3 Key Cost Benefits of Deploying a Hybrid Cloud

The biggest driver for hybrid cloud adoption is cost efficiency. Learn about the elements of a cloud infrastructure that are central to cost optimization.

By Dipti Parmar

By Dipti Parmar June 17, 2021

While the benefits of an easy-to-deploy public cloud or a workload-appropriate private cloud are obvious, enterprises and even SMBs are increasingly turning towards a unified hybrid, multicloud environment. In fact, nearly 94% of businesses surveyed in NTT’s 2021 Hybrid Cloud Report said that the hybrid cloud was a core enabler for their business strategy and critical to meeting their immediate business needs.

One of the key findings of the NTT report was that while business continuity, resilience, and agility were the top objectives for hybrid cloud adoption, the biggest driver was cost efficiency. Today’s distributed and remote workforce uses data and applications in new and complex ways, and organizations need to find cost-efficient ways to enable this via the cloud.

“One of the attractions of cloud computing is that it’s quick and easy to spin up additional resources if demand spikes or you need temporary capacity for some experiment,” said Gordon Haff, Technology Evangelist at Red Hat. “However, it’s also easy for costs to spin out of control. And this is doubly true in the case of complex multicloud or hybrid cloud environments.”

With that in mind, here are the different elements of a cloud infrastructure that are central to cost optimization.

CAPEX Savings over a Private Cloud or Data Center

Constantly evolving business functions and advancements in technology mean that enterprises need to find a balance between third party public or private cloud models and on-premises data center deployments. It also helps to be able to switch quickly between these options according to changing workload needs or cost saving opportunities.

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The private cloud is made up of roughly the same server, storage, and network architecture as an enterprise data center but offers tremendous improvements in efficiency and agility, with improved allocation of resources to applications. However, the CAPEX of hardware still depends on the organization’s peak usage patterns.

The hybrid cloud does away with over-provisioning while still keeping the bulk of the workload on-premise. Orchestration tools facilitate the on-demand and transparent movement or “bursting” of additional application loads to the public cloud during peak usage times.

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“Continually re-evaluate your use of the cloud to see if there are new cloud services or features that you should leverage. These optimizations can result in significant improvements in performance or reductions in costs that are easy to miss,” said Gokul Rajagopalan, Director of Products at Vectra AI.

OPEX Savings over a Public Cloud

Pay-as-you-go often gives a false sense of “all is well” to cloud managers and architects, drawing them into OPEX worship. A classic example is that of developers spinning up a few VMs on a testing environment and forgetting to delete them after the objective has been achieved. Add to that the fact that public cloud resources come in T-shirt like packages (small, medium, large), making it easy for customers to oversubscribe.

A few months of such oversights and before long, the TCO could end up exceeding the cost of an owned data center.

“In recent years, there’s been a mad dash to the cloud. But many faced a rude awakening when they saw public cloud costs skyrocket out of control. It gave us all more reasons to find a better way with the right mix of owned and rented IT infrastructure and services,” said Steven Kaplan, former VP of Customer Success Finance at Nutanix.

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An IDC study showed that over a five-year period, a bursting workload on a hybrid cloud cost 44% less than its native public cloud equivalent, even after taking into account all the costs of compute and storage infrastructure management, application installation and software licensing fees, as well as refactoring and migration.

Another study by IDC found strong cost efficiencies in migrating workloads to a hybrid solution compared to another public cloud – organizations incurred up to 57% lower costs of migrations, translating into savings of over $200,000 per 100 VMs.

The total ongoing cost savings in running a hybrid cloud environment, including benefits in productivity, risk mitigation, security, IT administration, and infrastructure maintenance, came to nearly $900,000 a year for 100 VMs.

Nutanix Clusters is the industry’s first platform to migrate and manage workloads to a unified hybrid, multicloud environment in a seamless and cost-effective manner. It lets organizations take control of hybrid cloud spend with automated cost governance policies, such as using the same software and licenses across all supported clouds.

The Economics of Data and Storage Management

Data transfer and management costs are one of the most overlooked and poorly analyzed expenses in designing and deploying a new workload or migrating to a new architecture. 

“Cloud provider pricing is complex and the cost of services like data transfers may even help determine the right architecture for an application, where it is run, and where its data is stored,” explained Haff.

“Egress costs happen when moving from cloud to on-prem, but there are even charges when moving data between zones and regions,” said Lenley Hensarling, Chief Strategy Officer at Aerospike. “Careful design can minimize these costs.”

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Traditionally, organizations spent a lot of effort and money on collecting and storing data. Hybrid cloud models feature simplified data management with different storage and access options for data that needs to meet privacy regulations and that which doesn’t. It is simple to set up pay-as-you-go storage systems for non-critical data (it can be moved to cheap public cloud storage as and when it is archived or goes below a preset threshold of access frequency). At the same time, it is possible to create an isolated environment with limited compliance and maintenance expenses for regulated or critical data.

From a hardware perspective, the hybrid cloud reduces the need for expensive storage arrays typical to a private cloud with a tiered storage model, which improves both the cost efficiency and the speed of backups and disaster recovery. Simultaneously, compared to the public cloud, the hybrid model offers cost-saving storage features such as compression, deduplication, and thin allocation to a smaller or larger extent.

The IDC study referred to earlier also found savings of over 47% over a five-year period for a DR workload in a hybrid environment compared to currently popular setups on native public cloud.

Beyond Cost Savings

Clearly, the hybrid cloud adds numerous advantages to those of public or private models by themselves. That said, it’s important to get the cost/benefit analysis for each workload or scenario correct before going ahead with migrations in any direction, whether from an on-premises data center to the cloud or one cloud to another.

Moving to any form of cloud doesn’t simply lead to optimized spending. In fact, without proper planning, organizations could be in for a nasty shock when their monthly bill arrives. As Kaplan emphasized, “It’s not about cloud first; it’s about cloud smart. You can be put out of business really quickly if you don’t manage your consumption wisely.”

Dipti Parmar is a marketing consultant and contributing writer to Nutanix. She writes columns on major tech and business publications such as IDG’s CIO.com, Adobe’s CMO.com, Entrepreneur Mag, and Inc. Follow her on Twitter @dipTparmar and connect with her on LinkedIn.

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