Click here to close now.

Welcome!

Cloud Expo Authors: Carmen Gonzalez, Liz McMillan, Pat Romanski, Hovhannes Avoyan, Peter Silva

Related Topics: Cloud Expo, Web 2.0

Cloud Expo: 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 Mobility 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 mobilty solutions and alliances. As part of the Citrix CTO Office he is also involved with or leading multiple 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.


@CloudExpo Stories
In 2015, 4.9 billion connected "things" will be in use. By 2020, Gartner forecasts this amount to be 25 billion, a 410 percent increase in just five years. How will businesses handle this rapid growth of data? Hadoop will continue to improve its technology to meet business demands, by enabling businesses to access/analyze data in real time, when and where they need it. Cloudera's Chief Technologist, Eli Collins, will discuss how Big Data is keeping up with today's data demands and how in t...
Modern Systems announced completion of a successful project with its new Rapid Program Modernization (eavRPMa"c) software. The eavRPMa"c technology architecturally transforms legacy applications, enabling faster feature development and reducing time-to-market for critical software updates. Working with Modern Systems, the University of California at Santa Barbara (UCSB) leveraged eavRPMa"c to transform its Student Information System from Software AG's Natural syntax to a modern application lev...
The 5th International DevOps Summit, co-located with 17th International Cloud Expo – being held November 3-5, 2015, at the Santa Clara Convention Center in Santa Clara, CA – announces that its Call for Papers is open. Born out of proven success in agile development, cloud computing, and process automation, DevOps is a macro trend you cannot afford to miss. From showcase success stories from early adopters and web-scale businesses, DevOps is expanding to organizations of all sizes, including the...
While DevOps most critically and famously fosters collaboration, communication, and integration through cultural change, culture is more of an output than an input. In order to actively drive cultural evolution, organizations must make substantial organizational and process changes, and adopt new technologies, to encourage a DevOps culture. Moderated by Andi Mann, panelists will discuss how to balance these three pillars of DevOps, where to focus attention (and resources), where organizations m...
The best mobile applications are augmented by dedicated servers, the Internet and Cloud services. Mobile developers should focus on one thing: writing the next socially disruptive viral app. Thanks to the cloud, they can focus on the overall solution, not the underlying plumbing. From iOS to Android and Windows, developers can leverage cloud services to create a common cross-platform backend to persist user settings, app data, broadcast notifications, run jobs, etc. This session provide...
Health care systems across the globe are under enormous strain, as facilities reach capacity and costs continue to rise. M2M and the Internet of Things have the potential to transform the industry through connected health solutions that can make care more efficient while reducing costs. In fact, Vodafone's annual M2M Barometer Report forecasts M2M applications rising to 57 percent in health care and life sciences by 2016. Lively is one of Vodafone's health care partners, whose solutions enable o...
ProfitBricks has launched its new DevOps Central and REST API, along with support for three multi-cloud libraries and a Python SDK. This, combined with its already existing SOAP API and its new RESTful API, moves ProfitBricks into a position to better serve the DevOps community and provide the ability to automate cloud infrastructure in a multi-cloud world. Following this momentum, ProfitBricks has also introduced several libraries that enable developers to use their favorite language to code ...
SYS-CON Events announced today that Vicom Computer Services, Inc., a provider of technology and service solutions, will exhibit at SYS-CON's 16th International Cloud Expo®, which will take place on June 9-11, 2015, at the Javits Center in New York City, NY. They are located at booth #427. Vicom Computer Services, Inc. is a progressive leader in the technology industry for over 30 years. Headquartered in the NY Metropolitan area. Vicom provides products and services based on today’s requirements...
Dave will share his insights on how Internet of Things for Enterprises are transforming and making more productive and efficient operations and maintenance (O&M) procedures in the cleantech industry and beyond. Speaker Bio: Dave Landa is chief operating officer of Cybozu Corp (kintone US). Based in the San Francisco Bay Area, Dave has been on the forefront of the Cloud revolution driving strategic business development on the executive teams of multiple leading Software as a Services (SaaS) ap...
