Why is Cloud So Expensive?

Why is Cloud So Expensive?

Introduction

“Why is Cloud So Expensive?” is a question that no one wants to ask or answer after completing the challenging task of moving workloads out of legacy platforms.

In this post, we look at one case study of a Software as a Service Provider (SaaS) that had predicable costs in private cloud and found themselves spending more in public cloud. We’ll attempt to illustrate why this was.

  • About 87% of our clients have applications that are based on 3 tier and not born on cloud architecture.
  • Our client had a strong development team but a small operations team
  • Public clouds can easily cost as much, if not more than managed private cloud.

Cost Summary Over Time

In the presentation below, you can see that my client had these costs:

  • 2015 – Private Cloud @ $17,000 (fully managed by private cloud)
  • 2017 – Public Cloud + Consultants @ $24,000 (Public IaaS + Consultants to help manage gaps in scope like a DBA)
  • 2019 – Public Cloud + Certified Managed Services Provider @ $20,000 (Public IaaS + MSP to fully manage all)

We also noticed that the ad-hoc consulting costs didn’t offer the consistency or ownership exhibited by a specialized Managed Services Provider (MSP).

why is cloud so expensive animated gif showing the progression of costs from 2015 to 2019

A Quick Note on Economies of Scale

  • A NOC (Network Operations Center) is a costly operation, it’s better to share this resource.
  • Monitoring, patching, trouble ticketing, event correlation, and inventory management systems are best shared amongst many organizations.
  • Engineers are difficult to recruit and retain unless you are an IT centric organization.

Economies of scale are usually talked about when it comes to hardware but they can also apply to expertise and staffing. A fully functioning NOC with all levels of support is costly to build and maintain.

Cost Overview from 2015 – 2019

The chart below takes you through what my client spent in 2015, 2017 and finally in 2019.

Cost Overview

So with this case study, we find that to answer the question, Why is cloud computing so expensive we can answer with this:

  • economies of scale apply to both hardware and personnel.
  • public cloud can be quite amazing for born on cloud code but not great for 3 tier, vertically scaling architecture.
  • public clouds are better costs for horizontally scaling environments.
  • it’s easy to turn on server instances and underutilize them.
  • bringing in consultants with a single focus can be costly.
  • consultants are great at solving point in time issues, but may not be the best in overall site ownership

Conclusion

When moving to public cloud, it’s important to take into account that if your systems were fully managed before, you’ll need to be fully managed after the move as well.

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