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>Ms Wang and Mr Casado have suggested that firms should think about building their own private clouds to keep costs down Yeah I distantly remember "on prem", t

>Ms Wang and Mr Casado have suggested that firms should think about building their own private clouds to keep costs down Yeah I distantly remember "on prem", too. Does everyone, everywhere really need to be equipped to hyperscale at a moment's notice? Wouldn't it be better not to be beholden to a megacorp that serves you with 30 pages of opaque billing for business-critcal functionality? Doesn't hiring external consultants to manage your fucking cloud infrastructure seem like sort of a risk as compared to keeping the services-wrangler in-house? ...I don't have an MBA, so these are half-serious questions. If anyone can chime in with (at least) a half-serious answer, I'd halfway appreciate it. I understand that The Economist is the voice of global capital, and global capital has decided that there's money in them thar clouds, but still!

arcbyte 5y ago
It's not about hyperscale, it's about time to market. Traditional corporate datacenters were dogshit when it came to provisioning new resources for business capabilities. In today's world, we need the ability to spin up and down deployments very quickly. We don't need huge numbers of resources, just fast response.
- benjaminwootton 5y ago
  I have worked with hundreds of companies moving to AWS, and believe that this is the answer. People are investing in cloud because its faster, more agile and better, not because it's cheaper. The top line looks expensive, but if you then do the correct analysis on the cost side of the equation (taking out staff costs and DC costs) then I think it is either close or in the black from a cost perspective. If the business case was really bad, I don't think we would see the rapid uptake we have seen.
  - hectord 5y ago
    If you think from an economic standpoint, Amazon should price AWS only a bit cheaper than the on-prem options. It's a way to maximize their profits. Then you have competition (GCP, Azure, Alibaba) which will tend to lower the price, but for now the cloud industry grows. Their goal is to attract new customers who didn't use the cloud before.
- deepstack 5y ago
  have developed on both AWS and non AWS server and db. There is no deference now days. Depending on if you want to hire the right people with the right skills is another thing.
- sgt101 5y ago
  Also experience. My team has been doing cloud deployments for the last 18mths, now we are on a gig at a company that has onprem. In theory the onprem infrastructure is comparable to cloud (K8's, GPU's, HDFS, Kafka) but the reality is that to get a set of K8's pods for a release has taken 2 weeks, 10+ meetings (calls) countless messages and 40+ emails. And the ones we got on Friday were wrong (we asked for 3 * 16GB ones + 1 * 2GB, we got a 16GB project container with 4GB pod limits). For our hadoop request - yes it got provisioned in >8hrs (mostly I think because no one is using it) but none of the access instructions work and everyone who has used it is mysteriously unavailable - so we can't access it. Compare and contrast to self service from any cloud. Why : well it's demand management. If you do self service and say "pay for what you want" then IT's costs bloom and the CIO is shot. If you do that in a cloud scenario then Cloud costs bloom and the CIO says "you guys have spent your money badly". This means that you need police and you need people who you ask to give you what you need if they are happy. These people obstruct you and then get things wrong.
  - mfer 5y ago
    You bring up some great points. There are two that I see. First, there are internal processes. All too often they end up needlessly slowing velocity. This isn't a technology problem but a people problem. Using a public cloud enables people to circumvent these issues, in some cases. Second, there are costs. What does it cost to give someone the features they ask for in the time they want it? This is a requirements, design, time, and cost problem.
    - sgt101 5y ago
      Yes - thinking about it, it's a market failure. Basically small markets (internal IT) can't sustain the investment to support the requirements design time cost issue - while the public cloud folk can say "any colour you like so long as it's black" and there are enough takers to pay for it all.
- AnIdiotOnTheNet 5y ago
  > In today's world, we need the ability to spin up and down deployments very quickly. Do you really? In my experience, admittedly outside of SV, pretty much nobody needs that.
  - zbentley 5y ago
    I think this is a common need, even in smaller organizations. Spinning up/down deployments doesn't imply you're doing it in response to scale needs (most orgs don't have those); often it means you're simply experimenting with new tools or new product offerings. Having the ability to do that without waiting for infrastructure provisioning, and having the ability to only spin up the resources you need to see (for example) if a given version of a web framework can run your site well, or of a new database meets your needs, can be a significant value add.
    - AnIdiotOnTheNet 5y ago
      > often it means you're simply experimenting with new tools or new product offerings. That only makes sense to me in the context of a business being an IT shop to begin with. Most businesses aren't, and their new product offerings require factories and dies and labor and materials. Besides which, the problem of provisioning is entirely overblown for this scale of business. I can spin up new servers all day on our on-prem vSphere cluster.
      - dagw 5y ago
        sense to me in the context of a business being an IT shop to begin with. Lots of businesses outside of 'IT shops' use computers. I currently work in Civil Engineering and more and more of our product and service offerings have an IT/Online/Web based component which involves setting up some sort server. I can spin up new servers all day on our on-prem vSphere cluster. I what price? At my old job an on-perm vSphere 'machine' cost my department a lot more than what AWS was charging.
