Identifying the Right Cloud Strategy for Better Efficiency and Cost Effectiveness


by Steen Dalgas

| min

With the power to drive innovation, improve efficiency and reduce costs, Cloud deployment is a topic at the top of every FS businesses agenda. But with a choice of Public, Private, Hybrid or Multi-Cloud – or all of them – to choose from, knowing which one is right for your business is a challenging choice.

Leading Cloud Economist Steen Dalgas gives his expert opinion on how to take an analytical approach to determining the most cost-efficient solution.

The starting point in determining the right Cloud approach is to understand the business strategy and ensure that the IT is properly aligned with delivering what the business is  looking for. This is typically lowering costs, improving the product / service and helping drive innovation. 

A common hurdle I encounter is cognitive bias. This is where people have a preconceived view of what they want and push their agenda, as opposed to looking at the facts independently. It’s crucial that you have an open mind and review all the facts before committing to a cloud strategy.

So, the way I recommend building out an objective business case is to look at the CapEx costs. These tend to be: 

  • Physical hardware
  • Software and licensing
  • Support costs
  • Data centre costs
  • People costs (this is really important to factor in)

Then, you want to review how these costs vary according to each of the different cloud platforms.

You then want to look at any soft benefits, and while they may be not form part of the final decision, its good to be aware of them. 

Finally, you want to understand if there are any risks to a certain platform. 

Cutting Costs with HCI

My job at Nutanix, which provides a Hybrid Cloud approach with Hyper Converged Infrastructure (HCI), is to ensure we take an objective approach to each use case and only ever recommend HCI if its right for the need. 

McKinsey did a study where they found that if you use external data to support and validate a business case then the numbers will be three times more accurate.

So, as part of my role I take external data and provide an objective evaluation on what is the right Cloud approach for a business. 

In my team we have reviewed approximately 1000 external cases and have uncovered some incredible findings. When comparing against three-tier architecture, HCI is 50% cheaper in 70% of workloads. 

Perhaps the biggest cost benefit we’ve found is actually around people, not software or hardware. HCI makes management of software very easy and we’re finding that clients are able to move staff resources out of data centres and into high value tasks which allows the business to innovate.

Counting the Cost of Public Cloud 

Taking the findings from our 1000 external data cases we’ve discovered that Public Cloud can be as much as three times more expensive than HCI.

The reason for this is that Public Cloud adopts a t-shirt pricing model. You have to choose a size that fits your requirements. However, if you find out that your size is a bit small you have to buy a larger size. 

This means that your costs can quickly get out of hand, while you can easily end up paying for storage that you don’t need. 

Of course, there are use cases where Private Cloud is highly efficient and these tend to be workloads that are highly elastic. In the use cases I’ve studied HCI will be most cost efficient 50% of the time, while in 20-30% of cases Public Cloud will be most efficient. 

Keep an Open Mind 

So, to summarise, I would urge all businesses to make a Cloud decision on a case-by-case basis rather than assume because it worked for someone else, it will work for us. There is no one-size fits all solution. You need to be open minded, don’t assume you know the answer and make sure you properly evaluate the market.

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