Do The Math On Cloud: Costs Of Public Cloud Versus On-Premise Software-Defined Object Storage

Adam Hauff
Senior Business Analyst, Advanced Software Division at EMC

Like most other enterprises today, it’s likely your organization is increasingly moving towards cloud-based technologies to improve agility, enable new capabilities and reduce costs.

Cost is one of the prime motivators for exploring cloud, with many public cloud providers offering innovative services at low monthly prices. Data storage in the public cloud can seem particularly attractive, costing just a few cents per gigabyte—but how do these costs and benefits really stack up against the latest on-premise solutions, based on software-defined object storage?

Cloud Storage In The News

A March 2016 article in Wired magazine reports how online storage business Dropbox has recently moved the hosting of most of its operations away from Amazon’s public cloud, to its own custom-built cloud storage infrastructure. The article discusses why, for companies reaching a larger storage scale, it makes sense to move at least part of their cloud storage away from public cloud providers: “Amazon and Google and Microsoft can keep cloud prices low, thanks to economies of scale. But they aren’t selling their services at cost... According to [Dropbox vice president of engineering Aditya] Agarwal, the main reason for moving off the Amazon cloud is raw economics...”

These cost issues are now driving business technology leaders to look more closely at the storage technology that increasingly powers the cloud—object storage.

Object Storage In The Cloud

Object storage is an important data storage model that organizations need to understand in order to exploit a range of new opportunities and deal with data growth. It’s ideal for storing large amounts of unstructured data, as it can scale elastically—and has become well known as the technology behind public cloud storage, with the growth of Amazon S3 and Microsoft Azure Storage.

The costs of public cloud storage can initially seem very attractive—typically just a few cents per gigabyte per month. However, the practical reality is that most users scale up their requirements more than they scale down—so with public cloud storage it’s very easy to suddenly find you’re paying more than you planned for. As you reach petabyte scale, those ‘few cents’ can really mount up—leaving you paying tens of thousands of dollars in monthly fees to a public cloud provider. This contrasts with on-premise storage in your datacenter, where the initial set up costs are higher than public cloud, but the on-going costs don’t rise as much with scale.

Public cloud storage is also not always an option for many organizations and data types—in sectors like government, healthcare and financial services—that face restrictions on how and where sensitive data can be stored.

A New Cloud Option—On-Premise Object Storage

The good news is that cloud-based object storage is now also an on-premise option for your organization’s datacenter—with solutions like EMC Elastic Cloud Storage (ECS) enabling you to create your own secure private cloud of storage.

The latest generation of on-premise object storage solutions, like ECS, provide an attractive alternative option to complement public cloud. With on-premise object storage you get the scalability and simple management of public cloud—but you retain full control over the location and protection of sensitive data. While you do need physical infrastructure, this can now be low-cost commodity hardware—the intelligence is in the smart ECS software that creates a software-defined storage platform that can store and manage billions of files of any kind.

Considering the ‘Cost to Serve’ for Cloud Storage

So how do you decide which cloud storage option is right for you—and in which situations? As well as the relative benefits involved, this kind of major decision will usually be influenced largely by cost. But what is the real cost of cloud storage—the total cost of ownership, or TCO?

A good way to think about this is in terms of the ‘cost to serve’ your data over time—meaning the total cost to store, access and manage data per gigabyte per month. To give a meaningful comparison for enterprise requirements, this cost is usually averaged out over a period of three to five years.

The ‘cost to serve’ has three main elements—‘cost to store’, ‘cost to access’ and ‘cost to support’.

Elements of Cloud Storage ‘Cost to Serve’

1. Bucks and Bytes—Your Cost to Store

Public cloud-based object storage is a popular choice for organizations when they want storage in a hurry—it’s easy to manage and there’s no need to buy, install and manage physical infrastructure. With public cloud storage, the apparent ‘cost to store’ is simply the quoted price per gigabyte per month for a storage bucket. Think ‘public cloud storage’ and many users only consider this top-line cost. But at scale and over time, this is just one component of the total—typically 50 to 60% of the TCO for public cloud storage.

