Beware of hidden cloud fees

Buy a used or new car recently? If you have, you understand the issues with “junk fees” that some dealers insist on tacking on.

Junk fees refer to additional charges that car dealers may include in the purchase agreement. These fees are often unrelated to the actual cost of the car, and they can significantly inflate the overall price. I’m sure you’ve seen them before: administrative fees, document processing, and my favorite, advertising fees, meaning they want you to pay for their marketing expenses. They have some nerve to try that one, but it happens all the time.

Now, what if junk fees are starting to appear on your cloud bill? This is becoming more common, and enterprises are beginning to push back.

Hidden cloud fees

Shortly after the mass move to the cloud during the pandemic, I began to get concerned calls about fees that enterprises did not expect. These are not really hidden. They are part of the lengthy agreements that cloud provider make their customers sign, analogous to the Terms of Service agreements we routinely accept on our phones.

Fees here and there, such as egress fees, initially don’t cause concern. But, now that enterprises are full speed ahead with the cloud and moving data out of a public cloud as part of their daily processing, these fees are starting to add up.

Fees can complicate cost management more so when transferring data across different cloud platforms, which is typical for multicloud deployments. Also, various factors such as location, geography, and data type can significantly impact the size of these charges.

Focus on egress

Egress charges, levied for data transferred out of a cloud service provider’s network, are now a hot button, even though they’ve been a part of cloud bills for years.

High egress charges can inflate operational costs and restrict organizations from transitioning between cloud providers or moving their data to more cost-effective alternatives, even back to their enterprise data centers. As one of my clients put it, they feel their data is being held for ransom.

This issue has attracted the attention of regulators, including the United Kingdom’s communications regulator, Ofcom. Indeed, they started investigating users’ barriers when attempting to change cloud providers, primarily high egress charges.

What to do?

Businesses are exploring strategies to mitigate the impact of egress charges. Of course, using finops comes to mind. Finops can’t do much to minimize hidden costs, but it can tell you in advance how much the charges will be. Hidden no more.

One approach involves optimizing data transfer processes. This reduces the volume of outbound data flows and thus can lower egress fees. When designing cloud systems, I’m always looking for events where data is moved out of a cloud provider, and I try to minimize the impact. This is new to many because moving data in and out of any system has been routine.

Another approach is using direct connect cloud services. These can leverage a dedicated private connection between a company’s on-premises infrastructure and the cloud. This minimizes egress charges since you’re bypassing the public internet for data transfers. A cost is also associated with this: circuit changes. However, a higher volume of data moving out of the cloud can make better economic sense.

Other networking tricks, such as software-defined networks and cloud interconnects, provide a less costly way to work around the changes for data connectivity and egress. Although it can be expensive to set up, businesses gain greater control over their data traffic. Efficient routing can help minimize egress charges.

Cloud providers are responding

Of course, many are looking to the cloud providers charging these fees to fix the issues. They may not be legally obligated to remove these fees, but they are listening to cloud users and have taken steps to reduce egress fees. Many enterprises are questioning their need to be in the cloud in the first place and could move to other platforms if costs are too high.

Much of the repatriation that’s occurring is purely for cost issues. All things being equal, companies would rather stay in the cloud. If enterprises could get relief from annoying fees, this could keep some companies in place on the public cloud providers.

I would make that call were I a public cloud exec right now. With the cost of hardware becoming dirt cheap, the business case for public cloud computing is more complex than it was just five years ago. If the cloud doesn’t prove its cost-effectiveness, enterprises do have other options.