There's not a company in the world that spends more than $1m annually on cloud costs that has saved money by doing so. You don't go to the cloud to save money, you go to the cloud to reduce technological risk.
If you go to the cloud you don't need to fire anyone for choosing IBM, you're not getting strangled by any Oracle contracts, you're not gonna lose all your data because of security holes in your use of Microsoft products.
You're also not going to be dealing with downtime because you couldn't find staff talented off to properly configure your Cisco networking equipment.
Your system administrators department is not gonna block any innovative employee initiatives because of the strain maintaining more projects puts on a deployment stack carrying 150 different projects but which was architected to solve a single business goal 15 years ago.
Imagine being a 67 yr old manager who just wants to be in the business of getting letters printed on tree pulp from Bumfuck, Idaho delivered to Louisville, Alabama reasonably effectively. Knowing nothing about computers or information technology, imagine the insane stack of perfect decisions that have to be made to get the IT infrastructure of a company like FedEX running.
Not saying going to the cloud is the best decision. Not even saying it's the decision I would make. But it does sound very enticing to just have all of those problems go away by throwing a couple hundred million dollars a year at Google, Microsoft or Amazon (btw lol if they go with Oracle or IBM instead).
>You're also not going to be dealing with downtime because you couldn't find staff talented off to properly configure your Cisco networking equipment.
>Your system administrators department is not gonna block any innovative employee initiatives because of the strain maintaining more projects puts on a deployment stack carrying 150 different projects but which was architected to solve a single business goal 15 years ago.
As someone in the “cloud” team at a legacy enterprise I strongly disagree with both of these points.
Cloud networking is as complicated as anything the Cisco people ever did but instead of CCNA you have certifications that barely scratch the surface of the complexity. So you get cloud people who barely understand the platform they’re administering flying by the seats of their pants. And instead of having a networking team to focus on networking the same people trying to figure out static routing across regions in AWS are also the people responsible for migrating EC2 instances from GP2 to GP3 but they were deployed with cloudformation which will replace the instance if your change of the disk type.
So getting to the second point this team will be totally overwhelmed and likely inexperienced so good luck getting them to do anything to help your “innovative” project because right hope they’re too busy trying to figure out how EKS is using up all the IP addresses in us-west-2.
Executives who think they’ll save on money by moving to the cloud are delusional. They’re also delusional if they think it’ll increase stability or resilience. And that’s not even getting into the EMR clusters the “data science” team spun up and left running at $30k/day.
God so much this. I see entire teams of developers who are, theoretically, software engineers. Yet their entire day is just configuring AWS. Endless meetings with endless acronyms and endless complexity to solve problems that have been solved for 20 years, but instead of focusing on the metal and first principles, the entire architecture is lost in a sea of "cloud services" that require multiple certifications to even begin to understand. All of this in service of an application load that could easily be handled with a few big servers.
> There's not a company in the world that spends more than $1m annually on cloud costs that has saved money by doing so. You don't go to the cloud to save money, you go to the cloud to reduce technological risk.
I don't know why I have to explain this every time "data center vs cloud" discussions come up, but if you reduce risks, then you are in effect saving money.
There are other ways of reducing risks. You only save money if it's the most efficient way of reducing risks and your risks are purely convertible into cash.
I'm quite sure if you take managing your IT infrastructure as seriously as you take your core business, you can definitely save tons of money by handrolling your infrastructure.
There's also a big difference between doing so 10 years ago versus now, with all the enterprise grade open source solutions to infrastructure challenges.
> I'm quite sure if you take managing your IT infrastructure as seriously as you take your core business
Try telling a company like Catepillar who manufactures excavating tools to "take IT as seriously as you do making tools"?
> with all the enterprise grade open source solutions to infrastructure challenges
You mean like OpenStack? Have you ever been in a large IT org (non tech company...like a distributing/manufacturing company) that has tried to implement it? and then maintain it? Oof...
It seems you're trying to nail down an absolute, I'm just saying that there's options sometimes. In my opinion AirBnB is setting money on fire by running on AWS. They've got huge talent pools of great engineers they could activate to in house their infrastructure and they'd save hundreds of millions of dollars. At the same time there's companies that have no business running their own web applications let alone their own infrastructure. A company like caterpillar I think should be run almost entirely on no/low code platforms. Their research department might run some code, they might have teams doing embedded dev for their devices. Beyond that it should just all be SaaS. And between those two extremes there is like a whole spectrum a business could be on.
> In my opinion AirBnB is setting money on fire by running on AWS.
And I'm saying you're completely armchairing this analysis because you literally don't know any of these details.
> A company like caterpillar I think should be run almost entirely on no/low code platforms.
Are you suggesting a global manufacturer like Catepillar run it's global financial ledger on a no-code platform? Which implies building the code for it and then maintaining it?
> It seems you're trying to nail down an absolute
In fact, I'm not. The only absolute I'm trying to nail down is "you need to do a buy vs build, rent vs own assessment and make the decision there, neither one is unilaterally true without that assessment". Anyone trying to speculate about budgets in the $100M+ space is just heresay.
Article says they're going Azure and Oracle. I actually use Oracle myself, but only their free tier because it's very generous. It probably works as marketing because I'd be inclined to throw them in the mix if I was looking for a real provider.
