Reminding Ourselves About the Economics of the Cloud


Since it’s been over 5 years since the “Economics of the Cloud” whitepaper was published, it’s time that we dust off that copy that’s been sitting at the bottom of our documents folder.  No doubt there are a few people that are “new to cloud” and might not be aware of this gem and there are a few people that certainly can be reminded of its content as they build new custom IT projects.

I’ve worked on a wide variety of cloud initiatives over the past 5 years and seen the supply side economics first hand.  For one initiative, I contacted suppliers of containerized data centres to purchase 10 containers.  I was a little taken aback that I could only be offered retail pricing for a quantity so small.  It was the same story for energy and also for floor space.  Operations and management also faced the same challenge, with every customization adding not only additional costs, but also introducing release drag by introducing new dependencies that needed to be considered with every release.

As I worked with Canadian organizations, I also encountered constraints on the demand side.  Clustered communities couldn’t take advantage of the business cadence of the other potential users (for example: An education-only community cloud has generally the same cadence.  Ditto for retail)

Organizations are building out business cases for their move to the cloud and they include a variety of elements in their analysis.  This generally includes all the traditional IT costs (hardware, licensing, personnel, floor space, energy costs).  Often overlooked are the costs associated with supporting bespoke services/solutions.  Creating organization specific documentation, training materials, education programs and configuration management should all factor in to the business case.  Non-standard configurations and services also introduces delays in incident management since the external support organizations wont necessarily be familiar with your specialized deployment.  Using standard public cloud approaches allows organizations to leverage the readily available training materials, standard templates and documents.

So if you’re planning to build your own cloud or looking to cluster with organizations like your own to build a community cloud, it’s important to revisit the Economics of the Cloud paper to appreciate the dynamics of scale that drive hyper scale cloud.

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