The long, slow death of private cloud continues

At some point the economic unviability of private clouds will become clear. Math will win out.

By Bernard Golden
Nov. 3, 2016

I must have touched a nerve with my last post, as I was contacted by two vendors that wanted to share their perspective on private cloud computing. Even though I don’t consider myself an analyst and therefore typically avoid “briefings,” I thought it would be interesting to see what they had to say.

Both vendors covered what I consider well-trod ground: Organizations use private clouds for reasons of security/compliance, data sovereignty, data gravity (i.e., there is lots of data on-premises and it would be very difficult to migrate it to a public cloud provider), application inflexibility, and so on.

However, one also identified another reason that organizations choose to use private clouds: cost. This vendor asserted that IT organizations can operate a cloud environment less expensively than what a public cloud provider charges for the same capability.

This caught my attention because, in my view, economics is the critical issue governing private cloud computing. Economics dictates how organizations will address the commonly cited issues outlined above (e.g., data gravity). If a private cloud is the same cost or less than the public counterpart, it would make sense to prefer it. But at some cost point (50 percent? 100 percent? 200 percent?) it’s likely that the organization would reconsider its preference. In other words, there is some cost point that would motivate IT organizations to figure out how to mitigate security/compliance, etc. and use public cloud computing.

Cloud misinformation abounds

Unfortunately, the question of private cloud costs is a swamp of misinformation (well-typified by this analyst’s post). One such spurious assertion is that AWS is really better-suited for development than production because private clouds handle stable workloads better. Implied in the statement is that a private cloud running a stable workload is bound to be cheaper than the public alternative.

I often wonder whether this kind of statement is grounded in any actual application experience, because in my career I’ve never seen the kind of well-behaved applications this kind of statement implies. Regardless, even stable applications require ongoing development, QA, load testing and the like. These activities are typically treated as low-priority and struggle to get on-premises infrastructure resources, which might account for why so many applications are deployed in public cloud environments.

The analyst’s post cites Dropbox as an example of a company that chose to move off of a public cloud in favor of self-managed infrastructure. Dropbox runs a limited set of applications over an enormous fleet of servers, and manages them with an incredibly talented set of staff. Holding Dropbox up as an example for why mainstream enterprise IT groups should consider building their own clouds is, to my mind, dangerous. It would be like suggesting to me that I should follow the nutritional regimen of Michael Phelps. He is an elite athlete who requires 12,000 calories a day to support his incredible training regimen; I am a sedentary adult who spends most of my day exercising my fingers on a keyboard. If I ate like Michael Phelps I’d soon have enormous health issues.

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