Brexit, economics and cloud

Arcus Global

Arcus Global
April 17, 2018

Politics and cloud are two things that don’t always appear to go hand in hand, however in the last 22 months we’ve seen a trend where this is very much the case.

Let me take you back to June 2016: warm, sunny days (memories are usually rose tinted!) and a vote on the UK remaining in the EU – affectionately known as ‘brexit’.

What does this have to do with cloud?

Simple economics.

The US dollar was trading at about $1.45 to the pound before the result, and fell sharply to $1.2068 in January 2017 – a huge drop.

As a result the cost of buying cloud from a vendor pricing in USD suddenly became more expensive through no other means than a political event. The service didn’t change but the underlying currency exchange did.

What did the vendors do?

Here’s the interesting part:

  • AWS continued to use the USD as their pricing unit – an approach unchanged since AWS’ creation in 2006.

  • Microsoft announced GBP price increases of between 13-22% for Office365 and Azure based on the fall in strength of the pound.

At the time Microsoft was widely criticised (as expected) but with other US products being adjusted based on this change in currency strength (thank you Apple…..) it seemed like this was the new normal.

But what now?

Reading today (17/04/18), the relative positions of the USD and GBP are now rather more interesting:

What we have now is the USD trading at about $1.43 – we’re almost back to pre-brexit exchange rates.

What does this mean?

This means that AWS – which has always been standardised on USD – is now back at (virtually) the same value point that it was 22 months ago. It has been a long road back, but at every upward tick on the above graph AWS has represented better value to us in the UK.

Meanwhile, Microsoft have not announced currency related price reductions to reverse their currency related price increases.

(A point to note is that both AWS and Microsoft have lowered cloud pricing in general in the last 2 years).

For this reason AWS continues to offer the best value for money for customers looking at using cloud in their organisations.

Cloud cost optimisation

The above highlights some important points when buying cloud especially when factoring in currency exchange rates.

As a validated AWS Managed Services Partner we have a deep understanding of cloud economics and how we can help you take advantage of the best possible pricing and value.

For example, if a customer had purchase 3 year Reserved Instances (RI’s) prior to June 2016, they would have insulated themselves against the currency fluctuation and achieved upto 76% discount on the compute resources.

Understanding what RI’s to purchase and when, is a tricky process and requires comprehensive understanding of how an environment is being used – and it is something that we have become very good at.

Give us a call or email today to see how we can help you.