How Much Does the Cloud Cost?

The Total Cost of Ownership of Public and Private Clouds

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Public cloud? Private cloud? Or an on-premises solution? When it comes to installing an Enterprise File Sync and Share Platform (EFSS), you first need to decide which way to go. All solutions have their advantages. Private cloud solutions offer higher data security, supply further control options and provide more flexibility by customizing special requirements and use cases.

On the other hand, the main argument for the public cloud is usually the supposedly lower costs. However, a precise comparison between current SaaS offerings and selected self-hosted solutions indicate that being well aware of the requirements and not being in need of unlimited storage, the choice of a private cloud may even be a significantly cheaper solution.

Vendor Comparison

As far as the usage of enterprise file sharing solutions is concerned, there is a lot of talk about, cloud computing and, naturally, storage, but there are some other basic questions that are more relevant than ever. Which IT infrastructure would meet requirements best? Is the data being saved on public or private servers? And where is the data being processed?

Theoretically, all combinations are possible and the answer to these questions comes down to the same four parameters: Security, scalability, ease of use, and, above all: costs. The common opinion is that public cloud infrastructure is always cheaper than the self-hosted alternative. But this is applicable only under certain conditions. Cheaper storage solutions, which came onto the market primarily with the Software-Defined Storages (SDS), are making on-premises data storage increasingly economical and are often even cheaper than public cloud solutions.

Real Consumption vs. Insurance Based Approach

SaaS vendors such as Dropbox, Box.com, or Microsoft include all storage costs in their premium offerings based on the average storage usage of all customers. Users that require less than the average end up paying extra for the storage of the so-called “heavy users”. That is why theoretical unlimited storage contingents can be offered in the first place since all the “outliers” are compensated by the many users that require little or almost no storage. However, when using a private cloud, all storage costs are based on the actual demand: the higher the storage requirement, the higher the costs.

On the other hand, this also means that those who do not require unlimited cloud space and do not usually exceed a value of 50 GB or 100 GB per employee in their daily routine, will benefit from cheaper prices by launching an on-premises solution in comparison to a public cloud service that promises unlimited storage that may not even be needed.

Storage As A Factor

The choice of storage provider is decisive for the calculation of the total costs. The comparison of prices is based on the study ’TCO Case Study – Backing Up Mountains of Data to Disk‘, published by the market research institute, IT Brand Pulse. The calculated costs include the fees for support by the provider, as well as hardware costs.

Software-Defined Storage (SDS) describes the possibility of centrally managing and controlling data storage in a company with a software solution. The benefits are a more efficient use of memory, better scalability and complete separation between memory hardware and the control level. Simply put, by using Software-Defined Storage, the storage of data is totally separated from the physical hardware. As a result, one may simply add additional storage requirements with low-cost data carriers, which greatly increase the scalability and, therefore, results in significantly lower costs compared to conventional storage systems of publically managed services.

According to IT Brand Pulse, SDS systems are already available for a third of the price of hyper-convergent devices. Ultimately, this means that choosing your storage provider carefully can significantly minimize this relevant cost block by setting up a private cloud and thus easily undercut the costs of SaaS providers.

Conclusion: Efficient Software Defined Storages are much more flexible and cost-effective than conventional storage systems. Therefore, they enable an on-premises infrastructure that can be even when all additional costs are included way cheaper in comparison to the public cloud solutions of the SaaS service providers that are listed in this study.

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The total cost of owning public and private clouds

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Total Costs

While the total costs of a public cloud consist of two parts (the subscription costs and admin costs), the costs of a private cloud consist of three parts: the storage costs for the selected storage architecture, the subscription costs for the used software that manages the data in a cloud-file-sharing-architecture, and finally the costs for the administrator, which are naturally higher for a self-administered cloud (for our sample calculation we have used the factor 2).

While storage and administration costs increase largely in a linear manner with the amount of required storage, the possible savings lies within software costs. With ownCloud’s license model, the costs per license decrease significantly with increasing volume. What this means for the total costs of an On-Premises solution can be seen in detail in the graph below, in which the various cost blocks are subdivided individually.