Earlier this year I left FedEx after 15 1/2 years of service. Every single day I used an IBM AS/400 terminal to interact with several systems to do my job, the bulk of my job was done via that terminal. Yeah, that's how old most of FedEx's tech is. A few months before I left they had just migrated one of our in-house systems over to Oracle likely as part of this. That said, the mission-critical system was having almost daily errors/downtime once migrated to Oracle soooo...
I imagine some of this is the simple fact that they need to replace these severely aging, no longer supported, IBM AS/400 servers throughout the company. They lost hardware support around 2020 and, if I'm not mistaken, haven't been made since like 2008 or something. That alone is going to save a pretty penny in new hardware and energy costs as well as free up physical space at often already crowded areas.
It'll also save time-lost costs. Any time power would go out at our building, the servers would usually be done for tens of minutes even with the generator kicking on. We'd lose a couple of hours a year usually to the servers that were in our building coming back online. A couple of hours, times 100~ employees at one site, equals a LOT of backlog being created which ripples through the company. While that few thousand dollars they're paying employees during that downtime isn't much, it would cascade and disrupt the freight handling. If a single package didn't clear customs in time, then it might end up as an overage and have to go to a bonded cage, that's now 2 extra movements added, that's freight planning for possibly multiple trucks that will be part of the delivery once the package landed in the United States, you might see a thousand or more shipments (that may or may not be single package shipments) now needing to be handled extra at a half dozen ports, even more sort facilities, and even more local facilities. That's just from 1 office losing power for say a half hour.
Moving those servers to a cloud provider should provide a much better uptime which should translate to a notable savings in the above situations.
IBM i on modern Power machines is fine as far as performance goes.
The hideous frontend of greenscreen RPG programs is optional, you could replace them with Java if anyone cared enough about UX for internal tools (they don't).
The hard part with that stack is getting RPG devs - most of them are 50+ and expensive.
They were probably promised a very low price for their first few years, before their cloud costs get re-negotiated. Once they are locked in, the cloud cartel can jack up their price to make sure they get as much money as possible.
But also, mainframes are extremely expensive, so they can probably do better on commodity hardware. The cloud is a way to rent a lot of commodity hardware.
The big-brained move that they are almost certainly not doing is to use cloud services to bridge the retirement of their mainframes and move everything back on-prem with Linux boxes in 5 years.
> They were probably promised a very low price for their first few years, before their cloud costs get re-negotiated. Once they are locked in, the cloud cartel can jack up their price to make sure they get as much money as possible
People often say that, but that literally has happened once, with GCP, and has no relation to how AWS and Azure do things. Please go and find an example in the 10+ years that AWS have been a big serious contender for the world's IT workloads of them jacking up prices.
It certainly seems unlikely. Maybe it's the current operational cost, not subtracted the new operational cost. Maybe it's due to already adopting cloud and thus having paying double. Maybe it's due to the use of mainframes, rather than conventional servers.
Either way, it's definitely not the cost difference between on-premise and cloud. Cloud providers are not charities, and their buildings and staff are not cheaper than yours.
FedEx essentially does make their own trucks - they buy from white box suppliers who have very narrow margins. Ships are similar. Planes probably have slightly higher margins, but they still will buy used.
Getting computers from the cloud companies is very different: most cloud products (aside from server rentals) are not in competitive markets.
False equivalence. FedEx isn't building the servers here, either. But they do have their own maintenance for their fleet. Thus the better analogy would be if FedEx outsourced fleet management & maintenance to Hertz or similar.
With trucks etc. there are still independent companies that can fix those and transitioning to a new provider is straightforward. With IT in cloud there is a strong vendor lock-in.
> Either way, it's definitely not the cost difference between on-premise and cloud. Cloud providers are not charities, and their buildings and staff are not cheaper than yours.
Exactly, which is why it’s quite a bit cheaper to not have a building and staff right? The premium you pay for the cloud provider having them must be less than having them yourself, or nobody would ever move to a cloud provider.
No, if the premium was less than the cost of operating a datacenter, no cloud provider would be able to stay in business, much less interested in entering the market.
In order for the cloud business to make sense, turn a profit and sponsor the kind of development into new products done by these companies, we can assume that the cloud services sold by these providers must have a very healthy margin compared to the cost of operating a datacenter full of resources.
The primary thing a cloud business can do to drive cost back down past what you could do with your own datacenter is to have better utilization of their resources by dealing with an average across a much wider range of workloads, or by selling spot instances that get killed if capacity is needed, but based on how things are priced it appears that this mainly just pads their margins.
For the customer, it only really ends up cheaper than on-premise is if: A) you need very few resources and do not already have anywhere to put a server or lack a good uplink; B) your use-case is extremely well-optimized for cloud (e.g. extremely bursty serverless where you average load is a tiny fraction of a single machine); or C) you are Netflix and can make a deal with AWS.
Either that or it’s an accurate figure for the first year or so while the cloud provider gives a ton of credits. By the time that all runs out the senior exec behind the migration will have moved on and someone else can do the maths.
It's likely the 400 m$ is inflated, "by 2024" will be many years late and there will be significant increased costs during the interim period, also likely kept artificially low.
