In this extraordinary competitive zone, we are seeing innovation, immense computing power affordable to all level of industries. Employees in small to medium businesses (SMB's) feel prolific and more efficient when using cloud applications to accomplish their mundane activities. Cloud technology has come a long way in just a few years. It has moved from the edge of the IT estate to the center, enabling a transformation in the entire business model.   

Entire range of cloud computing services including SaaS (Software as a Service) , PaaS (Platform as a Service), IaaS (Infrastructure as a Service) and private cloud hosting models, are all brooding at a pacing rate with the options available to the business users from a wide range of service providers growing on a monthly basis.

Cloud- Pay per Use Billing Model

Many business leaders assume that cloud has the panacea to all the issues addressed by companies. It allows paying for what computing resources you have utilized, switch services at your choice with little commitment. Apart from this, it enables companies to upgrade, or tweak IT services with a click of button, or even close the switch when the resources are no longer in use. We are not yet living in such kind of panorama and there remain many challenges driven by promised assumption made under the cloud services. Apparently, the objectives of the cloud solutions are flexibility, multi-tenancy, on demand usage and metered billing.

Cloud is certainly catering to many business objectives and challenges, helping to gain edge over their competitors. Today, you can see, B2C based companies influencing the model of B2B like never before, with demanded web and mobile access and user experience along with self-service architecture. Getting to the 'pay as you go model' is crucial aspect to maximize the global access and bring innovation among their digital services more cost effectively than was ever possible.  

What flexibility do the vendors commit?

The pricing of Cloud hosting services are neither based on licensing fee nor on annual maintenance fee. However, cloud is based on a usage fee, which is a subscription based payment. There are many pre- existing pricing models from free, flat rate, and subscriptions to  multi-tier packages based on functionality, per user per click and resources such as CPU power/storage used. In the PaaS and IaaS model, there is a combination of billing on offer, monthly, quarterly, annual, and pay for what you use models. In detailed, IaaS charging models billing may involve CPU utilization, server type, storage, backup, SLA variations, while in PaaS billing,  these same parameters are taken into account adding charges for operating system, hardware architecture and framework costs.  In SaaS, the cloud service provider is responsible for all components including, Platform, Infrastructure and Application, delivering it as a nifty set of package.

With the SaaS space today, clients are witnessing a flat rate bill, usually per user per year. However, most of the cloud vendor offers annual billing option. Flexible cloud billing and the delivery there of IT resources, has inherent complexities, which are required to be resolved. It is quite important that the cloud provider themselves understand the detailed usage of components in their system, so as to create the right business model, capacity planning and architecture. A more mature development of the cloud billing models will not only benefit the customer in flexibility and cost effectiveness, it will also allow providers to better understand and analyze usage patterns through data accumulation and real time analysis, which in turn will ensure that these more flexible models influence their business towards success horizon.

Undoubtedly, cloud has brought distinguished evolution in the IT industry and it has completely recomposed the pricing and billing landscape. Though it will be interesting to see how many cloud service providers step up to the plate and drive innovation in billing and not just the cloud service itself.