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Hiring your own security guard is cheaper than paying an outsourcing firm. Hiring your own janitor is cheaper than paying an outsourcing firm. Building your o

Hiring your own security guard is cheaper than paying an outsourcing firm. Hiring your own janitor is cheaper than paying an outsourcing firm. Building your own office is cheaper than renting one. Doing your taxes with pen and paper is cheaper than paying turbo tax. Making your own food is cheaper than eating out. Hiring a cook directly is cheaper than hiring sudexo. I could keep going. But sometimes it’s not just cost. The biggest two values you get with AWS is 1) reducing time spent outside your business’s core competencies and 2) a vast ecosystem - 3rd party offerings, readily available devs, consulting services, and compliance services. I’d add that for those having compliance needs. It’s not always as simple as rack and stacking infra. You have to use services that meet the compliance auditors needs.

nine_k 5y ago
It's still about cost. (1) opportunity cost: doing your own systems administration instead of growing your business (features, marketing, etc). (2) switching cost: once you have a working system that outgrows the free / cheap AWS tiers, and might be cheaper to run outside cloud, switching away from the cloud becomes expensive, and does not look like a good investment to many, see (1).
- fragmede 5y ago
  Opportunity cost is everything. Staffing for a small startup, after funding, is a huge bottleneck. Every second you spend managing an install of Rabbitmq, be it on a VM or on-prem, is time spent not working on the app, or anything else that's drastically more important.
  - izacus 5y ago
    And every dollar you bleed on expensive AWS (and expensive devops engineers to wrangle it), is a dollar less you can pay for a new employee to deliver value quickly and get you profitable (or aquired). So what's the balance?
    - fragmede 5y ago
      Personally I think run on-prem till you outgrow a server in the office closet, Digital Ocean/Linode till you run out of features, then AWS/GCP when you start needing to scale to handle hockey-stick user growth. Then again, you'll need an expensive devops engineer to manage those redeployments seamlessly, so have you really gained anything there? How much funding do you have? A couple hundred thousand is different from a couple million.
    - bushbaba 5y ago
      Startups spend way more on staffing than cloud. generally the cloud Premium is less than the cost of a single employee for an early stage startup. As the startup scales it’s about velocity of product. Spending 10% your time to save 20% on cost is a bad strategy. Instead startups should take that 10% time and invest it into their core product. This would lead to an accelerated timeframe for raising their next funding, which will be much larger than any cost savings. Eventually in the future once growth slows down you can focus on costs to improve profit. *you still want to ensure your costs grow slower than top line rev.
    - presentation 5y ago
      I pay my engineers six figures, and my cloud bills don’t top $1000/mo. Optimizing for cloud bills is stupid in my case.
alberth 5y ago
When people talk about the cost of cloud, there’s some assumptions we need to state: A. Does your workload fully utilize 100% of the capacity of the resource? If not, then cloud would be cheaper. Just like if you only need office space for a few people, it’s not cost effective to buy an entire office building. If you only need server with a few gigs of RAM, it’s not cost effective to buy (own) an entire physical server. B. If you are going to fully utilize a resource and don’t want to purchase/own it - then a service provider needs to provide that asset to you around cost and make margin from the efficiency from scale they have. Example, it’s actually more expensive for me to buy all of the ingredients to make a hamburger than to simply buy a fully prepared hamburger for McDonalds. McDonald’s is able to provide this due to their scale. What I’ve seen is that when you’re in Group B, many people are finding that AWS/etc is way more expensive. Essentially, their scale in efficiency is not being passed down to the customer in cost savings. And the sizable cost premium is not worth the value received in return. I’ll give a good example of where this does make sense, and that’s Hetzner or OVH. Their scale allows them to procure & host dedicated servers at a price I’d be difficult to match doing it myself. Or even if I could beat their price, it would be minimally. But folks are finding that with AWS/etc, that premium is extreme and that’s where the equation is unbalanced for folks.
- wongarsu 5y ago
  There are also a lot of people who think they are in group A, move to the cloud and find out they are much closer to group B.
- llampx 5y ago
  McDonald's is a pretty good example. For one, cheap burger they can provide it to you for cheaper. As soon as you start asking for quantity or quality though, you quickly realize you can make it yourself for cheaper, not counting your time. At that point, the question becomes how much is your time worth, or in this analogy, are you ready to hire a professional chef to get better quality food?
initplus 5y ago
I'm not even sure it's cheaper. At a previous employer we had approximately 150k of cloud expenses per annum. Bringing that in house would have eclipsed the cloud expenses on additional staffing costs alone.
- otabdeveloper4 5y ago
  You can outsource the staffing costs too. This also turns out to be much cheaper due to economies of scale. :)
- dijit 5y ago
  What are you guys doing to have such a low cost? I have a small GKE cluster and a few databases and I’m well above that, I nearly hit that in a month! Maybe you don’t have read replicas of your databases? Do you take any traffic?
  - hansel_der 5y ago
    idk but "a small GKE cluster and a few databases" doesn't sound like it should cost a million per year.
  - Thristle 5y ago
    How much is small? In terms of cpu cores and memmory Cost in cloud is all about capacity and each cloud has very good tools to see where the money is going. It sounds like either what you consider small is not that or money is being wasted somewhere on things you are not aware of
    - dijit 5y ago
      I guess “small” is open for interpretation. Let’s say 720vCPU for the cluster and about 2.3TiB of memory. These would be quite small nodes if you bought them as machines in a datacenter. Most modern machines have 40+vCPU and 128G+ RAM each. I have 36machines in my GKE nodepool with 20vCPU and 64G of ram. So the aggregate totals sound high but it’s not many. In terms of real machines I could have fewer, like 18 or so.
otabdeveloper4 5y ago
Not really. As far as I can tell, the core value of AWS is letting accountant shift CAPEX to OPEX. The technical considerations are a distant second or third place.
- oars 5y ago
  Could you elaborate how this is an advantage? In my previous role, my manager argued for my work as a developer to be charged as Capex to the project instead of Opex. Why would accountants want the opposite for AWS?
  - 2Gkashmiri 5y ago
