| Have you already considered with your CIO or | | | | many, is a result of the hourly usage pricing |
| CTO about having "The Cloud Conversation"? If | | | | model. Most data centers operate at 10%-20% |
| not, then the time is now for you to start with | | | | utilization, some as low as 5%. This means that at |
| this very important transition. | | | | least 80%-90% of your infrastructure is sitting |
| The cloud that needs to be discussed is the | | | | idle for most of the time - adding no value, just |
| infrastructure cloud - the kind of cloud Amazon | | | | costing you money. This extra capacity is there |
| has pioneered with its Amazon Web Services | | | | for those few weeks, days or even hours when |
| (AWS) offering. Amazon and friends are changing | | | | you hit peak demand - end of year sales, end of |
| the economics of IT infrastructure through the | | | | month processing, major promotions etc. |
| application of scale and specialized expertise in | | | | Simply by moving to a usage-based payment |
| much the same way that changed the rules for | | | | model in a cloud that scales resources up and |
| the smaller book store. | | | | down as required, you will eliminate most of the |
| There is a whole separate conversation to be had | | | | cost of idle capacity. This would have implications |
| concerning the agility, flexibility and transparency | | | | for your company which would largely depend on |
| that comes with a cloud infrastructure - but we | | | | your present use and the variables of the |
| are going to try and focus here on the financial | | | | demand, though it's not that uncommon to see at |
| and economic advantages and prepare you for | | | | least 50% of savings on costs as soon as the |
| "the conversation". | | | | applications are moved from a traditional data |
| The big picture is that there are three economic | | | | center or hosting provider to an infrastructure for |
| legs to the cloud infrastructure stool: Utilization, | | | | the cloud. |
| Specialization and Scale. | | | | At this point in the conversation, if not before, |
| Scale -- The advantage on a larger scale is that | | | | you might hear from your technical team that the |
| Microsoft, Amazon, Google, among others are | | | | public cloud infrastructure is too risky and that |
| investing some billions of dollars to build out high | | | | there are security concerns. |
| technology data centers which costs users rental | | | | But the main points I would suggest are that (a) |
| feels that are charged to customers on a per | | | | the object here is to start down a path with a |
| machine hour basis - the price point has already | | | | pilot project, not start with the crown jewels, (b) |
| come down as low as a few pennies per hour - | | | | there is already a ton of money and many |
| so you get a small piece of their buying power | | | | companies focused on addressing these issues to |
| and because you only pay for actual usage, by | | | | a level well beyond their resolution in most internal |
| the hour, no CapEx is required. | | | | data centers today, and (c) there are many very |
| So the first response from your CIO might be | | | | large and conservative organizations who have |
| that your current hardware costs equate to | | | | found enough here to start down their journey. |
| similar or even fewer pennies per hour when | | | | Another response you should be prepared for is |
| costs are amortized over 3 years, even after | | | | that the team is already well ahead of you and |
| cost of capital is included - and they are probably | | | | evaluating a private cloud strategy. This is great |
| right - the cloud providers are adding a margin | | | | news. |
| back into the price they charge you! | | | | Private clouds would have a different economic |
| Specialization -- BUT, this is the second pillar - the | | | | model - they involve you buying the infrastructure |
| fact is that, storage and servers are just | | | | and delivering on demand computing resources |
| approximately 50% of the delivery costs of your | | | | across your business. So the business advantages |
| IT infrastructure, not including the cost of the DC | | | | of responsiveness, agility, and transparency should |
| build out and the cost of labor. Power (and the | | | | be the same as for a public cloud like AWS, and |
| equipment required to keep your hardware cool) | | | | your team will have greater control of the |
| is the other major cost component and it has | | | | underlying physical infrastructure. But you may not |
| been growing over recent years. | | | | get the economic advantages of scale, |
| For the older and not so efficient facilities, this | | | | specialization and utilization we have been talking |
| could cost more than the actual storage and | | | | about here. |
| servers. In the event that you are using a | | | | The traditional infrastructure vendors are very |
| collocation facility, then you must be too familiar | | | | keen on this private cloud model - because of the |
| with the costs that I am referring to. | | | | obvious reasons that they can sell you the same |
| The providers of cloud infrastructure are the | | | | kit. This could be a great solution for your |
| forerunners of innovations on improving the | | | | organization, especially if you are very large and |
| energy efficiency and consequently reducing costs | | | | can consolidate IT infrastructure resources across |
| - they are quite probably between 50% and | | | | divisions or businesses. It will not automatically |
| 100% more efficient that your current | | | | deliver the cost advantages spelled out above. My |
| environment today, and investing substantial sums | | | | recommendation would be to push for a parallel |
| to get better. | | | | project to try out the public cloud and provide |
| The bottom line is that after combining hardware | | | | context and comparison for private projects. |
| and power/cooling costs, you are likely already | | | | We hope that this will help you get a better grasp |
| paying more than the price available from an | | | | of the conversation. The infrastructure for the |
| infrastructure cloud. And we still haven't talked | | | | cloud is not the only remedy for IT related issues. |
| about the most important advantage of a cloud | | | | Like every other new thing, it has its own set of |
| infrastructure. | | | | challenges - though it is very necessary and will |
| Utilization -- The third leg of the argument, and | | | | dramatically change your costs for IT and that of |
| the one that uncovers significant advantages for | | | | the competition. |