Welcome!

Microservices Expo Authors: Stackify Blog, Aruna Ravichandran, Dalibor Siroky, Kevin Jackson, PagerDuty Blog

Related Topics: @CloudExpo, Agile Computing

@CloudExpo: Article

Cloud Computing Economics, Part Two

Are the Economics Right for Premise + Cloud?

Chris Fleck's Blog

As described in part 1 of this blog series, the cloud is not the answer for every enterprise or every workload. This is true based on the current economics even without considering additional factors like security, control and SLA's. On the other hand the economics do point out a major cloud advantage when it comes to short term or variable workloads. (Pointed out by Michael Keen and Billy Marshall as well).

Perhaps this is not very surprising to many, but it does help to look at the numbers to put it in perspective. The largest Intrinsic cost advantage of the Cloud is the ability to share infrastructure among multiple customers ( i.e. Multi-Tenancy and/or Multi-Instance ). This comes into play when many customers have variable workloads that are not likely to overlay at the same time. A Cloud infrastructure can load balance this workload on-demand significantly reducing the cumulative infrastructure required to support N number of customer workloads.

A Premise only solution will typically deploy the infrastructure required to accommodate the anticipated peak demand plus a factor of safety. As a result excess capacity is built into every deployment even if it is rarely ( or never ) utilized. This formula gets very expensive for many scenarios such as implementing a redundant DR solution across multiple data centers or a retailer building infrastructure to accommodate the Christmas shopping season but paying for it all year. As noted in the Cloud 101 example however, when a premise based is well utilized it can be the most cost effective solution to stay with especially if the on-site facilities can accommodate the anticipated growth.

The following Premise Plus Cloud scenario provides an optimized view of where a fully utilized premise infrastructure is used for constant predictable workloads and the Cloud is used for the variable workload. To put some simple numbers to it based on the original example, let's assume that the constant workload is roughly equal to 5 Quadcore server capacity. The variable workload on the other hand peaks at 160% of the base requirement, however it is required only about 400 hours per year, which could translate to 12 hours a day for the month of December or 33 hours per month for peak loads such as test or batch loads.

The cost for a premise only solution for this situation comes to roughly 2X or $ 15,600 per year assuming existing space and a 20% factor of safety above peak load. If on the other hand you were able to utilize a Cloud for only the peak loads the incremental cost would be only $1,000. ( Based on Amazon EC2 )

Premise Only
$ 15,600 Annual cost ( 2 x 7,800 from Part 1 )
Premise Plus Cloud
$ 7,800 Annual cost from Part 1
$ 1,000 Cloud EC2 - ( 400 x .8 x 3 )
$ 8,800 Annual Cost Premise Plus Cloud

As noted for this example the server cost of using a Premise Plus Cloud solution could save as much as 44%. This does not factor in many costs that either the Premise only scenario or Premise Plus Cloud would face but those costs vary according to the situation. So the challenge is how to identify variable workloads that can be placed in the Cloud or split between premise and cloud.

The CSP ( Cloud Service Provider ) must also provide the proper infrastructure and remote administration to enable corporate IT to control and manage applications and images in the extended cloud as a virtual private network of their own. Economics aside, the CSP also needs to address the SLA's and security concerns that corporate IT has identified as prerequisites for adoption. Given the intrinsic cost savings possible as portrayed in this example, there is little doubt that CSP's will fill the gaps and the industry will move to Premise Plus Cloud solutions.

More Stories By Chris Fleck

Chris Fleck is Vice President of Emerging Solutions at Citrix Systems. Chris started his career at IBM working across multiple engineering and product organizations leading to Business Unit Exec of the IBM Industrial Computer Group. As a pioneer of new technologies, Chris founded an IBM spin-off to commercialize the initial Server Blade products as CEO of OmniCluster Technologies. At Citrix Chris is responsible for Emerging Solutions and is involved with or leading strategic initiatives at the company. You can follow him on Twitter and his blog at TechInstigator.com

Comments (0)

Share your thoughts on this story.

