Analyst Opinion – Time to End Cloud Egress Fees

One of the most common complaints from organizations that have moved at least some workloads to the cloud is the unpredictability of cloud billing, specifically as it relates to egress fees and transactional IO fees. Egress fees are the price the various cloud providers charge to move data from their cloud to another cloud provider or back on-premises. While none of the major cloud providers charge anything to ingress data, they all have an egress fee.

One of the problems with egress fees is that providers price the fee by the gigabyte transferred, typically less than ten cents US per gigabyte. These fees add up. For example, the cost to transfer 25TB of data from the cloud back to on-premises can be over $2,000 per transfer. Another problem is that data egresses are not typically a one-time event, especially in a hybrid cloud configuration where data is transferred back and forth between the cloud and on-premises on a regular basis. Ever wonder why providers are so enthusiastic about Hybrid IT? Because it encourages a lot of data transfers.

At the end of the month, the cost of these transfers and the subsequent invoice can take the customer off-guard. In fact 95% of IT leaders say that cloud billing is the most confusing part of public cloud adoption, according to a Gartner Symposium survey conducted in 2017.

The answer is quite simple, end egress fees. Certainly providers need to curtail users that abuse the use of data transfers but this curtailing can be done by placing a reasonable cap before egress fees kick in. The challenge, at least for the major providers, is that their business model depends on egress fees. It will be very hard for them to cut them out. Egress fees leave the door open for new providers to enter the market. These providers can build their business to run without the income from egress fees. The best way to kick a habit is to never get started on it.

How do You Beat a Giant?

There are many in the industry that assume the table is set and the cloud giants have been seated (Amazon, Azure and Google). How do beat a giant? Not by becoming a giant yourself but instead you use a slingshot and a handful of stones. Beating a cloud giant requires focus, strategy and better technology. The good news is there is no evidence that the bigger an organization becomes the better ideas it has. In fact, most new ideas come from very small organizations.

An ideal competitor to the cloud giants are companies that focus on a particular aspect of the cloud offerings. Cloud storage is a good example. There are several upcoming storage-only (or mostly) cloud providers that do not charge an egress fee or do so at a flat rate after a large amount of data has already been transferred for free. These cloud storage providers are also partnering with other cloud providers that specialize in cloud compute and leverage a direct connection into the cloud storage provider.

An alternative is to leverage a regional cloud service provider (CSP) or managed service provider (MSP) who doesn’t charge egress fees or who has low fees. Data can be exchanged with the CSP/MSP and on-premises. If the provider is too close to be consider safe from a disaster recovery perspective, the organization can still replicate data from the provider to the public cloud. Remember, ingress fees are typically zero. Also, a regional MSP can deliver data with low enough network latency so a server to go down while waiting for data retrieval from the MSP.

StorageSwiss Take

Storage Switzerland would like to see the end of egress fees now but the big three are not likely to do it until they are pressured from outside competition. Letting competition force course-correction through its practices is how change is made in the business world, and frankly is a better option than passing a law. These changes will take time though and until that time, organizations should look for other options, which are now readily available.

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George Crump is the Chief Marketing Officer at VergeIO, the leader in Ultraconverged Infrastructure. Prior to VergeIO he was Chief Product Strategist at StorONE. Before assuming roles with innovative technology vendors, George spent almost 14 years as the founder and lead analyst at Storage Switzerland. In his spare time, he continues to write blogs on Storage Switzerland to educate IT professionals on all aspects of data center storage. He is the primary contributor to Storage Switzerland and is a heavily sought-after public speaker. With over 30 years of experience designing storage solutions for data centers across the US, he has seen the birth of such technologies as RAID, NAS, SAN, Virtualization, Cloud, and Enterprise Flash. Before founding Storage Switzerland, he was CTO at one of the nation's largest storage integrators, where he was in charge of technology testing, integration, and product selection.

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