Public Cloud Adoption & Are The Economics Really Better?

When it comes to determining cloud return on investment (ROI) or economies, every company has its own idea on how to do so. Most organizations however have hardware utilization rates below 20% because of excess capacity for peak demands. As such, for startups or new applications, moving to cloud is sound because you only pay for what you use and also enjoy higher utilization rates. For enterprises that have invested in equipment and data centers, it’s not as simple.

Public Cloud Adoption - Are the economics really better?

The ability to efficiently manage infrastructure and utilization of hardware resources are the two most critical factors that influence the economics of a public vs. private cloud. If an organization can effectively manage the two, private cloud is cheaper but if not, public is. It’s now clear there’s a tipping point where each option makes sense. The trouble is finding your tipping point after you have already committed yourself to a particular route.

Public Cloud Adoption - Are the economics really better?
Public Cloud Adoption - Are the economics really better?

When is a private cloud cheaper?

Assuming your private cloud is architected correctly, is successfully provisioned, and is running without hitches, Datalink says that it will be 50% cheaper compared to a public cloud like Microsoft Azure. What’s more, you will also be able to achieve better:

  • Monitoring
  • Efficient management of compute and storage resources
  • Resource functionality
  • Data protection

All this is based on the assumption that your private cloud is very efficient.

Public Cloud Adoption - Are the economics really better?

Public cloud vs. private cloud use

Certain IT environments and workloads will either favor a public cloud like AWS or a private one. The following are the scenarios:


Private cloud

  • Huge number of applications
  • Applications with high transaction volumes that run 24/7
  • Large volumes of running, virtual instances
  • Higher requirements for data protection, security, compliance, or QoS
  • Systems that run databases, websites, emails, POS, or environments requiring SharePoint

Public cloud

You will realize public cloud economics from the following instances:

  • Unpredictable workloads that come in bursts
  • Smaller virtual instances that are running or are anticipated to
  • Short term and experimental application needs
  • Workloads with low transaction volumes
  • Workloads that don’t require a lot of extras like compliance, protection etc

Unexpected public cloud charges

The devil is always in the details and as much as Azure and AWS don’t lie about their charges, realizing public cloud economics is tough if there are hidden charges. Watch out for:

  • Added cost for premium services like faster and higher features
  • Transfer cost of data in and out of the cloud may be surprisingly high
  • If you want out, breaking a public cloud contract is painfully expensive
Public Cloud Adoption - Are the economics really better?

Public cloud-are the economics better?

At the end of the day, public and private IaaS clouds both have their pros and cons. Most enterprises should instead choose to work towards a hybrid model: utilizing both clouds. Using the best of both has more merits than demerits.

As said in the beginning, each organization has its own tipping point. A good assessment of your organization will tell you what combination to use to achieve maximum economics. Say 60% private and 40% public? Your choice to make.

Dan Mitchell President & Solution Architect at Rack Simply
Dan Mitchell

President & Solution Architect at Rack Simply

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