Public vs Private Cloud, a Cost Savings Showdown

October 12th, 2018 by · Leave a Comment

This Industry Viewpoint was authored by Joseph Portillo, Data Technology Specialist at Multacom Corporation

Companies of all sizes have flocked to the public cloud for its perceived cost savings. Although a single user virtual machine (VM) in the public cloud is cheaper than a dedicated server, as a business grows past its R&D stage and technology needs increase in complexity, the public cloud cost can increase beyond that of a private or hybrid cloud solution.  

Unanticipated cost increases are causing some companies to run limited services in the public cloud and move more expensive applications and other IT assets to a private cloud or maintain them on legacy systems.  Let’s compare a public cloud and a private cloud option and uncover how a private cloud can provide a better ROI.

Why Is the Public Cloud Perceived to Be Less Expensive?

Public cloud computing is often thought to be less expensive for a couple of primary reasons. Due to the pay-as-you-go model, you might assume it is less expensive than a private cloud. This is not true unless you are only using single-instance storage, an email server, or are able to quickly spin your data usage up and down.

In addition, management and maintenance are controlled by the public cloud provider like Amazon, Microsoft, Google or IBM, so no additional technical professionals need to be hired by you to maintain your network.

What Are the Public Cloud’s Hidden Costs?

As the public cloud has grown in popularity, the product portfolio of public cloud providers has grown to include compute, storage, databases, analytics, networking, mobile, management tools, IoT, security and enterprise applications. With such a large selection, it can be challenging to select exactly the solutions you require. Additional solutions are often selected as a contingency against future needs resulting in many purchased services going unused. This is not the most cost-effective or efficient means to manage your technology needs and could result in you paying 30-50% more than necessary.

With little to no visibility into public cloud operations, it can also be challenging to ascertain whether the infrastructure and bandwidth costs are excessive. This inability to analyze public cloud operations enables public cloud providers to build in management and support fees which are difficult to uncover. When combined, these increases in application, hardware, infrastructure, and support costs can result in a 50-70% increase over a private cloud environment.

Hardware cost savings are also not passed on to clients. Over the past decade, data storage costs have decreased so much that it is now possible to purchase a 10TB hard drive for as much as a 512GB drive cost 10 years ago. You would assume then that the public cloud has seen a significant decrease as well. But, this is not the case.  Although public cloud providers like Amazon have reduced their price, it has only decreased by approximately 30%. This does not reflect what the reduction would be if storage savings were included and passed on to consumers.

What Are the Benefits of a Private Cloud?

The benefit of a subscription-based model can be realized in the private cloud as well. Since facility, hardware, and employee expenses are paid for by the data center provider, private cloud clients can also take advantage of the ability to convert this IT expenditure from a capital expense to a monthly operating expense.

Since a private cloud environment is custom built for you, the sale takes on a consultative approach. The provider will evaluate your goals and design a solution unique to your needs. The flexibility and resources of the data center infrastructure will enable you to scale up or down as your requirements change over time.

Because there is no reason to purchase more than you need, the solution will most likely provide decreased application usage and server load which will reduce costs while increasing performance. And, since the data center provider has taken into consideration your future needs, new technologies can be easily integrated in the months and years ahead.

In a private cloud environment where resources are allocated to a specific client, a provider is also less able to hide additional costs for hardware, infrastructure, and network usage. As the prices for these resources continue to fall, the cost savings are passed on to you.

How Can A Private Cloud Be Less Expensive?

A private cloud solution could provide a cost savings of approximately 60-70% over the public clouds of AWS, Microsoft, Google, and others. Here are three critical criteria when selecting a private cloud provider.

Select a private cloud provider who allows you to choose only the services you need. Rather than requiring you to randomly select public cloud applications from a vast menu, a private cloud data center provider should spend time getting to know your business. Working as an unbiased counselor, they should design a unique solution that meets your individual needs at a reasonable price.

Select a private cloud provider who supplies real-time analytics and transparent cost/usage data. Real-time bandwidth monitoring, port monitoring and analytics should be available to you. It is important that they provide transparency in both usage and costs.

Select a private cloud provider who passes technology savings on to you. Public cloud providers utilize virtualization technology which is also available to companies choosing to deploy data and applications in a private cloud. Exporting public cloud data to a private cloud is fairly straightforward and can be easily accomplished. The difference is that private cloud providers more frequently pass the cost savings onto their clients. And, in addition to hardware savings, free hardware repair, remote hands, remote booting, and port monitoring may also be available.

Since the cloud has gone mainstream, companies are taking a fresh look at their technology usage and ROI. Many are surprised to learn that the public cloud is not as cost-effective as they were led to believe.

Are you currently using Amazon, Microsoft, Google or IBM’s public cloud but are reevaluating this decision? Or, are you looking for an alternative to your legacy system and assessing whether a public, private, or hybrid cloud approach would be the most appropriate for your needs? I’d love to hear how your assessment is going.

Categories: Cloud Computing · Datacenter · Industry Viewpoint

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