Hosting your own hardware will always be cheaper in the long run than hosting someone else's simply because you're not paying the "someone else" tax, or do we think they provide service of the goodness of their (bleeding) hearts?

And don't try the "hired sysadmins are expensive" bullshit. If you think that then your product is pointless, waiting to be undercut by someone who knows better.

Sorry but I have to strongly disagree with you. There are plenty of ways that a Large Datacenter can operate significantly cheaper than housing your own hardware. It's called economies of scale.

Buying 1000 servers will cost you significantly less on a per unit basis than buying 1 server (I'm talking hardware costs here). Large Datacenters usually set up in places where energy costs are cheap, and can design their entire facility to minimise energy usage (on a per output basis), whereas for your own Server you will be paying whatever the local energy costs are, and what deal your company has accepted. You also will be unlikely to be able to modify your server room to a massive extent so it's usage will be significantly more than a dedicated facilities (again on a per unit basis). Large Datacenters also usually manage to scam better tax breaks/benefits from the areas they setup in, which means again they have savings you cant match. And then of course there is the personnel costs, unless your workload is absolutely optimal that one sysadmin is working 100% at capacity on just your server, you're going to have inefficiencies, they'll either be a bit underused, or be working on something else at your firm, so again you're paying full price for the sys admin. At a Large Datacenter, one sys admin might be administrating a dozen clients, therefore you're only paying for 1/12 of their time. So that will be cheaper.

It's the old case of manufacturing 1000 widgets in one go is cheaper than manufacturing 100 widgets in batches of one.

This is not to say a Large Datacenter will actually be cheaper or better for your specific usecase. I actually prefer having things in house. But to claim that in-house is always cheaper is just plain wrong.

You're missing the most important point, which is that economics of scale only really work in your favor if you're the buyer/operator. If you're just a customer however, it rarely does, as the bulk of any savings will simply go into the pockets of your provider/supplier.

So yes, large datacenters may well be able to achieve lower running costs but that doesn't mean they pass on the savings to their customers. A large cloud operator may well buy 1000 of nearly identical servers at hefty discounts (although the big cloud providers don't use standard servers but bespoke inhouse developed server systems, with manufacturing contracted out to ODMs, so it's not the same as a regular server), but they will still charge you close to MSRP (or the equivalent in leasing fees) because they can. As customer, you'll generally see little to nothing from that discount on your bill (also remember that the big server vendors like HPE and Dell already provide pretty good discounts to business customers even for low order numbers). And the same is true for any tax breaks, local incentives or other incentives the datacenter operator may get. They'll lower customer pricing only when absolutely necessary, and only far enough to stay competitive.

And as far as staffing costs go, you may well remember that even this short into the year we already had a number of Azure/MS365 outages caused by Microsoft staff making stupid configuration errors, which suggest that paying only 1/12th of their time I'm also getting only 1/12th of their attention (which is nonsense of course, because at the current going rates for cloud computing I'm paying a lot more than just for 1/12th of their admin's time, while getting a lot less than 1/12th of their attention).

The very fact that cloud costs have been very high and have been increasing further at an accelerating rate proves that services providers will forward little to no cost or efficiency savings to their customers (in case of Microsoft, they simply increase Azure attrition rates by simply killing off their on-prem software offerings).

Cloud is only cheaper for the service providers, not for their customers.

For any business contemplating whether to go on-prem or cloud, the cost savings the cloud providers see from their large-scale operations are completely irrelevant, the only thing that matters is how much they are charging their customers for their services. If that's more or less than what an on-prem solution would cost depends on the individual case but more often than not on-prem turns out to be cheaper (and comes with the added benefit of not being completely dependent on a nearly worthless SLA).

It's more nuanced than you cite - and as the article mentions, it depends a LOT on your business and computing needs.

If you are very small, then yes - hiring a sysadmin capable of keeping up to date with "everything" is going to cost you, disproportionately relative to the size of the task - with the result that "sysadmin" is usually tacked onto the normal job of whoever was last to shout "NO" when it was raised in a meeting. Not that going cloud absolves you of that requirement, but it takes a lot away from it - "someone else" provides reliable power at scale, "someone else" provides cooling at scale", "someone else" provides security at scale, and so on. I've done that, in a small and a medium business, and it does have real costs and knowledge requirements (I have them, but many sysadmins really don't). As a simple example, neither of those businesses were large enough to justify a standby generator and the associated infrastructure - so we were reliant on larger UPS batteries to support a graceful shutdown rather than just ride out a couple of minutes while the genny (hopefully*) fires up. And of course, that does mean that when the power stops, so does your business.