        AnIdiotOnTheNet 5y ago
- hong_kong 5y ago
  People also seem to be overlooking the benefits of downward optionality - you effectively transform a fixed cost (servers and staff to run them) into a variable one, that you can flex down cheaply (no long-term leases or redundancy payments). It lets you test things out (e.g. entering a new market) and cheaply wind them down if they don't work out.
tw04 5y ago
I've mentioned it before and will again: AWS spent a decade openly and privately advertising how much "cheaper" the cloud was. How economies of sclae meant you'd save boatloads of money. Except, it was never true. You will potentially save money if you're just starting out and have no idea if your idea will be successful. A massive capital outlay is difficult and stupid at that point. You will also potentially save money if the tool you use to make money is something you can easily scale up and down, and actually DOES scale up and down. IE: I host a fantasy football stats app and every Monday night, Thursday night, and all day Sunday I've got millions of users, and thousands the rest of the week. If you don't meet those criteria, unless you are absolutely horrible at negotiating with your vendors, you aren't saving money going into the cloud. I don't care that "datacenters are expensive to build". If you are large enough to need to build your own datacenter instead of renting floorspace for pennies on the dollar from Switch or Equinix (although Equinix is kind of pricey) or Windstream or insert provider - then the datacenter is a rounding error in your 10-year IT budget. The problem is "I moved company XYZ to the cloud" is now a requirement for an IT exec to show up to the country club on Saturday. So whether it makes any fiscal sense at all, the board wants to know "what our cloud plans are" and most execs are more than happy to oblige in order to pad that resume. In my experience, most of them leave long before the bill comes due, and people start asking why the IT budget quadrupled in 3 years. The best part is, most of these companies can't pass along that increased cost to end-customers like a Netflix can because they aren't actually making money on the apps they're hosting in the cloud, those are all internal business facing apps.
- prpl 5y ago
  A few things are relatively cheap: Compute on preemptable VMs/spot instances is cheaper in cloud. Object storage, if you would have required a vendor support contract on prem, up to a PB or so. managed kubernetes, if you would have required a vendor support contract on prem.
- manigandham 5y ago
  The money is not the issue. Cost is not the same as value.
  - 5y ago
manigandham 5y ago
Scale (of your application) is usually not the reason to use clouds. Agility, flexibility, security, global deployments, and consolidated billing and operations are far more important.
- wiremine 5y ago
  Exactly. The reasons to adopt (or not adopt) cloud, like any technology, should revolve around business questions, not technical ones. Of course, technical ones are critical to business success, so you can't ignore them, but they are subservient to the business concerns.
- marcosdumay 5y ago
  Security is certainly and quite clearly not a reason to use clouds. If they are any reason at all it is to avoid them. But the others are spot on.
  - lotsofpulp 5y ago
    Being able to blame someone else for a security problem is a reason to use the cloud.
  - manigandham 5y ago
    Security is complex but many companies find it easier to offload it to managed services and best-practices/reference architectures in the cloud compared to janky internal systems.
    - marcosdumay 5y ago
      Offload what exactly? You mean making the same decisions, but through an opaque badly documented panel? Or you mean paying somebody to keep your OS up to date? Going into the cloud does not alleviate any security decision. You can't buy security.
      - manigandham 5y ago
wodenokoto 5y ago
On a previous job we had a huge GPU server on prem because we wanted to use it for deep learning. It would have been much, much cheaper to rent gpu in the cloud and when we knew _something_ about our workload we could buy an on prem and maybe rent extra if needed. But we weren’t cleared for cloud. Regarding in-house expertise: I think most companies would like to have in house expertise but they can’t hire the expertise they need so they use consultants.
- dnautics 5y ago
  that's really surprising to me, because I used to run a GPU cloud that was cheaper than amazon, and the margins were insane.
  - Enginerrrd 5y ago
    It all comes down to utilization as a percentage of time. If the workloads are infrequent enough, GPU cloud providers on going to crush the onsite equipment. However... I was also sort of surprised, because last time I priced this out, you can have pretty low utilization rates of the equipment and still come out ahead.
    - dnautics 5y ago
      the other thing to consider though is that if you are under pressure by management to not utilize GPU cloud, you might do fewer experiments than if you had at least a GPU workstation under the desk. (that, presumably, you can share with other workmates)
  - wiz21c 5y ago
    I've looked for some GPU on the web and it's super expensive to rent. I was expecting to rent that for say 50$ per month (considering I can rent some webspace for less then 10$ a month) but everything was more expensive like 600$/month (I look for entry level GPU, used just a bit, I'm a student) ... Did I look correctly ?
    - 5y ago
somethingAlex 5y ago
