Skip Ribbon Commands
Skip to main content
Sign In

Latest insights and trends in Personal Analytics, Operational Intelligence, and Workplace Productivity.

Oct 28
Why Cloud Does Not Save Money

Since enterprise cloud first emerged about ten years ago, it has been viewed by businesses as a way to cut costs. This expectation has very rarely materialized. Now, we start hearing more and more that even if cloud costs you more money, it still makes sense because of the various other higher reasons. Those can be the focus on core business, the flexibility to ramp up or down, and many more.

However, isn’t this logic fundamentally flawed? Do the higher reasons still hold if they do not lead to a commercial benefit?

Here is an interesting comparison. Let us look at some public utilities, which are heavily promoted with very similar justifications. You do not need your own car, use public transit, free yourself from maintenance costs, plan your costs in a predictable way, and only pay for the service that you actually use. Sounds quite familiar, right?

The numbers show a very impressive cost aspect of it. In Germany (being one of the most progressive places for public transit, other countries following suite and not much different) the cost of public transportation​ grew by 80 % between 2000 and 2018. During the same time, the cost of using a personal car has only increased by 36 %.

Would you like another one? The cost of centralized heating increased by 33 % between 2005 and 2018. It has been just 5 % for those who run their own little residential oil boilers. Those who replaced their boilers by newer ones are now paying less for their heating than they did back in 2005.

Coming back to the topic of cloud costs, the price per gigabyte of Amazon S3 storage is today 20 % of what it was in 2006. The gigabyte you buy on a disk costs now just 4 % of the 2006 price. Back in 2006, the annual cloud storage fee was 3,5 times the cost of outright purchase for the same gigabyte. Now in 2018, this annual fee is 12 times the purchase price. Just let these numbers sink: for the annual cloud storage fee one cay buy – permanently – twelve times as much storage to own. Power consumption does not change this calculation, it is well below 0,01 kWh per gigabyte per month.

All these examples tell us that owning your resources does actually pay off. And the “higher reasons” to give it up do not apply today in the same way they applied in the past.

The flexibility to ramp up becomes very relative if you remember that buying ten times more storage is less than one year of cloud fees for the original resource you had before ramping up.

As for redundancy and access from anywhere, with today’s new computers and software one does not have to be a “storage scientist” to have that. And this is where our new product adds a unique capability to simplify and streamline operations. Deploy Personal Files​, regain true ownership of your data, and save costs.

Comments

There are no comments for this post.
OmniContext™ Analytics blog