If you are big, then yes I'd agree that paying someone else to "do stuff" and add a markup before billing you makes little sense.

In between ? Well "it depends".

* Yes, the genny should "just fire up", but I think we can all remember stories reported here in ElReg where it's not gone to plan - whether that's having the lift pumps by the fuel tank in the basement not connected to your maintained circuits, the basement being flooded and talking out the electrics down there, or the genny catching fire, or it relying on batteries which are dead and no-one noticed because there was always mains when you ran your tests, or the system was wired wrong and relied on mains power to start the genny (or run the controls needed to do so), or (long list fo other reasons) or ... you simply forgot to fill the tank. With a larger installation, there's more scope for having a parallel run/export capability so you can load test the genny, turn over your diesel supplies, and have more "professional" people managing it rather than it being a sideline to some smuck's normal job (who probably doesn't know what it is he's managing).

"On-prem still cheaper, but don't expect a cloud exodus"

If you're spending a lot on cloud services then on premise is much cheaper so, what is "exodus"?

Non-IT businesses have no choice as they must support the non-IT business model but, what is the excuse if you're an IT business? Lazy? Fear? FUD?

The forgotten: "Cloud" puts a lot of _REAL_ IT people out of work and for an industry that goes on and on about equality and pay... well, all that political correctness seems like hypocritical bullshit.

Non-IT businesses have no choice as they must support the non-IT business model

Not true.

Firstly, the same applies to an "IT" business - hosting a load of servers, and the associated support infrastructure probably isn't their core business, so there's (for most of them) still going to be an element of the hosting being an adjunct to their core business.

But mainly, regardless fo the core business, the same considerations will apply : At the scale they need, what will it cost them to have the on-prem facilities and support compared with cloud ? OK, and "IT" business will probably have some savings in terms of having staff who are already doing "IT" stuff and hence can take on hosting support as part of their routine job, but beyond that there's little difference. For example, does you average small IT business employ someone fully up to date (and potentially, depending on your jurisdiction, licensed) to specify, install, and maintain your electrical installation ? Similarly, does it employ someone fully up to date (and potentially licensed) to look after the cooling system ? Do you have the scale to justify the cost (and space and other considerations) to have a backup genny - or you you have to do a graceful shutdown and put up the "closed for business" sign if the power is off for longer than you have UPS batteries for ?

So it's not really about "IT business" or "non core activities" - it's about whether the benefits of sharing someone else's facilities and support outweighs the benefits of the DIY approach. That will depend on the skills you have in house (and how much free time they have after their other duties), and your particular computing workload.

"what is the excuse if you're an IT business? Lazy? Fear? FUD?"

Nah - C-Suite chasing that sweet, sweet bonus.

” What's more, the analysts report that many of the same forces driving up cloud costs are negatively impacting colos and private datacenters too, which means the savings made from ditching the cloud may not be as large as enterprises are expecting.”

Savings will most probably be larger as we can expect cloud prices to increase at a faster rate than actual input costs. Remember the business model of the moment is subscription and companies need to keep increasing subscription rates to keep meeting the unrealistic expectations of market analysts….

As for the extra regulations, many will be more easily satisfied in a smaller and more local environment.

"For the time being, Uptime notes on-prem and colocation datacenter hosting is still less expensive than the cloud..."

Not just "for the time being", either. I think it should be obvious that if I am paying someone else to do something for me, it's likely costing them in the ballpark of what it would cost me, plus they're going to add a bit on top. The reason they can do it cheaper is because they have more expertise and/or volume than I do. The reason I'm happy to pay them more to do it is that it's worth it more for me to focus on my core business and not worry about the rest. It really is economics 101, straight out of Adam Smith.

I remember being the PFY, full of hope and excitment at working in the dynamic world of IT. I bemoaned the grumpy and wrinkled older guys who moaned that they'd "seen it before", or told me about the cycles, outsource, bring back, centralise, devolve... I scoffed that they were letting their greybeards cloud their thinking and that virtualisation and then cloud were game changers. They pointed to the mainframes and other technologies gathering dust - but largely still running "legacy systems".