Like anything it's just pros and cons. Sure you save money by doing on-prem or just buying servers and colocating, but you also get all the headaches that come with that. I used to work at one of the most popular fast food chains. I had one project that was internal to them and one that was customer facing. The internal product, a search engine for documentation ran on-prem while the e-commerce store ran on AWS. Running the former on-prem was just fine. I'm sure glad we were on AWS for the customer-facing site, though. We'd run ads during the Macy's day parade, college national championship, etc... dear lord I could not imagine wrangling the necessary people to scale that out from an infrastructure perspective. It was very nice just doubling the number on our ASG, failing over to the secondary database, launching another DB instance with double the capacity, and repeating for the second one. Between those popular ads and DDoS attacks I'd say AWS was a win there, but internal tools don't benefit from the cloud as much. Also not an MBA, but I feel like that's a rule a thumb you can add to the repertoire.
- JohnJamesRambo 5y ago
  I don’t see any cost analysis, you’re just glad you were on AWS so you didn’t have to do it. Could be a convenience fee in there big time.
  - baq 5y ago
    or, more likely, it would have been impossible to scale at a short notice and the site would slow down (with luck) or go offline for a bit (most probable).
hourislate 5y ago
Bank of America built their own cloud. They say they save 2 billion a year. https://www.businessinsider.com/bank-of-americas-350-million-internal-cloud-bet-striking-payoff-2019-10?r=US&IR=T https://www.businessinsider.com/bank-of-americas-350-million... It seems no company wants to be in the business of in house IT Systems. They think moving all their infra into the Cloud absolves them of all the responsibility of owning it themselves, they don't give a shit how much it costs but then tell you everyone has got to save money and tighten their belts.
- lotsofpulp 5y ago
  BoA’s scale of operations are probably orders of magnitude larger than most other businesses.
bsenftner 5y ago
MBA here. The cloud is not a good value, the cloud handicaps your organization by placing your most valuable resource - how you compute - in 3rd party hands. Doing the financial math, the cloud is absurd, it is a very bad value; if it were a better value, the cloud providers would not have such high profits. Doing the flexibility math, having one's own datacenter - even a rented colo cabinet - provides far more flexibility than working through a cloud provider's ticketing system. Doing the organization knowledge math, having in-house skills to create, modify, and completely customize one's backend infrastructure with the knowledge that you're numbers are pure - nothing but your jobs are running on your hardware - grants you the visibility to optimize effectively. I've done this: built a 17 server cluster, housed in a colo, for a high compute startup producing 3D avatars from photos automatically. The hardware for the cluster, including a Federal Reserve class hardware firewall, was just over $50K, with a month to month colo bill of $600. This was in contrast to $96K per month if the same configuration were at AWS. This was 7 years ago, so adjust the prices, but you get the exponential higher expense point.
- mwcampbell 5y ago
  On the other hand, what if your tiny company spends only four figures per month on AWS and has only a single developer who also acts as a sysadmin as needed? Is it even practical for a company operating at that scale to colocate servers in an environment that has anything like the private network and multiple per-region availability zones of AWS? Not to mention that, presumably, the developer would have to implement and test their own equivalent of AWS's auto scaling and multi-AZ database services. To me, AWS is worth the money.
  - deleted 5y ago
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  - ericd 5y ago
    We colo’d our own servers as a two person team. We didn’t have multiple availability zones, but we’d have the ability to fail over to leased machines if we needed to via automated builds and frequent offsite backups, and that was good enough for our needs. But we never needed to over the few years we ran this setup. This was after running on leased dedicated machines (which is a good first step so you can figure out what you actually need without putting out the money for hardware). A private network is ridiculously easy to set up. In our case, we had two switches, one public, one private. Every machine had 4 NICs. Just bind some to public addresses, some to private, plug in to appropriate switch. Unless your traffic is extremely bursty, auto scaling is probably more trouble than it’s worth. We were serving millions of users with three dual-socket machines. And if you really need it, you can try to handle base load with dedicated servers, and bursts with AWS infra. But at <$10k/mo on AWS, you’re not getting anywhere near the horsepower I’m talking about.
dayofthedaleks 5y ago
Often it's an OpEx vs CapEx play. Also large orgs crave treating staff as interchangeable parts and IT hiring is thorny. Throwing too much money at the problem can be preferable. Enterprises would rather not maintain inhouse infrastructure for many of the same reasons they engage MSPs despite persistently shoddy services.
TheRealDunkirk 5y ago
It depends on who's running your company. The bog-standard MBA's in middle management love to minimize capital outlay, preferring to expense everything possible. Sure, there are tax advantages, but it becomes a rule-of-thumb in most Fortune 500's, and winds up infecting IT as well. What a lot of blue chip companies STILL haven't grasped is that IT is as strategic, differentiating, and important as any custom machine they can design, build, and install on an assembly line, and the software engineers, as much or more, important as the product engineers.
api 5y ago
