Cloud Economics - TCO - Part 4
Private Cloud Provider
Series history:
Cloud Economics - TCO - Pt 1 - Environments
Cloud Economics - TCO - Pt 2 - On-Premises/Colocations
Cloud Economics - TCO - Pt 3 - Public Cloud
Private cloud providers come in about any flavor you can imagine and often will flex to your needs from multiple facets, such as OPEX/CAPEX (*Reminder* Validate with your accounting department), monthly/upfront/partial upfront pricing, and PaaS options. Now, while they might come in any flavor, that doesn’t make them all equal, so when evaluating your options, ensure you talk to them about all their service offerings.
Having utilized these private cloud providers in multiple instances, I would have no hesitation in considering them an option. Do they make sense in every scenario? No, so evaluate your options beyond the cost-only perspective. As we have pointed out, TCO is one component of your decision.
Like the public cloud providers, you don’t have to manage the hardware, the virtualization platform, and other components. Still, many of these have the same uptimes, even better in some cases, and similar durability of their offerings.
Bonus Information
Sometimes, you will find VARs representing multiple private cloud providers, which can help you quickly evaluate numerous service providers simultaneously, saving you time!
However, it has been challenging to find consistency in their pricing models when pricing them out. What is consistent is that they are very competitively priced in my evaluations.
In Part 1, I listed the pricing components of the different environment types and other costs that you might want to consider in TCO. When it comes to private cloud providers, I most commonly see these cost fields.
In some of the use cases I’ve done TCO calculations for, I’ve had to collapse some of the costs for each category. The providers often come back with the costs broken down for you, and you decide how to reflect them in your TCO.
When I review the quotes, I find that I need to clarify how they scale their calculations regarding a couple of these categories. Thus, I have to factor this into my TCO calculations so that as environments grow, we can scale it out appropriately and provide accurate estimates.
Monthly recurring costs
I use this component as a catch-all for the monthly recurring costs. Storage and computing are the primary two that fall in this category. Still, I break them out occasionally depending on how they scale and how we need to view the pricing compared to other solutions.
One-time costs
I will see this through environmental build-out costs, hardware procurement costs, circuit build-outs, and others. I haven’t seen this be overwhelming, but I do tend to see it as a small portion compared to the overall picture of the commitment. The nice part is that they are easy to add up as part of the initial costs for the TCO calculations.
I collapse all the one-time costs into this category, as all other categories in the diagram are generally recurring on a monthly cadence.
Network access services
As far as costs go, this one, through the providers I’ve worked with directly and utilized, is pretty consistent with a colo space provider providing an internet circuit. They will be looking at what type of circuit and how much bandwidth you consume monthly. Almost every one of them will have the ability to burst or some kind of option to go over your contracted circuit consumption.
I’ve not done a good job of making this one very flexible in our TCO calculations, but I do believe if there was a need for seasonal workloads with ramp-ups in costs that would be significant enough to impact the evaluation, I would work to add that complexity into the overall TCO.
Software costs
Depending on the use case, I don’t always see this one utilized. I often see it when evaluating DRaaS(Disaster Recovery as a Service) or another bolt-on solution. I call it out in my scenarios because we usually consider it, but it’s optional to the overall TCO analysis.
Networking
This category comprises any monthly recurring costs related to underlying network hardware passed through to you as a cost.
Cabling Services
I believe, and I’m probably wrong, but it reminds me of cross-connect costs that I would see in co-location space, P2P circuits, and other places with a telecom provider. Simply, you're renting the transceivers, cabling, and other hardware associated with the circuit.
Like the software costs category, I have seen this one be an optional category; it just depends on what you negotiate.
Virtualization Services
A staple among the costs of private cloud providers, this one is generally associated with the overall environment management and, again, can allow for overages.
What’s nice is that many of the providers will work with you to properly adjust as you see changes in your environment.
What I’m watching closely right now is how this category will change in the future or has already changed with the given changes we have seen in the virtualization platforms' pricing in the market recently. This is one area where, as you are evaluating your cost, make sure you ask because if the pricing is a pass-through of the costs, it could impact your overall costs significantly.
Through this journey, we have seen a lot of flexibility in grouping cost associate categories and building out our TCO evaluation. I recommend keeping it as simple as possible until you see a need for more complexity because this is already complex enough. Balancing this has been the most challenging part for me, especially in the modeling I constantly build out for my thought partners.