Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

FedEx to close data centers, retire mainframes

datacenterdynamics.com

Post reply on HN
Print view View original

481–490 of 573 posts

Re: FedEx to close data centers, retire mainframes

#481

Post by kragen »

scottyah wrote: post #378
masswerk wrote: post #159

Earlier quoted context omitted.

Mind that if you'd ever wanted to integrate again, this means buying land, planning infrastructure, building it, planning, obtaining and setting up hardware and software, hiring, training, defining and testing procedures, etc, as you're starting from zero again – and all this while the costs, which forced you to consider this move, are piling up. Odds are, you'll never do this and cloud providers will know this. The…

FedEx had very few on site people managing the hardware, it seemed like most work on hardware was done by the suppliers. There were also very few servers there and actually running, I think the software powering the enterprise took up a lot less than they expected. Either way, I think you're spot on with the "training" part. FedEx was one of the first companies to raise significant capital and pursue a business depen…

I deeply appreciate you sharing this context. What do you think about my wild predictions of disaster?

Re: FedEx to close data centers, retire mainframes

#482

Post by lostlogin »

floxy wrote: post #407
goindeep wrote: post #65

Earlier quoted context omitted.

I used to work with a very smart man that I'm sure was some kind of secret genius. He's was that sort of tech gofer. Hardware, software, didn't matter, if there was a problem he'd solve it. Sort of guy you'd see carrying a thick ass SQL book around because he 'needed to learn it' to solve just one little problem. He built whole entire solutions for the company I worked at in his spare time that the company once tried…

"A new CEO was hired to take over a struggling company. The CEO who was stepping down met with him privately and presented him with three numbered envelopes. “Open these if you run into serious trouble,” he said. Well, six months later sales and profits were still way down and the new CEO was catching a lot of heat. He began to panic but then he remembered the envelopes. He went to his drawer and took out the first e…

This is how governments run too, but they add a few more envelopes as they have more avenues to peruse. War, plague, etc.

Re: FedEx to close data centers, retire mainframes

#483

Post by FooHentai »

kragen wrote: post #19

Ultimately companies that abdicate their informatics operations like this will give their profits to their data-center operators, who will be empowered to charge them whatever price they want. Because what's their BATNA? Migrating from Azure to AWS when Microsoft doesn't want to let them? Renting your information infrastructure is a great way to reduce startup costs, but down the road, that information infrastructure…

I agree that long-term, outsourcing of compute capability is probably going to be a negative for everyone. That said, when your organizations point of difference isn't rooted in computing, and you're not a producer of compute platforms yourself, why wouldn't you source that from a third party? The arguments don't look that different to buying pizza boxes from HP, Sun etc - If they could have gouged your profits away I'm sure they would, but as long as the space is commodified competition should be assured, and that sets pricing down at competitive levels, not monopolistic levels.

Far as I can see the only arguments here are that either cloud compute is naturally monopolistic, which seems a stretch, or there's another factor that will lead to ruin here (e.g. long-term connectivity loss between your and your compute in a particularly nasty disaster scenario). Like, I don't care* if my baker's goals are orthogonal to my own. They just provide crullers for the morning stand up and I can get them from other places despite the insurrection that would occur if staff ever went without. I can likewise not care if my cloud provider's goals are not aligned, because if they screw me I can just shop at another bakery, so speak.

All of this said, outsource to cloud isn't free. You have to have an exit, or at least transition, plan. You have to architect into the configuration, not just transpose what you have. You have to maintain platform-agnostic restorable backups of the information that's critical to your organization, and have an operable proven plan to bring in online. Failure to do these things, which I think is the case for a scary number of organizations that have 'gone cloud', could indeed lead to ruin.

I know this comment is weird. I'm in an odd space here of agreeing with your conclusion but mostly disagreeing with the premises on which you reached it.

*until we see a cloud provider that also owns major fab i.e. if Intel or AMD went into direct cloud provision and took it seriously for about a decade I'm pretty sure it's game and over the world itself would implode from the sheer monopoly that would ensue. Until then, however...

Re: FedEx to close data centers, retire mainframes

#484

Post by kragen »

jollybean wrote: post #270
cs702 wrote: post #36

Earlier quoted context omitted.

Without a doubt, a future generation of executives will revisit and reverse the decision to rent all information infrastructure, but that will likely be many, many years down the road. In the meantime, the current generation of executives who made this decision will look very smart for saving the company lots of money for a good number of years. And they stand to benefit personally from it. They're doing the rational…

They are doing the rational thing and there is no going back. HNers need to get their heads around this: the economies of the could represent a fundamental, secular shift. Imagine if Fedex designed and made their own delivery vehicles. Then they 'outsourced' that to Ford/GM. You might say 'look at Ford's amazing margins, look at the money being left on the table' - but in reality, it's still more cost effective to 'b…

Ford and GM and Freightliner are not in a position to use price discrimination to confiscate FedEx's entire profits; if they try to sell trucks to FedEx at an inflated price, FedEx can just buy the same trucks from dealers, or buy them used, or buy GM trucks instead of Freightliner trucks.

By contrast, generally speaking, cloud providers are in an excellent position to use price discrimination to extract the entire surplus value of every transaction. And the flexibility and reliability provided by FedEx will to a significant extent simply be that of their computers.

(As chrisseaton pointed out, Boeing is in a cloudier position.)

Re: FedEx to close data centers, retire mainframes

#485

Post by kragen »

scottyah wrote: post #381
shuntress wrote: post #350

Earlier quoted context omitted.

