OpenStack and other commercial private cloud options can beat out public cloud when it comes to overall cost, but only once they reach a certain scale, according to a new Cloud Price Index (CPI) released by 451 Research on Monday.

According to a press release, the CPI “analyzes the costs associated with using various cloud options to determine when it becomes better value to use a self-managed private cloud instead of public or managed cloud services.” The tipping point, it found, was when an engineer managed either greater than, or less than, 400 virtual machines.

Commercial private cloud offerings, like those from VMware and Microsoft, are currently a better deal in terms of total cost of ownership (TCO) when fewer than 400 virtual machines are managed per engineer. For those unfamiliar, TCO factors in the upfront cost of the technology, as well as the cost of maintaining it over time.

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However, when more than 400 virtual machines are managed per engineer, options like OpenStack become more financially attractive, the CPI found. “In fact, past this tipping point, all private cloud options are cheaper than both public cloud and managed private cloud options,” the press release said.

According to the CPI, an OpenStack distribution can also be more financially beneficially than a do-it-yourself (DIY) approach. The CPI said that, “if an OpenStack distribution increases the number of virtual machines an engineer can manage by just 5%, then it offers better value for money than the DIY approach.” The authors also noted the ease of installation and management that come with such distribution, and how that could help improve efficiency as well.

Despite its potential for lower cost, the private cloud adds complexity. As noted by the authors, public cloud is the “least wasteful” option, due to on-demand provisioning. Private cloud, on the other hand, is more difficult to plan for in terms of resources.

Of course, cost is only one factor in the equation. In the press release, 451 analysts urge IT leaders to consider their long-term strategy and security implications as well.

“But as with any IT purchasing decision, cloud buyers need to look beyond the pricing and evaluate all the risks, such as the impact of vendor lock-in over the long term,” Dr. Owen Rogers, research director of the Digital Economics Unit at 451 Research, said in the press release.

The 3 big takeaways for TechRepublic readers

  1. A new Cloud Price Index from 451 Research claims that private cloud deployments are cheaper than their public cloud counterparts if they reach proper scale.
  2. The tipping point for the scale is developer productivity, specifically whether they are managing more or less than 400 virtual machines.
  3. Private cloud adds complexity in that it is more difficult to manage resources and provisioning, which may make public cloud more appealing.