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Is the Cloud Really Cheaper?

Is the Cloud Really Cheaper?

There has been plenty of debate around the real cost of the cloud versus using internal IT resources, or even erecting your own private cloud. Those arguing against the public cloud tend to focus on matters such as a few cloud providers having complicated pricing plans that make it difficult for you to know how much you will really be charged. The simple answer is to deal only with reputable providers that offer easy-to-follow pricing with no hidden fees to menace you. If you deal with the right company, you won’t end up being reminded of the time when your 13-year-old's texting frenzy cost you an extra $500 on your monthly phone bill.

Those who still aren’t convinced need only complete a simple exercise. This involves adding up all the costs of "building your own" to come up with an internal cost per GB overall. Take into account the price of hardware, software, support costs, personnel, power usage, cooling, networking and everything else that goes into storing data.

True Cost of Private Cloud

As a rule of thumb, the following OpEx costs apply: scalability costs (to be able to ramp up and down as required) come out at roughly 5 percent of CapEx; hardware support is around 18 percent of CapEx; software support is 5 percent of CapEx. That already amounts to an additional 28 percent on top of the initial hardware expenditure. But hidden OpEx costs to add are data center hosting costs, at about $6,000 per year; networking costs of about $3,000 per year; and personnel costs per year of $25,000 or more, based on 25TB. These elements have to be taken into account in order to properly evaluate the build-vs.-buy equation.

Now do the same for the cloud. After all the many complications, contortions and calculations it took to come up with an internal number, it will come as a big relief that you are simply provided a cost per GB. Beware of lowball figures, as they come with either hidden costs or poor support. But if it’s all comprehensive and inclusive, you have an immediate and good comparison. It’s extremely doubtful if that number would ever be higher for the cloud.

Bottom line: It is no longer possible to ignore the fact that it is all but impossible to arrange storage and backup more cheaply than you can in the cloud. Providers take advantage of economies of scale in terms of hardware and software licensing to provide sophisticated backup and data protection services at an affordable price. When you add it all together, building and managing your own data center is going to end up more expensive, and you are unlikely to end up with something better than is now available in the cloud.

Art Ledbetter is director of channels at Zetta. Guest blogs such as this one are published monthly and are part of Talkin' Cloud's annual platinum sponsorship.

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