Why most of the CIO still choose to DIY their Private Cloud over the Public Cloud?

17/10/2016 16:56:33
Why most of the CIO still choose to DIY their Private Cloud over the Public Cloud?

No doubt, public cloud cost is going down as predicted. But services are not the same as hardware, they include labor costs as well, so their prices decrease much slower compared to Moore’s law.

AWS’s price dropped by 56% in the last three years, and the difference will be only getting bigger and bigger. But why is that the percentage of enterprises who adopts the private cloud increased from 22% last year to 32% as of today? (Source: RightScale report) 
 
Science columnist Jim Stogdill made a simple calculation to understand this trend. There is a certain bank in West America, which deployed 120,000 computing units, with a total cost of 340 million USD, including 7,000 IT engineers. Let’s suppose that they move their services to AWS, the cost saving would be around 120 million USD for 3 years, so 40 million USD per year.
 
40 million is a big number for any enterprises. However, if we look at the revenue of this bank, which is 34 billion USD, with a net profit of 10 billion USD, then 40 million USD is just 0.4% of their profit. By trying to save only 0.4% by switching to the Public Cloud, they are taking an enormous risk to lose extremely confidential & critical data. It is certainly not the wisest decision a reputable enterprise can make. 
 
That’s why public cloud is currently not the right solution for enterprises and governmental institutions. Of course, Public Cloud has its advantages such as low price, but the ROI is not yet attractive enough to let them give up control of their services and data.
 
Whenever you need to adapt a new technology or solution, you always have to make the right balance between benefits, risks & investment. 

By Alex Li, Senior Product Manager @ Sangfor Technologies. 

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