You have to run the numbers for your specific company, expected scaling behavior, compute work load, and expected system administration overhead and compare all scenarios. I will say that if your work load is relatively fixed in magnitude and especially if it's bandwidth intensive, you can probably beat the "big cloud" providers by at least an order of magnitude. If it's extremely bandwidth intensive you should never consider mainstream cloud as outbound bandwidth is absurdly overpriced... like 1000% markup or even more. I can't exaggerate how insane bandwidth pricing is. If you are just prototyping something, your work load is highly elastic, or your product is rapidly evolving, the flexibility and outsourced sysadmin of cloud will probably make sense. Edit: There are edge cases too. If your work load is, say, inbound bandwidth and storage intensive, AWS might be great since S3 is cheap and inbound bandwidth is free. Just keep in mind that you might pay a lot for egress if you ever need that data out. Will you? Run your own numbers and be detailed!
dagw 5y ago
Big corp financing is weird, and IT is often its own cost center responsible for its own budgets. This means that every time my department asks IT to do something for us they send us a bill. And that bill is always several times more than going to an external provider. At a place I worked, hosting in-house would for example cost a minimum $150/server/month for something with the same spec/performance that would cost $20/month on AWS. It could also take up to 10 days to get that (virtual) server set up. As a project owner and someone responsible for my project/department budget using an external cloud over in-house hosting makes rational, economic sense Building up an IT infrastructure that can provide services at roughly the same quality and cost as AWS takes a large investment in talent and infrastructure. And many companies don't see the value in making that huge upfront investment for something they might not need. Better to start with AWS, and once you get to the point where you can lower your costs by 50-70%, then start looking at moving in house.
- mistrial9 5y ago
  > Building up an IT infrastructure that can provide services at roughly the same quality and cost as AWS takes a large investment in talent and infrastructure no, you missed an important point here.. no one, at any scale, has been able to compete directly with AWS on the combination of service, scale and cost per unit.. its intensely competitive
closeparen 5y ago
Almost all “on prem” business IT is managed by external contractors. I was one of them. We served about a third of the commercial premises in a small Midwestern city, driving out to visit the server closet, change backup tapes, click through Windows Updates, and perhaps make the rounds of desktop users with any questions or concerns. We sold a monthly package of so many labor hours, and we’d visit each customer site about once a month. We’d get the keys from an office administrator who perhaps knew how to provision user accounts. The biggest, richest customers might have had 1-2 help desk on staff, probably not domain admins and certainly not empowered to do any decision making or design. That was for us. It was quaint, adorable, personal, and hilariously inefficient.
- greedo 5y ago
  You're talking "Mom and Pop" scale businesses that have minimal computing needs other than printing and Internet access. Most "on-prem" IT is much larger. My company (also in the Midwest) has mainframes, SANs, vSphere deployments, Nutanix, as well as supporting ~3K users.
  - closeparen 5y ago
    These businesses ranged from "Mom and Pop" to about 50 employees. There'd be a domain controller, Exchange server, file server, PBX, SQL server, and application servers for 2-3 line of business apps. It seems very clear to me that these kinds of businesses are much better served by cloud. No one of them is that valuable of a customer, but there are so many. Companies that are large enough to have an IT department with multiple highly skilled professionals onsite, or who could even contemplate doing a real data center (most "on prem" is in a closet), I agree is a different calculation.
timmy2ply 5y ago
It's not always easy to bypass the cloud, especially when you have to deal with things like GDPR and host client data in their respective region.
gautamdivgi 5y ago
I have worked on reliability for some private OpenStack deployments, on-prep K8S deployments. Views are my own and don’t reflect on any open source community or company. To operate a production cloud you need expertise at all parts of the stack. This includes network, kernel, maybe firmware, orchestration, etc. You also need adequate planning where your on-prem data center teams continuously upgrade your hardware/firmware and add capacity. From an organizational perspective this is an entire VP or SVP level organization depending on where you are. Operating large infrastructure is hard. If it’s not your core competency there is really no point in dealing with it. Either way, it takes enormous effort to hire and keep a team skilled to operate infrastructure. You will lose your team to big-tech eventually. You don’t need external consultants to manage your cloud infrastructure. Your existing engineers can skill up to use it. Public cloud will commoditize what typically takes a lot of time to plan for capacity, DNS, networking, scaling, etc. In short - its prioritizing speed of execution over everything else. The opaque billing is just cost of doing business. But unless tech is your core competency, opaque billing is much easier to deal with than all the other situations that come up with managing and maintaining your own infrastructure.
rswail 5y ago
I bet in the 1920s, people were questioning whether or not businesses should generate their own electricity on site or whether to go with the new-fangled "cloud" solution. The question for businesses comes down to economics, of capital expenditure vs operating expenditure. If I buy my own hardware, I have to spend capital and depreciate it as part of the operating expenses. If I lease hardware (whether on prem or cloud), then that's pure operating expense. There are accounting and tax implications. There's also the "stick to your knitting" of a business. Do I need my own payroll service, or do I outsource it. Do I need my own accounting, or do I outsource it. Do I need my own cleaning service...