Add your comment
You must be signed in to add a comment. Sign-in | Register

In accordance with our Comment Policy, we encourage comments that are on topic, relevant and to-the-point. We will remove comments that include profanity, personal attacks, racial slurs, threats of violence, or other inappropriate material that violates our Terms and Conditions, and will block users who make repeated violations. We ask all readers to expect diversity of opinion and to treat one another with dignity and respect.


@MicroservicesExpo Stories
How is DevOps going within your organization? If you need some help measuring just how well it is going, we have prepared a list of some key DevOps metrics to track. These metrics can help you understand how your team is doing over time. The word DevOps means different things to different people. Some say it a culture and every vendor in the industry claims that their tools help with DevOps. Depending on how you define DevOps, some of these metrics may matter more or less to you and your team.
For many of us laboring in the fields of digital transformation, 2017 was a year of high-intensity work and high-reward achievement. So we’re looking forward to a little breather over the end-of-year holiday season. But we’re going to have to get right back on the Continuous Delivery bullet train in 2018. Markets move too fast and customer expectations elevate too precipitously for businesses to rest on their laurels. Here’s a DevOps “to-do list” for 2018 that should be priorities for anyone w...
If testing environments are constantly unavailable and affected by outages, release timelines will be affected. You can use three metrics to measure stability events for specific environments and plan around events that will affect your critical path to release.
In a recent post, titled “10 Surprising Facts About Cloud Computing and What It Really Is”, Zac Johnson highlighted some interesting facts about cloud computing in the SMB marketplace: Cloud Computing is up to 40 times more cost-effective for an SMB, compared to running its own IT system. 94% of SMBs have experienced security benefits in the cloud that they didn’t have with their on-premises service
DevOps failure is a touchy subject with some, because DevOps is typically perceived as a way to avoid failure. As a result, when you fail in a DevOps practice, the situation can seem almost hopeless. However, just as a fail-fast business approach, or the “fail and adjust sooner” methodology of Agile often proves, DevOps failures are actually a step in the right direction. They’re the first step toward learning from failures and turning your DevOps practice into one that will lead you toward even...
DevOps is under attack because developers don’t want to mess with infrastructure. They will happily own their code into production, but want to use platforms instead of raw automation. That’s changing the landscape that we understand as DevOps with both architecture concepts (CloudNative) and process redefinition (SRE). Rob Hirschfeld’s recent work in Kubernetes operations has led to the conclusion that containers and related platforms have changed the way we should be thinking about DevOps and...
The goal of Microservices is to improve software delivery speed and increase system safety as scale increases. Microservices being modular these are faster to change and enables an evolutionary architecture where systems can change, as the business needs change. Microservices can scale elastically and by being service oriented can enable APIs natively. Microservices also reduce implementation and release cycle time and enables continuous delivery. This paper provides a logical overview of the Mi...
While walking around the office I happened upon a relatively new employee dragging emails from his inbox into folders. I asked why and was told, “I’m just answering emails and getting stuff off my desk.” An empty inbox may be emotionally satisfying to look at, but in practice, you should never do it. Here’s why. I recently wrote a piece arguing that from a mathematical perspective, Messy Desks Are Perfectly Optimized. While it validated the genius of my friends with messy desks, it also gener...
The next XaaS is CICDaaS. Why? Because CICD saves developers a huge amount of time. CD is an especially great option for projects that require multiple and frequent contributions to be integrated. But… securing CICD best practices is an emerging, essential, yet little understood practice for DevOps teams and their Cloud Service Providers. The only way to get CICD to work in a highly secure environment takes collaboration, patience and persistence. Building CICD in the cloud requires rigorous ar...
