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Using Cloud-Bursting as a Means to Manage TCO

LalitS

In the eighth part of this hybrid cloud economics blog series, I discussed the influence of personnel costs on TCO for private vs. public clouds. In this ninth part of the series, I will talk about how you can use cloud-bursting to manage TCO in a hybrid cloud environment.

Cloud-bursting defined

Cloud-bursting involves moving workloads from a private cloud (called the host cloud for our purposes here) or even traditional IT infrastructure, to another cloud, public or private, when the host cloud runs out of capacity. A simple example would be a movie studio looking to render a 3D animated film. While the studio is likely to have its own dedicated host cloud, the amount of processing power needed to complete the rendering job in the time available may exceed the capacity of the host cloud. One option available to the studio would be to burst the excess work to either another public or private cloud, to which it has access. The situations that fit the cloud-bursting profile best, are those that involve highly variable workloads that are also suitable to moving to an infrastructure outside of the host cloud.

Now let me review the cost considerations of cloud-bursting. First, instead of purchasing additional computer equipment, networking gear, storage systems, and even datacenter space to increase the capacity of the host cloud, the enterprise only needs to pay for the public cloud resources while it is using them. Once the peak load work is done, the temporary resources can be shut down, and the costs associated with them will stop instantly. In contrast, if it expanded the capacity of the host cloud to accommodate these peak workloads, the enterprise would continue to be saddled with the associated costs, for which it would derive limited benefit, as the additional resources sit idle, waiting for the next “peak”. Excess workloads sent to a public cloud on the other hand, can be managed dynamically, running them up and down as needed, with no long-term commitments, or associated fixed costs.

Out-of-pocket cost is not the only consideration. Since public cloud resources can be allocated quickly and easily, acquiring the additional capacity needed to complete the rendering project on time will involve little more than a few mouse clicks. On the other hand, standing up additional resources for the host cloud will take time, perhaps weeks or months, to get equipment ordered, delivered, and installed. This delay will entail its own costs in the form of what economists call opportunity costs. In this case, the cost would be the delay in completing the project, and thus delay in having the opportunity to derive revenue from getting the film into studios, DVDs, or Netflix—or losing the opportunity for revenue entirely.

In fact, prior to the availability of cloud technology, businesses needed to build out their IT infrastructures to accommodate peak demand. Their only option was to delay the completion of projects to fit the capacity of their systems. That might work when rendering a 3D animated film, but it doesn’t work as well for handling things like online shopping around the holiday season. However, building for peak demand also means that the equipment sits idle or underutilized once the peak demand has past, while the cost burden remains in place.

The bottom line

In summary, while not appropriate to all situations, cloud-bursting is a powerful tool available to enterprises today to help them manage their IT costs, and to further reduce the TCO of their IT resources. There are cases where it may not be appropriate, but when it is an option, it should definitely be considered in developing your right mix of IT resources.

In the next part to this series, I will take a look at the economic benefits of a Flexible Capacity service, which provides a pay-as-you-go ownership model combined with the benefits of on-premises IT (security, compliance, performance), while reducing cost and avoiding capital outlays.

To learn more about the core principals of cloud economics, I encourage you to read Forrester’s insightful research paper, “The Top 10 Facts Every I&O Pro Should Know About Cloud Economics.

Read the next blog in the Cloud Economics 101 series: Using Flexible Capacity to Lower and Manage On-Premises TCO

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About the Author

LalitS

I am the Chief Operating Officer and Vice President of the Hewlett Packard Enterprise cloud business unit, driving all aspects of operations and performance. I am a leader in HPE’s Cloud Economics campaign. I have also held various leadership roles in General Electric and Electronic Data Systems, and have a Master’s degree in Business Administration, Analytical Finance and Strategic Marketing from the Indian School of Business, Hyderabad in India. I am also Six Sigma Black Belt certified. Follow me on Twitter @lalitsingh17

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