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There has been lots of talk and discussion around external vs internal clouds over the past couple of years.  Everywhere you look there is cost-benefit-analysis for cloud.  We all know that cloud is just a new name to an old face, but do we have real metrics on the cost of using an external cloud vs. an internal one? 

An apple to apple comparison I mean, not a pie in the sky scenario that cloud vendors publish.  I have nothing against cloud or any vendor for that matter.  I think the hype of Cloud computing will hurt adoption in the long run as people’s view will be crushed once they implement a cloud infrastructure hoping to an ROI based on the hype.

This is what I like to see:

-          If you go and lease or buy 10 machines

-          and one person is managing this cluster of 10 machines

-          and you are utilizing this cluster 100% of the time for a month

What is the cost?  ( = A)

Then, I like to see a number for a cloud vendor:

-          you lend 10 machines, similar to above

-          and you use these machines 100% of the time for a month

What is the cost?  (=  B)

Let’s compare A and B, and see what we will get.  In fact, we can graph it and see where is makes sense to switch to cloud.  I am sure that there is a turning point in that if you are, for example, utilizing over 50%, it is cheaper to self-host. 

You could do this for your organization, but logic prevails here that A is cheaper.  If it was not cheaper, a cloud vendor would not be profitable! 

I would argue that:

-          Cloud would be more expensive than an internally managed infrastructure if you were to compare both having 100% usage

-          Your cost today is a result of the inability to fully utilize your infrastructure

Let’s analyze these two scenarios.  The key phrase for both of these test cases would be “use these machines 100% of the time for a month”.  The hyped-up numbers that you see are bloated because you are not fully utilizing your infrastructure.  Going to cloud vs. what you do today makes sense if you are over-provisioning.  Better stated, if you are expecting spikes that you are unable to predict or provision for, cloud makes sense.  You might argue that all you care about is the final cost. 

So am I! So Am I. 

Comments (3)

	1. 02-25-2010 01:41
	I too am less than impressed with the "Cloud" hype that I have heard creep louder in the recent times. When it comes down to it there will always be a price point where the management will cost more than the outsourcing but I too would like to know where this point is. The problem is that it is a floating number as cost change often and could probably only be done reliability on a case by case basis.     -sean Registered

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	2. 03-01-2010 17:14
	I agree however, there can be occasions that some businesses require a burst of computing power and don't have the capacity or to turn on that capacity would be too costly.  Soooo the argument for cloud computing, provided a suitable model is availabel, can be justified in terms of cost. An example of this is where some large government projects deliver solutions over say a 5-10 year period for which the compute reeqs are not known and the cloud service for compute would help keep costs to a minimum. Also, where the compute reqs are more than anticipated, due to scope chage etc, again a cloud compute power service would meet the needs. Thr BAU costs of running your own infrastructure need to be factored into a comprehensive cost model. But as usual it depends on the cost. Registered

Dharmesh Mistry

	3. 03-09-2010 03:16
	There are certain use patterns which lend themselves better to the Cloud model – I know of one organisation where peak demand is for only three hours a day. For the rest of the time their processing power idles away at less than 10% utilisation. Yet there is also the cost consideration for porting between private infrastructure and public cloud. More and more companies are finding ways to introduce further value into the model – take a look at the Logicalis Co-Operative Cloud model where they enable portability to ensure easy transition between public and private:   http://www.ca.com/us/insights/collateral.aspx?cid=227646 Registered

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