Cloudonomics: achieving cost-efficiency and agility through hybridization – Part 2

In my previous post, I explained the public IaaS cloud and the conundrum faced by IT professionals who are eager to realize the benefits of the public cloud but also require flexibility, control and security. A tall order, but possible with the right mix of IT Infrastructure platforms. Let’s pick up where we left off with why a hybrid hosting solution is often the best solution…

A hybrid solution is one that melds the existing internal capabilities and assets of the IT organization with the benefits that the cloud offers. There are two main reasons that enterprises are attracted to public IaaS clouds: improved economics and improved agility. The combination of these factors actually makes a hybrid solution very compelling.

Let’s start with the economics. What is the cost savings potential of public IaaS clouds? Will an enterprise save money by moving servers into the cloud? Probably not! Compare the ‘all-in’ costs for operating thousands of servers for a few years in a well-run corporate data center (or wholesale colocation environment) versus having that same capacity on a pay-as-you go public IaaS cloud. The cloud will lose every time … badly.

This is a surprise to most people and somewhat of a dirty secret within the IaaS industry. For predictable workloads and core base infrastructure that is always on, the public cloud is a more expensive option. This economic imbalance only gets worse when you consider that Moore’s Law allows internal IT to more than triple the performance-per-dollar with every server refresh. Are we seeing similar price declines with IaaS cloud services? Not really, and we probably won’t any time soon.

On the other hand, the public cloud can make a lot of sense for unpredictable workloads. Enterprises can leverage the cloud to expand capacity “on demand” without incurring capital expenditures on new servers. Workloads that are well suited for public IaaS clouds typically have great variability in demand with significant traffic peaks and troughs, such as batch jobs, new software rollouts, marketing campaigns and seasonal projects. Perhaps human resources needs some extra capacity during employee enrollment periods or sales needs more during an e-commerce initiative and needs less during the holiday season.

The most cost-effective approach for an enterprise is often a combination of public cloud, other third-party IT service options (such as colocation, managed hosting or even private cloud) and in-house IT resources. This hybrid approach makes even more sense when an enterprise already has existing sizable infrastructure investments. It’s generally a good strategy to consider the individual workload when making a decision about whether to run it on a public IaaS cloud or elsewhere.

That’s all for now. Check our part 3 as I discuss the agility of a hybrid solution.

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