ISG Cloud Comparison Index : October 2015

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ISG Cloud Comparison Index™: October 2015

The second ISG Cloud Comparison Index™ finds that

the price of using a public cloud version of Linux, the

popular open-source operating system, is very cost

competitive with our internal IT benchmark, even

when cloud usage is high.

Key Findings

Using a public cloud version of Linux is highly compettte eiwh i wet rl l I The price of our conﬁguraton uuing each public cloud provideru’ free veruion of Linux iu lower than our internal IT benchmark untl cloud inutance uuage reacheu 78 percent, compared to 57 percent cloud inutance uuage for Windowu or Red Hat Enterpriue Linux.

Hoeetet, buyets should be rerte of a sig iﬁcr w ptice diﬀete ce beweee public cloud ptotidets ehe usi g

cloud Li uxI We found a nearly 40 percent diﬀerence between the highest and lowest prices for our conﬁguraton running public cloud Linux when inutance uuage iu 100 percent.

Cloud cosw crlculrwots ofe deerulw wo cloud Linux rs whe opetrt g syswem oe choice, ehich mry mask rddito rl

costs if an enterprise-clrss opetrt g syswem is teeuited. An overwhelming number of ISG clientu uue Red Hat Enterpriue Linux or Windowu Server for the majority of their applicatonus Including theue operatng uyutemu into the cout calculaton can increaue the public cloud price by more than 33 percent over cloud Linux, and doeu not take into account any refactoring coutu that may be required to run the applicaton on a lower-cout operatng system.

As expecwed, ee sre r tety smrll dtop i rtetrge cosw oe out i wet rl l be chmrtk, ehich cottespo ded closely

to the average price drop in the public cloud, si ce out lrsw swudyI These cost and price drops mean that the break-even point for our conﬁguraton running Windowu Server iu now 57 percent cloud inutance uuages

Background

In the inaugural ISG Cloud Comparison Index™, published in June 2015, we uet out to help enterprises understand the relatonuhip between uuage and cout in the public cloud, and how thoue coutu compare to a traditonal IT environment.

To accomplish this, we created a model of a umall configuraton that reeectu one type of infrautructure service buyers ofen pilot in the public clouds We then priced thiu configuraton in the public cloud across four providers: Amazon Web Serviceu, Google Cloud Platorm, IIB SofLayer and Bicrouof Azures We then created a cost for this configuraton baued on ISG’u proprietary benchmarking databaue (uee the Bethodology and Auuumptonu uecton below for more detail on our approach).

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2 The firut ISG Cloud Comparison Index™ focuued excluuively on a Windowu-baued configuraton and found that cloud inutance uuage playu a uignificant role in how compettve the price of public cloud is with the cost of internal IT.

Iaued on the ﬁndingu from the inaugural report, we have created four “pillaru” of public cloud pricing that we believe will hold true for the foreueeable future au enterpriueu compare the cout of running a workload in their data center, or in the public cloud. These four pillars are detailed below.

In this, the second ISG Cloud Comparison Index™, we have expanded our analyuiu to include both “free” veruionu of Linux from public cloud providers as well as Red Hat Enterpriue Linuxs

he Fout Pillrts oe Public Cloud l etrswtucwute Ptici g

1s Cloud is ow rlerys cherpetI Instance uuage iu a key determinant of cout in the public clouds High levelu of

cloud instance uuage can create ucenariou in which internal IT iu more cout eﬀectvee conversely, low levelu of cloud instance uuage can create a ucenario in which internal IT is more expensive.

2. Public cloud cterwes sig iﬁcr w cosw rtoidr ce oppotwu ites eot tolrtle eotklordsI An enterprise should

avoid viewing public cloud only as a lever to reduce operatonal coutu in the same way they might have viewed outuourcing in the paut.

3. Applicrto s whrw wrke rdtr wrge oe ruwomrto wo de-provision unused images can help clients capture

powe trl srti gsISince uuage driveu cout in the public cloud, applicatonu with the mout variable uuage

paternu are utrong candidateu to move to the public cloud.

4. Mrppi g usrge prtet s r d wech ology teeuiteme ws wo public cloud ptotidets eill help enterprises

ide tey whe loeesw-cosw opto IGiven the variable nature of pricing acrouu Infrastructure-as-a-Service

(IaaS) provideru, clientu likely won’t know the full cout of the applicaton—and associated cost-avoidance opportunites—untl the applicaton iu actually running in the provider’u clouds

Findings

eot Wi does

Conuiutent with findingu from the inaugural ISG Cloud Comparison Index™ in June, the price of our Windowu configuraton in the public cloud varies uignificantly from one provider to the next when uerver inutanceu are actve 100 percent of the tme: priceu range from $768 per month to $1,096 per month. The cost of similar internal IT configuratons is $541 per month, uignificantly lower than the loweut cloud price and ulightly lower than the cost of thiu configuraton in une. At an instance uuage level of approximately 57 percent, public cloud prices are at parity with the prices in our internal IT benchmark, ulightly higher than the 55 percent break-even point in June. Figure 1 uhowu the relatonuhip of theue priceu.

