How to Compare Cloud Providers, Services, and Prices

Finding a way to compare Cloud providers can often seem like comparing apples to oranges. From afar many providers seem similar, but upon closer inspection, you quickly realize they’re entirely different species altogether. In other words, comparing Cloud providers is hard.

Since the explosion of Cloud computing, providers have rapidly innovated their Cloud services with new configurations, new pricing models, and other methods of differentiating their Cloud services from the competition. As a result, forming an easy pricing comparison has become extremely difficult.

For buyers, however, transparent Cloud Service Provider comparisons are essential to the selection process.

This blog explores the means by which buyers can compare Cloud providers on the basis of price, performance, and the ultimate metric — price-performance, or value.

NOTE: This three-part blog series is available in this eBook, Comparing Cloud Providers: A Key Metric for Seeing Through the Clouds. Or read Part Two at: How to Compare, AWS, Azure, Google, and IBM and Part Three at: Seeing Through The Clouds: The Power of Cloud Transparency.

Challenges of the Cloud Computing Industry

Comparing Cloud providers and the Cloud computing services they offer can often be daunting. While procurement professionals have the expertise to perform the necessary vendor due diligence on providers to determine their business stability, reliability, and their overall capabilities and pricing, there are many underlying dimensions of Cloud services that must also be explored.

For example, the Cloud services offered by providers rely on the underlying infrastructure technology they use to host physical servers, which are partitioned via virtualization tools into the “virtual” servers and then sold as IaaS compute services. To be able to adequately compare the above, the following must be known:

Network and bandwidth
Physical server attributes — such as CPU, memory, and storage
The type of virtualization technology (or hypervisor) and how it’s implemented

Due to guarded intellectual property, however, the above is rarely disclosed by providers thus making a true comparison impossible.

This is just one of the challenges that Cloud consumers face when trying to compare Cloud providers, as we explore below.

Benefits of Cloud Transparency

There are many benefits of Cloud Transparency for end-user enterprises, for individual end-users, and for the providers themselves. Below are some of the key benefits of Cloud Transparency:

Allows provider evaluation and selection: Cloud Transparency allows end-user enterprises to objectively compare and evaluate providers, as well as their individual Cloud services, in order to make the best choice for their particular applications.
Enables Service and workload alignment: Cloud Transparency allows an enterprise to align their specific workloads with the appropriate Cloud services based on the combination of performance data, pricing information, and price-performance analytics. Taken together, these allow an optimized approach to deploying workloads to the Cloud.
Enables cost optimization and savings based on harnessing price-performance analytics: Cloud Transparency data could provide a basis for truly optimizing Cloud cost and Cloud portfolio management processes. Knowing the best value for Cloud services will enable data-driven decision making for moving workloads to the right Provider and to the best price-performance value services, enabling long-term cost optimization.
Opens the door to workload simulation and forecasting: Using appropriate modeling and simulation tools, price-performance analytics could be used to simulate application workloads and forecast the annual operating costs for running them on various Providers’ Cloud services. This could ultimately become the foundation for Cloud arbitrage, or selecting the best-fit Cloud services based on the current price and performance analytics.
Enables potential for Cloud provider arbitrage based on price-performance analytics: Eventually, the holy grail of Cloud management will be within our grasp: dynamically moving workloads based on the actual performance and price offered by providers in a multi-Cloud deployment. This will only be possible based on having real-time Cloud Transparency data available to import into the various Cloud management tools available on the market.
Enables true objective comparisons of providers, prices and performance, creating true industry Cloud Transparency: Finally, Cloud Transparency can provide an industry-wide view of pricing and performance analytics, thereby creating transparency across all providers and their respective Cloud services.

The benefits of Cloud Transparency are clear. This approach represents the only objective way in which fair and transparent comparisons can be made with respect to Cloud services, prices and performance. Price-Performance analytics enable a truly apples-to-apples means for evaluating Cloud services.

The Factors of a Transparent Cloud Comparison: Providers, Services, and Price

There are three key factors that are needed to compare Cloud providers: types of provider, services offered, and pricing.

Comparing Based on Type of Cloud Provider

While procurement professionals have the expertise to perform the necessary vendor due diligence on providers to determine their business stability, reliability, and their overall capabilities and pricing, there are many underlying dimensions of Cloud services that also should be explored, such as:

Regions and countries that providers operate in
Data center locations
Size and business stability
Security and risk
Reliability and trustworthiness
Audit and compliance opacity
Pricing models and contract terms
Service-Level Agreements (SLA)
Ease of use, self-service, robust API

The Cloud industry is dominated by three hyperscale providers (Amazon, Google, and Microsoft) followed by many smaller regional providers serving specific global regions.