    if the project is in R&D phase, we call it "captalization" . other than that, the regular employee is generally opex and sent to profit and loss
  - bfung 5y ago
    OPEX in the US is tax deductible for the current financial year; a lot easier to calculate and maintain. It’s basically the cost to run the company, taking away from revenue. CAPEX items are amortized over multiple fiscal cycles; it’ll count and can helps raise the value(valuation) of your company, but tricker to calculate. So depending what financial number goals your company has, the accounting of items can go one way or the other. If your dev work brought permanent value to the company, then it can be capex. If you were a contractor instead, it could be either cap or opex. AWS services are basically rented and not permanent value to the company, ie, if you sold everything the company owned for cash, you couldn’t sell the AWS part, just the terraform scripts.
  - Rastonbury 5y ago
    For business perspective, it's large irreversible upfront investment on capex vs ongoing opex. Sizing and building a data center is risky, execs not wanting to attach their names to $xxM data center project. Cost wise Capex are depreciated, this gives less visibility on month on month costs compared with opex which goes onto income statement. Developer work as capex is intangible asset, which has a bit more 'flexibility' depending on what management wants. It can operate on the same idea, developer wages for 1 year spread over several years via amortization of intangible asset.
KronisLV 5y ago
Not to be dishonest towards the argument that you're making, but most of the examples that you give actually seem fairly straightforward. I do my own taxes, but maybe that's just easier in Europe and is definitely easier for individuals. That said, there's no reason why a LibreOffice spreadsheet would be an insufficient solution for handling taxes and other things like that. I also haven't eaten out in years, the closest to that was ordering some Wolt when hanging out with my friends pre-COVID, because they wanted to try some. Apart from that, it's all just home cooked meals for me and that's pretty great. It also seems to be working out great for the folks over at https://www.reddit.com/r/mealprep/top/?t=month https://www.reddit.com/r/mealprep/top/?t=month At work, the company that i work for have their own building and have their own support staff as well, which seems to be working out great for them. Furthermore, there are plenty of on prem resources that are used and despite the disadvantage of lacking self-service in many cases, there's very little difference in configuring and running software for deployments, with something like Ansible and containers. Even moreso when you have to support clients that have their own particular data centers and on prem deployments, which might differ noticeably from public cloud offerings. That's even not thinking about things like compliance in regards to what data can be stored where. Personally, i also have a homelab with some repurposed old computers with 200 GEs and value RAM, a few HDDs and WireGuard for working around NAT and exposing my sites to the world through a pretty cheap cloud VPS or two from https://www.time4vps.com/?affid=5294 https://www.time4vps.com/?affid=5294 (affiliate link, to make hosting cheaper if anyone else uses them). Of course, when i need 24/7 uptime, i do use their VPSes in a hybrid cloud setup, especially since my blog getting 30k views could be a bit taxing on a residental 4G LTE modem connection. The argument about competencies, ecosystems, 3rd party offerings, outsourcing and so on is probably a valid for some, but not for me and not for many companies out there - too often you end up depending on SaaS solutions which vendor lock you and might cause you to spend unreasonable amounts of money, or will let you remain ignorant about how to actually manage the software that you're using, i think SaaSS (Service as a Software Substitute) is a relevant term here: https://www.gnu.org/philosophy/who-does-that-server-really-serve.en.html https://www.gnu.org/philosophy/who-does-that-server-really-s... That said, what works for me and even the company that employs me, won't work for others. And what works for others, won't work for me. This is all because of how different the circumstances of various people out there are: i cannot afford AWS, i cannot afford Azure, GCP and managed services for my own needs. I currently pay 320 EUR for 6 cloud VPSes per year (and additional amounts for the occasional replacement HDD for my homelab), whereas others pay similar amounts for their cloud platforms of choice per month. For them, depending on their circumstances, it might be more cost effective to spend their time working and throw money at problems, whereas for me it's almost always more cost effective to learn the tech myself. Similarly to how in Latvia you could hire a team of developers for what one developer would cost in the US. Companies have other factors to consider, of course, but this is just one example - the alternative (opportunity) costs of individuals. Edit: Of course, some in the comments are talking about hundreds of VPSes/VMs/nodes and in my eyes, that's just an order of magnitude or two higher than what i'm talking about. I've seen plenty of companies in my country running their own data centers and there have been relatively few issues with those that i'm aware of. Something like Ansible and container clusters can scale pretty far! The problems were more often caused by either mismanaged environments/deployments by developers/agencies who just didn't care about shipping sustainable software but cared more about getting paid and making their software someone else's problem, or making mistakes early in the development and not considering load testing and scalability of the systems as priorities. I'd argue that you can do bad engineering anywhere, though, be it on prem or in the cloud.
headsoup 5y ago
* understanding what you're actually doing is better than outsourcing your knowledge. Most of the issues I see from either on-premises or cloud generally come from not actually understanding the business/use cases/environment. Cloud becomes the 'solution' to a problem of people and process, rather than a value proposition that augments existing reality. You can't make good decisions (e.g. Should I outsource my taxes) if you don't understand what doing those thiggs acrually involves (which most people don't bother to even try). And usually worked into this is a lot of outsourcing of expertise to the point the business relies on third parties to tell them what to do, which is never a cheaper outcome.
slac 5y ago
Managing all of these careers is a big cost though in time and effort
mmcnl 5y ago
What you call "sometimes it's not just cost", actually are costs. Only it's indirect costs that are hard to measure, but these costs definitely exist and definitely have to be taken into account somehow. A large part of hidden costs in corporates is the things you are not doing to save costs because the infrastructure is not flexible enough. I think everyone will recognize this, but it's really hard to put a number on it though.

