KASTERVO Cloud BlogBlog

Your source for technology related articles, KASTERVO press releases and more!


BY KASTERVO / ON March 30, 2024

Considerations on Cloud Costs: Evaluating the Value Proposition

In recent times, there has been a noticeable shift among companies reconsidering the costs associated with cloud services, prompting a movement towards hybrid or on-premises solutions. What factors are driving this trend?

This blog post aims to delve into the rationale behind companies returning to conventional computing methods and offers insights into managing cloud computing expenses effectively.

The Return to On-Premises

During the 2010s, the cloud computing industry experienced significant growth, with many companies embracing this new paradigm to save costs, access cutting-edge technologies promptly, and ensure business continuity. However, in the latter part of the decade and beyond, factors such as inflation have led hyperscale cloud providers to raise their rates, rendering services from major providers increasingly expensive. Consequently, companies are reconsidering the cost justifications for cloud services and transitioning either entirely to on-premises infrastructure or adopting a hybrid approach, leveraging both on-premises and cloud-based solutions for different workloads.

Reason #1: Pricing Considerations

Large corporations, particularly those publicly traded, prioritize maintaining stakeholder and investor satisfaction as an essential aspect of their corporate responsibility. Cloud service providers are keenly aware of the challenges associated with migrating workloads between providers, resulting in a reluctance among clients to switch providers abruptly. Recognizing this inertia, providers may adjust pricing structures with confidence, knowing that clients are more likely to tolerate increased costs rather than undergo the complex process of migrating to a different provider. This strategic maneuver allows providers to maximize profitability while minimizing client attrition.

Reason #2: Cost Predictability Challenges

One of the primary concerns I have regarding cloud services pertains to egress and ingress fees, particularly concerning high-traffic applications. The costs associated with transferring data outside of the cloud environment can be considerable. While methods exist to estimate these expenses, the precise amount remains uncertain until the invoice is received. In my view, such fees should be reevaluated to either be eliminated entirely or structured as flat monthly fees if deemed essential for operational sustainability.

Reason #3: Complex Billing Models.

A comprehensive range of factors contributes to cloud service costs, encompassing various elements such as multiple storage tiers, availability zones, bandwidth utilization, and associated operational expenses. Even seemingly trivial aspects, including environmental considerations, incur costs. Utilizing cost calculators provided by major hyperscale cloud providers can be challenging for non-technical individuals. Understanding and estimating average expenses can be particularly daunting for those without a background in IT engineering.

Reason #4: Return on Investment (ROI) Concerns

Many of the cloud services offered by major hyperscale providers may not provide commensurate value for their cost. In addition to potentially overpaying for these services, clients often encounter limited or inadequate support unless they opt for costly support contracts. Consequently, businesses may find it necessary to retain additional personnel to manage their workloads effectively. Despite the presence of sophisticated dashboards, they may fall short of meeting the operational needs and expectations of clients.

The Shift

The cloud essentially entails leasing computing resources from a third-party provider. While various providers exist, the fundamental premise remains consistent across hyperscale cloud platforms.

Having explored reasons prompting organizations to reconsider their cloud strategy, let us now examine why companies initially opt for cloud migration.

Reason #1: Scalability

Businesses have the advantage of scaling their resources seamlessly, a capability often unattainable with on-premises hardware. Cloud providers maintain robust compute reserves capable of accommodating sudden surges in power, compute, and storage demands. This scalability is particularly crucial for enterprises operating e-commerce platforms during peak events such as Black Friday sales or news websites covering significant events.

Reason #2: Taxation.

Many IT consultants often overlook discussing the tax advantages associated with utilizing cloud services with their clients. Cloud services, categorized as operational expenditures, offer significant tax benefits whereby clients can claim 100% of their annual expenses as tax deductions by the year’s end. In contrast, on-premises infrastructure typically entails substantial upfront capital investments. In certain countries such as Greece, tax regulations may limit the annual tax benefits for capital expenditures to 20% over a five-year period, making the tax advantages of cloud services particularly appealing.

Reason #3: Service Availability.

To achieve comparable levels of availability to cloud services, substantial investments in server clusters are necessary, leading to increased expenditures in electricity, IT support, and capital infrastructure. Hosting your cloud infrastructure with KASTERVO offers a significant advantage in cost savings, particularly in electricity expenses, as it eliminates the need for HVAC systems, servers, firewalls, and switches traditionally associated with on-premises hosting.

Reason #4: Access to experts.

One significant advantage of partnering with a cloud service provider such as KASTERVO is the accessibility of support services. Our dedicated support team ensures prompt and efficient assistance, coupled with transparent pricing structures. Unlike the frustrating experience of enduring extended wait times or waiting days for a response from outsourced support teams, our clients benefit from timely and effective communication, tailored to address their specific needs. This commitment to exceptional support ensures that issues are resolved promptly, enhancing overall client satisfaction and operational efficiency.

Reason #5: Compliance & Risk Transfer.

During the early 2000s and mid-2010s, the landscape of information technology, data privacy, and security underwent significant evolution. The enactment of GDPR, a regulatory framework applicable to businesses operating within the EU, mandated the implementation of specific data privacy measures. Additionally, clients increasingly demand adherence to industry compliance standards such as PCI-DSS, ISO 27001, among others. Acquiring these certifications confers a competitive advantage and signifies a commitment to security and compliance, fostering trust among clients.

The concept of risk transfer is a fundamental principle, exemplified by practices such as car insurance. By transferring infrastructure to a cloud provider, organizations effectively shift a portion of the risks associated with self-hosting on-premises to the provider. This strategic move not only mitigates potential liabilities but also leverages the provider’s expertise and resources to enhance operational resilience and security posture.


While compelling reasons exist both for adopting and reassessing cloud solutions, it is essential for businesses to remain vigilant and explore emerging alternatives. At KASTERVO, we established our service in response to the challenges posed by traditional cloud offerings, aiming to provide a more efficient, sustainable, and transparent solution tailored to the needs of modern businesses.

Our straightforward billing model ensures transparency and predictability, empowering clients to anticipate costs accurately and make informed decisions. We invite you to engage with us in a 30-minute consultation to discover how KASTERVO can optimize your business operations.

Thank you for your attention, and we look forward to the opportunity to assist you further. For further updates and insights, follow us on LinkedIn.