@Eric: thanks for the comment. You are absolutely ...

2009-02-14T11:21:00.000-05:00

@Eric: thanks for the comment. You are absolutely right that there is a difference between racking and maintaining hardware (the servers) and deploying and managing the software that runs on them. Hardware only accounts for 7% of server TCO.

My previous post on hardware deployment learning curves suggests that cloud computing vendors have a massive cost advantage over an in-home datacenter on this front. However, infrastructure-as-a-service vendors like AWS don't free you from that second phase--managing what software is running where.

Platform-as-a-service offerings like Google App Engine, Mor.ph, and others actually free you from a lot of traditional operating activities (and costs), so in my mind they are even more compelling solutions.

When the title of your article came up in my searc...

2009-02-11T12:51:00.000-05:00

When the title of your article came up in my search, my first thought was "oh, finally someone's discussing the elephant in the livingroom about Cloud Computing!" but it wasn't to be.

Cloud computing provides operational cost transparency in another way: by lumping all the operations costs into a single number (with the exception of deployment and management labor, which often incorrectly assumed to be much lower with cloud deployments.)

As a cloud vendor, what I run into most often is that people shop on price, but are comparing apples to oranges: they compare our service (or Amazon) to buying a server or to colocation. Yet buying a server doesn't represent operations costs at all: it's only the first of many. Colocation also doesn't represent them well because again the costs focus on the servER rather than the servICE. This is why, if you shop on price alone, Cloud always loses out. It also means that Cloud vendors have some education to do around accounting for operations costs. I know I spend at least 75% of my sales effort on education, often in the form of business consulting for my potential customers.

Those who choose cloud either see a critical requirement being met by its unique features, or they understand the cost structures of the alternatives well enough to see that there is an economic advantage to choosing a cloud deployment despite its apparently higher price.

-Eric Novikoff
ENKI
http://www.computingutility.com/

Comments on Cloud Computing Economics: Operational Cost Transparency

@Eric: thanks for the comment. You are absolutely ...

When the title of your article came up in my searc...