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Private cloud can be cheaper than public cloud

According to new research, a private cloud can be much cheaper than using a public cloud service, though only when it's running on a large scale.

The analyst firm 451 Research has released a new report exploring the costs of private, public and hybrid cloud services, revealing that when a private cloud is large enough, it can actually be cheaper than public cloud services. There are, however, upsides and downsides to both approaches.

The report was written with the intention of giving potential cloud customers more transparency when it comes to understanding the complex pricing models used by cloud providers. 451 Research also took the total cost of ownership (TCO) into account when compiling its research which includes both the salaries of cloud managers and the workload requirements of organisations.

The firm reached the conclusion that when labour efficiency is under 400 virtual machines per engineer, the commercial private cloud offerings being sold by companies such as Microsoft and VMware actually have a lower TCO. However, when labour efficiency becomes greater, OpenStack suddenly becomes a much more reasonable option financially with all private cloud options being cheaper than public cloud and even the managed private cloud options that are currently available.

Analysts at 451 also put together a Cloud Price Index (CPI) to compare private and public clouds. The index was able to show that OpenStack offers customers a more beneficial TCO than even a DIY approach when the number of virtual machines managed by an engineer increases by five per cent.   

Owen Rogers, the research director of 451's digital economics unit, offered further details on the findings, saying: “Salaries and labour efficiency have a disproportionately large impact on pricing, so our analysis provides a true picture of total cost of ownership, beyond the technology costs. 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.

"While the CPI provides a basis for assessing options, we suggest buyers consider a hybrid or multi-cloud strategy so that they can determine the best execution venue for each workload based on cost, management, technology and location requirements.”

451's report made it clear that public cloud is the least wasteful option since the end user is not required to invest or ensure that there is enough capacity for their workload.

Private cloud on the other hand may be cheaper on a large scale, but it is more difficult for an organisation to implement as providing too much capacity will waste resources while too little capacity may leave it lacking the resources it needs to get the job done. 

Image Credit: Imilian / Shutterstock

Anthony Spadafora
After living and working in South Korea for seven years, Anthony now resides in Houston, Texas where he writes about a variety of technology topics for ITProPortal.