State of the Cloud A perspective on cloud infrastructure services, Neev Technologies July 9, 2012
Most businesses are not ready for the cloud! 1 in 5 customers approach us for a bare-minimum infrastructure setup on the cloud with budgets of less than $10K per annum towards infrastructure & maintenance. But, are they really right in going with the cloud? What real benefit of the cloud can a business derive from one or two low-cost instances? Realistically, can they gain anything at all from trafficbased infrastructure shaping or pay-per-use pricing? On the contrary, the very nature of the cloud poses a real disadvantage. Having been built out of low cost, commodity hardware and with no SLA on individual instances, the premise of the cloud is that applications are architected to withstand individual instance failures. Unless a business has a spend of at least $10K or more per annum, there is no advantage to be gained; putting enormous pressure on support & maintenance that does not justify costs. Typically the businesses with infra requirements in line with this budget (>$10K) are the ones that require additional servers to handle higher traffic during campaigns and those that really take advantage of being able to increase or decrease the size of servers dynamically. Without minimum expenditure, the economic efficiency of the cloud does not kick in. Most of our audience today, especially the typical startup is looking at an AWS spend of no more than $5000 per annum. This prompts for a minimum qualifying budget of $10K per annum on infrastructure & maintenance.
'Marketing speak' and real numbers The recent ads by Precision says 'Saving 22 crores' and '18:1 server consolidation ratio' !! 'Marketing speak'? Either that or we have the wrong market. For example, how many of our customers have 18 servers to begin with? Also, consider: to save 22 crores (assuming an average of 40% cost savings), the total cost of infrastructure must be at least 55 crores - that is $11million (that is around 1.1% of AWS' expected revenue in FY12). Does any single company manage that much of AWS? Here are the customers we have engaged so far with that have big AWS spend (> $25K per annum) – not including maintenance cost!! • Apalya • FFTY • Tubifi • KEH There are few companies that spend more than INR 12L every year on servers (again not including maintenance cost). One may buy at least 8 physical servers every year (@INR 1.5L per server including the cost of power & cooling). For many large companies, the cost on servers is a very small percentage of the total IT spend.