7 ms·

Making accurate calculations of data center cost is of course complicated and rarely manages to take everything into account, but the common knowledge I’ve hear

by hnarn 4y ago

Making accurate calculations of data center cost is of course complicated and rarely manages to take everything into account, but the common knowledge I’ve heard is that there comes a point when a company is so large that going on-prem is what actually saves them a lot of money. If FedEx is not large enough to be one of those companies, how large do you actually have to be? Or has cloud pricing changed to the point where this is no longer true, and even huge corporations can save money in moving away from their own premises?

Out_of_Characte 4y ago
Technology scales faster than fedex's data needs. Maybe somewhere in the future the reverse trend happens as their needs can be met with very small servers. Though I've always been wary of putting your data somewhere because getting your data to a competitor costs alot of money.
- ClumsyPilot 4y ago
  > Technology scales faster than fedex's data needs. I don't think this sentence has meaning
  - geodel 4y ago
    I mean it is like executive statement e.g. Real time analytics in Cloud IoT on Edge.
- throwawaymaths 4y ago
  I don't think it's the server costs they care about it's stuff like db maintenance, security, security, and security. Security professionals are expensive, and it's very hard to get right in house on metal.
  - hrunt 4y ago
    Moving away from on-prem data centers does not reduce security costs. At best, it's a lateral move, and depending on the cloud setup, may actually be more expensive. Ultimately, this is an opex vs. capex decision. Data centers are expensive, and require a lot of up front capital to go into the ground. FedEx is worldwide and moving more technology to the edge, so buying land, designing and constructing buildings, and then operating them for 10 years or more in a large number of locales requires a huge investment. They can take that money now and solve their problems immediately. They are also not saying what they mean by "closing its data centers". FedEx announced a 10-year partnership with Switch last year to build and operate edge facilities. FedEx may be moving out of data centers it operates on its own into facilities built and run by others, and using "cloud-native" designs deployed on hardware in those facilities.
lou1306 4y ago
Or maybe they are large enough, they just don't realize it right now.
nuthje 4y ago
It's not just money, it is also how you spend a limited quantity of organisational focus. You cannot do it all, this is actually even more important when you are that big of a company.
sofixa 4y ago
It's not only about size, there's also workloads to take into consideration. Take FedEx, their operations are highly dynamic - per day but also per period. The number of packages sent, and being transported, vary greatly between a random Tuesday 15:00 and the weeks before holidays. In such a scenario, with your own infrastructure, you need to overprovision, by a lot, to be able to handle the heaviest load possible, and then some margin on top. And that capacity is wasted what, 90% of the year? Meanwhile if you subcontract that part on AWS, it's their problem, and they can afford to handle it, and you only pay for what you actually use when you use it.
- whatever1 4y ago
  The cost does not scale linearly with the #of packages. A table with 1 entry is not cheaper than a table with 1 million entries. The same routing algorithms have to run either they have one package or 1 million packages. Plus you need to keep the history of the operations for months if not years (meaning that you will store both holiday and random Tuesday data anyway). So where is this flexible cost exactly?
  - coredog64 4y ago
    May I point you to the DynamoDB docs? Costs scale along the dimensions of storage and activity. A 1 entry table is essentially free if you use on-demand RCU/WCU provisioning.
  - mrep 4y ago
    Ever heard of the traveling salesman problem because that is worse than linear, it is factorial. Granted, that is probably overkill for most people and my team (Not FedEx) just does NxN so it is only quadratic but it is definitely not constant nor even linear.
    - whatever1 4y ago
      Exactly because tsp variants are exponentially combinatorial we solve them with a strict time limit and use the best found solution. So for practical applications they are constant time.
mberning 4y ago
The transition to “cloud” is often more about the culture and capabilities of a company than the technology. If you have been on some shitty mainframe and a bunch of other technology from the 60s you cannot bank on that carrying you for the next 20-30 years. The people that know that stuff are ancient, expensive, and retiring. “Cloud” is a very good opportunity to jettison the legacy burden and reinvigorate the technical competence of the org.
chmod600 4y ago
Running your own data centers is a form of vertical consolidation, which is a strategy. Specialization is the opposite strategy. A single company may strategically decide to specialize some things and vertically consolidate others. The dollars-and-cents are details. Those matter, of course, but don't base your entire analysis there. Staying vertically integrated may help fedex be 4.713% more profitable today, but might miss out on important growth areas and become a dinosaur. Or maybe the important growth areas involve data center innovations, and staying vertically integrated allows them to exploit those opportunities. So it's not always an easy decision, but it involves more than the present-day costs.
cavisne 4y ago
Maybe this is true for public cloud pricing but it hasnt been true for some time when it comes to enterprises on cloud. Large enterprises come in and ask for a quote for X cpus/ram/storage over X years. They sign a multi year contract with a guaranteed minimum spend, and a discount on every line item. Then they "lift and shift" their physical data center into a cloud region, in a very static way (no autoscaling etc). This works great for everyone, the hyperscalars have much lower costs than even the biggest enterprise customers so the company get a good deal. And the cloud company makes some revenue off the minimum spend (making capacity planning a lot easier) and they know once the compute and storage there it will be very likely the company starts using extra managed services.

by hnarn 4y ago

Out_of_Characte 4y ago

Technology scales faster than fedex's data needs. Maybe somewhere in the future the reverse trend happens as their needs can be met with very small servers. Though I've always been wary of putting your data somewhere because getting your data to a competitor costs alot of money.

