Cloud optimize

When it doesn't make sense to go to the cloud

Even cloud advocates understand that not every situation is a good candidate for a cloud solution. Here are some use cases in which the cloud would not provide any particular benefits.

Cloud computing has already come a long way from its days as a brand new technological development. It has become a full-fledged industry, with all sorts of players in multiple levels of the ecosystem and, along the way, it not only has shed many of the myths originally associated with it, but also clearly demonstrated its business value in multiple use-cases and situations.

Over the past two years, I have time and again defended the benefits of cloud computing and tried to present its advantages vs. conventional systems (especially when it relates to infrastructure). Even I have to admit, however, that sometimes it actually does not make sense to make the move to the cloud; sometimes, "sticking to the old ways" might make more sense and be more aligned with business objectives.

External dependencies

The first thing that might come to mind when we talk about staying away from the cloud are security issues. The argument that the cloud is insecure is still raging, and many people have already argued its merits elsewhere. The situations I want to talk about today go beyond the obvious complaints and fears that people have with respect to the cloud, and illustrate more complex situations.

One such issue, that I have come across a couple of times over the past few months, is the creation of external dependencies by the usage of cloud computing. Some companies that make heavy use of cloud computing on their daily business are realizing that, by running their entire infrastructure in the cloud, they are becoming extremely dependent on cloud providers, to the point where this dependency creates a fundamental business risk for them.

This risk becomes even larger when a single cloud provider is used. If you're running your entire infrastructure on Amazon, what happens if they decide to increase their prices overnight? Relying on a single vendor, on the cloud or out of it, is a huge risk but interestingly enough, companies seem to have forgotten this old lesson.

Even if you rely on multiple providers, however, the risk remains: your infrastructure is still in the hands of someone else, and you are still subject to their decisions. What this mean is that it can make sense to avoid the cloud if your company is worried about the risk (which goes far beyond a simple security risk) of relying on external vendors for their infrastructure.

A matter of cost

One of the great benefits of the cloud is enabling cost optimizations: the ability to scale infrastructure up and down according to demand allows companies to optimize their internal costs in a way that internal infrastructure, which is essentially a fixed cost, simply does not allow.

This scalability, however, comes at a price: the cost per hour for a cloud server can actually be greater than the average hourly cost of a server when it is amortized over its lifespan. This means that, for some companies, with certain computational workloads, it might actually make more sense to run those workloads internally rather than putting them on the cloud.

So what are these situations? Think about workloads where the servers have to be running full power 24x7, or nearly so. In these cases, there isn't really any opportunity to optimize any costs (since the infrastructure can't really be downsized), so it doesn't really make sense to move to the cloud. Another interesting situation is companies that have already incurred the "extra costs" that the cloud could help them avoid -- hardware investments and personnel costs. For these companies, purchasing more hardware can actually help them spread their fixed costs, therefore reducing overall cost, while a move to the cloud can actually mean increased costs.

Ultimately, a move to the cloud must be contemplated by companies like any other major change in technology: the benefits and drawbacks need to be weighed against each other and evaluated carefully. Just as in other IT shifts, there will be situations where it makes sense and situations where it doesn't. Recognizing this doesn't weaken the position of cloud advocates, but rather helps them display a maturity of thought that will be ever more important as the cloud continues to evolve.

About

After working for a database company for 8 years, Thoran Rodrigues took the opportunity to open a cloud services company. For two years his company has been providing services for several of the largest e-commerce companies in Brazil, and over this t...