arcbyte 5y ago

It's not about hyperscale, it's about time to market. Traditional corporate datacenters were dogshit when it came to provisioning new resources for business capabilities. In today's world, we need the ability to spin up and down deployments very quickly. We don't need huge numbers of resources, just fast response.

benjaminwootton 5y ago
I have worked with hundreds of companies moving to AWS, and believe that this is the answer. People are investing in cloud because its faster, more agile and better, not because it's cheaper. The top line looks expensive, but if you then do the correct analysis on the cost side of the equation (taking out staff costs and DC costs) then I think it is either close or in the black from a cost perspective. If the business case was really bad, I don't think we would see the rapid uptake we have seen.
- hectord 5y ago
  If you think from an economic standpoint, Amazon should price AWS only a bit cheaper than the on-prem options. It's a way to maximize their profits. Then you have competition (GCP, Azure, Alibaba) which will tend to lower the price, but for now the cloud industry grows. Their goal is to attract new customers who didn't use the cloud before.
deepstack 5y ago
have developed on both AWS and non AWS server and db. There is no deference now days. Depending on if you want to hire the right people with the right skills is another thing.
sgt101 5y ago
Also experience. My team has been doing cloud deployments for the last 18mths, now we are on a gig at a company that has onprem. In theory the onprem infrastructure is comparable to cloud (K8's, GPU's, HDFS, Kafka) but the reality is that to get a set of K8's pods for a release has taken 2 weeks, 10+ meetings (calls) countless messages and 40+ emails. And the ones we got on Friday were wrong (we asked for 3 * 16GB ones + 1 * 2GB, we got a 16GB project container with 4GB pod limits). For our hadoop request - yes it got provisioned in >8hrs (mostly I think because no one is using it) but none of the access instructions work and everyone who has used it is mysteriously unavailable - so we can't access it. Compare and contrast to self service from any cloud. Why : well it's demand management. If you do self service and say "pay for what you want" then IT's costs bloom and the CIO is shot. If you do that in a cloud scenario then Cloud costs bloom and the CIO says "you guys have spent your money badly". This means that you need police and you need people who you ask to give you what you need if they are happy. These people obstruct you and then get things wrong.
- mfer 5y ago
  You bring up some great points. There are two that I see. First, there are internal processes. All too often they end up needlessly slowing velocity. This isn't a technology problem but a people problem. Using a public cloud enables people to circumvent these issues, in some cases. Second, there are costs. What does it cost to give someone the features they ask for in the time they want it? This is a requirements, design, time, and cost problem.
  - sgt101 5y ago
    Yes - thinking about it, it's a market failure. Basically small markets (internal IT) can't sustain the investment to support the requirements design time cost issue - while the public cloud folk can say "any colour you like so long as it's black" and there are enough takers to pay for it all.
AnIdiotOnTheNet 5y ago
> In today's world, we need the ability to spin up and down deployments very quickly. Do you really? In my experience, admittedly outside of SV, pretty much nobody needs that.
- zbentley 5y ago
  I think this is a common need, even in smaller organizations. Spinning up/down deployments doesn't imply you're doing it in response to scale needs (most orgs don't have those); often it means you're simply experimenting with new tools or new product offerings. Having the ability to do that without waiting for infrastructure provisioning, and having the ability to only spin up the resources you need to see (for example) if a given version of a web framework can run your site well, or of a new database meets your needs, can be a significant value add.
  - AnIdiotOnTheNet 5y ago
    > often it means you're simply experimenting with new tools or new product offerings. That only makes sense to me in the context of a business being an IT shop to begin with. Most businesses aren't, and their new product offerings require factories and dies and labor and materials. Besides which, the problem of provisioning is entirely overblown for this scale of business. I can spin up new servers all day on our on-prem vSphere cluster.
    - dagw 5y ago
      sense to me in the context of a business being an IT shop to begin with. Lots of businesses outside of 'IT shops' use computers. I currently work in Civil Engineering and more and more of our product and service offerings have an IT/Online/Web based component which involves setting up some sort server. I can spin up new servers all day on our on-prem vSphere cluster. I what price? At my old job an on-perm vSphere 'machine' cost my department a lot more than what AWS was charging.
      - AnIdiotOnTheNet 5y ago
hong_kong 5y ago
People also seem to be overlooking the benefits of downward optionality - you effectively transform a fixed cost (servers and staff to run them) into a variable one, that you can flex down cheaply (no long-term leases or redundancy payments). It lets you test things out (e.g. entering a new market) and cheaply wind them down if they don't work out.

