Cookies help us display personalized product recommendations and ensure you have great shopping experience.

By using this site, you agree to the Privacy Policy and Terms of Use.
Accept
SmartData CollectiveSmartData Collective
  • Analytics
    AnalyticsShow More
    image fx (67)
    Improving LinkedIn Ad Strategies with Data Analytics
    9 Min Read
    big data and remote work
    Data Helps Speech-Language Pathologists Deliver Better Results
    6 Min Read
    data driven insights
    How Data-Driven Insights Are Addressing Gaps in Patient Communication and Equity
    8 Min Read
    pexels pavel danilyuk 8112119
    Data Analytics Is Revolutionizing Medical Credentialing
    8 Min Read
    data and seo
    Maximize SEO Success with Powerful Data Analytics Insights
    8 Min Read
  • Big Data
  • BI
  • Exclusive
  • IT
  • Marketing
  • Software
Search
© 2008-25 SmartData Collective. All Rights Reserved.
Reading: Rent vs. Buy? The Cloud Conundrum
Share
Notification
Font ResizerAa
SmartData CollectiveSmartData Collective
Font ResizerAa
Search
  • About
  • Help
  • Privacy
Follow US
© 2008-23 SmartData Collective. All Rights Reserved.
SmartData Collective > IT > Cloud Computing > Rent vs. Buy? The Cloud Conundrum
AnalyticsCloud ComputingCommentaryExclusive

Rent vs. Buy? The Cloud Conundrum

paulbarsch
paulbarsch
5 Min Read
Image
SHARE

Image

 

 

Over the long-run, is cloud computing a waste of money? Some startups and other “asset lite” businesses seem to think so. However, cloud computing for specific use cases, makes a lot of sense—even over the long haul.

More Read

Image
5 crucial questions on people analytics, answered
IBM and ILOG – What Else?
Big-Data PCA: 50 Years of Stock Data
How To Share Data Safely Across Your Supply Chain
Taking Assumptions With A Grain Of Salt

Image

 

 

Over the long-run, is cloud computing a waste of money? Some startups and other “asset lite” businesses seem to think so. However, cloud computing for specific use cases, makes a lot of sense—even over the long haul.

A Wired Magazine article emphasizes how some Silicon Valley startups are migrating from public clouds to on-premises deployments. Yes, read that again. Cash poor startups are saying “no” to the public cloud.

On the whole this trend seems counter intuitive. That’s because it’s easy to see how capital disadvantaged startups would be enchanted with public cloud computing: little to no startup costs, no IT equipment to buy, no data centers to build, and no software licensing costs. Thus for startups, public cloud computing makes sense for all sorts of applications and it’s easy to see why entrepreneurs would start—and then stick with public clouds for the foreseeable future.

However, after an initial “kick the tires” experience, various venture capital sponsored firms are migrating away from public clouds.

The Wired article cites how some start-ups are leaving the public cloud for their own “fleet of good old fashioned computers they could actually put their hands on.”  That’s because, over the long run, it’s generally more expensive to rent vs. buy computer resources. The article mentions how one tech start up “did the math” and came up with internal annual costs of $120K for the servers they needed, vs. $320K in public cloud costs.

For another data point, Forbes contributor Gene Marks cites how six of his clients analyzed the costs of public cloud vs. an on-premises installation, monitored and managed by a company’s own IT professionals. The conclusion? Overall, it was “just too expensive” for these companies to operate their workloads in the public cloud as opposed to capitalizing new servers and operating them on a monthly basis.

Now to be fair, we need to make sure we’re comparing apples to apples. For an on-premises installation, hardware server costs may be significantly less over the long run, but it’s also important to include costs such as power, floor space, cooling, and employee costs of monitoring, maintaining and upgrading equipment and software. In addition there are sometimes “hidden” costs of employees spending cycles procuring IT equipment, efforts for capacity sizing, and hassles of going through endless internal capitalization loops with the Finance group.

Thus, cloud computing still makes a lot of financial sense, especially when capacity planning cycles aren’t linear, when there is need for “burst capacity”, or even when there is unplanned demand (as there often is with fickle customers). And don’t forget about use cases such as test and development, proof of concept, data laboratory environments and disaster recovery.

Another consideration is resource utilization.  As I have stated before, if you plan on using IT resources for a brief period of time, cloud computing makes a lot of sense. Conversely, if you plan on operating IT resources at 90-100% utilization levels, on a continual and annual basis, it probably makes sense to acquire and capitalize IT assets instead of choosing “pay per use” cloud computing models.

Ultimately, the cloud rent vs. buy decision comes down to more than just the price of servers. Enterprises should be careful to understand their use cases for cloud vs. on premises IT. In addition, watch for hidden costs in your TCO calculation that underestimate how much time and effort it really takes to get an IT environment up, running and performing.

 

 

TAGGED:CAPEX vs. OPEXcloud computingcloud TCOprivate cloudpublic cloudrent vs. buyresource utilizationrisky business
Share This Article
Facebook Pinterest LinkedIn
Share

Follow us on Facebook

Latest News

power supplies for ATX for data scientists
Why Data Scientists Should Care About SFX Power Supplies
Big Data Exclusive
AI for website optimization
Free Tools to Test Website Accessibility
Artificial Intelligence Exclusive
Generative AI models
Thinking Machines At Work: How Generative AI Models Are Redefining Business Intelligence
Artificial Intelligence Business Intelligence Exclusive Infographic Machine Learning
image fx (2)
Monitoring Data Without Turning into Big Brother
Big Data Exclusive

Stay Connected

1.2kFollowersLike
33.7kFollowersFollow
222FollowersPin

You Might also Like

Kronos Supercharges Workforce Analytics with New Technology

5 Min Read

Managed Hosting: Let Somebody Else Do the Heavy Lifting

5 Min Read
Image
Big DataBusiness IntelligenceRisk Management

4 Business Risks That Might Prevent Big Data ROI

5 Min Read
Image
AnalyticsCommentaryExclusiveHadoopITOpen SourceRisk ManagementUnstructured Data

Is Your IT Architecture Ready for Big Data?

5 Min Read

SmartData Collective is one of the largest & trusted community covering technical content about Big Data, BI, Cloud, Analytics, Artificial Intelligence, IoT & more.

ai chatbot
The Art of Conversation: Enhancing Chatbots with Advanced AI Prompts
Chatbots
AI and chatbots
Chatbots and SEO: How Can Chatbots Improve Your SEO Ranking?
Artificial Intelligence Chatbots Exclusive

Quick Link

  • About
  • Contact
  • Privacy
Follow US
© 2008-25 SmartData Collective. All Rights Reserved.
Go to mobile version
Welcome Back!

Sign in to your account

Username or Email Address
Password

Lost your password?