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Economic Insight: On-Premises versus the Public Cloud for an Enterprise IT Environment

An Evaluator Group TCO Analysis Comparing AWS Cloud with a Converged Infrastructure in an Enterprise Development and Production Environment

The Cloud is a valuable technology for IT as the foundation for solutions that offer simple deployment, simple operation, simple expansion and nearly unlimited resources. But the Cloud also means potential problems around data governance, control, security and latency. The public cloud can also be more expensive than an on-premises infrastructure.

Because of these issues many organizations have moved or “repatriated” applications back from the public cloud or chosen a hybrid cloud strategy. This is a combination of on-premises infrastructure and the public cloud that can provide the ability to use the cloud for some activities, such as development, while running production workloads on premises.

Determining that hybrid cloud mix, how much of the total workloads to run in the cloud and how much run on-premises, can be a complex decision involving multiple factors including a cost comparison. This report looks at Dell EMC VxBlock 1000 as an on-premises solution and as the on-premises portion of a hybrid cloud environment. Using a Total Cost of Ownership (TCO) model it compares this on-site infrastructure for running virtualized workloads with a similarly configured solution running in Amazon Web Services (AWS). This report shows that the public cloud is significantly more expensive, more than double the cost of a hybrid solution and more than 3x the cost of an all on-premises solution, based on a comparison of monthly costs.

Infrastructure for this TCO Comparison

This TCO model compares an on-premises converged infrastructure solution, Dell EMC VxBlock 1000, to an AWS infrastructure with comparable compute power, memory and storage capacity. The model emulates an enterprise IT environment supporting a combination of workloads over a 3-year period. The graphic in Figure 1 shows the growth of this infrastructure as new applications are developed, tested and put into production in four phases: Development, Pre-Production, Production Phase 1 and Production Phase 2. The assumption is that development for new applications will continue as current applications move into production. At the end of three years IT estate growth reaches a stasis, of sorts, with a maximum of 650 applications supported on an ongoing basis.

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Related to this document:
Economic Insight: The Cost of Using the Public Cloud, Economic Insight: Is Hyperconverged Cost-Competitive with the Cloud?,

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Date:

March 16, 2021

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