The Myth of “The Cloud is Cheaper”

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Click to learn more about author Chris Lynch.

As we have all experienced recently, change is the only constant that continues to be true, decade in and decade out. Irrespective of pandemics, macro or microeconomic uncertainty, or even geopolitical unrest — one thing is guaranteed, especially in tech: change.

There’s been a significant investment of marketing dollars, engineering time, and development and market research on “the cloud” in recent years. Market segments have been created, massive amounts of venture capital deployed, and companies espousing the promise of cheaper, better, and faster have all been chasing Amazon Web Services (AWS) for what feels like a decade. One of the more intriguing panaceas in these developments is that “the cloud is cheaper.” As a longtime industry executive, Founder, CEO, and venture capitalist, the concept of “cheaper” has, in my opinion, always represented a race to the bottom and one where only commodities need apply.

I’ve been fortunate enough to work in enterprise tech for more than 30 years, beginning my career at DEC and moving on to a networking startup, Wellfleet, followed by early-stage startups in networking (Prominet), web (ArrowPoint), storage and virtualization (Acopia), data warehousing (Vertica), and advanced analytics and virtualization (AtScale). Each of these organizations developed, defined, or redefined a market segment, but one thing amongst them all was consistent — there was a sea change occurring in the market that would unlock extraordinary value for the enterprise — at an expense. The expense may be monetary, perhaps time or training, but ultimately, the return on that investment far outweighed the expense an organization would experience in transitioning to the new normal.

The recent pandemic has created a “compelling event” for enterprises globally, and by “compelling event” I mean the necessity to contemplate solutions for service and application delivery that rely upon services and organizations not a part of their own company — in short, the cloud. Which brings us back to the original comment regarding the “panacea” with the cloud — that it’s “cheaper.” In most of the enterprises I’ve been in contact with, the cloud is faster to provision, easier to maintain, and, ultimately, provides an unparalleled scale and flexibility — but at a cost. That cost typically comes in the form of far greater TCO and suboptimal performance for analytic applications.

Please note, my focus is on analytics applications here; I’m not painting with a broad brush. I’m focused on the segment of the market where my current endeavors have led me and an area where I’m engaged with Fortune 2000 customers on a daily basis.

So, while there are tremendous benefits to the cloud — many of which enterprises are experiencing throughout COVID-19 as they see the direct compare and contrast to applications running on-premise and those on cloud platforms like Salesforce, Snowflake, Microsoft Azure, AWS, GBQ, etc. — there are incredible constraints to moving analytic applications quickly and with the performance and latency required by Fortune 2000 companies.

Part of the equation in these migrations goes back to the investment I mentioned earlier. In order to experience the real potential of cloud migration ROI — and it is very real — organizations have to invest in strategies to optimize application I/O, Data Management, and, ultimately, data engineering. As the models tied to cloud computing are based upon compute cycles (and the cost per), it’s critically important that data is optimized for the applications which will consume it and that compute cycles are minimized wherever and whenever possible. These basic premises are why we continue to invest heavily in our semantic layer, alleviating the constraints of moving analytic applications between on-premise deployments and hybrid cloud topologies and autonomous data engineering, automating the complex, time-oriented tasks of data engineering. This ensures the right data is available in the optimal structure for interactive analytics — with minimal cost.

As I mentioned earlier, there is always investment required to maximize ROI for any enterprise in any market segment, technological advance, etc. The cloud is no different. There is a tremendous opportunity out there for organizations and one that will, ultimately, rewrite how enterprises bring technology to their internal and external customers. The key to doing so effectively and efficiently is making the necessary investments upfront to amplify the ROI — not just today but into the future.

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