Monday, February 14, 2011

A Lesson in License Cost Risk In The Cloud

I came across something recently that places a black mark on cloud computing in general.  In January of 2011, MOZY, a network backup provider, significantly changed their pricing.  In fact, it’s so significant (and just a bit strange) that some MOZY customers will see renewed billing that can be double or 10s of times higher than they were paying.  MOZY’s unlimited storage for backup was just $6/month but when MOZY discontinued the unlimited plan and put a 50GB cap on that price plan, users with 100s of gigabytes of backed up data are now looking for a new home (or deciding to pay a lot more).

Like out of box software, consumers expect pricing and features to change over time but not in a significant manner.  The change may impact the ROI calculations a company made before they decided on a service.  Not only was the pricing restructured, but many users were never notified (which according to MOZY was due to slow mail servers). MOZY went from a low price leader to much more costly solution with the refresh of a web page, and with no grandfather clause.  Competitors, like iDrive, have a more economical pricing plan and the new low cost leader is who allows unlimited backup on a single PC for $5/month.

Cloud service licensing changes are always a risk, just like they are with boxed software you install on your PCs or servers.  But if pricing or other features go awry you can normally discontinue your maintenance contract and continue to use the software.  I didn’t mention cost changes in my “Challenges & Risks of Implementing Cloud Computing” because although I’ve seen changes, they are rarely this significant, and sometimes the price goes down on a cloud service due to economies of scale.  In general, this is a sizable “black mark” against the use of cloud computing.  The one positive note here is that the barrier to changing service providers for this type of service is small compared to switching your cloud customer relationship management system (CRM) or accounting application.  It is just a backup service, and although switching does take time (it would be over a month in my case), it’s a fairly painless process.  This wouldn’t be the case if you had 100s of users in a company using that service however.

As I examine this, I wonder how one might mitigate this risk.  I think it would be worth some time researching a potential company to see what their past behaviors are.  In addition, try to evaluate the financial health of a potential provider.  Success for them is success for you in the long term. It’s important to note that many cloud providers are new so this may be a difficult task.  In this case, EMC Corporaton owns MOZY (they purchased MOZY in 2007) and this event tarnishes EMC’s company image as a cloud provider in my opinion.

This does give me pause when evaluating the risks of going to the cloud.  Again, it’s not a whole lot different than purchased software license agreements except in many cases, you can discontinue your maintenance contract and continue to use the software.

Note: Pricing may have changed since this article was published.


- Chris Claborne

No comments:

Post a Comment