Is Public Cloud Really Cost-Effective?

More and more businesses are moving to the public cloud for at least a portion of their workloads

And why shouldn’t they? It’s an attractive model, with low upfront costs and the speed and agility businesses could only dream about a few short years ago.

Yet, many still have legitimate concerns about public cloud. I’ve touched on a few of these in previous articles — high profile cloud outageslatency issues; and questions regarding control, security, and compliance.

Another nagging concern is cost. Although the upfront costs are enticingly low, the question remains…is public cloud really cost-effective over the long haul? Or are you burning money that could be used to fund a more effective mix of traditional IT, private, and public cloud?

The high cost of accessing your own data in a public cloud

The actual storage fee for housing your data in the public cloud is typically low. But once your data is in there, you must pay to access it, which for many comes as a surprise. That means the more value you get from your data, the more money you have to pay. Although these charges are considered low (in the range of $0.01 to $0.05 per 1,000 transactions) costs can quickly escalate when a customer is using the public cloud as primary storage or for storing any particularly active data set.

Public cloud vendors also charge for a variety of services besides just storing your data. You need to not only be aware of these costs, but also do a cloud storage cost analysis to really understand your costs before moving your data to the public cloud.

You’ll also likely encounter data migration costs, which can be substantial. If you have a multi-cloud strategy, as many enterprises do, you’ll see additional costs as you move a workload from one cloud to another — along with any application adjustments that will probably be needed. You’ll also want to ensure that security and governance is covered — as I wrote in my article on data in the public cloud, your data is ultimately your responsibility (and may add additional expense).  And while most vendors don’t charge to bring your data into the cloud, public cloud providers usually charge for data you move out of the cloud.

All of these public cloud costs can add up, and the sticker shock may be more than you bargained for. Remember: Your data is your most important digital asset. Be careful not to make it too expensive to access!

On-premises: cost-competitive with public cloud

With new technologies, such as composable and hyperconverged infrastructure, implementing a private cloud becomes an effective option to deliver a public cloud experience in your datacenter. And it can often come with a lower total cost of ownership, as outlined in a 451 Research 2016 report.

A private cloud model combined with traditional IT are now a critical and proven option in the design and deployment of applications that require enhanced security, availability, and performance — at costs equal to or less than public cloud.

For example, HPE recently modeled three sizes of their private cloud solution on their composable platform, HPE Synergy.  Working with CloudGenera, HPE found that the public cloud was 2-5 times more expensive than HPE Synergy over a 3-year period — that’s like buying the hardware 2-5 times. And if those numbers aren’t enough for you to look twice at all options, remember the added benefits of having your own hardware and software: dedicated performance/storage, complete control over your infrastructure, and increased agility due to new private cloud technologies.

Another popular option today is hyperconvergence. According to a 2016 report by Evaluator Group, HPE SimpliVity offers up to 49% total cost of ownership (TCO) savings over a three year period when compared to Amazon Web Services (AWS). Cost savings in comparison to public cloud is just one reason why hyperconverged infrastructure has been growing so rapidly over the past few years. Other reasons include simplicity and speed of deployment, all while keeping control of your workloads on-premises.

Realistically, pricing can go up or down based on many factors; yet this comparison shows that pricing in the public cloud isn’t always the best deal.

Are you putting your money in the right cloud?

Public cloud providers have succeeded in marketing their services so well that many believe public cloud is more cost-effective than implementing a hybrid IT strategy. In the short term, it is likely cheaper and faster to rent capacity in a cloud than to build and own it yourself.  Over the long haul, however, renting may be the more expensive option, and you never own anything. If your workload is committed to run at a certain level over a longer period, you may actually be burning money in the public cloud — money that could be used to implement a better solution for your enterprise.

This realization begs the question: if you can have your applications and most valuable data on-premises with full control and a cloud-like experience for the same cost or even less, which would you choose.

About Gary Thome

Gary Thome is the Vice President and Chief Technologist for the Software-Defined and Cloud Group at Hewlett Packard Enterprise. He is responsible for the technical and architectural directions of converged datacenter products and technologies including HPE Synergy. To learn how composable infrastructure can help you achieve a hybrid IT environment in your data center, download the free HPE Synergy for Dummies eBook.

To read more articles from Gary, check out the HPE Converged Data Center Infrastructure blog.