SOLVING FOR
“TOTAL COST”
IN THE CLOUD
The cloud is often depicted as, well, like a cloud — endlessly flexible and ready to take you aloft to an IT world of unlimited futuristic potential. And it is. But for IT managers not already experienced with the ins and outs of real-world cloud provisioning, deployment, and ongoing management, unforeseen costs can loom large.
Total cost of ownership (TCO) for the cloud must take into account two kinds of non-obvious — and non-trivial — costs that can add up quickly to large amounts. First is a myriad of separate charges for everything from server memory to intrusion detection levied by some cloud
providers. Second is the cost of personnel to administer cloud management in early-generation clouds that lack sufficient automation.
As this paper clarifies, making financial sense of the cloud requires:
• Thinking beyond the list prices of CPU, RAM, servers, and storage.
• A holistic view that includes the human costs of making business applications work in the cloud, both in terms of salaries and intangibles.
• An understanding that automation of cloud management is the essential element required to keep TCO as low as possible.
Personnel Cost Surprises in the Cloud
The notion that TCO is lower in the cloud can turn out to be largely a myth if administrative processes remain manual. While cloud infrastructure costs are coming down and there are fewer person-hours required for network administration and physical hardware support, the payroll expense for IT headcount could go up as much as 150% in the cloud.Infrastructure teams often do not give adequate consideration to the manual overhead of managing an application in the cloud. Factors that drive such non-obvious increased personnel costs in the cloud generally fall into the following four categories.
Challenge:Avoid costly surprises when planning cloud applications.
At stake: Because total cloud cost can vary widely due to hidden costs and different degrees of management automation from one cloud platform to another, you could end up spending far more than you planned.
Solution: Our guidelines help you understand the total cost, including non-obvious itemised charges and the differing human cost of administrative personnel in automated and non-automated cloud scenarios.
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SOLVING FOR “TOTAL COST” IN THE CLOUD
• New skills required: Cloud-based applications function differently from their familiar on-premises cousins, even if they appear similar. For example, ensuring that a cloud-based application has disaster recovery, load balancing, and failover requires a different skillset from accomplishing these same tasks on-premise. If your cloud management platform doesn’t help you automate tasks that require new skills, your team will either have to master those skills or you will have to find new people to do the specialised work.
• Developers handing IT operations: Many cloud applications start out as Platform-as-a-Service (PaaS) solutions, with software developers typically responsible for both the code and the infrastructure. As these applications go into production, developers may be kept on operations duty. Unless you can bring developers and IT operations together in the new “DevOps” mode collaboration, you will suffer from a financially adverse arrangement that pulls developers off of coding.
• New tools to manage: Cloud deployments almost always involve new tools to manage a code base in the cloud, especially if there is an interest in doing continuous integration of new code. Other tools, such as Puppet and Chef, may not be well-known to system administrators accustomed to on-premises applications. Getting an admin team up to speed on the new tools — or hiring new personnel with those skills — can be time-consuming and costly.
• New processes: Managing cloud-based software involves different workflows from those required for traditional on-premises applications. For example, the RESTful APIs that connect front-end and back-office systems need their own lifecycle management and security controls. This means assigning someone to API management. This is likely a new IT staff resource —
and another unforeseen cost of being in the cloud.
Cloud management automation can lower all these costs, and is a high priority for many cloud teams. But it can be difficult to accomplish because of incomplete or inadequate tools, immature processes and organisational challenges.
Understanding Hidden Costs in the Cloud
The basics of setting up cloud applications are relatively straightforward: mapping out the number of virtual machines, the CPU specs, storage requirements, etc. Even in this area, however, there can be a multitude of hidden costs that add up fast. Here is a rundown of them to increase your awareness and help you avoid a “surprise” in your cloud bill.
• Application migration. Moving applications to the cloud can incur labour costs for virtual machine imports and bandwidth charges for transferring virtual machine images. There also may be a charge for storing virtual machine images during the import process.
• Server CPU. Some providers let you provision the exact number of virtual CPU cores desired; others provide fixed “instance sizes” that come with a pre-defined allocation of CPUs and memory.
• Server memory. Cloud providers are ratcheting up the amount of RAM they offer to address memory-hungry applications, caching products, and in-memory databases.
• Server storage. There are many different types of storage (e.g. block storage, object storage, vSAN storage) and costs vary with each. Don’t forget to include the cost of storing data backups, virtual machine templates, and persistent disks that survive even after servers have been deleted. • Bandwidth. It’s easy to forget about bandwidth, but it’s a charge that can bite you if you’re
not expecting it.
• Public IP addresses. Nearly every cloud provider offers a way to expose servers to the public Internet, and some charge for the use of public IP addresses.
• Load balancing. There often are charges both to use a load balancer and for the traffic that passes through it.
• VPN and Direct Connect. Cloud vendors now offer a rich set of connectivity options — at a cost. There may be fees for setup, operations, and bandwidth associated with these connections. • Firewalls. This is usually baked into each cloud provider’s native offering — but make sure
that sophisticated firewall rules don’t cause extra charges.
• Server monitoring. Depending on your monitoring needs, there can be a range of charges associated with standard and advanced monitors for each cloud server.
• Intrusion detection. Given that cloud servers are often accessible through the public Internet, it’s important to use a defence-in-depth approach that includes screening incoming traffic for potential attacks.
• Distributed disaster recovery environments. You may need to duplicate your application in geographically dispersed cloud data centres. You’ll likely incur noticeable charges for replicated environments.
• Development/QA environments. Applications may run differently in the cloud than in your local data centre. Hence, you’ll likely provision pre-production environments in the cloud for building and running your applications.
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SOLVING FOR “TOTAL COST” IN THE CLOUD
Understanding Human Costs in the Cloud
It is trickier, however, to get a handle on the human costs of managing a cloud application. One good approach is to analyse cloud management staff costs based on the number of system administrators needed to manage the cloud-based system times their average salary. The number of cloud administrators you need will depend on, most prominently:
• Your ratio of cloud servers to administrators. This number is a moving target. In general, the number of full-time equivalent (FTE) administrators varies according to the complexity of the system and the level of automation available. A single administrator can support up to 25 standard midrange Windows Servers.1 More complex, manually managed systems can have
ratios as low as 1:1 — to administer, for example, a cloud server running a Unix operating system coupled with a clustered database and customer application integration interfaces. In contrast, in highly automated and uniform deployments, such as at Facebook, one admin can manage as many as 20,000 servers.2 In the latter case, there are thousands of identically
configured machines running atop a smart cloud controller that automates virtually every step of server administration. It’s a big spread, with the critical question being: What is your level of automation?
• Labour for integrating with on-premises assets. You don’t want to create silos in the cloud, so you will likely spend a non-trivial amount of time integrating with your critical applications, data, identity provider, and network.
• Workflow for creating, provisioning, managing and updating cloud servers. The steps involved, their respective length, and the number of person-to-person communications required, all affect the time and staff costs for administration.
How Automation Works to Lower Cost
Automation is necessary to keep cloud staff costs down while enjoying the agility and economy that businesses want from their cloud investments. Automation starts with a cloud management platform that your team can embrace; the platform must automate cloud management workflow in ways that are intuitive, efficient and aligned with the way your IT shop works. Force-fitting a workflow pattern from a management tool onto the team is counter-productive.
1 Fichera, Richard; Voce, Christopher; and Chi, Eric — How Many Servers Can Dance on the Head of an Administrator? – Forrester Research, March 2013 2 http://www.datacenterknowledge.com/archives/2013/11/20/facebook-ops-staffer-manages-20000-servers/
Effective cloud management platforms typically offer role-based delegation, in which tasks are assigned automatically to administrators according to their roles. Cloud management platforms then effect automation through two key features:
• A unified management console that gives administrators a complete view of the cloud environment, including connections between front-end and back-office on-premises systems. The console shows administrators the role-based tasks they are being assigned; and there
is cross-group visibility (developers know what IT operations people are doing and IT ops is aware of developer actions and required tasks).
• A service catalogue with automated workflow. A service catalogue shows developers and IT operations people the pre-built components of cloud systems that can be readily re-used. For example, if a team has already invested the time necessary to set up a MySQL database on a specific version of Linux, that pattern can be easily replicated if it’s discoverable in a service catalog. The new team does not have to re-invent something that already exists.
Conclusion: Migrate to Automated Clouds
As organisations migrate to the cloud, they are discovering that there often are TCO surprises. Hidden costs emerge from surprising places, and the human costs can be much higher than expected. Keeping TCO low in the cloud is essentially a matter of management strategy. You have to find a cloud with orchestration, automation, and management built in, or assemble that optimal combination with best-of-breed tools from the cloud’s add-on ecosystem. In the latter case, you must plan for the people costs of integration and management costs of the additional vendors, as well as the service fees for those tools.
When considering all the services you need to deploy and operate enterprise-level business applications, the “cheap virtual cores!” pitch is less compelling. True enterprise clouds require a cloud provider with an all-in, integrated offering that gives you the set of services you need to deploy and maintain a robust, connected infrastructure.
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PRACTICES FOR
KEEPING CLOUD
TCO LOW
Recommended practices for keeping costs down and pursuing an effective cloud management strategy include: • Splurge on early planning.
• Plan on making mistakes. Learn to fail fast. Get your apps up; you can always turn them off.
• Really understand your total cloud strategy. • Plan. Collaborate. Plan. Be holistic. Plan. • Understand your tool set.
• Work on constant optimisation. Keep up with industry innovation, which is nonstop and will provide newfound abilities to continuously improve your cloud economics.
• Cut your teeth on easy workloads. Then, with good migration practice established, move more complex workloads.
• Leverage the efficiency of experts. Cloud providers have thought about how to do this at scale. You don’t need the expertise in-house to take advantage of it.
business-critical workloads. CenturyLink Cloud offers high-performance, scalable, self-service virtual machines across our global network of data centres, including Hyperscale instances for distributed workloads that require maximum performance. And CenturyLink Cloud provides built-in automation, orchestration, and management tools for an IT-ready and developer-friendly platform that is flexible, scalable, cost effective and highly manageable. For more information, visit www.centurylinkcloud.com
About CenturyLink Technology Solutions
CenturyLink Technology Solutions delivers innovative managed services for global businesses on virtual, dedicated and colocation platforms. It is a global leader in cloud infrastructure and hosted IT solutions for enterprise customers. Parent company
CenturyLink, Inc. is the third-largest telecommunications company in the United States, and empowers CenturyLink Technology Solutions with its high-quality advanced fibre optic network. Headquartered in Monroe, La., CenturyLink is an S&P 500 company and is included among the Fortune 500 list of America’s largest corporations. For more information, visit www.centurylink.com/technology.
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