This is a really interesting question and it depends a lot on where you come from with regards to managing applications on public cloud services. Our company has considerable experience in running enterprise applications on public clouds for customers and ISV's. We came from the traditional hosting company background though from our previous company we sold, so appreciate those previous cost models well.

So, if your outsource this to a provider like us, I can tell you that your costs should be at least 50-80% less overall as a TCO over 5 years. that is, less than inhouse managed and less that hosted services.

As a internally managed solution (that is, if you do it yourself), then the costs could actually be more or about equal. The reason is that the costs you don't hear about are that the tools, processes and skills required to manage applications on cloud services (public or private) are COMPLETELY different to those needed to run existing systems in house. Therefore, you have ADDED costs you never had before and diametrically apposed skillsets and tools. Your existing skills and tools etc are still needed to run existing systems not in the cloud so those costs don't magically go aeway. If you try and run your applications the tradtional way on the cloud then you may as well go out and shoot yourself, as you are not getting from the cloud the benefits available or intended. Running applications on the cloud is all about massive amounts of automation, more than you would have ever dreamed of with traditional management capabilities.

It is not about the added costy of storage, bandwidth or even security costs. That is just a red herring. Bandwidth and Security costs btw will definately be higher (storage won't be). But this misses the point. It is all about the total cost of ownership. If automation is deployed corrrectly, then you will only use the computing resources you need - by the hour, and you will do things with security that you would never of dreamed possible before, but which you will need to do to satify theh security policies of your organisation. But the overall costs will be massively lower, even though some components will actually cost you more. What matters in the end is the total cost combined. The Total Cost of Ownership (TCO).

hope this helps.

I don't have much idea on this, while browsing I came across articles I hope these will help you betterhttp://www.fiercecio.com/story/hidden-costs-cloud-computing/2009-11-09
http://www.cio.com/article/506719/Beware_Cloud_Computing_s_Hidden_Costs

As with anything there are pros and cons of the cloud. For each individual business case and functional use you can consider the cloud as an option and weight up the pros and cons both functionaly and commercially before selecting the appropriate solution for your business. In a high majority of cases the cloud delivers reduced overall costs due to its economy of scale (multitenancy), cheaper storage costs and removal of a) the need to deploy architecture, b) pay setup/installation fees c) maintain the kit and software yourself.

Bandwidth wise it will increase your reliance on having a good connection, but cloud apps can be test driven for a period easily to trial performance and any concerns over bandwidth usage. Being a cloud vendor usually implies they will utilise all available acceleration capabilities to ensure a consistent and viable web experience so this should not be a problem.

Source: http://gigaom.com/2009/07/17/the-hidd...