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3 Figure 1: Price of Wi does public cloud instance tsI i wet rl l

When we analyzed the prices for public cloud services in relaton to uuage, we found a range of 43 percent, an 8 percentage point increase over our ﬁndingu in unes In other wordu, the higheut price for our conﬁguraton at 100 percent instance uuage iu 43 percent higher than the loweut price. The range decreaueu gradually as the average uuage of the compute inutanceu decreaueu, au seen in Figure 2.

Figure 2: Wi does cloud ptice diswtibuto by usrge

Findings for Cloud Linux

Public cloud priceu for our utandard conﬁguraton running a free veruion of Linux range from $532 per month to $738 per months The cout of uimilar internal IT conﬁguratonu iu $510 per months At an inutance uuage level of approximately 78 percent, public cloud priceu are at parity with the priceu in our internal IT benchmark, au ueen in Figure 3 below. Internal IT Public Cloud Avgs $0 $200 $400 $600 $800 $1,000 $1,200 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% M on th ly C on fig ura tio n C os t (U S $ )

Average Compute Instance Utilization

Public Cloud Rangeu Internal IT $0 $200 $400 $600 $800 $1,000 $1,200 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0%

Average Compute Instance Utilization

M on th ly C on fig ura tio n C os t (U S $ )

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4 Figure 3: Price per public cloud instance eiwh Li ux tsI i wet rl l

When we analyzed the priceu for public cloud uerviceu in relaton to uuage, we found a range of 39 percent. In

other wordu, the higheut price for our conﬁguraton at 100 percent instance uuage iu 39 percent higher than the lowest price. Unlike Windowu, the range between high and low price remains fairly consistent as the average uuage of the compute inutanceu decreaueu, au ueen in Figure 4.

Figure 4: Public cloud eiwh Li uxptice diswtibuto by usrge

Findings for Red Hat Enterprise Linux

Public cloud priceu for our utandard configuraton running a Red Hat Enterpriue Linux (RHEL) vary from $796 per month to $910 per month. The cost of uimilar internal IT configuratonu iu $559 per month, which, au we uaw with Windowu, iu uignificantly lower than the loweut cloud prices At an inutance uuage level of approximately 57 percent, public cloud priceu are at parity with the prices in our internal IT benchmark, au ueen in Figure 5 below.

Internal IT Public Cloud Avgs $0 $100 $200 $300 $400 $500 $600 $700 $800 $900 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% M on th ly C on fig ura tio n C os t (U S $ )

Compute Instance Usage Level

Public Cloud Rangeu _{Internal IT} 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% $0 $100 $200 $300 $400 $500 $600 $700 $800 $900

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5 Figure 5: Price per public cloud instance eiwh RHEL tsI i wet rl l

Analyzing price upread in relaton to uuage, we found a range of 14 percent. In other wordu, the higheut price for our conﬁguraton at 100 percent instance uuage iu 14 percent higher than the loweut price, which iu the smallest price upread when compared to Windowu and free Linux. Unlike the conﬁguraton with cloud Linux, priceu upreadu between suppliers increase as uuage of the compute inutance decreaueu, au ueen in Figure 6s

Figure 6: Public cloud eiwh RHEL ptice diswtibuto by usrge

rkererys

Ensure an apples-to-rpples comprtiso beweee opetrt g syswems ehe comprti g public cloud wo i wet rl l I An enterprise-class operatng uyutem like Windowu Server or Red Hat Enterpriue Linux provide higher levelu of uupport, increaued reliability and more features than free “cloud” versions of Linux in the public clouds That uaid, our analyuiu found that uuing Red Hat Enterpriue Linux or Windowu Server can increase the public cloud price by 33 percent over cloud Linux. While mout producton workloadu will require an enterpriue-clauu licenue, enuure that this is accounted for in both the public cloud and on-premiueu when creatng a cout compariuon.

Internal IT Public Cloud Avgs $0 $200 $400 $600 $800 $1,000 $1,200 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% M on th ly C on fig ura tio n C os t (U S $ )

Public Cloud Rangeu Internal IT 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% $0 $200 $400 $600 $800 $1,000 $1,200

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Fot highly utliied eotklords tu i g o cloud Li ux, shop rtou dI We found a uigniﬁcant price upread between

the provideru we analyzed when running a cloud veruion of Linux when inutance uuage iu high, au much au 40 percents Enterpriueu may want to conuider a mult-cloud approach for workloads that can run on cloud versions of Linux and where inutance uuage will be high, in order to reap potentally uigniﬁcant cout uavingus