The enterprise data storage marketplace is poised to become a battlefield. No longer the quiet backwater of cloud computing services, the focus of this global transition is now going from compute to storage. An overview of recent storage market history is needed to understand why this transition is important. Before 2007 and the birth of the cloud computing market we are witnessing today, the on-premise model hosted in large local data centers dominated enterprise storage. Key marketplace play...
The cloud revolution in enterprises has very clearly crossed the phase of proof-of-concepts into a truly mainstream adoption. One of most popular enterprise-wide initiatives currently going on are “cloud migration” programs of some kind or another. Finding business value for these programs is not hard to fathom – they include hyperelasticity in infrastructure consumption, subscription based models, and agility derived from rapid speed of deployment of applications. These factors will continue to...
Some people are directors, managers, and administrators. Others are disrupters. Eddie Webb (@edwardawebb) is an IT Disrupter for Software Development Platforms at Liberty Mutual and was a presenter at the 2016 All Day DevOps conference. His talk, Organically DevOps: Building Quality and Security into the Software Supply Chain at Liberty Mutual, looked at Liberty Mutual's transformation to Continuous Integration, Continuous Delivery, and DevOps. For a large, heavily regulated industry, this task ...
Following a tradition dating back to 2002 at ZapThink and continuing at Intellyx since 2014, it’s time for Intellyx’s annual predictions for the coming year. If you’re a long-time fan, you know we have a twist to the typical annual prediction post: we actually critique our predictions from the previous year. To make things even more interesting, Charlie and I switch off, judging the other’s predictions. And now that he’s been with Intellyx for more than a year, this Cortex represents my first ...
"Grape Up leverages Cloud Native technologies and helps companies build software using microservices, and work the DevOps agile way. We've been doing digital innovation for the last 12 years," explained Daniel Heckman, of Grape Up in this SYS-CON.tv interview at 21st Cloud Expo, held Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA.
The Toyota Production System, a world-renowned production system is based on the "complete elimination of all waste". The "Toyota Way", grounded on continuous improvement dates to the 1860s. The methodology is widely proven to be successful yet there are still industries within and tangential to manufacturing struggling to adopt its core principles: Jidoka: a process should stop when an issue is identified prevents releasing defective products
Defining the term ‘monitoring’ is a difficult task considering the performance space has evolved significantly over the years. Lately, there has been a shift in the monitoring world, sparking a healthy debate regarding the definition and purpose of monitoring, through which a new term has emerged: observability. Some of that debate can be found in blogs by Charity Majors and Cindy Sridharan.
We seem to run this cycle with every new technology that comes along. A good idea with practical applications is born, then both marketers and over-excited users start to declare it is the solution for all or our problems. Compliments of Gartner, we know it generally as “The Hype Cycle”, but each iteration is a little different. 2018’s flavor will be serverless computing, and by 2018, I mean starting now, but going most of next year, you’ll be sick of it. We are already seeing people write such...
It’s “time to move on from DevOps and continuous delivery.” This was the provocative title of a recent article in ZDNet, in which Kelsey Hightower, staff developer advocate at Google Cloud Platform, suggested that “software shops should have put these concepts into action years ago.” Reading articles like this or listening to talks at most DevOps conferences might make you think that we’re entering a post-DevOps world. But vast numbers of organizations still struggle to start and drive transfo...
Let's do a visualization exercise. Imagine it's December 31, 2018, and you're ringing in the New Year with your friends and family. You think back on everything that you accomplished in the last year: your company's revenue is through the roof thanks to the success of your product, and you were promoted to Lead Developer. 2019 is poised to be an even bigger year for your company because you have the tools and insight to scale as quickly as demand requires. You're a happy human, and it's not just...
"Opsani helps the enterprise adopt containers, help them move their infrastructure into this modern world of DevOps, accelerate the delivery of new features into production, and really get them going on the container path," explained Ross Schibler, CEO of Opsani, and Peter Nickolov, CTO of Opsani, in this SYS-CON.tv interview at DevOps Summit at 21st Cloud Expo, held Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA.