Cloud Price Rises: What Organisations Are Doing To Offset Them

Computing's latest research finds companies looking to cut out the waste and renegotiate terms

Due to inflation and high fuel costs cloud prices have been rising, but it's a mixed picture. While some widely used SaaS such as Microsoft 365 and Salesforce saw price rises of 9% in recent months, elsewhere costs have fallen, such as in on-demand Azure compute.

A study in November suggested that SaaS prices were rising at four times the rate of inflation. Meanwhile, IBM announced a 24% price hike in January, including for SaaS products. IaaS prices tend to drop over time, but last October, Google announced price rises of 50% for some cloud storage and tweaked its data egress terms too.

The already complex picture is made all the more so with regional differences, currency fluctuations and many other factors. And if it's difficult to track cloud pricing within one provider, comparing across providers is even trickier. Vendors base prices on different metrics, and are liable to tweak them according to market conditions and to remain competitive.

Nevertheless, there is a prevailing feeling that cloud prices have been rising of late.

We asked 110 UK IT leaders at organisations of all sizes whether cloud prices have increased over the last 12 months. Unsurprisingly, the vast majority of those who offered an estimate said that prices had risen overall, with 2% estimating increases of more than 50%. Only 3% reported that prices had decreased, while 14% felt they were static. The average estimated change overall was a rise of 14%, a little above the approximate 10% UK inflation figure for the last 12 months.

Indeed, Inflation was the most commonly cited reason for the observed increases, followed by the Microsoft 365 price rise.

A technical operations director at a large media company estimated that cloud prices have risen around 20% "mainly due to Microsoft's significant recent M365 price hike."

A pro vice chancellor at a university using both AWS and Microsoft thought that one had largely offset the other: "AWS prices decreased, MS prices increased." Prices had remained pretty much the same, he thought.

Meanwhile, an IT manager at a college using Microsoft and Oracle clouds questioned whether cloud, once touted as a cost saving measure, had caught up with the alternatives: "It's becoming more costly than the big data systems we relied on in the past."

Indeed, 50% agreed with the statement: "We end up paying more in the long run," for cloud services.

Tackling the price rises

So, cloud prices are rising for most organisations, but perhaps not as much as some of the more headline grabbing figures would suggest. What are organisations doing to rein them in?

Most popular was the common-sense measure of eliminating overspecified or underused services. This was followed by modernising cloud infrastructure and negotiating with cloud suppliers. The latter finding is interesting, since the big public cloud providers are not known for their listening ear, unless you happen to be a very important customer.

Reducing duplication by consolidating cloud suppliers was another option. Cloud arbitrage, playing one service provider's offerings against another's, is not a viable option for most. 14% were ready to switch cloud providers for more favourable pricing.

17% said they were renegotiating terms with managed service providers, whereas a similar number were considering cloud in the round, placing a focus on building business resilience.

This article was originally published on our sister site, Computing UK.