Cloud Savings And TCO

Kevin Feasel

2018-04-17

Cloud

James Serra argues that moving to the cloud can be a net savings on cost:

I often tell clients that if you have your own on-premise data center, you are in the air conditioning business.  Wouldn’t you rather focus all your efforts on analyzing data?  You could also try to “save money” by doing your own accounting, but wouldn’t it make more sense to off-load that to an accounting company?  Why not also off-load the  costly, up-front investment of hardware, software, and other infrastructure, and the costs of maintaining, updating, and securing an on-premises system?

And when dealing with my favorite topic, data warehousing, a conventional on-premise data warehouse can cost millions of dollars in the following: licensing fees, hardware, and services; the time and expertise required to set up, manage, deploy, and tune the warehouse; and the costs to secure and back up the data.  All items that a cloud solution eliminates or greatly minimizes.

When estimating hardware costs for a data warehouse, consider the costs of servers, additional storage devices, firewalls, networking switches, data center space to house the hardware, a high-speed network (with redundancy) to access the data, and the power and redundant power supplies needed to keep the system up and running.  If your warehouse is mission critical then you need to also add the costs to configure a disaster recovery site, effectively doubling the cost.

I don’t think this story plays quite as well.  For small and mid-sized companies, yes, the cloud is often a net savings.  For companies whose products were designed to be cloud-first and take advantage of burstiness and spot markets, yes, you can drive cost savings that way.  But for most mid-to-large companies, I think the calculus shifts to where sometimes cloud options work better but often they don’t.  Need a few hundred SQL Server instances with microsecond-level latency running SQL Server Enterprise Edition 24/7?  That’s not going to be cheaper.

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