Savings in the cloud: How to find them and when to make your move

Rallo, Chief Executive Officer, TSO Logic

This contributed piece has been edited and approved by our editors

savings cloud piggy bank
Credit: Thinkstock via Network World

C-level executives are increasingly calling on IT to investigate cloud options. In fact, according to Gartner, 90 percent of organizations are looking into crafting a cloud strategy. There are, in fact, significant economic advantages to be found in the cloud. But despite the potential benefits, you need to look carefully before you leap.

Cloud providers have many things working in their favor. For starters, their ability to procure and operate at scale gives them substantial discounts that can be passed along to customers. Cloud customers also benefit by being able to purchase compute for specific applications on a pay-as-you-go basis, without the need for a long-term commitment. The real savings come from elasticity and not having to lay out substantial capital if you only want to ramp up compute for a short period of time.

Additionally, many cloud providers now offer specialized, off-the-shelf services to accommodate common IT needs. So functions like data analytics, elastic load balancing, databases and more can now be plugged into existing environments and used by application developers and IT ops to reduce costs and significantly accelerate deployments.

So with all this in the cloud’s favor, why aren’t all enterprises using cloud today?

If it weren’t for legacy applications, most enterprises would have already migrated. Companies like Netflix were born in the cloud, and thus have architected their applications to run there. As such, Netflix can scale on demand, take advantage of micro services, run across multiple regions in a stateless fashion, and operate elastically. In contrast, legacy applications weren’t built to leverage the cloud’s flexibility, scale, or economic model. What’s more, many were crafted by people long gone, and today’s IT teams are afraid to mess with them.

The typical enterprise is dealing with thousands to hundreds-of-thousands of instances and petabytes of storage embedded in their data centers, co-location facilities, and development labs. Some of their applications will require re-platforming to make them a better fit for cloud and that takes time and money. Is it really worth all that effort to make cloud migration an economically viable proposition?  

It depends.

To explore the cost equation, let’s consider a recent analytical study we conducted in order to identify the best future state options for on-premise or cloud compute. After looking across economic models based on 50,000 OS instances, our analytics concluded that without having to re-platform applications, 45 percent of those instances would run 36 percent more cost effectively in the cloud. The enterprises we assessed spend on average $33M per year operating their compute and storage nodes on premise.

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