I've worked on programmes with a "cloud first" approach and ignored the squeals of fellow techies when they claimed that X wouldn't work in the cloud... and written them off as luddites, only to also see their smug faces as they were proved right, usually expensively right too.

I am now that wrinkled old guy who has lived through enough battles to know that there isn't a one size fits all approach as I am about to embark on a new programme following a change of director and change of direction. He's not siad the actual words "cloud first" but came very close, I think my pre-emptive wince stopped him in his tracks.

To paraphrase the patron saint of IT workers "Jesus Christ", Give unto the cloud what is the clouds, but keep the stuff better run on prem, on prem". Hopefully another deity can help us better identify which systems and services are which. In the meantime, if the thing has given 2 contractors nervous breakdowns since management decided to let Keith go as he could be easily replaced then it probably should stay in house

The summary of the summary: Right tool for the job.

And not putting all of your eggs in one basket. Keep a foot in both worlds. Years ago, the team I worked with wanted a Co-Lo, we scoped it out, visited the facility, and looked at cost. Not so attractive. A few years later, a move to the cloud for email, then a few more things, but it stopped there for that org. They still had a 3 node cluster of VMware hosting lots of services that could have gone into the cloud. A handful of physical servers doing local stuff, it worked well I must say.

and running your kit in there is still cheaper than the Cloud plus you're not subjugated to MS or AWS SLA's.

I agree that these days there is no way an IT Team (usually infrastructure) should have to deal with boring things like power, air conditioning, risk of flood etc. PLUS the inevitable "oh didn't the building owner tell you there was a power down test this weekend"?

Only the very smallest businesses should have local "in office" server rooms. The best thing you can do is stick your kit into a CoLo, especially if you're a Govt Organisation, Crown Hosting is so cheap you'd be mad not to.

Forget the technology of on prem vs. hosted or cloud for a moment and think about the money: if you're a beancounter, it's far preferable to pay a monthly/quarterly fee for your compute than it is to dig into the company savings and tie up a vast sum in buildings, hardware and people. Sure, if you average-out the costs over a few years of both models then the chances are good that the on prem will work out cheaper - but that's not how it works in finance. Operational costs are better on the balance sheet because there's there's less debt.

While they could bring the services back in house and lease the building space, rent the hardware and so on - that generally comes with lock-ins and, once again, that looks ugly on the balance sheet because it has to show as money you are committed to spending in subsequent years and you generally can't forward account for income on a similar basis.

That works until your business finds itself on the receiving end of a worthless SLA which is designed around protecting your cloud provider from having to take responsibility for service interruptions or security issues, which, if your business is fully reliant on the cloud, could quickly turn out very damaging or even fatal (to your business).

Good example is OMIGOD, a security hole in Azure's Linux management stack (which is invisible to Azure customers), giving attackers root access to Azure customers' Linux instances. Microsoft was informed about the security hole early on but didn't do shit for months while the hole was already actively exploited. Eventually, they came up with a fix, but at first not with a way to easily patch existing installations. It took Microsoft forever to come up with a workable solution.

Of course, OMIGOD was one of the worse ones but not the only security hole of that caliber. Any business which during OMIGOD has been an Azure customer and had sensitive data on an Azure Linux instance has been at very high risk of being powned. Depending on the nature of the business and the sensitivity of the data, that pownage could have easily caused major damage or even kill the business for good. And because it runs on someone else's computers, there is literally nothing the business could have done to protect itself (other than not using Azure of course).

And this is on top to the usual Azure/MS365 outages, which we already had several of, even this short into the year, and which make any at least half-decently run on-premises solution look like Fort Knox.

That's cloud SLAs for you. I wonder how much the beancounters [*] which prefer OPEX over CAPEX have factored in to compensate for the potential complete loss of control of what often is a company's most valuable asset (data).

[*] in reality, it's not accountants which prefer OPEX over CAPEX (they usually don't care), it's often someone higher up the food chain (usually someone who isn't "a numbers guy").

Oh really ?

So now on-prem is attractive again ?

Does that mean that all those C-suits are no longer basing their bonuses on moving everything and its dog to The Cloud TM ?

Because I seem to recall a not-so-distant time when The Cloud TM was the cheapest, most reliable way to go.

Looks like the beancounters have brought a cluebat to the board's meeting room.

About time too.