Cloud computing - is it cheaper?
Cloud computing offers a lot of positive points, but being cheaper is not always one of them. For the typical small business, cloud computing IS more cost effective if you only need one or two servers. Once you start scaling to the level where you need to virtualize your servers (put multiple virtual servers on a single or multiple physical servers) the cloud computing starts looking less attractive. Once you start dealing with big data, terabytes of storage and massive data transfers, cloud computing becomes very expensive. The breakeven point (at current pricing from the large cloud vendors) is approximately at 25-30 virtual machines per physical server - under this, your hardware (including initial purchase, maintenance costs, bandwidth and IT salaries) is more expensive than cloud. Once you are operating 40 plus VM's, cloud IS more expensive. This is changing as cloud vendors scale up, more local cloud vendors establish in each country and demand for cloud services increase. All these factors put pressure on cloud providers to lower pricing to keep competitive.
The one scenario where cloud wins hands down is sporadic usage - whether it be overflow traffic, auto scale out on demand or sporadic testing. Paying only for what you use when you use it is a brilliant pricing strategy. Who would lend you a highly kitted out server to use for a day or two, then take it back and only charge you for the time it was switched on. No hardware vendor would be willing to do that, especially if you had no intention of buying said server. Cloud gives you exactly that - set up a dream machine with oodles of RAM, High-performance CPU's and expensive SSD storage, use it to load test a proof of concept, finish off and switch off. Then get billed only for the time the machine was running and the resources it used in that time. Absolute bliss and no risk!
A final word of warning - beware of cloud "salesmen" talking to your executive team and selling them this "magic bean" which promises to turn all their CAPEX into OPEX and saves them a bundle - and then convinces them that they can now fire or retrench their IT team as "the cloud provider has their own teams". You still need in-house skills to manage your cloud-based machines - which have very much the same demands as physical or in-house virtual servers. Where you DO save is on hardware replacement costs, maintenance of hardware, power issues and load demands as cloud solutions can often be automated to scale out or back as demand varies.
In summary - cloud computing is where we are moving, but research your options and compute your REAL costs, ROI and human cost before making any quick decisions.
