Four cloud costs that you must consider before committing to a private cloud journey

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Cloud architectures are complex, and so are its costs. There are many things to be aware of before committing to a hybrid cloud journey.

From the initial CAPEX, to on-going lifecycle management and maintenance costs, make sure you’ve considered all the different types of costs before going ahead.

1) CAPEX of on-premise private cloud

There’s significant investment when it comes to on-premise cloud.

If you purchase and provision on-premise IT with too few resources, you’ll have to consider additional capex each year due to poor capacity planning. Or the other side of the coin is that if you overprovision servers, you might underutilise and therefore raise your cost of virtual machines per month.

Additionally, there are costs to consider in depreciation of your physical assets and the costs of building and operating cloud infrastructure on your own (compared to if you’re consuming cloud from an off-premises provider).

Lastly, the cost of downtime of on-premises infrastructure can be substantial, whereas a cloud service provider can deliver an SLA uptime guarantee.

Compared to environments that are physically located on-premises, customers can access dedicated private infrastructure without the upfront costs and resources required to maintain on-premises infrastructure in a hosted private cloud1.

2) Scalability can be expensive and unpredictable

A big factor of on-premises private cloud is its limited scalability.

When your organisation’s demand exceeds capacity, you’ll need to either reroute that demand off your private cloud or purchase and maintain new hardware. If that excessive demand is not constant, you’ll end up having underutilised hardware.

A hosted private cloud solution can offer the agility and scalability of a public cloud solution, without the burden of maintaining an on-premise private cloud.

Ensure you understand the differences of on-premises and off-premises cloud solutions, as well as what suits your business needs best. If you’re a growing organisation, make sure you’re prepared to scale.

3) Management and maintenance of ongoing operational expenses

The initial capex investment isn’t the only cost that comes with on-premises cloud – there’s a large list of potential operational expenses involved including potential downtime, the ability to leverage specialist knowledge to optimise your applications and cloud, and the team members you’ll need to dedicate to maintaining on-premises equipment.

Add in the soft costs too and it becomes incredibly hard to forecast the real impact of on-premises cloud.

A hosted private cloud might be the solution you need, and with the added benefit of managed cloud services, you control the day-to-day operations of your virtual machines and outsource the management of the platform infrastructure. You want a cloud provider or vendor that offers cost predictability with multiple contract length options, and with the option of a partner that can help you manage your cloud and operational cloud expenses.

Partners could also help address critical incidents, complex concerns and enhance internal skill sets2.

4) The dreaded cloud bill shock

We’ve written about cloud bill shock before and the impact it can have on your organisation.

It’s something that unfortunately needs to be considered, as most organisations believe their cloud usage has increased since COVID-193, and no one is safe from it.

Make sure you have visibility over your cloud with platforms like Telstra Cloud Sight™ that act as a one-stop shop, and that your forecasting is accurate by utilising monitoring tools and different contract options to suit your organisation’s needs.

Additionally, consolidate your cloud service providers to avoid having multiple bills at multiple times from multiple providers, and to mitigate the risk of multiple bill issues across the board.

Cloud bill shock isn’t something that is entirely preventable, but you should be aware of it and do what you can to be prepared.

Don’t let the long-term capital expenditure wear you down or pull you back from taking that first step towards cloud adoption.

At Telstra, we’ve developed our Telstra Hybrid Cloud ecosystem, which includes Telstra Private Cloud to give you the optimal balance of cost, visibility, certainty, and control.

Learn more about Telstra Private Cloud here.



1.    Telstra, best of both worlds: Navigating the Hybrid Cloud landscape

2.    Omdia, State of Cloud Adoption in Australia 2021

3.    Flexera, 2021 State of the Cloud Report