Public Cloud Vs Private Cloud – The Cost Factors

Now that most companies from around the world have a cloud presence, a new debate has surfaced. Should your company go for a public cloud or a private cloud hosted on a data center? Considering that cost is one of the most important factors affecting this decision, let’s look at a few factors that affect the cost of both the options.

Direct and Hidden Costs

A private cloud is often considered to be more expensive as it comes with its own dedicated consultation and management team for any type of architecture. This prompts most companies to go for a public cloud platform like Microsoft Azure or Amazon’s AWS. However, these public cloud platforms come with several hidden costs. For example, a charge is levied by public cloud companies for simply moving traffic between the virtual machines using your application. In addition to this, public cloud companies charge an additional 20% towards background management and maintenance charges.

Server Utilization and Resource Efficiency

The cost also depends on an organization’s ability to manage its infrastructure and hardware resources. Organizations which efficiently optimize server utilization across numerous servers can have a Total Cost of Ownership (TCO) advantage by choosing private clouds. On the other hand, if the expected load is clearly dynamic, variable and significantly smaller, public clouds can be financially more attractive.

Another important consideration is the number of virtual machines which can be managed per engineer. If the number of virtual machines an engineer can manage is more than 400, then a private cloud would be more budget-friendly.

In case the infrastructure is utilized only for half its capacity, your engineer would be required to manage at least 1000 virtual machines to have a TCO advantage. If your organization is unable to achieve that level of efficiency, it would be financially better off with a public cloud.

When it comes to on-demand provisioning of resources, the public cloud is the least wasteful. This eliminates the need for organizations to worry about capacity planning, which in itself could be expensive in terms of resource spend.

Ultimately, it all comes down to finding the sweet spot of utilization management and resource efficiency rates to decide whether a private or public cloud platform is right for your organization.

CloudNow Technologies is a cloud consulting company with a host of services for every cloud requirement. We offer comprehensive cloud consultation services which include analyzing requirements, optimizing solutions and delivering results, whether it is on the public or private cloud. Get in touch with us to know more about our services and how it will help your organization.