ClumsyPilot 4y ago
> Technology scales faster than fedex's data needs. I don't think this sentence has meaning
- geodel 4y ago
  I mean it is like executive statement e.g. Real time analytics in Cloud IoT on Edge.
throwawaymaths 4y ago
I don't think it's the server costs they care about it's stuff like db maintenance, security, security, and security. Security professionals are expensive, and it's very hard to get right in house on metal.
- hrunt 4y ago
  Moving away from on-prem data centers does not reduce security costs. At best, it's a lateral move, and depending on the cloud setup, may actually be more expensive. Ultimately, this is an opex vs. capex decision. Data centers are expensive, and require a lot of up front capital to go into the ground. FedEx is worldwide and moving more technology to the edge, so buying land, designing and constructing buildings, and then operating them for 10 years or more in a large number of locales requires a huge investment. They can take that money now and solve their problems immediately. They are also not saying what they mean by "closing its data centers". FedEx announced a 10-year partnership with Switch last year to build and operate edge facilities. FedEx may be moving out of data centers it operates on its own into facilities built and run by others, and using "cloud-native" designs deployed on hardware in those facilities.

lou1306 4y ago

Or maybe they are large enough, they just don't realize it right now.

nuthje 4y ago

It's not just money, it is also how you spend a limited quantity of organisational focus. You cannot do it all, this is actually even more important when you are that big of a company.

sofixa 4y ago

It's not only about size, there's also workloads to take into consideration. Take FedEx, their operations are highly dynamic - per day but also per period. The number of packages sent, and being transported, vary greatly between a random Tuesday 15:00 and the weeks before holidays. In such a scenario, with your own infrastructure, you need to overprovision, by a lot, to be able to handle the heaviest load possible, and then some margin on top. And that capacity is wasted what, 90% of the year? Meanwhile if you subcontract that part on AWS, it's their problem, and they can afford to handle it, and you only pay for what you actually use when you use it.

whatever1 4y ago
The cost does not scale linearly with the #of packages. A table with 1 entry is not cheaper than a table with 1 million entries. The same routing algorithms have to run either they have one package or 1 million packages. Plus you need to keep the history of the operations for months if not years (meaning that you will store both holiday and random Tuesday data anyway). So where is this flexible cost exactly?
- coredog64 4y ago
  May I point you to the DynamoDB docs? Costs scale along the dimensions of storage and activity. A 1 entry table is essentially free if you use on-demand RCU/WCU provisioning.
- mrep 4y ago
  Ever heard of the traveling salesman problem because that is worse than linear, it is factorial. Granted, that is probably overkill for most people and my team (Not FedEx) just does NxN so it is only quadratic but it is definitely not constant nor even linear.
  - whatever1 4y ago
    Exactly because tsp variants are exponentially combinatorial we solve them with a strict time limit and use the best found solution. So for practical applications they are constant time.

mberning 4y ago

The transition to “cloud” is often more about the culture and capabilities of a company than the technology. If you have been on some shitty mainframe and a bunch of other technology from the 60s you cannot bank on that carrying you for the next 20-30 years. The people that know that stuff are ancient, expensive, and retiring. “Cloud” is a very good opportunity to jettison the legacy burden and reinvigorate the technical competence of the org.

chmod600 4y ago

Running your own data centers is a form of vertical consolidation, which is a strategy. Specialization is the opposite strategy. A single company may strategically decide to specialize some things and vertically consolidate others. The dollars-and-cents are details. Those matter, of course, but don't base your entire analysis there. Staying vertically integrated may help fedex be 4.713% more profitable today, but might miss out on important growth areas and become a dinosaur. Or maybe the important growth areas involve data center innovations, and staying vertically integrated allows them to exploit those opportunities. So it's not always an easy decision, but it involves more than the present-day costs.

cavisne 4y ago

Maybe this is true for public cloud pricing but it hasnt been true for some time when it comes to enterprises on cloud. Large enterprises come in and ask for a quote for X cpus/ram/storage over X years. They sign a multi year contract with a guaranteed minimum spend, and a discount on every line item. Then they "lift and shift" their physical data center into a cloud region, in a very static way (no autoscaling etc). This works great for everyone, the hyperscalars have much lower costs than even the biggest enterprise customers so the company get a good deal. And the cloud company makes some revenue off the minimum spend (making capacity planning a lot easier) and they know once the compute and storage there it will be very likely the company starts using extra managed services.