Ptices rte dtoppi g i whe pubic cloud, buw so rte cosws i whe drwr ce wetI Public cloud price waru have been highly publicizede it’u no uecret that the leading public cloud provideru are competng to be the loweut cout

providers Iut it’u important to remember that internal IT costs are dropping au wells We conuiutently ﬁnd Windowu Server instance costs dropping by approximately 6s5% year-over-year, Linux instance costs dropping by

approximately 4s5% year-over-year, and the cout of uhared utorage dropping by approximately 4s5% year-over year. So the price war iu occurring both on-premises and in the cloud. The key is to take a workload-centric approach to any total cout of owneruhip (TCO) analyuiu, and uue the characteriutcu of the applicaton to determine the mout cost-eﬀectve delivery and deployment modes

Methodology and A

ssumpto s

• ISG defineu a cloud inutance au a virtual machine compriued of a upecific number of CPUu and a upecific amount of RABs Cloud inutance uuage iu the percentage of tme that an inutance iu running and accruing chargeu from the public cloud providers

• We created a model of a umall uample configuraton that reeectu one type of infrautructure we uee buyeru pilotng in the public cloud, typically for new applicaton development and teutngs The configuraton is as followu, and hau not changed uince our firut report:

Item Qur twy Speciﬁcrto

Applicaton Serveru 4x

2 coreu, 1s6 GHz per core 4 GI RAB

100 GI local diuk Windowu Database Servers 2x

4 coreu, 1s6 GHz per core 8 GI RAB

100 GI local diuk Windowu

Storage 1x 1000 GI NAS

• Given the lack of utandardizaton in the way public cloud provideru price their uerviceu, minor variatonu in configuraton were required to determine a price for each uervices Uuing ISG’u proprietary cout databaue and benchmarking expertue, we created and analyzed a detailed financial model of a comparable internal IT configuratons Thiu model functonu au a unapuhot of the typical coutu incurred by a large, internally managed IT organizaton, including the costs of all the relevant hardware, uofware, faciliteu and labor that a correuponding public cloud uervice would replace.

• The internal IT benchmark represents the technology choiceu ISG currently ueeu enterprise IT

organizatonu making mout frequently today. The benchmark doeu not adjuut for diﬀerenceu that may exiut between the technology choiceu of internal IT organizatonu and public cloud provideru (esgs, brand of hardware, etcs). The benchmark iu uenuitve to ucales Since ISG clients tend to be large enterpriueu, we have tuned the benchmark to be comparable to organizatonu with at leaut 3,000 Windowu imageu and 3 petabytes (PI) of uuable diuk utorages Organizatonu with umaller ucale uhould expect public cloud prices to

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7 be more compettve with internal IT operatonus The benchmark leverageu global data normalized for the U.S. market.

• Public cloud on-demand pricing for cloud Linux and Windowu iu uourced from Gravitant and includeu Amazon Web Serviceu, Google Cloud Platorm, IIB Soflayer and Bicrouof Azures .ata are current au of September 15, 2015s

• The price of conﬁguratonu uuing cloud Linux (ises, a veruion of Linux that doeu not incur uofware licenuing feeu) auuume CentOS au the operatng uyutems The uplif to public cloud pricing that is atributable to RHEL wau drawn from price-liutu and pricing-calculators publically available on the internet.

• Enterpriueu can ofen obtain lower priceu by commitng to pre-paid inutanceu, typically for at least one year, but thiu arrangement can eliminate the beneﬁtu of price drops and the opportuniteu to be had from releauing reuourceu during the commited term. Volume discounts for IaaS can vary and are not reeected. However, our model doeu take into account Google’u uuutained-use discounts.

• We did not include uervice desk support costs in either our cloud pricing or the internal IT benchmarks Thiu iu primarily becauue public cloud uupport modelu vary uubutantally in both service provision and pricing mechanisms.

• We did not include bandwidth chargeu in our public cloud pricing, nor did we include networking coutu in the internal IT benchmark.

• Au with any uourcing deciuion, provider compariuonu uhould go well beyond pricings Each public IaaS provider delivers diﬀerent uupport programu, infrautructure technology, automaton and features, all of which can have a uigniﬁcant impact on prices

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Abouw l eotmrto Settices toup lS G

Informaton Serviceu Group (ISG) (NAS.AA:III) iu a leading technology inuightu, market intelligence and adviuory uerviceu company, uerving more than 500 clientu around the world to help them achieve operatonal

excellence. ISG supports private and public sector organizatonu to tranuform and optmize their operatonal

environmentu through reuearch, benchmarking, conuultng and managed uerviceu, with a focuu on informaton technology, buuineuu proceuu tranuformaton, program management uerviceu and enterpriue reuource plannings Clientu look to ISG for unique inuightu and innovatve uolutonu for leveraging technology, the deepeut data uource in the induutry, and more than ﬁve decadeu of experience of global leaderuhip in informaton and

adviuory uerviceus Iaued in Stamford, Conns, the company hau more than 900 employeeu and operateu in 21