ubiquitous and unavoidable catalyst for innovation, has now become synonymous with the citadel of business resilience for many organizations. Echoing this, Gartner predicts that global end-user spending on public cloud services will reach $494.7 billion in 2022. Even with all the benefits, there are still challenges and lack of understanding associated with accepting the cloud that makes many organizations hesitant, causing delays in their journey to the cloud or a return to their traditional monolithic processes.

Chief among these challenges is the inability to deliver excellent cloud economics due to unexpected costs or a lack of planning and understanding. Even as organizations learn to chart an economical path to the cloud, the hidden costs rise in time to disrupt their near-perfect approach. Research by O’Reilly also revealed that the primary concern for organizations using the cloud is cost management.

Raise the data egress cost

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These hidden costs are particularly alarming today when the cloud is not just an additional business process, but forms the foundation for building future-ready organizations. Businesses are often faced with egress cost or data egress cost as a surprise billed in arrears, which prevents them from planning intelligent data extraction in advance. This has become a significant barrier to meeting cloud budgets globally, with some companies paying thousands of dollars a year. Businesses of all sizes and across industries find these costs unmanageable, primarily due to a lack of up-front understanding.

While smaller organizations may struggle to find the budget, larger ones with businesses in multiple countries and regions struggle to keep track of those costs, with many teams working concurrently. Due to these high hidden costs, the ROI of cloud hosting drops significantly, making it a less efficient way to do business.

Every business leveraging the cloud will eventually move its data in one form or another, no matter what industry it is in, but a significant example of industries caught in the egress whirlwind would be OTT platforms, websites e-commerce web and online education among many others. . These platforms have seen a massive surge lately, forcing them to move data at an unprecedented rate and incurring significant data egress costs.

Even beyond that, any large organization with enterprise overflow systems running across multiple sites or across multiple data centers inevitably faces a huge output bill, as these systems inevitably have to interact with each other. For example, an e-commerce platform is required to interact with multiple external parties to ensure business runs smoothly, resulting in excessive data input and output. In such specific cases, it becomes extremely difficult to predict exit costs because organizations cannot predict the number of users who will leverage their platform.

Even when organizations learn to forecast costs, they face another challenge: a bewildering cost structure. There are several layers and complexities in the calculations in addition to the hidden clauses, which makes it difficult to calculate the exit fee effectively in advance. The relay must fall to cloud providers to ensure that businesses, large or small, are able to effectively plan and understand all hidden costs well in advance. As we aim for a world where 100% of organizational processes are cloud-driven, we could eventually see a global slowdown in cloud acceptance with a domino effect if cloud investments start to feel like an uncontrollable burden. These high egress costs will also eventually become a barrier to innovation through a hugely advantageous multi-cloud environment, as they can lead to excessive egress data costs.

Navigate hidden expenses

As the cloud becomes a necessity, organizations must take advantage of it, but at the same time ensure superior cloud profitability by learning to manage these costs. The first step would be to find a cloud provider whose services don’t stop at product delivery but start there. A cloud provider must be a strategic advisor who guides the organization to achieve an excellent return on investment. While the cost of egress remains a huge source of revenue for cloud providers and therefore cannot be completely eliminated, companies should try to find a provider that has significantly reduced these costs, and also has low standard billing and techniques in place that will help reduce more expensive costs.

Ultimately, today’s cloud is not a choice but a necessity for organizations. Therefore, enterprises must become smart cloud investors by choosing the right cloud partner. Cloud providers must also engage deeply with businesses and help them achieve maximum return on investment.

Shabier Mohamed is a senior director at Digital Oracle. The opinions expressed by the author do not necessarily reflect the views of Business Insider India.


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