Are public clouds really that expensive?

Introduction

When i’m talking to my customers about IT platforms or “the cloud”, I always hear them say that “the public cloud is too expensive”. If that should be true, why is it then that everyone is still thinking about it? And question yourself why do a lot of customers still move towards a public cloud?

My thoughts about this subject are that you (with a traditional mindset) cannot create the correct business case.

One word of advice before continuing the read below: I can be somewhat sarcastic (and straight to the point), but hopefully you get (and agree) my points!

The business case

In short: Business Case = Total Cost of Ownership (TCO) calculation based on OpEx and CapEx.
Or to be more precise TCO = Acquisition + Migration + Operation Costs.
With the public cloud the CapEx costs are moving to OpEx and at the first glance (read: when doing a 1-to-1 comparison) the cost of the public cloud offering are way higher than with your traditional on-premise IT infrastructure.

BUT IT IS WRONG! .. Oeps .. did I just say that out loud?!?

In my opinion you should not do a 1-to-1 comparison of your on-premise IT to a public cloud offering, because you then miss the benefits of using a public cloud in your calculation.

Flexibility

The public cloud delivers flexibility: When implementing a on-premise infrastructure it has to run for a predetermined period of time (3 or 5 years) and the resources are calculated based on that utilization for that duration. So usually the resources are over-provisioned to accommodate future growth needs. With the public cloud you can start small and grow when needed: The familiar pay-as-you-grow methodology.

So when doing the 1-to-1 comparison, you should subtract the over-provisioned resources or better: You should only calculate the resources you really have in use/need.

PS: And have a good talk with you DBA’er as it isn’t normal to have a virtual machine with 72 vCPUs and 256 GB of memory! That are specs that cover-up their lack of good query writing skills in the physical world, those rules do not apply in the virtualized world anymore!

You get my point: move away from over-provisioned servers.

When talking about datacenter infrastructures i’m talking about server (compute), storage and networking. Public cloud offerings (usually) have a large set of server, storage and network offerings. Which can be more aligned with the application requirements and which can be a cost saver: you don’t have to place your internal Exchange DAG cluster on the already available metro-cluster shared storage solution.

Cost Optimization

Be aware, when you have a on-premise IT infrastructure the infrastructure costs are static for the period of time you are using it. With the public cloud you can down-scale when needed, lowering the costs. This is the same story as with the pay-as-you-grow methodology, but now you can call it pay-less-when-you-can methodology.

When creating the business case, also do not forget to take the datacenter facility- (datacenter-, rack-, power-, cooling-cost), disaster recovery- and the back-up-costs into account! These are also a substantial part of the costs.

Ok, enough about the infrastructural costs! Let’s talk about applications.

Application Modernization

Container-based computing is a very hot topic these days! Containers have been designed (from the ground up) to be cloud-agnostic, you can run you application anywhere you want.

When talking about the business case again, the comparison is usually based on traditional monolithic applications which require an operating system and an aligned (read: highly redundant) underlying infrastructure (which also must be managed/operated).

Think about this: when implementing a new monolithic application, all infrastructure teams are needed to fulfill the implementation (taking multiple days/weeks). With containers, by using Infrastructure as Code, new applications can be deployed within minutes/seconds, gaining a higher business value compared to competitors.

This should be a part of the business case, but is usually not calculated as a part the TCO!

Also when moving monolithic applications to a public cloud, it’s easier to modernize the application landscape: public cloud offerings have the pre-build resources and services for container-based computing. To have your old app next to you new app can speed up the migration.So the migration itself from monolithic apps to container-based apps is faster/easier, which will also save money.
This is where VMware Cloud on AWS (VMConAWS) or VMware Cloud on Azure (VMConAzure) comes into place, which allows you to seamlessly migrate your monolithic apps to the public cloud, right next to the services needed for container based computing.

Operational Costs

With the public cloud a lot of the infrastructure operational tasks are moved to the public cloud services itself. Because a cloud service provider operates at a large scale, they can lower their operational costs, which should be beneficial for you as a customer. If that’s not the case for you, try another public cloud offering *wink*.

Conclusion

The public cloud allows you (as a customer) to be facilitated with the services to grow your business further than it is possible with the on-premise IT infrastructures, as it allows you to quickly modernize your applications delivering your customers the service they require. Public clouds have the scale to be more efficient, but the business case should be created with care: A wrong business case can result in missing a great opportunity to grow you business faster then before! Which, in the worst case, can result in be overtaken by competitors losing (your) business.

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