Data Centre vs Cloud

Just a cost issue?

It’s official. The cloud is no longer just a buzz word, and it’s definitely not a fad. The cloud is here to stay, and it’s here to take over from traditional data centres. If you’re involved in any form of IT decision-making, or simply have a passing interest in technology, or you simply haven’t had your head in the sand for the past decade, you know the cloud’s basic premise: move your IT infrastructure to a remote location, let others worry about it, and pay for what you use. You may even have read about how this move will not only increase availability and performance for your services, but will also reduce costs. This being said, if industry giants and analysts such as Gartner are right, cost won’t even matter in two years.

In a Nutshell

Almost all business today offer services to their business partners, suppliers and of course clients via the internet. Offering such services means the business has to host servers, which carry out a variety of tasks such as serving up web pages, processing payments, handling network load, offering security, sending/receiving e-mail and much more. Before the cloud concept became popular at the turn of 2006, there were two ways to do this. First, you could purchase space in a datacentre, run by large organisations. Typically, enterprises would purchase dedicated servers within these data centres, and then be responsible for the installation and configuration of these services. This, however, didn’t scale well – especially with the Big Data (also no longer a buzz word) phenomenon at the turn of 2010. Enterprises would now build data centres to host their IT infrastructure, which entailed hiring IT administrators and server experts to keep everything running. Of course, computers age, so besides the initial cost of hardware purchase, there is the recurring cost of keeping everything up to date.

Enter the cloud. Large organisations such as Amazon, Microsoft and Google offer their vast data centres, and all services associated with them, for sale on a pay-per-use basis to any internet-based enterprise (or individual). You can choose the level of control you maintain, with tiers such as IaaS, PaaS and SaaS. In IaaS (Infrastructure) as a Service, you essentially purchase virtual machines from the cloud provider, and then it’s up to you to install, configure and integrate with other cloud/data centre services – this is the closest you can get to a dedicated server in the cloud. With PaaS, you are given a Platform on which to develop your applications, typically used by developers. Finally, with Software as a Service (SaaS) you are simply given a license to use software in the cloud, which is what Google is doing with Google Apps for Business. The cloud, especially PaaS and SaaS offers the enterprise the applications it needs without the headache and cost of having to setup and manage an IT infrastructure and, thanks to the multitude of top-notch data centres available from many cloud providers, at reliability and performance levels that would be difficult to achieve with a private cloud.

It Often Costs Less…

Comparing an on-premises data centre with the cloud in terms of cost is not easy, because you’re not necessarily comparing apples to apples. When you set up your own data centre, you’re paying for the running, maintenance and upgrade costs of the machinery 24/7, no matter when your application actually needs the capability you have invested in. You also have to plan for peak times (such as the holidays for retail outlets) meaning you have to invest in hardware for the busiest two weeks of the year, and then maintain it for the remaining 50 weeks. Even if the hourly rate for ‘renting’ a server on the cloud is higher than the electricity cost of having it on-premises, the ability to enable and disable resources as your requirements change still make the cloud a cheaper option most of the time.

Information Week points to Apptio, a firm that has established metrics contained in the Technology Business Management (TBM) Unified Model for measuring the expense of IT functions and unit of work. The company has been capturing data from Amazon Web Services and Microsoft Azure – two major cloud providers, and comparing costs from their cloud offerings with the cost of running a private data centre. Their clients include First American insurance, who consulted Apptio before deciding on a cloud deployment. First American’s cloud deployment resulted in a 40% reduction in IT infrastructure expenses by consolidating several data centres onto a single cloud provider, and a further 20% reduction thanks to the ability to turn services off when they are not in use. All in all, Chuck Niethold, VP of IT project and portfolio management, concluded that the company had saved $2 million in IT expenses in the first year of moving to the cloud. You don’t have to be a Fortune 500 company to save either; Matt Prigge from InfoWorld argues that for small businesses with a couple of servers and a small amount of storage, the cloud can usually offer what you need much cheaper than any similarly priced on-premises option, even over a longer period of time. He continues that, for larger requirements, the cloud will not necessarily always be the cheaper option – but that doesn’t disqualify it as a worthy option.

… and if it doesn’t you’ll still use it

According to Gartner , by 2020, a corporate ‘no-cloud’ policy will be as rare as a ‘no-Internet’ policy is today. “Aside from the fact that many organizations with a no-cloud policy actually have some under-the-radar or unavoidable cloud usage, we believe that this position will become increasingly untenable,” said Jeffrey Mann, research vice president at Gartner. He continues by stating that “Cloud will increasingly be the default option for software deployment. The same is true for custom software, which increasingly is designed for some variation of public or private cloud”. Gartner further predicts that, by 2019, more than 30% of the 100 largest vendors’ new software investments will have shifted from cloud-first to cloud-only, and that by 2020, more computer power will have been sold by cloud providers than sold and deployed into enterprise data centres.

The dominance of the cloud is clearly not only related to cost. It also highlights the inherent flexibility of a cloud solution – being able to deploy a large, globally available, reliable data service in hours, rather than waiting for a physical data centre to be built. This is also reflected by hardware manufacturers – when was the last time you saw a CPU being advertised in GHz speeds? The reality is that modern CPUs focus on number of cores and thermal efficiency – both essential for running multiple virtual machines in a cloud environment. With the security, reliability, elasticity and maintainability of cloud solutions, the technology and business industry as a whole is rapidly shifting from on-premises data centres to cloud solutions, and cost is but one of a number of drivers for this shift.

There is, of course, the option to set up a private cloud – a data centre with white label cloud software that gives you the flexibility of the cloud but on your own local data centre. However, you still have a data centre, with the maintenance and staffing costs you’ve always had. In this author’s opinion, a private cloud is simply a stopgap solution for organisations not willing to take the leap onto a public cloud, and dilutes most of the benefits of a true cloud solution. So, before you build your new data centre, you might consider embracing the flexibility of a public cloud solution, and leaving virgin land to the cows.


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