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There are an endless supply of articles talking about “the dangers of the hidden costs of cloud computing”.  Week after week there’s a new article from a new source highlighting (in the same way) how the movement to cloud won’t help the bottom line of a business because all of the “true costs” are not fully considered by most until it’s “too late”.  Too late for what?  These articles are an empty defensive move because of the inevitable movement our industry is experiencing toward cloud.  Now to be fair…are some things overlooked by folks?  Yes.  Do some people jump in too quickly and start deploying before they plan properly?  Yes.  Is cloud still emerging/evolving with architecture, deployment and cost models shifting on a quarterly (if not monthly) basis?  Yes.  But, this is what makes cloud so exciting. It’s a chance for us to rethink how we leverage technology, and isn’t that what we’ve done for years in IT?  Nobody talks about the hidden savings of cloud nor do they talk about the unspoken costs with status quo infrastructure.

Before jumping into an organization that was cloud-first, I worked for 13 years, in many roles, at an infrastructure/data center-first organization, and we did very well and helped many people.  However, as the years progressed and as cloud went from a gimmick to a fad to a buzzword to now a completely mainstream and enterprise IT computing platform, I saw a pattern developing in that traditional IT data center projects were costing more and more whereas cloud was looking like it cost less.  I’ll give you an unnamed customer example.

Four years ago a customer of mine who was growing their virtual infrastructure (VMware) and their storage infrastructure (EMC) deployed a full data center solution of compute, storage and virtualization that cost in the 4 million dollar range.  From then until now they added some additional capacity overall for about another 500K.  They also went through a virtual infrastructure platform (code) upgrade as well as software upgrades to the storage and compute platforms.  So this is the usual story…they made a large purchase (actually it was an operational lease, ironically like cloud could be), then added to it, and spent a ton of time and man hours doing engineering around the infrastructure just to maintain status quo.  I can quantify the infrastructure but not the man hours, but I’m sure you know what I’m talking about.

Four years later guess what’s happening – they have to go through it all over again! They need to refresh their SAN and basically redeploy everything – migrate all the data off, , validate, etc.  And how much is all of this?  6 to 7 million, plus a massive amount of services and about 4 months of project execution.  To be fair, they grew over 100%, made some acquisitions and some of their stuff has to be within their own data center.  However, there are hidden costs here in my opinion.  1)  Technology manufacturers have got customers into this cycle of doing a refresh every 3 years. How?  They bake the support (3 years’ worth) into the initial purchase so there is no operational expense. Then after 3 years, maintenance kicks in which becomes very expensive, and they just run a spreadsheet showing how if they just refresh they avoid “x” dollars in maintenance and how it’s worth it to just get new technology.  Somehow that approach still works.  There are massive amounts of professional services to executive the migration, a multi-month disruption to business, and no innovation from the IT department. It’s maintaining status quo.  The only reduction that can be realized on this regard are hardware and software decreases over time, which are historically based on Moore’s law. Do you want your IT budget and staff at the mercy of Moore’s law and technology manufacturers that use funky accounting to show you “savings”?

Now let’s look at the other side, and let’s be fair.  In cloud there can be hidden costs, but they exist in my mind only if you do one thing, forget about planning.  Even with cloud you need to take the same approach in doing a plan, design, build, migrate, and manage methodology to your IT infrastructure.  Just because cloud is easy to deploy doesn’t mean you should forget about the steps you normally take. But that isn’t a problem with cloud. It’s a problem with how people deploy into the cloud, and that’s an easy fix.  If you control your methodology there should be no hidden costs because you properly planned, architected and built your cloud infrastructure.  In theory this is true, but let’s look at the other side people fail to highlight…the hidden SAVINGS!!

With Amazon Web Services there have been 37 price reductions in the 7 years they have been selling their cloud platform.  That’s a little more than 5/year.  Do you get that on an ongoing basis after you spend 5 million on traditional infrastructure?  With this approach, once you sign up you are almost guaranteed to get a credit as some point in the lifecycle of your cloud infrastructure, and those price reductions are not based on Moore’s law. Those price reductions are based on AWS having very much the same approach to their cloud as they do their retail business.  Amazon wants to extend the value to customers that exists because of their size and scale, and they set margin limits on their services. Once they are “making too much” on a service or product they cut the cost. So as they grow and become more efficient and gain more market share with their cloud business, you save more!

Another bonus is that there are no refresh cycles or migration efforts every 3 years.  Once you migrate to the cloud AWS manages all the infrastructure migration efforts.  You don’t have to worry about your storage platform or your virtual infrastructure.  Everything from the hypervisor down is on AWS, and you manage your operating system and application.  What does that mean?  You are not incurring massive services every 3-4 years for a 3rd party to help you design/build/migrate your stuff, and you aren’t spending 3-4 months every few years on a disruption to your business and your staff not innovating.

-David Stewart, Solutions Architect