Achieving infrastructure cost optimization has become a business priority for many organizations around the world. The rapid growth in demand for digital services in recent years has forced companies to modernize their IT infrastructure and move to the cloud. Here, they were promised optimized costs, more agility and efficient operations.
Tytus Kurek is Product Manager at Canonical.
It turned out, however, that cloud migration is not that simple from an economic point of view. Many companies that initially enthusiastically embraced a cloud-based strategy and moved all their workloads to public clouds have experienced cost increases over time. According to the IDC Cloud Pulse 4Q19 Quarterly Summary, 85% of organizations are repatriating workloads from the cloud and back to on-premise, in order to regain control of their budgets and finally achieve long-term cost savings.
Therefore, the search for cost optimized infrastructure continues, with hybrid/multi-cloud emerging as a popular architecture choice. According to 451 Research’s report about cloud trends in 2020, 62% of enterprises are pursuing a hybrid IT strategy. This approach leverages the best of public and private clouds, ensuring workloads always run where it makes the most sense from an economical standpoint. But, how can businesses ensure they are choosing the right cloud approach for them?
Public cloud vs private cloud: the challenges
When it comes to choosing between private and public clouds, each business will have its own unique reasons for choosing one or the other. However, one of the most common deciding factors is cost. We can break down cost into two categories, capital expenditure (CAPEX) and operating expenses (OPEX). CAPEX is a company’s major, long term expenses, while OPEX is a company’s day-to-day expenses. Both play a big part in optimizing cloud cost.
The main reason behind the initial success of public clouds was their ease of use and the near-zero CAPEX cost. In the public cloud world, all you need to do is to create an account, attach your credit card to the billing system and you can start using public cloud resources right away. But when you compare this to private cloud platforms, their CAPEX costs are extremely high. This is because implementing a private cloud requires specialist knowledge and the purchase of hardware and software licenses that have to be paid upfront.
Looking at OPEX costs, the numbers speak in the favor of private clouds. This is because public clouds tend to suffer from the lack of pricing transparency and their fees are expensive, especially when handling long-term and large-scale workloads. Meanwhile, private cloud OPEX costs are fairly static and in the case of cost-efficient private cloud platforms, such as OpenStack, much lower compared to public cloud OPEX costs. Thus, optimizing infrastructure costs should always involve looking at the total cost of ownership based on the current number of workloads and their growth prediction. It’s up to a business and their individual needs as to whether they choose a private or public cloud infrastructure. But we often see businesses find the most success when they use aspects of both and adopt a hybrid approach into their operations.
Adopting a hybrid strategy
Since both public and private clouds have their own economic advantages, adopting a hybrid strategy sounds smart. This is because the complexity of businesses today generally necessitates a mixture of on-prem and public, no matter if you are a start-up, medium or larger enterprise. While some may see hybrid as overkill, many aspects of businesses and our everyday lives are now hybrid anyway, so why should the cloud be any different?
For example, a mid-size software company based in London with two small satellite offices in the US and China may not need its own office in all of these regions. It may only own the London office while renting the satellite ones until the number of employees in these regions grows. This is hybrid accommodation. Or let’s take a big transportation company as another example. Such a company may have its own fleet vehicles, but may also rent some during periods of increased demand for services. This is hybrid transportation. Hybrid makes sense because it marries the best of both worlds together, offering businesses flexibility and choice in how, and where they operate.
Businesses have known for a long time that the implementation of a hybrid strategy enables cost optimization. But over the past 18 months, hybrid strategies have demonstrated their value for another reason – how well they equipped and supported businesses in the shift to remote working. Overnight, once office-based workers found themselves at home, at their physical workplace. For some businesses, this transition was easier than others because they already had hybrid strategies in place, or could quickly implement them. As a result, there was little downtime and employees were able to work as efficiently as before.
Ultimately, this is the beauty of a hybrid approach – its benefits extend far beyond cost. It can help businesses maintain operations, even in the most testing of times.
The benefits of hybrid/multi-cloud architecture
There are many benefits available to businesses who embark on a hybrid/multi-cloud architecture. For instance, it enables organizations to always run their workloads where it makes the most sense from an economical standpoint. They can start small in the public cloud and build their own cost-efficient cloud infrastructure when the number of their workloads grows. Once they own the cloud they can migrate the majority of their workloads to use their own resources instead of renting them.
At the same time businesses can continue using highly-scalable public cloud resources during heavy load periods. They can also leverage them occasionally when they need to execute compute-intensive tasks, such as data analytics. Using both flexible public and cost-efficient private cloud infrastructure at the same time enables them to monitor their spending and always pay less for the same amount of resources while ensuring scalability and flexibility.
Finally, since the hybrid/multi-cloud model assumes consuming services from more than one cloud service provider, this enables organizations to avoid vendor lock-in and negotiate prices. Thus enabling optimization of infrastructure costs even further.
While hybrid as a concept isn’t new, it’s one that has been thrust in the spotlight over the past 18 months. Businesses that adopt a hybrid approach have lots to gain, from taking back control over their cloud expenditure, to ensuring their employees are working efficiently, no matter if they are in the office or elsewhere. So is the future of infrastructure going to be hybrid/multi-cloud? We don’t know yet. But it is certainly an area businesses will be exploring in the years to come.
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