For an on-premise solution, calculating the ‘cost to store’ is a little more complex, incorporating the up-front infrastructure cost of purchasing storage hardware, networking and software, plus the cost of power, cooling and space for the system. This will also vary depending on your existing datacenter capabilities—will you be able to use existing infrastructure—or will you have to build a whole new datacenter to meet your needs? Remember also that a modern software-defined storage platform like ECS uses lower-cost commodity infrastructure, and can be expanded gradually according to your requirements on a pay-as-you-grow basis—making it much more economical compared with the big up-front investments required for traditional enterprise storage.

Although the total cost of an on-premise object storage system initially sounds large compared to the costs associated with public cloud, over a period of years both approaches usually average out to around a couple cents per gigabyte per month.

2. Transfer and Egress—Your Cost to Access

This is where public cloud storage often surprises organizations, as it typically charges extra for actions where you need to get to your data, to move or copy it out of storage—variously termed data access, transfer or egress. These access costs may again only be a few cents per gigabyte—but with repeated transfers on the terabyte or petabyte scale, they can also quickly mount up.

By contrast, with on-premise object storage you are in full control of your own data at all times—so there are no fees for accessing or moving it. In addition, with a multi-protocol platform like ECS offering built-in HDFS access, you can conduct in-place Hadoop analytics on your data without the delays of moving it to a specialist analytics platform—delivering valuable insights and shortening your time-to-market.

This is a big cost differentiator for ECS—as public cloud does not usually include in-place Hadoop analytics. With a typical leading public cloud, for example, you need to copy your data from object storage to a separate cloud block storage volume and spin up a compute service to run analytics on it. You end up needing to pay to store two copies of your data (one copy in object and one in block while you’re running analytics)—and pay for the analytics service on top of that.

3. Manage and Maintain—Your Cost to Support

For an on-premise solution, you will need to manage, maintain and support your own system—either with your own personnel, or with the help of external support and maintenance providers.

This initially seems like a significant cost compared with public cloud, where you might think this is included in the provider’s fees. However, included support is usually quite basic with public cloud, and the user is largely expected to self-support.

Again, over time, the support and maintenance costs for both public cloud and on-premise solutions typically average out to less than a cent per gigabyte per month.

Other Object Storage Value Considerations

There are a range of other factors that can also feed into cost advantages for your cloud storage system—and deliver added value for your organization.

With ECS geo-distributed object storage, as you increase your number of sites, you increase performance and storage efficiencies—which reduces the overhead required to protect data.

Public cloud object storage is also usually hosted in geographically distant datacenters. With an on-premise solution like ECS, your data is stored closer to your in-house business apps and users, helping to reduce latency and improve user experience. This can save you money on other latency-reduction measures you might otherwise have considered.

Object Storage Cost Savings—How It All Adds Up

The exact cost savings versus public cloud storage that you can make with ECS will vary according to your specific situation and requirements—you can get a tailored TCO savings projection by talking to EMC.

However, calculations indicate that organizations deploying ECS to manage a multi-petabyte on-premise object storage system based on commodity infrastructure, over a period of around four years, can potentially achieve TCO savings of up to 65% compared against public cloud costs.

Your Cloud Storage Cost Conclusions

For most organizations, the choice between public cloud and on-premise object storage will not be a ‘one or the other’ decision—both will play a valuable role in different use cases. Often, organizations choose a ‘hybrid cloud’ strategy to leverage the benefits of both public and private cloud. The important thing is—you now have a range of cloud options to meet your cost requirements.

Organizations exploring on-premise object storage and wanting the reassurance and confidence of a turnkey solution can turn to a partner like EMC for end-to-end software, support and pre-configured commodity hardware—with the EMC ECS Appliance.

If you want all the benefits of ECS, without setting up your own infrastructure, talk to EMC to find a Cloud Service Provider.

Get your organization in position to gain the cloud cost savings enabled by on-premise object storage. It’s easy to start small—and scale up as your storage demands increase.

EMC ECS software is available and try for free.

Learn more about cloud object storage cost savings with EMC ECS.