Attribution to original author: Chris Chandler
I understand that it might sound heretical to claim that traditional colocation is still the more cost-effective approach to hosting, but let’s look at the numbers.
tl;dr
Cloud computing isn’t that “cheap” unless you’re talking about tiny costs that early, early stage startups might face. Once you know you will require dedicated infrastructure it’s very likely worth it to get your own hardware. You’re employing technical people anyway; have some of them manage your infrastructure. You would have needed some people doing it with your cloud hosting anyway. Being able to throw stuff away is nice, but so is having authoritative control over your business operations and in-house accountability.
The actual numbers
Hypothetically, let’s look at a scenario where we need 4 web servers, 50 app servers, and 2 reasonably high powered databases. For all intents and purposes, this is a small data center and the kind of configuration that cloud companies like Amazon claim they are designed to handle. It also mimics several of my clients’ infrastructures, which are built on Rails, so it feels particularly apropos.
Secondly, let’s suppose that each of these servers requires 8 cores to keep up with the workload. So all together we have 56 servers at 8 cores a piece. For the database, let’s assume those are also 8 core machines but will require 68GB of RAM a piece plus about 10TB of storage. I think it would make more sense to actually add more RAM, but that’s the largest amount you can get from Amazon right now on their Instance Types list.
We’re going to talk about the total cost of ownership across a year for both options. I am also going to make the assumption that the duty cycle of activity is fairly uniform.
Note: If you’re going to disagree with one of my assumptions it’s this last one. I am perfectly aware that a uniform duty cycle is unheard of when it comes to web applications because we’re saying that our traffic load is uniform across the day. I am, however, making this assumption because for all the companies I talk to that cite the ability to dynamically decommission hardware, none of them do. There seems to be a massive perceived risk in starting up and shutting down instances on the fly and whether or not the custom experience will suffer. If you are currently cloud hosted and you decommission hardware daily then congratulations: anecdotally you are extremely rare.
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