One of the first considerations is which of the “Big Three” (if any) should be targeted? Should an enterprise partner with two of the three hyperscale providers to ensure competition and avoid vendor lock-in? On the other hand, depending on where your business operates, you may consider adding one or more smaller providers that may have unique services and value that may be of interest.

Beyond the procurement view of a Cloud provider, features such as ease of use, self-service access to the provider’s services, and a robust API that enables simple access to the offered Cloud services are also important.

Comparing Based on Cloud Services Offered

Evaluating the various Cloud services offered by Cloud providers is also not as straightforward as one might envision. Here are a few of the aspects that must be considered when comparing a provider’s services:

Service specifications (e.g. vCPU counts, RAM quantity, storage types, and sizes).
Class or size of a Cloud service (e.g. standard virtual machine versus compute-optimized). This aspect of Cloud services typically revolves around the ratio of vCPUs to RAM, and is a general way to compare equivalent VMs and VM families from provider to provider.
Storage technology and configurations (e.g. local storage versus network-attached storage, spinning disk versus solid state drives (SSD).
CPU technology and chip generation (e.g. Intel Haswell versus Skylake versus Xeon processors).
Actual performance, as measured by an objective benchmarking process.
Underlying technology (this will not be shared with end-users).
Value-added services, e.g. support, managed services, add-on value-added services.

The specifications for Cloud services on the provider website is often the first point of comparison for an end-user, followed by a price comparison.

As suggested above, however, the specifications of a given VM only provide a very coarse-grained view of its potential performance in use when running workloads.

Comparing the number of vCPUs (virtual CPUs), the chip technology on the physical server, the amount of memory (RAM), and the storage type and volume size are factors that are readily available to explore. However, the reality is that performance is not that well-correlated with the website specifications as advertised by providers. One must dig deeper into pricing to shape a more complete comparison.

Comparing Based on Cloud Prices

Understanding Cloud service prices is an arcane science these days. Cloud providers continuously roll out new versions of existing services, completely new services, and new pricing strategies targeted toward achieving a competitive advantage against other providers.

Some pricing models are relatively straightforward, while others are less so. Some of the following factors are essential to understand Cloud service pricing, not only for an individual service but also, more importantly, when Cloud services are bundled into a solution for a particular business use case.

Pricing of individual services, e.g. compute services, classes, and instances of virtual machines (VMs), storage configurations and options, network services, and more.
Billing increments (e.g. daily, hourly, per-second).
Reserved instances and up-front discounts as compared to spot instances, or unused capacity being sold on a discounted price to ensure target asset utilization.
Discounting strategies for multi-year commitments.
Bundling of services, e.g. bundling local SSD with a VM in the price, versus selecting these à la carte. Some providers bundle storage with VMs while others do not.
Currency differences and fluctuations for global enterprises.

The one thing we know about Cloud services is that prices are continually dropping, and discounts are also more readily available for locking in with a particular provider. This “race to the bottom” is a market share grab that the hyperscale providers are engaged in, and it will slow or end at some point.

In the meantime, this trend continues to be advantageous to consumers.

Further compounding the pricing complexity is the fact that deploying workloads to the Cloud requires more than a single server, plus storage (sometimes bundled, sometimes not depending on type) and network and other necessary services to meet the total application needs. While an organization can certainly obtain discounts for reserved instances with a multi-year commitment, the corresponding reality is that Cloud prices are continually falling. Thus, making a substantial multi-year commitment based on a given discount, may not make sense knowing that prices will drop.

From a consumer perspective, the evaluation of Cloud pricing options and scenarios is a dizzying experience, and may well require an army of financial modelers to understand. At minimum, consumers must find ways to monitor the pricing of their Cloud providers, and make the best-informed decisions as to who to partner with and what specific Cloud services to utilize.

The Need for Cloud Transparency

As we have shown, there are many drivers supporting the need for Cloud transparency. The turbulence of the Cloud computing industry is one. Providers come and go. Mergers and acquisitions are frequent, and the field of play is in constant flux. Adding to this ever-changing landscape is the continuous introduction of new Cloud services, new generations of technologies (processors, virtualization technologies, storage innovations), price changes, and new features that often are even confusing to the most seasoned of IT executives. From a consumer’s perspective, the Cloud computing industry is undergoing a dizzying pace of change.

As such, Cloud transparency is needed in order to help buyers make sense of the Cloud computing industry. Cloud pricing, performance, and value are universal metrics that will allow Enterprise buyers make informed buying decisions— achieving true Cloud transparency.

Learn more about how you can compare Clouds with our Cloud Transparency Platform.