Why the Cheapest Cloud Platform Isn't Always the Most Cost-Effective
Roger Mitchell
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Most organizations fixate on the licensing costs of their cloud platforms and SaaS applications, although when purchasing decisions are made, the cheapest does not always translate to being the most cost-effective.
Let's consider an organization that is looking to modernize their data stack. They're currently running their own legacy servers and databases, and the time has come to either get new hardware or embrace the cloud.
As an organization, they're leveraging Microsoft as their collaboration suite, have a few agnostic platforms for CRM and marketing, and many industry-specific services that offer a mix of integration patterns (i.e. APIs, flat files to FTP, read-only database replication).
While there may be some benefits to running their own on-premises environments, they're leaning towards a shift to the cloud and are evaluating AWS, Azure, GCP, and Oracle.
Those cloud offerings they're evaluating are attractive, yet have an entirely different pricing model that is usage-based. Plus, within some of those platforms, there are multiple ways to achieve the same solution.
In this case, stakeholders already have a natural hesitation to something that is unfamiliar (usage-based pricing) and might gravitate towards the lowest cost provider on paper (e.g. Oracle).
However, will that be the most cost-effective solution for them?
This is where understanding total cost of ownership matters.
While the licensing costs may favor an Oracle-based solution, there are both internal and external factors to consider:
Existing competencies administering and maintaining other Microsoft products
Integration with Microsoft 365 and other platforms that business users leverage
Compatibility with their existing and target state infrastructure
Available talent pool to hire new employees or contractors
It's worth precisely estimating your total cost of ownership to account for those factors and make a decision based on a more complete picture.
TLDR: Lower license costs don't always mean lower total costs. Consider expertise, integration needs, and available talent when choosing platforms.