Increased cloud costs pulls focus of some SMEs to on-site storage

A snapshot survey just published indicates smaller companies may well baulk at paying rapidly increasing cloud storage costs, with a number instead intending to move some of their data onto on-premises storage systems to mitigate the increases.

All the hyperscale cloud storage suppliers have announced price increases recently, and last week, IBM announced its own raft of more expensive services, taking effect from January 2024.

The research suggests that almost two-thirds (62 percent) of UK SMEs that use cloud computing services will take steps to combat their rising cost by the end of 2023.

The report, commissioned by business internet service provider Beaming, questioned the leaders of 500 UK companies employing fewer than 250 people, and found that a third (33 percent) of them planned to reduce the amount of data they stored in the cloud. In addition, a quarter (24 percent) were going to reduce the number of cloud services they used.

Although more than a quarter (27 percent) of SMEs said they initially adopted cloud to reduce computing expenditure, they now expect a 10 percent increase in the cost of cloud services this year. Several major cloud providers have introduced double-digit price increases for services used by SMEs already.

Just one in five (20 percent) of SMEs say they will absorb the extra costs, however.

In addition to reducing the amount of data stored in the cloud, and cutting the number of cloud services used, 21 percent of firms say they will downgrade some subscriptions to basic services. And a further 17 percent plan to move data or applications from the cloud to on-premise systems instead.

“While the cloud has delivered many benefits to businesses, the cost of cloud has been creeping up for some time now, and that creep is starting to look unjustified to businesses dealing with wider inflationary pressures,” said Sonia Blizzard, managing director at Beaming. “Many SMEs, some of which rushed to the cloud to support remote working during the pandemic, are questioning the value of these services for the first time, and are now taking action to get on top of cost increases.”