> I think its more fair to so that FedEx building their own datacenters is like building their own roads to deliver packages on. Your metaphor is a little bit off. This is more comparable to FedEx renting vs owning their fleet vehicles. Obviously they aren't going to be setting up foundries to to scratch-build engines and network switches. But it probably makes as much sense for them to own the buildings & computers…

Fun Fact: They don't technically own their planes, since it would have made them an nice target for a hostile takeover if someone wanted them

Oh really. They lease their fleet of planes? I had no idea!

Re: FedEx to close data centers, retire mainframes

#486

Post by FooHentai »

menzoic wrote: post #262
kragen wrote: post #19

Ultimately companies that abdicate their informatics operations like this will give their profits to their data-center operators, who will be empowered to charge them whatever price they want. Because what's their BATNA? Migrating from Azure to AWS when Microsoft doesn't want to let them? Renting your information infrastructure is a great way to reduce startup costs, but down the road, that information infrastructure…

>Renting your information infrastructure is a great way to reduce startup costs, but down the road, that information infrastructure runs your company. Trying to outsource it is like trying to outsource upper management. This isn't a one size fits all thing. For a company like FedEx I don't see the advantage of owning their own data centers. They just don't have the scaling challenges that would require that. Data cen…

>For a company like FedEx I don't see the advantage of owning their own data centers. They just don't have the scaling challenges that would require that.

Depends how seriously they're locked onto the postman/route inspection problem. Which is a factor for delivery companies and, depending on how hard you chase it, a driver for almost infinite compute. Once you're playing that game, the economics look very different to most 'not an IT company' IT needs.

Re: FedEx to close data centers, retire mainframes

#487

Post by twblalock »

dsr_ wrote: post #176
Hnrobert42 wrote: post #61

Earlier quoted context omitted.

> that information infrastructure runs your company This is silly. There is a lot more to FedEx than hosting physical compute infrastructure. FedEx doesn’t own all its own airports. A CSP is just another vendor.

At almost every airport that FedEx has an operation at, there is another airport within 100 miles that could be used instead, managed by a different company. The barrier to changing is not controlled by the airports. That's a competitive environment. How many major cloud providers exist, and what could they do to make it difficult for FedEx to leaving for another one?

AWS, Azure, and GCP are all operating at large scale and compete with each other directly. There are other providers too. It’s definitely a competitive environment.

Re: FedEx to close data centers, retire mainframes

#488

Post by kragen »

WJW wrote: post #204
kragen wrote: post #19

Ultimately companies that abdicate their informatics operations like this will give their profits to their data-center operators, who will be empowered to charge them whatever price they want. Because what's their BATNA? Migrating from Azure to AWS when Microsoft doesn't want to let them? Renting your information infrastructure is a great way to reduce startup costs, but down the road, that information infrastructure…

Fedex does not create their own electricity or fuel either, yet without those they have no going concern. Yet they choose to acquire those services on the open market because it is cheaper, even though they do make themselves more dependent on the supplier. In the end, full self-sufficiency is just not viable for large companies in a highly specialized economy. In this case, if a cloud provider gets too monopolistic…

I'm not arguing for autarky, I'm arguing for maintaining a strong negotiating position to keep from being taken advantage of. Fuel is fungible, and electricity is provided by regulated monopolies who are forbidden to price-discriminate, so the same issues don't arise as when you're outsourcing your core business processes to Microsoft.

I don't think FedEx re-hiring a competent sysadmin team and rebuilding data centers once they've lost that knowledge is merely a question of spending enough money on the problem; it's the kind of high-risk IT project that often sinks companies.

Re: FedEx to close data centers, retire mainframes

#489

Post by appletrotter »

SoftTalker wrote: post #265
RandomWorker wrote: post #216

Earlier quoted context omitted.

right now, they can't retain the people or afford the people to do this work. When you can go work elsewhere for more money you move. And, running a main frame isn't just having it, it's keeping the people running it, plus paying for the electricity and space. Depending where, the real-estate and energy prices are nuts in most places. And, the engineers are expensive right now, and the services are cheaper. It's not…

> These managers see the larger trends, rising energy costs, maintenance costs rising, hiring difficult, and retention of existing engineers impossible. But how will the cloud providers avoid these trends? They won't. They will have to do the same thing as anyone else: pay more. And therefore charge more. There are economies of scale, but those savings are logarithmic and a company like FedEx is already pretty far ou…

it's called economies of scale

Re: FedEx to close data centers, retire mainframes

#490

Post by kragen »

dylan604 wrote: post #175
kragen wrote: post #19

Ultimately companies that abdicate their informatics operations like this will give their profits to their data-center operators, who will be empowered to charge them whatever price they want. Because what's their BATNA? Migrating from Azure to AWS when Microsoft doesn't want to let them? Renting your information infrastructure is a great way to reduce startup costs, but down the road, that information infrastructure…

As a startup, the greatest benifit of cloud compute isn't the fact that I can scale up at the push of a button, but that I can scale DOWN at the push of a button. I want to test things on beefy systems, but I don't want to have to pay for those systems any longer than I need to use them. To me, this is the single best thing about cloud compute. Once your start up has become an established company and are so busy that…

Yeah, that's my thinking. Also as a small startup they don't benefit from confiscating your profits through price discrimination; if anything, they benefit from "investing" in you as a customer, to help you get to profitability, while remaining as addicted as possible to their services.
Post reply on HN