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Singapore software vendor says own hardware in colo costs $400M less than cloud

theregister.com

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Re: Singapore software vendor says own hardware in colo costs $400M less than cloud

#11

Post by tehCorner »

Not on the same scale but in my previous company we observed the same thing (though the other way around since we moved from self-hosted to cloud).

He had a team of 4 managing the infra for an app (82 million users, 30 million DAU) and spent around 500.000€ per year on the data centers + this team's salaries + some other expenses like travels to the datacenters, some new stuff etc..., let's say around 1.000.000€ per year.

At some point upper management decided to move to the cloud and we eneded up in a worse situation: the promise of easier resource management was unfulfilled since the same 4 people was managing now the cloud so no cost reduction on that side and most important, cloud costs were 4-5 times higher than self-hosting

I still wonder why management decided to go that way

Re: Singapore software vendor says own hardware in colo costs $400M less than cloud

#12

Post by vidarh »

rippercushions wrote: post #8

From the caveat at the end of the original article: > This article doesn’t take into account other aspects that would make the comparison even more complicated. These include people skills, financial controls, cash flow, capacity planning depending on the load type, etc. You can't handwave all this away in real life though. If you're rolling your own data center, the engineering time you need to put into managing ser…

One of my longest contracts was being on call for a a company to assist with their cloud setup. Most of this is not abstracted away all that well. Having managed both on premises, colocated, managed servers and cloud services, my customers when I was consulting tended to need more of my time for similar sized setups to manage cloud setups. Yes, with a colocated setup we needed to rack and wire up servers, but the amount of time spent for the lifetime of a server was typically measured in single digit number of hours amortised over several years.

EDIT: As to why the time to manage colocated servers is so low, consider that pretty much everything has IPMI or similar now, so apart from a few hours setting up an initial provisioning server for the entire environment, on a per server basis you're connecting power, screwing on rails, connecting the network, configuring IPMI (remote reboot, remote KVM, remote sensor access), running your provisioning scripts and starting (automated) burn-in tests, and then you have a bunch of new capacity in your orchestrator at the end of it. Everything else is pretty much the same as using a cloud provider, except your instance sizes are tailored to your actual workloads. The odd replacement of broken equipment can often be handled by your colo provider. When I was racking equipment myself, I'd often install more than one server an hour, and then not touch that server again physically for several years. Monitoring is largely the same - you need to be able to migrate away from failing instances either way, only now some of those failures might mean hardware has failed and you have a few more indicators in your monitoring system matching your IPMI sensors.

Re: Singapore software vendor says own hardware in colo costs $400M less than cloud

#13

Post by vidarh »

dikei wrote: post #6

This is kinda obvious, isn't it. Companies have made this observation for years: cloud is very expensive compared to self-hosting. However, * you do not have to spend a large amount of money upfront * cloud's provisioning time is very short * cloud's automated management requires way less man-power to operate

> * cloud's automated management requires way less man-power to operate

My experience here is the opposite. I did contracting in the devops space for years, and those of my clients who spent the most on ops were consistently those using cloud providers.

Re: Singapore software vendor says own hardware in colo costs $400M less than cloud

#14

Post by jtwaleson »

tehCorner wrote: post #11

Not on the same scale but in my previous company we observed the same thing (though the other way around since we moved from self-hosted to cloud). He had a team of 4 managing the infra for an app (82 million users, 30 million DAU) and spent around 500.000€ per year on the data centers + this team's salaries + some other expenses like travels to the datacenters, some new stuff etc..., let's say around 1.000.000€ per…

I was PM for a cloud hosting solution that we were originally running colocated. We moved it all to AWS for about 5x the costs after you calculated capex vs opex etc.

"The Cloud" allowed our customers to set up their applications with High Availability and PITR (via RDS, building that ourselves at scale would have been problematic). It also allowed us to launch services anywhere in the world. Setting up data centers globally would have been hell.

The product was still easily profitable despite the costs, so I think we made the right move.

Re: Singapore software vendor says own hardware in colo costs $400M less than cloud

#15

Post by yardie »

This keeps being brought up since the early days of AWS. Yes, the cloud is more expensive. It simply adds another layer of management, scalability, and flexibility you would not be able to build yourself. And there is a layer of profit for the cloud provider as well. Whoever was told the cloud would be cheaper was being lied to.

