The Unexpected Costs of Moving to the Cloud

Posted 8 April 2015 9:26 PM by Commvault

Just a few years ago, customers thought the cloud might help save on costs. We're sure everyone recalls the bevy or articles with titles like: "How to save time and money in the cloud" [1] and "ROI Calculator Estimates Cloud Computing Costs Savings" [2] or "Cloud Computing can generate massive savings" [3] from 2010 and 2011. Analyst studies from leading think tanks from the likes of Booze Allen Hamilton [4] and The Brookings Institute [5] also supported the notion that moving to the cloud will result in massive cost reductions in IT spending.

But - shockingly - the reality hasn't quite materialized this way. Don't get us wrong, the benefits of cloud infrastructure are real and extremely compelling. In a 2014 IDG Enterprise Study, 63% of organizations indicated “IT Agility“ was a major driver of cloud adoption; 61% said “IT innovation“ and another 58% said “access to critical business data and applications“. While only 23% said the cloud was reducing IT costs and 20% said the cloud was reducing IT headcount.

So the reality is a little more complex. Now we see headlines like this from the Wall Street Journal: “The Hidden Waste and Expense of Cloud Computing“ or this from CFO Mag: “Cloud Computing's Wasteland“. So what's really happening?

The Implications of the Shift from CAPEX to OPEX driven IT

Customers are finding a set of “unexpected costs“ popping up - mostly in the form of an unexpected or unusually large bill from a cloud provider. We hear stories, like the Journal article mentions, of cloud instances left running, but unused as cloud sprawl becomes a bigger challenge. The controls aren't in place to help track and manage resource utilization, and the mind-set isn't there in terms of thinking about the best way to control and manage the cost of the cloud.

In the traditional CAPEX centric model (which is how traditional data centers are built), IT is driven by large up front purchases of hardware and software that follow the 3-4 year vendor refresh cycle. But in a cloud centric view of the world driven by OPEX, everything shifts to monthly or annual subscriptions. Ultimately this should be a good thing. You replace a highly variable CAPEX model, driven by infrequent large purchases, with a very smooth (in theory) predictable OPEX model with standard, recurring costs every month.

This is something Sabrinath Rao covered in the first blog of this series, “The Next Act: Commvault and the Cloud“ when he drew the analogy between a managing and costing the utility model for IT with his water bill. No one wants that $2,000 water bill at the end of the month.

The long standing traditional CAPEX centric model based on large upfront costs did have the benefit of well-established control processes when it came to managing resource utilization. But those days are fading rapidly. We have entered a transition period where IT is technically using the new “utility“ delivery model, most are still thinking about the cost and management processes for IT in the form of CAPEX.

Deal with it (Requires a change in management processes; and new tools to keep up)

Getting our arms around this problem is as much about mindset and management processes as it is about tools and technology. In IT, we have been thinking in terms of those high dollar refresh cycles and CAPEX management for many, many years. The thinking like a utility company is going to take some time - but the organizations that can change their thinking quickly and efficiently are going to have a major advantage.

That goes the same for management processes where we need to start tracking actual legitimate usage and consumption on an ongoing basis. The days of counting up physical boxes was left behind quite a few years ago when we started virtualizing large swaths of the data center. But let's face it - now we're just counting sockets and VMs instead. We need to get a system of accounting and management that tracks actual CPU cycles, network bandwidth and storage CONSUMED, but not just units purchased and sitting idle.

Deploy the right tool sets

Of course it isn't just the thought processes and management approaches that change. As we evolve our thinking, we're going to need some new tools to help us track and optimize all this stuff. Let me plant a seed of an idea here for you. Imagine a single, web based tool that will let you:

  1. Provision large numbers of cloud instances
  2. Attach expiration dates to those VMs
  3. Automatically power VMs down after expiration
  4. Manage across many cloud platforms in a single interface.

This type of functionality makes sure that a team (for example a dev team working on a new application) does not go home for the weekend and “leave the water running“ on their project sitting in AWS. The idea is to set up some automation that does the “custodial work“ or clean-up work for you.

Let us know what you think in the comments below. And please stay tuned for the next post in the “Commvault and the Cloud“ series: “Operationalizing In-Cloud Recoveries.“

This is the second part in a series on Commvault and the Cloud.

[1] "How to save time and money in the cloud"

[2] "ROI Calculator Estimates Cloud Computing Costs Savings"

[3] "Cloud Computing can generate massive savings"

[4] Booze Allen

[5] "The Brookings Institute