12 comments
rdalenberg
rdalenberg

As the ROI increases, moving a business to a self hosted private cloud eliminates many of the pitfalls of Cloud services. Although currently only large businesses have the distribuited infrastructure to need and have the capability for self hosting, the rapid decrease in cost is enabling SMB and individuals to do it themself. Software is also being enabled to operate in a self hosted mode. What are your thoughts about moving to private clouds?

aidemzo_adanac
aidemzo_adanac

We have a busy server room and manage a Peer 2 network for software and services we provide to our clients. However we also use cloud mail, cloud CRM, store commonly needed documents etc. As a BDM, it offers me flexibility when on the road, which I like, and I don't have to have MY notebook with me to access quotes, docs etc. As far as everything being stored on the cloud though, we do a complete download and update to our in house servers nightly too. So even though things are used and manipulated online, if a cloud provider was to shut down, burn down, be sold etc. We have all the data in house too, and can easily migrate to another cloud or turn it into local network access only. Am I missing your point here ? Is it not normal to have your own CRM and data backups, even though using cloud computing all day?

suplero
suplero

Everything is cyclical, and it seems people forget/ignore the past. Henry Ford made cars, but the strikes of the early 20th century really hindered his ability to keep his business running. He was outsourcing all of the different pieces, and the suppliers were trying, but the strikers were shutting down the system. So, Ford moved everything internal - Ford Mining, Ford Tires, Ford Steel, etc. He interalized every aspect of making cars to keep his business running. That model held for many years - into the manufacturing area too. Then outsourcing suppliers gained traction. Now the game is to outsource everything, putting the entire business model in someone else's hands. It all boils down to either money or control - is it more important long term to be cheaper, as in outsourcing, or is it more important to retain control, and not have to deal with the upstream problems as they develop.

ksconsult
ksconsult

I am an independent IT Consultant. Most of my clients are small businesses - from 5 employees to 25. Where I live in the Midwest, we have very limited choices for internet providers - one cable company or a few substandard DSL providers, unless you want to invest in multiple T1 lines. That kind of cost is simply not an option for smaller organizations. One client who is an independent insurance agent, has 5 employees. His software provider is trying to push him, and all their customers, to use their cloud based software. This is simply not a practical option for an organization this size. He simply cannot afford the cost of Internet service. Plus, when running your organization using cloud services, multiple internet providers would be a must, further increasing the costs.

Charles Bundy
Charles Bundy

Am I reading too much into the "Matter of Cost" or is the implication that small business may not scale enough to justify ROI for cloud services a reasonable conclusion? E.G. small business <= three real servers running 24/7.

PhilM
PhilM

You can also add in where your data is held due to legal constraints. If, say for example, you are an offshore entity, your (client's) data shouldn't be held onshore.

NickNielsen
NickNielsen

that addresses both pros & cons. Thanks.

CharlieSpencer
CharlieSpencer

Exactly how does it differ from the traditional model of in-house servers and shared resources? I'm buying the hardware, install the OS and apps, managing the resources, connecting users, etc. I can't scale the resources up without throwing more iron at the problem, another capital expenditure. How does 'Private Cloud' differ?

wdewey@cityofsalem.net
wdewey@cityofsalem.net

I don't know that size alone can completely rule out cloud computing. It would be necessary to take a look at all the costs and risks involved. What is the impact of loosing a server? Is a server public facing or only internal? Are the applications bandwidth intensive? How reliable and fast is your internet connection? It may only be cost effective to us cloud services for particular functions such as email or web hosting or it may not be cost effective to use any cloud functions. This is dependent on a lot of factors so I don't see being able to say that one size of company it is cost effective and another size of company should steer clear. Bill

HAL 9000
HAL 9000

But it sounds so Techy that it must be a good thing right? Col

Charles Bundy
Charles Bundy

and I certainly didn't mean to imply that cost savings was the only deciding factor. Thoran's "Matter of Cost" description just seems to fit the small business environment. E.G. [ol] long term investment in equipment 24/7 operations no scaling wrt services (a server or three provide all the cycles needed) [/ol] One thing that makes the assumption murky is a lot of small business folks don't have dedicated IT staff to leverage new equipment costs on. Also for small business owners cost savings are often the only consideration. Not that they don't care about the other factors, it's just they may not be able to afford it.