I've built cloud, colo'ed and hybrid systems. Every few years this would come up. Now, so many cloud services we use are connected to the cloud providers we don't even need to spin up SSO/authentication servers because it's simply built in at this point.

Re: Singapore software vendor says own hardware in colo costs $400M less than cloud

#16

Post by openplatypus »

Cloud was always more expensive (in the short term) than self-managed/collocated servers.

How is this news?

In cloud, you pay for availability, for ad-hoc instances without waiting for a month to install new servers and more.

You only need to hire “software” DevOps, rather than people who neatly lay your cables, journey to DC to replace disks, etc, etc, etc.

Pick a good, cheap cloud. It is a commodity product. Just because AWS is expensive, you don't have to pick AWS.

If going solo is an option, you likely do not use any of them “fancy” AWS managed services. In that case, you can just as well go with any of tens of other Cloud providers.

DHH sang the song and some people take it as a gospel. (eyeroll)

Re: Singapore software vendor says own hardware in colo costs $400M less than cloud

#17

Post by johnklos »

rippercushions wrote: post #8

From the caveat at the end of the original article: > This article doesn’t take into account other aspects that would make the comparison even more complicated. These include people skills, financial controls, cash flow, capacity planning depending on the load type, etc. You can't handwave all this away in real life though. If you're rolling your own data center, the engineering time you need to put into managing ser…

You know, you can't hand wave away all the additional costs of having anything in the cloud. You need lawyers to tell you your liability for using third parties. You need all that time and money engineering cloud solutions that work, that can scale, and aren't going cost tons of money. You need to factor all those multi-hour calls needed to get to a real person at the cloud company who isn't reading from a multiple choice book and actually knows what you're talking about. You need a rotation of people available 24/7 to know what to look for in the cloud instance and can handle things if / when they go sideways. All these costs are considerable and will often dwarf the costs of the oversimplified cloud estimate you're first given, particularly at startup scale. With an in-house team of systems administrators and colocated hardware, it's (almost) all well understood and abstracted away.

I wonder if people have actually thought about the costs you mention, or if the marketing forces that have led everyone to believe that everything should in the cloud are why people who've never done the slightest work in a datacenter think the cloud is the way to go. I hear it all the time, but people can't articulate real reasons aside from general handwaving about how much salary a company can save from getting rid of systems administrators. But I've also worked for companies that don't even have a single systems administrator of their own, and trust me - they pay much more money for everything as compared with paying for a good admin.

Re: Singapore software vendor says own hardware in colo costs $400M less than cloud

#18

Post by openplatypus »

openplatypus wrote: post #16

Cloud was always more expensive (in the short term) than self-managed/collocated servers. How is this news? In cloud, you pay for availability, for ad-hoc instances without waiting for a month to install new servers and more. You only need to hire “software” DevOps, rather than people who neatly lay your cables, journey to DC to replace disks, etc, etc, etc. Pick a good, cheap cloud. It is a commodity product. Just b…

For completeness: There are many reasons to NOT go with cloud. Cost is rarely on that list.

Re: Singapore software vendor says own hardware in colo costs $400M less than cloud

#19

Post by endisneigh »

openplatypus wrote: post #16

Cloud was always more expensive (in the short term) than self-managed/collocated servers. How is this news? In cloud, you pay for availability, for ad-hoc instances without waiting for a month to install new servers and more. You only need to hire “software” DevOps, rather than people who neatly lay your cables, journey to DC to replace disks, etc, etc, etc. Pick a good, cheap cloud. It is a commodity product. Just b…

What is a "good, cheap cloud?"

Re: Singapore software vendor says own hardware in colo costs $400M less than cloud

#20

Post by mabbo »

My goodness is it Monday already and time for yet another of these articles?

At a given scale and software maturity, it is cheaper to buy your own hardware and pay for your own team to operate it. Generally, this is when you start thinking of your hardware needs in terms of fractions of an entire data center, but in simple cases may be smaller.

This almost is not ever true for software startups, who get more value from speed, flexibility, and not needing to pay a team to manage hardware. Just let [cloud services company] handle it for you until you reach that point.

And then when you do reach that point, you get to write the article about how everyone using the cloud are fools because it's cheaper to self host.

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