tw04 5y ago

I've mentioned it before and will again: AWS spent a decade openly and privately advertising how much "cheaper" the cloud was. How economies of sclae meant you'd save boatloads of money. Except, it was never true. You will potentially save money if you're just starting out and have no idea if your idea will be successful. A massive capital outlay is difficult and stupid at that point. You will also potentially save money if the tool you use to make money is something you can easily scale up and down, and actually DOES scale up and down. IE: I host a fantasy football stats app and every Monday night, Thursday night, and all day Sunday I've got millions of users, and thousands the rest of the week. If you don't meet those criteria, unless you are absolutely horrible at negotiating with your vendors, you aren't saving money going into the cloud. I don't care that "datacenters are expensive to build". If you are large enough to need to build your own datacenter instead of renting floorspace for pennies on the dollar from Switch or Equinix (although Equinix is kind of pricey) or Windstream or insert provider - then the datacenter is a rounding error in your 10-year IT budget. The problem is "I moved company XYZ to the cloud" is now a requirement for an IT exec to show up to the country club on Saturday. So whether it makes any fiscal sense at all, the board wants to know "what our cloud plans are" and most execs are more than happy to oblige in order to pad that resume. In my experience, most of them leave long before the bill comes due, and people start asking why the IT budget quadrupled in 3 years. The best part is, most of these companies can't pass along that increased cost to end-customers like a Netflix can because they aren't actually making money on the apps they're hosting in the cloud, those are all internal business facing apps.

prpl 5y ago
A few things are relatively cheap: Compute on preemptable VMs/spot instances is cheaper in cloud. Object storage, if you would have required a vendor support contract on prem, up to a PB or so. managed kubernetes, if you would have required a vendor support contract on prem.
manigandham 5y ago
The money is not the issue. Cost is not the same as value.
- 5y ago

manigandham 5y ago

Scale (of your application) is usually not the reason to use clouds. Agility, flexibility, security, global deployments, and consolidated billing and operations are far more important.

wiremine 5y ago
Exactly. The reasons to adopt (or not adopt) cloud, like any technology, should revolve around business questions, not technical ones. Of course, technical ones are critical to business success, so you can't ignore them, but they are subservient to the business concerns.
marcosdumay 5y ago
Security is certainly and quite clearly not a reason to use clouds. If they are any reason at all it is to avoid them. But the others are spot on.
- lotsofpulp 5y ago
  Being able to blame someone else for a security problem is a reason to use the cloud.
- manigandham 5y ago
  Security is complex but many companies find it easier to offload it to managed services and best-practices/reference architectures in the cloud compared to janky internal systems.
  - marcosdumay 5y ago
    Offload what exactly? You mean making the same decisions, but through an opaque badly documented panel? Or you mean paying somebody to keep your OS up to date? Going into the cloud does not alleviate any security decision. You can't buy security.
    - manigandham 5y ago

wodenokoto 5y ago

On a previous job we had a huge GPU server on prem because we wanted to use it for deep learning. It would have been much, much cheaper to rent gpu in the cloud and when we knew _something_ about our workload we could buy an on prem and maybe rent extra if needed. But we weren’t cleared for cloud. Regarding in-house expertise: I think most companies would like to have in house expertise but they can’t hire the expertise they need so they use consultants.

dnautics 5y ago
that's really surprising to me, because I used to run a GPU cloud that was cheaper than amazon, and the margins were insane.
- Enginerrrd 5y ago
  It all comes down to utilization as a percentage of time. If the workloads are infrequent enough, GPU cloud providers on going to crush the onsite equipment. However... I was also sort of surprised, because last time I priced this out, you can have pretty low utilization rates of the equipment and still come out ahead.
  - dnautics 5y ago
    the other thing to consider though is that if you are under pressure by management to not utilize GPU cloud, you might do fewer experiments than if you had at least a GPU workstation under the desk. (that, presumably, you can share with other workmates)
- wiz21c 5y ago
  I've looked for some GPU on the web and it's super expensive to rent. I was expecting to rent that for say 50$ per month (considering I can rent some webspace for less then 10$ a month) but everything was more expensive like 600$/month (I look for entry level GPU, used just a bit, I'm a student) ... Did I look correctly ?
  - 5y ago

somethingAlex 5y ago

Like anything it's just pros and cons. Sure you save money by doing on-prem or just buying servers and colocating, but you also get all the headaches that come with that. I used to work at one of the most popular fast food chains. I had one project that was internal to them and one that was customer facing. The internal product, a search engine for documentation ran on-prem while the e-commerce store ran on AWS. Running the former on-prem was just fine. I'm sure glad we were on AWS for the customer-facing site, though. We'd run ads during the Macy's day parade, college national championship, etc... dear lord I could not imagine wrangling the necessary people to scale that out from an infrastructure perspective. It was very nice just doubling the number on our ASG, failing over to the secondary database, launching another DB instance with double the capacity, and repeating for the second one. Between those popular ads and DDoS attacks I'd say AWS was a win there, but internal tools don't benefit from the cloud as much. Also not an MBA, but I feel like that's a rule a thumb you can add to the repertoire.

