Interestingly though, according to 451 Research’s Voice of the Enterprise service, 33% of IT end users don’t understand their cloud costs or know if costs are under control. And 25% are not conducting any cost analysis whatsoever on their use of cloud services. That’s like buying a house without knowing its true value!
When conducting research to decide which cloud model is right for your business, part of any analysis should include developing a cost comparison between different cloud models, including public cloud and on-premises private cloud options. Of course, cost isn’t the only consideration when determining a cloud strategy. Just like when determining whether you should buy a house, a laundry list of factors can influence your decision on a cloud strategy. These factors include your existing hardware, software, and personnel – along with your business needs in terms of agility, security, performance, compliance and regulatory issues, just to name a few.
So why do so many businesses not know the true costs of public versus private cloud? Because it’s challenging to get a true apples to apples comparison.
When dealing with public cloud, pricing is readily available (although it’s constantly changing.) In contrast, when accessing a true total cost of ownership (TCO) for an on-premises private cloud there are many different considerations and options to weigh. I’d argue though, that it’s not as difficult as you would think. By taking your time to research and identify the factors and various business requirements that matter most to your business, you can be confident that you have made the best decision for your business.
To help get your started, here are two methods to determine a comparative TCO for private cloud: a quick approach and an in-depth approach.
A Quick Approach
For many, a quick approach provides a good enough cost comparison that is based on a set of assumptions and an accompanying margin of error. This option is appropriate when you have limited resources and time -- or you just want a fast and simple estimate.
A recent paper by 451 Research details this approach. The paper looks at two core metrics used to evaluate the cost of private cloud: system utilization and manpower efficiency. It uses a simple equation to apply a cloud price index to a set of variables. The report also shows two examples of enterprise use cases. The first is a typical use case; the second shows the increased efficiency you can achieve by adopting some key efficiency factors, which reinforces the idea that an on-premises private cloud can at times be a lower cost option than public cloud.
An In-Depth Approach
An in-depth approach provides a deeper level analysis that allows for more tailored insights and can provide an expanded comparison of options, including traditional IT, public cloud, managed private cloud, and on-premises private cloud to support your cloud strategy decision. Factors such as high performance computing needs, regulatory compliance, security, unique workload placement requirements, or just overall investment are weighed. To develop this detailed level of TCO, you must look at all elements of your hardware, software, data center, personnel and your business--deciding which ones matter most based on your unique situation.
Many businesses often turn to third parties such as Hewlett Packard Enterprise (HPE) for help, as the in-depth approach takes time and requires extensive expertise. HPE enables enterprises to define, power, and optimize their right mix for a hybrid infrastructure. Whether you are looking for a quick cost comparison or an in-depth analysis, HPE has the expertise to plan your cloud strategy and help you define which cloud is right for you as you transform to hybrid IT.
For more information on cloud costs, read HPE’s Cloud Economics 101 blog series. To learn how to calculate your cost using the quick approach, download a copy of the 451 Research paper now.