We have finally arrived to where we have been working towards. The Apples to Oranges conversation around pricing models that so many of us discuss but hardly know the honest advantage one can give over the other when we get down to the brass tacks of your unique environment. To date, we have given you the resources to determine your current technical requirements and the questions to ask in order to determine your application’s business value. (If you have no idea of what we are talking about, read our latest and greatest blogs at Net3 Blog) We have done all of this so you can have a detailed execution plan for your compute resources moving forward.* With this groundwork laid out it is now time to compare pricing for the Cloud vs. On Prem.
The On Prem pricing model. This model is what we’ve been accustomed to for years – it’s in our comfort zone. If you take a microscope to it however, it’s really not that comfortable to work with at all. For On Prem resources, purchasing is based on forecasted growth. Forecasted Growth = Guessing. Guessing what you may or may not need in the future. The On Prem model is also a one size fits all model. One standard is chosen and everything in your environment is required to adhere to that standard. The obvious problem: not everything needs the same resources! Many businesses that use On Prem resources are over paying for what they actually need. Here is a classic example:
We have a customer that was the in the market to procure new storage. They had 300 servers. 40% required Flash performance and the other 60% needed a requirement of SaaS drives. Due to their On Prem environment, they purchased Flash for every server. A multi million dollar purchasing decision was based on 40% of performance critical resources (which is fine), but the majority of their environment didn’t need it. They overpaid for over half of their servers (which is not fine). As a side note, they have already outgrown the storage and do not have any budget to rectify.
Over paying can also occur during the low/slow seasons of a business. On Prem environments have to purchase equipment to handle the peak seasons – if they didn’t their business requirements would not be met. Think of Retail. If Christmas is your busiest season, more than likely you are overpaying for 10-11 months out of the year. Not a very Merry Christmas for your CIO and CFO. And if he/she wants to know the cost to run a certain application, how exactly are you going to show the entire cost (backup, DR, etc) for that one application? On Prem typically cannot give you show back (basically an itemized receipt) because most On Prem environments lack the advanced analytic tools needed for this type of reporting.
Governance Requirements can be a thorn in the side too with On Prem resources. What do you do if HIPPA, SOX, or Ferpa changes their requirements 6 months after your new installation? What happens if the business changes their own requirements or their business strategy 3 months after your purchase? There is no “easy button” to accommodate any of these changes. New purchases will have to be made and time consuming installations will have to be done to react to these changes.
The On Prem model is the one size fits all model with the purchasing approach of guess work. If anything requires change from a business or governance standpoint, it could be a slow, manual process – not to mention time and money wasted. Making changes On Prem could very well feel like going up river without a paddle.
Follow us on Twitter @N3TTech and on LinkedIn (Net3 Technology) to see all of our updates. If you can’t wait until next week to see the advantages of the cloud pricing model and you’re ready for more information on how N3T can successfully move you to the cloud, contact us at 864-990-0112/www.n3t.com to talk with one of our experts.