Data Centers

How to determine if cloud storage is a cost savings

Trying to assess costs for on-site vs. cloud storage can be tricky, but it must be done. IT Pro Rick Vanover shares a few insights on decision-making.

For many situations, the move to public cloud storage is a good use case to address abstraction and off-site storage. This could be for situations such as data protection, content delivery, and large file exchange. Simple cost savings with public cloud storage aren't usually a leading discussion point however.

The issue with determining if cloud storage is less expensive is to first of all match an internal price model with that of the public cloud storage systems. When I used to be an infrastructure manager, one of the biggest challenges in sorting out different costs was equating one price model to another. I used to have this expression, "Because this store doesn't sell oranges, I need to make this apple look like an orange."

The fact is that it is more than just an acquisition cost of a storage system compared to one month's worth of storage. There are a number of ways to tackle this problem -- the first is to establish some metrics for inside your own data centers. I have heard of the "cost per floor tile" data center facility cost being used. Another would be an operational cost per server or storage system per month. These costs would then need to be extended to a monthly model; taking into account operational spikes around deployment or decommissioning. This is one example of what I mean by making an apple look like an orange.

That being said, the takeaway is having a way of making your costs for in-house storage 'look like" that of a cloud storage model. Once that is established, the comparison possibly becomes a bit clearer. There are still some intangibles such as bandwidth, lack of control, and performance that may be harder to assign a cost to; so keep that in mind.

I still like the data protection use case for public cloud storage as the leading use case. In this use case, I like to address the 1-2-3 approach. Divide all data protection requirements into three categories, with the first category being the most critical. Ideally, this is communication and authentication services (email and Active Directory for example); the second category in this approach contains critical applications; and the last is everything else that may not really be needed in a true disaster.

To put a cost around the absolute abstraction that cloud storage provides would be difficult. But if you need it, it becomes a priceless recovery option. So, if we have a 2 Terabyte model it would cost $155.65 per month in US-West and US-East standard Reduced Redundancy Storage on Amazon S3 storage. At that point, you may as well treat yourself to the standard storage option which would run $194.56 per month for the same 2 Terabytes. Over three years, that is over $7,000 to keep 2 Terabytes in the public storage cloud. Most on-premise storage systems would cost less, but in the disaster recovery use case the abstraction that cloud storage brings is priceless. But how much power, cooling, and operational expense would be avoided (says the orange apple)?

With all of that being said; the hard part is still becoming familiar with the process. Details such as key management for encryption, knowing how to deploy onto a totally new infrastructure, and setting key expectations for the performance of a recovery are critical. Especially if Glacier storage is considered as part of a recovery plan, which has a lower cost yet slower retrieval time among other differences.

While the 2 Terabyte example is small, its impact is huge. For a small business, that may be an ideal footprint for cloud storage utilized for disaster recovery. Does that make sense for your organization, or part of your infrastructure? Share your comments below.


Rick Vanover is a software strategy specialist for Veeam Software, based in Columbus, Ohio. Rick has years of IT experience and focuses on virtualization, Windows-based server administration, and system hardware.

Tony Hopkinson
Tony Hopkinson

Decide whether you want the cloud or not. Then cherry pick some numbers to cya with should your choice be questioned. They'll more than ambiguous enough, in fact if you get a bit clever you could probably come to a position that might not be a position..

Timothy J. Bruce
Timothy J. Bruce

While costs are mentioned as driving factors, there are other issues, besides those that nontrad raised. One is security of your data. How do you protect your data if you've moved it to the cloud? The recent break-ins at Evernote is just one example. Anothe is the denial of service waged against some cloud providers. Being unable to access your data, when it's needed, can be as big an inconvience as an internal outage. And finally is regulatory requirements that require your data to be protected (HIPPA, PCI, SAS70, FERPA, among others). Storing data in the cloud could require encryption (and key management) as well as additional audits to ensure your data hasn't leaked. None of this is meant as fear mongering - it just needs to be included in your risk analysis that should complement the cost analysis of moving data into the cloud.


I disagree with the logic of this determination about Cloud storage. It does not take into account that "the cloud" may put you files on any system, anywhere in the world, and each contry has different laws (and enforcement of those laws) concerning privacy. If you are a company that has proprietary information that would be of interest to another country, would you want to risk having any information on a storage asset in that country, even if encrypted with a long password? (Even white hat hackers have cracked almost all passwords 14 characters and below and are working on 15+.) And one last note - In the U.S., there must be a court order for a law enforcement agency to enter your place of work and get your files. However, your "cloud assets" may not have the same protection. Or else the agency could get a court order telling the company who is your "cloud" to give them access to your files, and with the reastriction that they cannot notify you. So the initial/monthly cost is not the only option that should be considered in teh decision to go to the cloud or not. Look at the possible international, proprietary information and legal aspects too. As another scenario, let's say your files are stored in country X and that country either has political instability that cuts off computer access or there are "tensions" between the U.S. and that country. Would you want your files being held hostage or compromised because of this?


It doesn't sound like you're disagreeing - you're just bringing up another important consideration when making the decision (security of data). This article was purely about considering cost.

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