JohnJamesRambo 5y ago
I don’t see any cost analysis, you’re just glad you were on AWS so you didn’t have to do it. Could be a convenience fee in there big time.
- baq 5y ago
  or, more likely, it would have been impossible to scale at a short notice and the site would slow down (with luck) or go offline for a bit (most probable).

hourislate 5y ago

Bank of America built their own cloud. They say they save 2 billion a year. https://www.businessinsider.com/bank-of-americas-350-million-internal-cloud-bet-striking-payoff-2019-10?r=US&IR=T https://www.businessinsider.com/bank-of-americas-350-million... It seems no company wants to be in the business of in house IT Systems. They think moving all their infra into the Cloud absolves them of all the responsibility of owning it themselves, they don't give a shit how much it costs but then tell you everyone has got to save money and tighten their belts.

lotsofpulp 5y ago
BoA’s scale of operations are probably orders of magnitude larger than most other businesses.

bsenftner 5y ago

MBA here. The cloud is not a good value, the cloud handicaps your organization by placing your most valuable resource - how you compute - in 3rd party hands. Doing the financial math, the cloud is absurd, it is a very bad value; if it were a better value, the cloud providers would not have such high profits. Doing the flexibility math, having one's own datacenter - even a rented colo cabinet - provides far more flexibility than working through a cloud provider's ticketing system. Doing the organization knowledge math, having in-house skills to create, modify, and completely customize one's backend infrastructure with the knowledge that you're numbers are pure - nothing but your jobs are running on your hardware - grants you the visibility to optimize effectively. I've done this: built a 17 server cluster, housed in a colo, for a high compute startup producing 3D avatars from photos automatically. The hardware for the cluster, including a Federal Reserve class hardware firewall, was just over $50K, with a month to month colo bill of $600. This was in contrast to $96K per month if the same configuration were at AWS. This was 7 years ago, so adjust the prices, but you get the exponential higher expense point.

mwcampbell 5y ago
On the other hand, what if your tiny company spends only four figures per month on AWS and has only a single developer who also acts as a sysadmin as needed? Is it even practical for a company operating at that scale to colocate servers in an environment that has anything like the private network and multiple per-region availability zones of AWS? Not to mention that, presumably, the developer would have to implement and test their own equivalent of AWS's auto scaling and multi-AZ database services. To me, AWS is worth the money.
- deleted 5y ago
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- ericd 5y ago
  We colo’d our own servers as a two person team. We didn’t have multiple availability zones, but we’d have the ability to fail over to leased machines if we needed to via automated builds and frequent offsite backups, and that was good enough for our needs. But we never needed to over the few years we ran this setup. This was after running on leased dedicated machines (which is a good first step so you can figure out what you actually need without putting out the money for hardware). A private network is ridiculously easy to set up. In our case, we had two switches, one public, one private. Every machine had 4 NICs. Just bind some to public addresses, some to private, plug in to appropriate switch. Unless your traffic is extremely bursty, auto scaling is probably more trouble than it’s worth. We were serving millions of users with three dual-socket machines. And if you really need it, you can try to handle base load with dedicated servers, and bursts with AWS infra. But at <$10k/mo on AWS, you’re not getting anywhere near the horsepower I’m talking about.

dayofthedaleks 5y ago

Often it's an OpEx vs CapEx play. Also large orgs crave treating staff as interchangeable parts and IT hiring is thorny. Throwing too much money at the problem can be preferable. Enterprises would rather not maintain inhouse infrastructure for many of the same reasons they engage MSPs despite persistently shoddy services.

TheRealDunkirk 5y ago

It depends on who's running your company. The bog-standard MBA's in middle management love to minimize capital outlay, preferring to expense everything possible. Sure, there are tax advantages, but it becomes a rule-of-thumb in most Fortune 500's, and winds up infecting IT as well. What a lot of blue chip companies STILL haven't grasped is that IT is as strategic, differentiating, and important as any custom machine they can design, build, and install on an assembly line, and the software engineers, as much or more, important as the product engineers.