How do you securely enable access to your applications in AWS without exposing any attack surfaces? The answer is usually very complicated because application environments morph over time in response to growing requirements from your employee base, your partners and your customers. In his session at 16th Cloud Expo, Haseeb Budhani, CEO and Co-founder of Soha, will share five common approaches that DevOps teams follow to secure access to applications deployed in AWS, Azure, etc., and the frict...
The 17th International Cloud Expo has announced that its Call for Papers is open. 17th International Cloud Expo, to be held November 3-5, 2015, at the Santa Clara Convention Center in Santa Clara, CA, brings together Cloud Computing, APM, APIs, Microservices, Security, Big Data, Internet of Things, DevOps and WebRTC to one location. With cloud computing driving a higher percentage of enterprise IT budgets every year, it becomes increasingly important to plant your flag in this fast-expanding bu...
What exactly is a cognitive application? In her session at 16th Cloud Expo, Ashley Hathaway, Product Manager at IBM Watson, will look at the services being offered by the IBM Watson Developer Cloud and what that means for developers and Big Data. She'll explore how IBM Watson and its partnerships will continue to grow and help define what it means to be a cognitive service, as well as take a look at the offerings on Bluemix. She will also check out how Watson and the Alchemy API team up to off...
The IoT Bootcamp is coming to Cloud Expo | @ThingsExpo on June 9-10 at the Javits Center in New York. Instructor. Registration is now available at http://iotbootcamp.sys-con.com/ Instructor Janakiram MSV previously taught the famously successful Multi-Cloud Bootcamp at Cloud Expo | @ThingsExpo in November in Santa Clara. Now he is expanding the focus to Janakiram is the founder and CTO of Get Cloud Ready Consulting, a niche Cloud Migration and Cloud Operations firm that recently got acquir...
SYS-CON Media announced today that John Treadway’s blog has exceeded 475,000 page views. John Treadway, Vice President at Cloud Technology Partners, has surpassed 475,000 page views on the SYS-CON family of online magazines, which includes Cloud Computing Journal, Internet of Things Journal, Big Data Journal, Microservices Journal, and several others. His blog home page at SYS-CON can be found at JohnTreadway.SYS-CON.com.
With IoT exploding, massive data will transform businesses with opportunities to monetize almost anything that can be measured. In this C-Level Roundtable Discussion at @ThingsExpo, Brendan O’Brien, Aria Systems Co-founder and Chief Evangelist, will lead an expert panel of consultants, thought leaders and practitioners who will look at these new monetization trends, discuss the implications, and detail lessons learned from their collective experience. Finally, the panel will point the way forw...
SYS-CON Media announced today that @WebRTCSummit Blog, the largest WebRTC resource in the world, has been launched. @WebRTCSummit Blog offers top articles, news stories, and blog posts from the world's well-known experts and guarantees better exposure for its authors than any other publication. @WebRTCSummit Blog can be bookmarked ▸ Here @WebRTCSummit conference site can be bookmarked ▸ Here
SYS-CON Events announced today that the DevOps Institute has been named “Association Sponsor” of SYS-CON's DevOps Summit, which will take place on June 9–11, 2015, at the Javits Center in New York City, NY. The DevOps Institute provides enterprise level training and certification. Working with thought leaders from the DevOps community, the IT Service Management field and the IT training market, the DevOps Institute is setting the standard in quality for DevOps education and training.
DevOps tasked with driving success in the cloud need a solution to efficiently leverage multiple clouds while avoiding cloud lock-in. Flexiant today announces the commercial availability of Flexiant Concerto. With Flexiant Concerto, DevOps have cloud freedom to automate the build, deployment and operations of applications consistently across multiple clouds. Concerto is available through four disruptive pricing models aimed to deliver multi-cloud at a price point everyone can afford.
The WebRTC Summit 2015 New York, to be held June 9-11, 2015, at the Javits Center in New York, NY, announces that its Call for Papers is open. Topics include all aspects of improving IT delivery by eliminating waste through automated business models leveraging cloud technologies. WebRTC Summit is co-located with 16th International Cloud Expo, @ThingsExpo, Big Data Expo, and DevOps Summit.
SYS-CON Events announced today that Column Technologies, a global technology solutions company, will exhibit at SYS-CON's DevOps Summit 2015 New York, which will take place June 9-11, 2015, at the Javits Center in New York City, NY. Established in 1998, Column Technologies is a leader in application performance and infrastructure management for commercial and federal markets. The company is headquartered in the United States, with a diverse and talented team of more than 350 employees around th...