nine_k 5y ago

It's still about cost. (1) opportunity cost: doing your own systems administration instead of growing your business (features, marketing, etc). (2) switching cost: once you have a working system that outgrows the free / cheap AWS tiers, and might be cheaper to run outside cloud, switching away from the cloud becomes expensive, and does not look like a good investment to many, see (1).

fragmede 5y ago
Opportunity cost is everything. Staffing for a small startup, after funding, is a huge bottleneck. Every second you spend managing an install of Rabbitmq, be it on a VM or on-prem, is time spent not working on the app, or anything else that's drastically more important.
- izacus 5y ago
  And every dollar you bleed on expensive AWS (and expensive devops engineers to wrangle it), is a dollar less you can pay for a new employee to deliver value quickly and get you profitable (or aquired). So what's the balance?
  - fragmede 5y ago
    Personally I think run on-prem till you outgrow a server in the office closet, Digital Ocean/Linode till you run out of features, then AWS/GCP when you start needing to scale to handle hockey-stick user growth. Then again, you'll need an expensive devops engineer to manage those redeployments seamlessly, so have you really gained anything there? How much funding do you have? A couple hundred thousand is different from a couple million.
  - bushbaba 5y ago
    Startups spend way more on staffing than cloud. generally the cloud Premium is less than the cost of a single employee for an early stage startup. As the startup scales it’s about velocity of product. Spending 10% your time to save 20% on cost is a bad strategy. Instead startups should take that 10% time and invest it into their core product. This would lead to an accelerated timeframe for raising their next funding, which will be much larger than any cost savings. Eventually in the future once growth slows down you can focus on costs to improve profit. *you still want to ensure your costs grow slower than top line rev.
  - presentation 5y ago
    I pay my engineers six figures, and my cloud bills don’t top $1000/mo. Optimizing for cloud bills is stupid in my case.

