Does Public Cloud Storage Cost More? Yes and No – Forbes blog by John Webster

By John Webster, Tuesday, September 18th 2018

Analyst Blogs

Recently published research on hybrid cloud storage use cases sheds light on the ongoing debate over which storage environment costs more: the cloud or an on-premises data center. It this increasingly advanced stage of public cloud storage usage within the enterprise, users are certainly aware that cloud storage costs more than on-premises data center storage. However, the question of greater or lesser cost ultimately leads to a discussion of whether the increase for cloud storage such as AWS Elastic Block Storage (EBS) and Microsoft Azure Blob Storage is worth the cost.

The ultimate perception of cost equivalency varies by the way hybrid cloud architectures are used. If they are used for test and development where cloud is the test environment, many users believe that cloud storage costs less. On the other hand, in the case of data archiving, users often see data center storage as more affordable than public cloud storage.

There are also subtle but important differences in the perception of value for money spent that are critical to understanding how enterprise users view the cost differential—perceptions that equate to cost justification. Users know that, for many use cases, public cloud storage costs more than on-premises storage. However, there are two common ways to justify “paying-up.”

One can justify the cost of public cloud storage by saying, “Yes, cloud storage costs more, but its worth it.” Here, there is a perception of value added for money spent on the cloud in the form of services that cannot be easily (or not at all) replicated without significant additional expense. Cloud storage offers the agility of storage on demand plus value-added services. One can also avoid hiring more on-premises IT administrative staff with the required experience—a cost avoidance factor. Teams that manage traditional data center storage are more expensive.

The other way is to say “No, cloud storage actually costs less.” This justification takes the argument above a step further by saying, “When we add it all up, if we could actually reproduce on-premises everything we get from the public cloud, our on-premises storage would cost more, maybe much more.” Therefore, on the basis of value equivalency, cloud storage actually costs less.

These perceptions support other research findings. For example, spending on public cloud storage for hybrid use cases will increase by at least 20%, but even more significantly for some use cases such as business continuance and disaster recovery (BC/DR) which is still the most popular hybrid cloud use case. In my previous blog, I noted that BC/DR is the “killer app” for VMware Cloud on AWS (VMC) and that one of the values of VMC comes from an ability to automate reliable DR testing on VMC—something could take enterprise IT organizations months if not years to do.

It is clear that, while public cloud storage costs more in terms of raw dollars, users generally look beyond the raw cost for value received.

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