When an organization is building a new IT infrastructure or expanding an existing one, the question of whether to use on-premises resources or subscriber-based cloud services is a critical decision to make these days. Cloud-based services might not be preferable for every computing scenario, but they can provide many advantages over on-premises datacenters. When designing an IT strategy, a business should consider both the practical needs of the organization, including data security and other business factors, and the relative costs of the required services.
Some of the advantages that cloud computing can provide in the various deployment models and their relative costs are discussed in the following sections.
Economy
Cloud services incur regular charges, but they are usually based solely on the subscribers’ needs and what they use at a particular time. The monetary savings that result from using cloud services can be significant. Some of the expenses that can be reduced or eliminated by using cloud services include the following:
- Hardware The high-end server hardware used by a large enterprise, aside from the standard computer components, can include elaborate storage arrays and other redundant hardware that is an expensive initial outlay before any actual work starts. While the hardware required to construct a datacenter becomes a company financial asset, the leasing fees for equivalent virtualized hardware realized in the cloud are much lower and are amortized over the life of the projects it is used for.
- Upgrades In a large enterprise, physical servers and other hardware components have a documented life expectancy, after which they should be retired and replaced. Cloud hardware is virtual, so the subscriber is isolated from the maintenance costs of the provider’s physical hardware. Those costs are, of course, factored into the price of the service, but they eliminate another substantial hardware outlay for the subscriber.
- Software Software licenses are a significant expense, especially for server-based products. In addition to operating systems and applications, utility software for firewalls, antivirus protection, and backups all add to the expenditure. In the case of cloud-based servers using the IaaS model, the subscriber is still responsible for the software charges. However, in the PaaS and SaaS models, the product’s subscription price includes some or all the necessary license fees. As with hardware, software furnished on a subscription basis by a cloud provider requires little or no initial outlay. Typically, cloud-based software also includes updates the provider applies regularly. For example, a Microsoft 365 subscription includes software updates for all of its applications and services and the Windows operating system.
- Environment Outfitting a large datacenter on an organization’s premises usually involves much more of an expenditure than the cost of the computer hardware alone. In addition to the square footage cost, a datacenter typically needs
- Special air conditioning and other environmental controls
- Electricity and power regulation equipment
- Racks and other mounting hardware
- Cables and other network connectivity equipment
- Physical security infrastructure
Depending on the organization’s needs, these costs can range from significant to astronomical. None of these expenses are required for cloud-based services, although the provider certainly factors their costs into the fees paid by the subscriber.
- Network A datacenter requires an Internet connection and might also require cross-connections between locations within the datacenter. The size and functionality of the datacenter determine how much throughput is required and what technology can best supply it. More speed costs more money, of course. Cloud-based resources eliminate much of this expense because connectivity is part of the service. The subscriber still requires an Internet connection for client and administrator access to the cloud resources, but the amount of data transferred is relatively small. By basing their servers in the cloud, the subscriber does not have to supply the throughput needed for incoming clients to access the servers from the Internet.
- Redundancy Depending on the organization’s needs, fault tolerance can take the form of backup power supplies and drives, redundant servers, or even redundant datacenters in different cities, which can cause the deployment and operational costs to grow exponentially. Typically, cloud providers can provide these various types of fault tolerance at substantial savings. A contract with a cloud provider usually includes a service-level agreement (SLA) with an uptime availability percentage that insulates the subscriber from the actual fault tolerance mechanisms employed. The SLA simply guarantees that the contracted services will suffer no more than a specified amount of downtime. For example, a contract specifying 99 percent uptime (colloquially called a two-nines contract) allows for up to 3.65 days of downtime per year. A 99.9 percent (or three-nines) contract allows for up to 8.76 hours of downtime per year. Contract stipulations go up from there, with the cost rising as the allowed downtime decreases. For example, a 99.9999 percent (or six-nines) contract allows only 31.5 seconds of downtime per year. If the provider fails to meet the uptime percentage specified in the SLA, the contract typically calls for a credit toward part of the monthly fee or some other sort of reparation.
- Personnel A datacenter requires trained people to design, install, configure, and maintain all the equipment. While cloud-based service equivalents require configuration and maintenance, which administrators perform through a remote interface, eliminating the need for hardware installation and maintenance greatly reduces the staffing requirements and the overall cost of a datacenter deployment.
The costs of cloud-based services are not insignificant, but the nature of the financial investment is such that many organizations find them to be more fiscally practical than building and maintaining a physical datacenter. This is because the initial outlay for cloud services is minimal, and the ongoing costs are easily predictable.