alberth 5y ago

When people talk about the cost of cloud, there’s some assumptions we need to state: A. Does your workload fully utilize 100% of the capacity of the resource? If not, then cloud would be cheaper. Just like if you only need office space for a few people, it’s not cost effective to buy an entire office building. If you only need server with a few gigs of RAM, it’s not cost effective to buy (own) an entire physical server. B. If you are going to fully utilize a resource and don’t want to purchase/own it - then a service provider needs to provide that asset to you around cost and make margin from the efficiency from scale they have. Example, it’s actually more expensive for me to buy all of the ingredients to make a hamburger than to simply buy a fully prepared hamburger for McDonalds. McDonald’s is able to provide this due to their scale. What I’ve seen is that when you’re in Group B, many people are finding that AWS/etc is way more expensive. Essentially, their scale in efficiency is not being passed down to the customer in cost savings. And the sizable cost premium is not worth the value received in return. I’ll give a good example of where this does make sense, and that’s Hetzner or OVH. Their scale allows them to procure & host dedicated servers at a price I’d be difficult to match doing it myself. Or even if I could beat their price, it would be minimally. But folks are finding that with AWS/etc, that premium is extreme and that’s where the equation is unbalanced for folks.

wongarsu 5y ago
There are also a lot of people who think they are in group A, move to the cloud and find out they are much closer to group B.
llampx 5y ago
McDonald's is a pretty good example. For one, cheap burger they can provide it to you for cheaper. As soon as you start asking for quantity or quality though, you quickly realize you can make it yourself for cheaper, not counting your time. At that point, the question becomes how much is your time worth, or in this analogy, are you ready to hire a professional chef to get better quality food?

initplus 5y ago

I'm not even sure it's cheaper. At a previous employer we had approximately 150k of cloud expenses per annum. Bringing that in house would have eclipsed the cloud expenses on additional staffing costs alone.

otabdeveloper4 5y ago
You can outsource the staffing costs too. This also turns out to be much cheaper due to economies of scale. :)
dijit 5y ago
What are you guys doing to have such a low cost? I have a small GKE cluster and a few databases and I’m well above that, I nearly hit that in a month! Maybe you don’t have read replicas of your databases? Do you take any traffic?
- hansel_der 5y ago
  idk but "a small GKE cluster and a few databases" doesn't sound like it should cost a million per year.
- Thristle 5y ago
  How much is small? In terms of cpu cores and memmory Cost in cloud is all about capacity and each cloud has very good tools to see where the money is going. It sounds like either what you consider small is not that or money is being wasted somewhere on things you are not aware of
  - dijit 5y ago
    I guess “small” is open for interpretation. Let’s say 720vCPU for the cluster and about 2.3TiB of memory. These would be quite small nodes if you bought them as machines in a datacenter. Most modern machines have 40+vCPU and 128G+ RAM each. I have 36machines in my GKE nodepool with 20vCPU and 64G of ram. So the aggregate totals sound high but it’s not many. In terms of real machines I could have fewer, like 18 or so.

otabdeveloper4 5y ago

Not really. As far as I can tell, the core value of AWS is letting accountant shift CAPEX to OPEX. The technical considerations are a distant second or third place.

oars 5y ago
Could you elaborate how this is an advantage? In my previous role, my manager argued for my work as a developer to be charged as Capex to the project instead of Opex. Why would accountants want the opposite for AWS?
- 2Gkashmiri 5y ago
  if the project is in R&D phase, we call it "captalization" . other than that, the regular employee is generally opex and sent to profit and loss
- bfung 5y ago
  OPEX in the US is tax deductible for the current financial year; a lot easier to calculate and maintain. It’s basically the cost to run the company, taking away from revenue. CAPEX items are amortized over multiple fiscal cycles; it’ll count and can helps raise the value(valuation) of your company, but tricker to calculate. So depending what financial number goals your company has, the accounting of items can go one way or the other. If your dev work brought permanent value to the company, then it can be capex. If you were a contractor instead, it could be either cap or opex. AWS services are basically rented and not permanent value to the company, ie, if you sold everything the company owned for cash, you couldn’t sell the AWS part, just the terraform scripts.
- Rastonbury 5y ago
  For business perspective, it's large irreversible upfront investment on capex vs ongoing opex. Sizing and building a data center is risky, execs not wanting to attach their names to $xxM data center project. Cost wise Capex are depreciated, this gives less visibility on month on month costs compared with opex which goes onto income statement. Developer work as capex is intangible asset, which has a bit more 'flexibility' depending on what management wants. It can operate on the same idea, developer wages for 1 year spread over several years via amortization of intangible asset.

