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Cloud Economics: Deciding Build vs. Buy

Should you build you own private cloud or buy someone else's? What about doing both?

Yes, you've heard enough and are probably tired of all the marketing hype. But the evolving notion surrounding the cloud is shifting the "if" toward "when" you'll be incorporating it into your IT services strategy. Even Microsoft has released compelling documents like its brief, "The Economics of the Cloud" (you can download it here), a document more than six months old but no less valuable for the CTO with a cloud-based decision to make.

Once the decision is made to implement a cloud infrastructure, the next step is deciding how it should be constructed. Two diametric opposites appear to be the primary options available now: build your own private cloud or buy someone else's public cloud.

Nearly all of IT's diametric opposites have eventually settled into some combination of "a little of both." Mainframe and client/server swung back and forth to the point where now both approaches are roughly equal in prevalence. One wouldn't be remiss in assuming that today's private versus public cloud debate will likely take the same path.

When deciding whether private or public cloud makes sense for you, the more sensible path probably lies somewhere in between. What does that "both" path mean for the decision-making CTO? In reality, a lot.

Enterprise organizations already have a significant investment in virtualization. Gartner Inc. reports that slightly more than half of all IT workloads will be virtualized by the end of 2012. Many of the underlying technologies that manifest private cloud computing are in fact already within your datacenter today. What remains is a slight alteration to the management techniques used in delivering virtualized IT services. Some of that alteration is procedural; other parts are technical. Each of the major virtual players is only now adding private cloud awareness into core virtual management platforms.

But if you already have a private cloud, why even consider the public cloud? One reality is the ever increasing need for speed in IT service delivery. Another is, simply, cost.

Take, for example, Amazon Elastic Compute Cloud (EC2) services. A "small" Windows On-Demand Instance, Amazon parlance for a server priced by the hour, gets you a single x86 processor with 1.7GB of memory and 160GB of storage for about $87.84 per month at 100 percent utilization (as of this writing). Prepay on a three-year contract and that rate drops to $36.60 per month, a rate that's almost what it costs just to power and cool your own physical equivalent. Add to this the realization that few servers are 100 percent utilized all the time, and the EC2 use-based rate structure quickly melts the costs away.

While the costs are compelling, it's the speed in which EC2 resources are provisioned that absolutely impresses. Select the instance you want, and expect it delivered literally in minutes. Add software and interconnect servers and you've quickly extended your services to the Internet.

Neither EC2's nor its competitors' speed of deployment -- nor their price -- belie the fact that you still have local processing needs. Amazon itself suggests EC2 is designed as a Web platform. Its competitors advertise a wider scope. Notwithstanding, your business requires locally homed services for which you've already made the infrastructure investment.

These reasons and more highlight why the "both" strategy is the smart answer for decision making in the long term.

Some hybrid of private and public cloud is our industry's future, with services operating locally when they make sense and elastically expanding into the cloud as resources are needed. Connecting the two to create the LAN, WAN, DMZ or other connectivity your business services require is only the next step toward this future of highly optimized computing.

About the Author

Greg Shields is a senior partner and principal technologist with Concentrated Technology. He also serves as a contributing editor and columnist for TechNet Magazine and Redmond magazine, and is a highly sought-after and top-ranked speaker for live and recorded events. Greg can be found at numerous IT conferences such as TechEd, MMS and VMworld, among others, and has served as conference chair for 1105 Media’s TechMentor Conference since 2005. Greg has been a multiple recipient of both the Microsoft Most Valuable Professional and VMware vExpert award.

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