api 5y ago

You have to run the numbers for your specific company, expected scaling behavior, compute work load, and expected system administration overhead and compare all scenarios. I will say that if your work load is relatively fixed in magnitude and especially if it's bandwidth intensive, you can probably beat the "big cloud" providers by at least an order of magnitude. If it's extremely bandwidth intensive you should never consider mainstream cloud as outbound bandwidth is absurdly overpriced... like 1000% markup or even more. I can't exaggerate how insane bandwidth pricing is. If you are just prototyping something, your work load is highly elastic, or your product is rapidly evolving, the flexibility and outsourced sysadmin of cloud will probably make sense. Edit: There are edge cases too. If your work load is, say, inbound bandwidth and storage intensive, AWS might be great since S3 is cheap and inbound bandwidth is free. Just keep in mind that you might pay a lot for egress if you ever need that data out. Will you? Run your own numbers and be detailed!

dagw 5y ago

Big corp financing is weird, and IT is often its own cost center responsible for its own budgets. This means that every time my department asks IT to do something for us they send us a bill. And that bill is always several times more than going to an external provider. At a place I worked, hosting in-house would for example cost a minimum $150/server/month for something with the same spec/performance that would cost $20/month on AWS. It could also take up to 10 days to get that (virtual) server set up. As a project owner and someone responsible for my project/department budget using an external cloud over in-house hosting makes rational, economic sense Building up an IT infrastructure that can provide services at roughly the same quality and cost as AWS takes a large investment in talent and infrastructure. And many companies don't see the value in making that huge upfront investment for something they might not need. Better to start with AWS, and once you get to the point where you can lower your costs by 50-70%, then start looking at moving in house.

mistrial9 5y ago
> Building up an IT infrastructure that can provide services at roughly the same quality and cost as AWS takes a large investment in talent and infrastructure no, you missed an important point here.. no one, at any scale, has been able to compete directly with AWS on the combination of service, scale and cost per unit.. its intensely competitive

closeparen 5y ago

Almost all “on prem” business IT is managed by external contractors. I was one of them. We served about a third of the commercial premises in a small Midwestern city, driving out to visit the server closet, change backup tapes, click through Windows Updates, and perhaps make the rounds of desktop users with any questions or concerns. We sold a monthly package of so many labor hours, and we’d visit each customer site about once a month. We’d get the keys from an office administrator who perhaps knew how to provision user accounts. The biggest, richest customers might have had 1-2 help desk on staff, probably not domain admins and certainly not empowered to do any decision making or design. That was for us. It was quaint, adorable, personal, and hilariously inefficient.

greedo 5y ago
You're talking "Mom and Pop" scale businesses that have minimal computing needs other than printing and Internet access. Most "on-prem" IT is much larger. My company (also in the Midwest) has mainframes, SANs, vSphere deployments, Nutanix, as well as supporting ~3K users.
- closeparen 5y ago
  These businesses ranged from "Mom and Pop" to about 50 employees. There'd be a domain controller, Exchange server, file server, PBX, SQL server, and application servers for 2-3 line of business apps. It seems very clear to me that these kinds of businesses are much better served by cloud. No one of them is that valuable of a customer, but there are so many. Companies that are large enough to have an IT department with multiple highly skilled professionals onsite, or who could even contemplate doing a real data center (most "on prem" is in a closet), I agree is a different calculation.

timmy2ply 5y ago

It's not always easy to bypass the cloud, especially when you have to deal with things like GDPR and host client data in their respective region.

gautamdivgi 5y ago

I have worked on reliability for some private OpenStack deployments, on-prep K8S deployments. Views are my own and don’t reflect on any open source community or company. To operate a production cloud you need expertise at all parts of the stack. This includes network, kernel, maybe firmware, orchestration, etc. You also need adequate planning where your on-prem data center teams continuously upgrade your hardware/firmware and add capacity. From an organizational perspective this is an entire VP or SVP level organization depending on where you are. Operating large infrastructure is hard. If it’s not your core competency there is really no point in dealing with it. Either way, it takes enormous effort to hire and keep a team skilled to operate infrastructure. You will lose your team to big-tech eventually. You don’t need external consultants to manage your cloud infrastructure. Your existing engineers can skill up to use it. Public cloud will commoditize what typically takes a lot of time to plan for capacity, DNS, networking, scaling, etc. In short - its prioritizing speed of execution over everything else. The opaque billing is just cost of doing business. But unless tech is your core competency, opaque billing is much easier to deal with than all the other situations that come up with managing and maintaining your own infrastructure.

rswail 5y ago

I bet in the 1920s, people were questioning whether or not businesses should generate their own electricity on site or whether to go with the new-fangled "cloud" solution. The question for businesses comes down to economics, of capital expenditure vs operating expenditure. If I buy my own hardware, I have to spend capital and depreciate it as part of the operating expenses. If I lease hardware (whether on prem or cloud), then that's pure operating expense. There are accounting and tax implications. There's also the "stick to your knitting" of a business. Do I need my own payroll service, or do I outsource it. Do I need my own accounting, or do I outsource it. Do I need my own cleaning service...