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Comparing private cloud TCO: The metrics that matter


In the third part of this cloud economics blog series, I discussed two different approaches to compare costs across private cloud, public cloud and managed cloud options. In this fourth part, I’ll highlight the metrics and related factors that 451 Research identified that matter when developing a private cloud TCO.      

As mentioned in the prior blog, 451 Research presents a new way to do a quick TCO comparison based on two metrics they identified representing the majority of cost factors—utilization and manpower efficiency. These metrics can be used to calculate cost per VM and are dependent on a number of key factors, such as use of automation or the type of workload. These key metrics, and the factors that drive them, offer a simple basis for quickly estimating and comparing the relative costs of private cloud against public and managed cloud alternatives.

Owen Rogers - 451 Research

 The utilization metric is a measure of what percentage of a private cloud is being used for business results activity. Unutilized capacity is simply waste. The higher the utilization rate the lower the cost per VM. The lower the utilization rate, the higher the cost per VM. Things that can effect utilization include simply good capacity planning up front. With suitable planning, the private cloud can be designed from day one with suitable capacity such that cost-saving levels of utilization can be achieved.

Architecting hardware, O/S and software requirements as a single solution can help achieve overall objectives. As internal capacity levels are reached, having flexible procurement programs allows users to procure additional capacity over time as demands grow, thereby maximizing utilization.

Availability and disaster recovery resources are not delivering any real value, until the moment comes when those resources are required as a result of disaster. Scalable resources and third-party management can keep internal cloud resources to a minimum, while monitoring for failure. If a recovery is needed, additional resources can be spun-up in a DR site as soon as an issue is detected.

Workload types that are not time-critical can also improve utilization by scheduling them ad-hoc. A private cloud can constantly be kept at full utilization by scheduling in these applications when capacity becomes available—or set aside when higher priority applications need to run. This approach is ideal for big data, batch processing, economic, financial and scientific analytics, or even overnight archiving and indexing.

The manpower metric, expressed as VM’s-per-administrator, is affected by both automation and how mature the enterprise’s IT practices are. Companies with clear processes for consuming cloud resources, are more likely to achieve better utilization and a lower TCO from their private cloud.

For enterprises with fairly immature technology and processes, a relationship with a strong partner can provide the needed consultancy, support, and management needed to reach the enterprise’s goals for manpower efficiency and utilization. Once designed and implemented, the partner can help support and manage the cloud while the enterprise’s IT maturity grows over time. Overall, the level of IT maturity an enterprise has will have a significant impact on the TCO of a private cloud and managed cloud cost comparisons.

Automation also has a big impact on the manpower metric. While much of the private cloud administration work can be automated and made self-service, some level of manual activity will always be required. The key to lowering the manpower costs of a private cloud is to automate and simplify as much of the management as possible without opening up the infrastructure to unnecessary risk—patches, resilience, polices and configuration all have an impact on security, availability and performance.

To improve utilization and manpower efficiency, automating and simplifying the management processes for regularly recurring tasks is essential. Investing in an orchestration platform that provides out-of-the-box tools allows administrators to do other tasks. Installation, pre-defined configuration, workload on-boarding, self-service capabilities and general tasks should be automated as fully as possible to achieve the lowest possible TCO from a private cloud.

LalitS_blog4image_400x267.jpgHPE has a full suite of IT management tools that can fully automate the services and provide the needed self-service and service catalog capabilities, that increase the ratio of VM’s to administrator as well as increase utilization of the resources. Solutions such as HPE Data Center Automation provide a scalable solution, which accelerates provisioning, patching and compliance in a consistent and efficient way across heterogeneous environments, achieving a software defined data center. Additionally, HPE Helion CloudSystem is an open, fully integrated, hybrid cloud management solution with native world class IaaS and PaaS features. This end-to-end hybrid cloud solution is ideal for running traditional and cloud-native workloads. It delivers automation and orchestration across multiple private and public clouds as well as traditional IT infrastructure. These are just a couple of the many HPE cloud solution components that can help to lower TCO for your private cloud.

Based on simple approach 451 Research provides for calculating private cloud TCO, controlling, managing and optimizing utilization and manpower are the key metrics for lowering costs. Architecture and capacity planning, type of workloads, availability/disaster recovery solutions, IT Maturity and automation all play a significant role in the outcome of these metrics.

HPE has solutions to help manage and control all of these factors effectively and efficiency, helping you get the lowest TCO possible while providing a superior level of service for your private cloud.

In the next blog, I will look at applying this simple approach along with some examples for you to consider.

Read the next blog in the Cloud Economics 101 series: How to Derive Your Own Quick Cost Comparison

About the Author


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