CIO, Cloud, Data Center, Opinion

PanelCast 2019 Predictions: How Public Cloud Costs Are Driving Organizations to On-Prem and Back

Presently, it seems that cloud run costs/subscriptions can easily exceed on-premises costs for general workloads beyond small systems. Do you see this changing moving forward, and how soon?

This blog post was created following ActualTech Media‘s inaugural PanelCast event, held in December of 2018.  This event addressed 2019 enterprise IT predictions in a discussion moderated by Scott D. Lowe, along with four industry experts, including Sirish Raghuram of Platform9, Theresa Miller of Cohesity, Mike Wronski of Nutanix, and Jeff Ready of Scale Computing.

If you’d like to watch our very first PanelCast, please visit https://youtu.be/lbFfTbdztn8


Panelist responses to this audience question:

Operating in the cloud is expensive, and that’s not likely to change in the foreseeable future.

On-prem costs vs. off-prem costs are inevitably tied to operating costs, an area that panelist Sirish Raghuram (Platform9) sees gaining more attention in 2019. “I do think there will be a renewed focus on the operating cost [over opportunity cost], and I think there’s very little debate that, generally speaking, operating costs on the cloud can easily exceed the on-premises cost.”

Ultimately, it depends on whether or not companies are willing to change what they’re doing now, because without that change, the cost is not going to go down. “But as customers start doing a true on-prem refactoring of how they build out and architect their data centers,” says Wronski, “that’s where that parity or a true competitive cost nature is going to come from.”

Jeff Ready (Scale Computing) is not optimistic. “I think we’re a ways away from seeing the cloud become cheaper,” he says.

Scott's Take

“The cloud” has had one of the most visible journeys along the Gartner Hype Cycle in recent memory.  At inception, people quaked in fear that the cloud would end their jobs as they listened to the pure hype that was generated about this technology.  That, of course, didn’t happen.  But, a lot of companies still make huge bets and starting dumping everything there in the hope that it would reduce cost and complexity.

In some ways, this happened.  Organizations that wanted to ramp quickly leveraged cloud as their starting point, giving birth to the phrase “born in the cloud.”  This is a trend that is continuing, but, at the same time, organizations have realized that public cloud is not the only way.  As such, we’re on a direct path to a world dominated by hybrid and multi-cloud architectures.

There are a lot of reasons that the public cloud isn’t a simple panacea.  First and foremost is cost.  Those early pioneers that made their big jumps into cloud quickly discovered that there was an inflection point at which the cost of public cloud began to far outweigh the cost of on-premises deployments.  Second, people quickly realized that some applications simply aren’t meant for cloud and that so-called “lift and shift” operations just didn’t provide the hoped-for results or cost benefits.

But the public cloud is here to stay and with good reason.  It has enabled organizations to move far more quickly than ever before and it provides an incredibly powerful and eminently distributed location for business-critical workloads.  It’s also enabled the innovation of software-as-a-service tools that have begun to replace some stubborn on-premises tools.

Moreover, there exist today any number of tools that can help organizations better predict their ongoing cloud spend, although there is a need for constant invoice diligence.  Further, as we see continued innovation in new software development – such as the use of microservices and containers – we’ll see a rise in adoption of both public cloud services as well as on-premises infrastructure in hybrid cloud architectures.