Understanding Cloud Purchasing Models

13 Jun Understanding Cloud Purchasing Models

Cloud has many benefits for most organisations. It provides an easy way to purchase services; whether it be infrastructure, platform or software; but not all Cloud services are equal … in technical or commercial comparisons. In the interests of ensuring our customers are always informed we’ve taken the time to look at common public Cloud infrastructure services, commonly referred to as Infrastructure-as-a-Service (IaaS), and the commercial models they offer. For simplicity we’ve focused on the purchasing and operating of Virtual Servers in Amazon Web Services (AWS), IBM SoftLayer, Microsoft Azure and our own platform, Flex. Hostworks’ Chief Strategy Officer, Nathan Norrie, reveals what you need to know.

We used as a base the purchase of a Virtual Server which be definition is a virtualised unit of server hardware providing virtualised memory, compute, storage and networking services to be able to install and run an operating system and application.

We then focused on the two primary types of services available:

–                 On-Demand – a fully flexible service where you can increase, decrease, add, and remove services at any point in time with the only commitment to the service provider of being the minimum billable unit (e.g. an hour).

–                 Reserved – a guaranteed service is provided in return for a commitment to purchase the services for a minimum term.

The following table summarises the minimum terms associated with On-Demand and Reserved Virtual Servers across service providers.

Service Provider Minimum On-Demand Term Minimum Reserved Term(s)
Amazon Web Services 1 hour 1 or 3 years
IBM SoftLayer 1 hour 1 month
Microsoft Azure 1 minute 1 year
Hostworks Infrastructure 1 day 1 year

Amazon Web Services.

Amazon Elastic Compute Cloud (Amazon EC2) is AWS’ service that provides clients with Virtual Servers. AWS provides three methods to pay for virtual servers on EC2: On-Demand, Reserved Instances and Spot Instances. For this comparison we’ll ignore Spot Instances.

AWS’[1] “On-Demand (Virtual Servers) let you pay for compute capacity by the hour with no long-term commitments or upfront payments.” AWS[2] describes Reserved Virtual Servers as a reservation of “Amazon EC2 computing capacity for 1 or 3 years, in exchange for a significant discount (up to 75%) compared to On-Demand (Virtual Server) pricing.”

IBM SoftLayer

IBM SoftLayer’s Virtual Servers[3] provides clients with Virtual Servers and offers two procurement models, hourly or monthly. Their hourly model provides an On-Demand comparable offering while their monthly model is aligned to a Reserved model. The minimum commitment for each On-Demand and Reserved model is respectively hourly or monthly[4].

Microsoft Azure

Microsoft Azure’s Virtual Machines provides clients with Virtual Servers. Microsoft Azure provides a few different procurement models, depending on your relationship with Microsoft. As a general platform delivering Virtual Servers you can opt for Microsoft Azure’s Pay-As-You-Go rates for On-Demand Virtual Servers or Microsoft Azure’s Prepaid Subscription for Reserved Virtual Servers. Microsoft Azure’s Pay-As-You-Go rates are billed in minute increments with a minimum commitment of 1 minute. Microsoft Azure’s Prepaid Subscription[5] works a little differently from other providers Reserved models in that it’s basis is on a prepaid monetary value for services from Microsoft Azure and not specifically Virtual Servers so you can change the subscribed services that make up your subscription during the course of the term, which starts at 1 year. In addition, Microsoft Enterprise Agreement customers can add an equivalent Microsoft Azure subscription to their Enterprise Agreement with an upfront monetary commitment to Microsoft that is consumed during the year[6]. This Enterprise Agreement subscription works in line with Microsoft Azure’s Prepaid Subscription and is best aligned to Reserved Virtual Servers.

Hostworks Infrastructure

Hostworks’ Infrastructure provides clients with Virtual Servers. Our infrastructure provides clients with the flexibility of two pricing models, On-Demand and Reserved. The On-Demand model has a minimum commitment of 1 day and the Reserved model has a minimum commitment of 1 year.

So, in summary, how do they compare commercially?

Service Provider On-Demand Reserved
Amazon Web Services Pay for compute capacity by the hour with no long-term commitments or upfront payments.[7] Reserve Amazon EC2 computing capacity for 1 or 3 years, in exchange for a significant discount (up to 75%) compared to On-Demand pricing.[8]
IBM Softlayer[9] Pay by the hour Pay by the month[10]
Microsoft Azure Microsoft Azure’s Pay-As-You-Go rates are billed in minute increments with a minimum commitment of 1 minute. 1 year prepaid subscription that encompass multiple Microsoft services including Azure.[11] Azure can also be included in services associated with a Microsoft Enterprise Agreement.[12]
Hostworks 1 day 1 year

With varying commitment and commercial models available we always recommend that our clients consider the right model for the need at hand. The benefits of the comparison above are that it helps simplify the points of consideration. A devops environment will have different needs to an always available and scalable environment.

Here is where Hostworks can help. Our team can help you better understand the Cloud for your business. We can listen to help develop your Cloud strategy. We can work with you to build your Cloud business case. We can be the skilled hand to help design and build your solution.

Hostworks Flex+

One of the many great things about Cloud is flexibility; the flexibility to choose between platforms, the flexibility to move and migrate between providers, the flexibility to build resiliency and redundancy between providers. Hostworks’ Flex+ helps unify this flexibility through a combination of industry best people, industry leading technology and industry best practices aligned to helping you get the most out of the Cloud. Flex+ enables you, and your business, to choose the IaaS platform that best suits your needs, whether it’s an hourly On-Demand model, an annual Reserved model, a bit of both, or a bit from multiple providers. Flex+ provides a unified approach and way of doing this.

Flex+ also provides you with a Cloud agnostic way of deploying and managing your environments across multiple Cloud services. Integrating with CI/CD frameworks and common automation and configuration toolsets is standard, across Clouds. Add in our 24/7 Customer Management Centre filled with Cloud experts and we can monitor, manage and support your environments across Clouds around the clock. Flex+ gives you the flexibility to use any Cloud, any pricing model, backed by a team of experts in each Cloud.

Still a bit hazy? Hostworks’ team can help you better understand the Cloud for your business. We can develop your Cloud strategy, build your Cloud business case, and help you in designing, building and operating your Cloud services. We’ve been doing it for over 15 years and we’re trusted by some of Australia’s biggest brands. Contact us now.

[1] https://aws.amazon.com/ec2/purchasing-options/

[2] https://aws.amazon.com/ec2/purchasing-options/reserved-instances/

[3] http://www.softlayer.com/virtual-servers

[4] http://static.softlayer.com/sites/default/files/softlayer-csa-slsd.pdf

[5] https://azure.microsoft.com/en-us/offers/ms-azr-0026p/

[6] https://azure.microsoft.com/en-us/pricing/enterprise-agreement/

[7] https://aws.amazon.com/ec2/purchasing-options/

[8] https://aws.amazon.com/ec2/purchasing-options/reserved-instances/

[9] http://www.softlayer.com/virtual-servers

[10] http://static.softlayer.com/sites/default/files/softlayer-csa-slsd.pdf

[11] https://azure.microsoft.com/en-us/offers/ms-azr-0026p/

[12] https://azure.microsoft.com/en-us/pricing/enterprise-agreement/

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