KronisLV 5y ago

Not to be dishonest towards the argument that you're making, but most of the examples that you give actually seem fairly straightforward. I do my own taxes, but maybe that's just easier in Europe and is definitely easier for individuals. That said, there's no reason why a LibreOffice spreadsheet would be an insufficient solution for handling taxes and other things like that. I also haven't eaten out in years, the closest to that was ordering some Wolt when hanging out with my friends pre-COVID, because they wanted to try some. Apart from that, it's all just home cooked meals for me and that's pretty great. It also seems to be working out great for the folks over at https://www.reddit.com/r/mealprep/top/?t=month https://www.reddit.com/r/mealprep/top/?t=month At work, the company that i work for have their own building and have their own support staff as well, which seems to be working out great for them. Furthermore, there are plenty of on prem resources that are used and despite the disadvantage of lacking self-service in many cases, there's very little difference in configuring and running software for deployments, with something like Ansible and containers. Even moreso when you have to support clients that have their own particular data centers and on prem deployments, which might differ noticeably from public cloud offerings. That's even not thinking about things like compliance in regards to what data can be stored where. Personally, i also have a homelab with some repurposed old computers with 200 GEs and value RAM, a few HDDs and WireGuard for working around NAT and exposing my sites to the world through a pretty cheap cloud VPS or two from https://www.time4vps.com/?affid=5294 https://www.time4vps.com/?affid=5294 (affiliate link, to make hosting cheaper if anyone else uses them). Of course, when i need 24/7 uptime, i do use their VPSes in a hybrid cloud setup, especially since my blog getting 30k views could be a bit taxing on a residental 4G LTE modem connection. The argument about competencies, ecosystems, 3rd party offerings, outsourcing and so on is probably a valid for some, but not for me and not for many companies out there - too often you end up depending on SaaS solutions which vendor lock you and might cause you to spend unreasonable amounts of money, or will let you remain ignorant about how to actually manage the software that you're using, i think SaaSS (Service as a Software Substitute) is a relevant term here: https://www.gnu.org/philosophy/who-does-that-server-really-serve.en.html https://www.gnu.org/philosophy/who-does-that-server-really-s... That said, what works for me and even the company that employs me, won't work for others. And what works for others, won't work for me. This is all because of how different the circumstances of various people out there are: i cannot afford AWS, i cannot afford Azure, GCP and managed services for my own needs. I currently pay 320 EUR for 6 cloud VPSes per year (and additional amounts for the occasional replacement HDD for my homelab), whereas others pay similar amounts for their cloud platforms of choice per month. For them, depending on their circumstances, it might be more cost effective to spend their time working and throw money at problems, whereas for me it's almost always more cost effective to learn the tech myself. Similarly to how in Latvia you could hire a team of developers for what one developer would cost in the US. Companies have other factors to consider, of course, but this is just one example - the alternative (opportunity) costs of individuals. Edit: Of course, some in the comments are talking about hundreds of VPSes/VMs/nodes and in my eyes, that's just an order of magnitude or two higher than what i'm talking about. I've seen plenty of companies in my country running their own data centers and there have been relatively few issues with those that i'm aware of. Something like Ansible and container clusters can scale pretty far! The problems were more often caused by either mismanaged environments/deployments by developers/agencies who just didn't care about shipping sustainable software but cared more about getting paid and making their software someone else's problem, or making mistakes early in the development and not considering load testing and scalability of the systems as priorities. I'd argue that you can do bad engineering anywhere, though, be it on prem or in the cloud.

headsoup 5y ago

* understanding what you're actually doing is better than outsourcing your knowledge. Most of the issues I see from either on-premises or cloud generally come from not actually understanding the business/use cases/environment. Cloud becomes the 'solution' to a problem of people and process, rather than a value proposition that augments existing reality. You can't make good decisions (e.g. Should I outsource my taxes) if you don't understand what doing those thiggs acrually involves (which most people don't bother to even try). And usually worked into this is a lot of outsourcing of expertise to the point the business relies on third parties to tell them what to do, which is never a cheaper outcome.

slac 5y ago

Managing all of these careers is a big cost though in time and effort

mmcnl 5y ago

What you call "sometimes it's not just cost", actually are costs. Only it's indirect costs that are hard to measure, but these costs definitely exist and definitely have to be taken into account somehow. A large part of hidden costs in corporates is the things you are not doing to save costs because the infrastructure is not flexible enough. I think everyone will recognize this, but it's really hard to put a number on it though.