People at Red Hat, IBM, Microsoft, Google and Amazon who make their living developing and selling cloud services need to look at this report on cloud prices.

Is “cloud computing” cheaper than running information technology applications on your own internal resources?

It’s often touted that way, but a new report from Information Services Group says “cloud” is not always cheaper.

People at Red Hat, IBM, Microsoft, Google and Amazon who make their living developing and selling cloud services need to look at this report. Amazon Web Services, Google Cloud Platform, Microsoft Azure and IBM SoftLayerprices/services were checked using public cloud data is sourced from Gravitant, a global strategic partner of ISG.


  • “For specific infrastructure configurations, the study found the price of public cloud services varies significantly from one provider to the next, ranging from $811 per month to $1,096 per month at 100 percent usage levels.
  • “The cost of internal IT for the same configuration was $548 a month, 32 percent lower than the lowest public cloud price.
  • “Cloud instance usage is the percentage of time that a compute instance is running and accruing charges from the public cloud provider.
  • “However, when the average usage level for public cloud falls to 55 percent, the cost of public cloud is at parity with the cost of internal IT.
  • “The cost advantage for public cloud increases significantly as the amount of time that instances can be released increases (that is, usage falls).”

The data is included in the ISG Cloud Comparison Index, which is scheduled to be published quarterly.

ISG says the report is a “benchmarking service that offers clients a first-ever view of how public cloud costs differ among providers and how they stack up against those of internal information technology (IT) solutions.”

“Pubic cloud is not always cheaper,” said Christopher Curtis, partner, ISG Emerging Technologies, and head of ISG’s Cloud Solutions practice. “It’s largely a factor of usage. High levels of public cloud usage can create scenarios in which internal IT is more cost effective; conversely, the cost advantage of internal IT disappears when public cloud usage is at lower levels, that is, applications can release more resources. The break-even point appears to be around 55 percent for the specific configuration we analyzed.”

The bottom line?

“Enterprises should avoid viewing the public cloud only as a lever to reduce operating costs, as they do with traditional outsourcing solutions,” said Curtis. “Instead, they should view public cloud as a way to reduce or eliminate future capital expense by avoiding over-provisioning of internal IT resources to meet high levels of periodic demand. Public cloud creates significant cost-avoidance opportunities for volatile workloads. Applications with the most wide-ranging usage patterns are strong candidates for the cloud.”

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