Cloud vs ColocationSSDs and Big Data

Data centers are expensive. Even a small one can cost $2 million or more. For most small and midsize businesses (SMBs), the necessary investment in such IT equipment is not a feasible option, especially when all that computing power might not be required. More companies today are turning, instead, to ways that both cut down infrastructure while raising ROI. Companies are moving to third-party cloud providers and colocation

Introduction

WHITEPAPER

In its simplest definition, the cloud refers to moving computing workloads to off-site locations. In this white paper, “cloud” will refer to third-party hosted solutions such as the public and private cloud, services offered by hyperscale providers like Amazon Web Services (AWS), Microsoft Azure and Google Cloud Platform. “Colocation,” which also involves moving workloads off premises, refers to the leasing of data center space to host one’s own hardware. Both are departures from owning a data center, bypassing the necessity of up-front purchasing of large amounts of both hardware and real estate, as well as relieving the need of hiring

more technical staff to manage it all. Companies therefore move more of their spending from capital expenditures (CapEx) to operating expenditures (OpEx), a more straightforward financial model, while allowing them to stay lean with opportunities to scale.

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CLOUD AND COLOCATION

A company opting to host workloads on the cloud can choose a public cloud solution (publicly shared infrastructure with associated economies of scale) or a private cloud solution (a cloud solution dedicated to a single organization for enhanced security and control). Adoption of the latter has grown substantially, doubling the adoption rates of the public cloud, according to the RightScale State of Cloud Survey. (005) Often, companies choose a mix of the two, otherwise known as the hybrid cloud, choosing to use the private cloud for security and occasionally the public cloud during instances when more computing resources are required.

Colocation offers many of the benefits of the cloud and can be viewed as a self-hosted form of private cloud. The organization manages its own hardware, which is either purchased or leased. This allows for greater infrastructure control by the company itself, offering the ability to upgrade according to business changes. Of course, purchasing hardware to use in leased data centers yields higher up-front costs (CapEx) in favor of further monthly costs (OpEx).

Research firm McKinsey notes the fundamental shift in companies going from building to consuming IT, in which infrastructure and data center real estate are downsized in favor of off-site solutions, a practice growing at an accelerating rate. Large enterprises, in particular, will be major contributors in the growth of cloud environments. By 2018, over one in three companies will use cloud services as the primary environment for at least one workload. Approximately 80 percent of said companies will hand at least one workload to a hyperscale provider. (002) Colocation is set to rise as well, growing with a growth rate of approximately 12.4 percent per year in global worth to a projected $51.8 billion by 2020. (001b)

From 2015 to 2018, on-premises shipped server instances and storage capacity will see compound growth rates of approximately five percent and three

percent respectively. Much of this growth will come from hyperscale providers. From 2014 to 2018, global public cloud revenue is forecasted to rise by 222.56 percent from $56.3 billion to $181.6 billion. The rising adoption of cloud services will further spur the increasing use of colocation as such companies find success and “outgrow the cloud,” a growth forecasted at a 45.61 percent rise from $22.8 billion in 2014 to $33.2 billion in 2018.

From cost savings to adaptability and services, it’s not so much a matter of if a company should invest in cloud or colocation but rather when. This white paper will examine the pros and cons of both cloud hosting and colocation, while offering important considerations for IT managers determining which route to embark upon.

BENEFITS OF THE CLOUDThe cloud offers a number of benefits that can take the stress load off the shoulders of IT staff. Because services are acquired on demand, companies only pay for what they need, allowing them to stay lean and efficient, potentially saving money while offering opportunities to grow.

Companies using the cloud are able to requisition servers as required by their business needs, whether they need more server resources for application testing or because they’re growing, with just a simple payment. This elasticity allows organizations to adapt quickly to any market or changes in business requirements. Customers are able to increase CPU, RAM and storage on a whim. The economics of scale of a multi-tenant environment is a boon in particular to SMBs just starting out, as little initial investment is required and supporting services are plentiful.

Moving workloads to cloud providers also means

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relinquishing control over hardware. This can be a benefit for many SMBs, as they may not have the staff to handle IT infrastructure. Hyperscale providers, in particular, regularly invest in upgrading their hardware to increase performance, reliability and cost savings. Today’s cloud solutions tout the use of fast solid state drives (SSDs), a vast improvement from clunky and slow hard disk drives (HDDs). AWS, for example, utilizes their Elastic Block Store, persistent block storage for Amazon EC2 instances built entirely on SSDs. With the decreasing cost of flash technology and their exponential performance increases, investing in SSDs makes good business sense for providers, especially if they are to stay competitive. As cloud providers improve their infrastructure, their “tenants” likewise find better work environments without the need to handle the hardware themselves.

Today’s cloud isn’t the same as yesterday’s, as current providers are increasing their portfolio of services, including on-demand Software-as-a-Service (SaaS) applications like managed databases, email, DNS, queuing, data warehousing, auto-scaling and even machine learning. Software licensing may also be included, potentially saving an organization in licensing fees. With managed 24/7 support, the customer experience with cloud providers is high. Of course, these are services that add to the cost of existing in the managed cloud environment.

Cloud providers also offer protections against

potential security breaches and leaks. Because the cloud is managed 24/7 by dedicated staff, issues can be found, flagged and fixed relatively quickly. For SMBs with limited technical staff, they may face greater risks stemming from human error if they attempted to manage servers themselves. Furthermore, cloud providers adhere to compliance standards when it comes to the creation and management of virtual machines, data encryption, monitoring signons and usage, and incorporating data loss prevention. Additional services like next-gen firewalls, SSL decryption and cloud access security brokers provide additional layers of security.

DRAWBACKS OF THE CLOUDOf course, nothing is as simple as signing up and migrating workloads. As moving into a new apartment requires tiresome rearrangement of furniture, it’s not enough to change spaces and assume all will run smoothly. There are notable downsides with the cloud that ought to be considered.

Perhaps the chief concern of utilizing cloud services is the “noisy neighbor” problem. Because the cloud is shared among many organizations, resources are also divided. A noisy neighbor in the cloud is a fellow tenant who over-utilizes bandwidth, CPU, disk input/output or any other resource, leading to spotty performance in other virtual machines.

IT complexity and security are the top reasons cloud strategies collapse. (010) While the aforementioned security protections offered by cloud providers are certainly benefits, the fact that the cloud is shared means there are always the potential for security breaches, especially since many attackers are attracted to large targets rich with sensitive data like the cloud. The public cloud is a shared space based in multiple data centers with many entry and exit points. And though cloud providers work hard to ensure only companies see their own data, the inherent risks are still there.

Opting for the private cloud offers a more dedicated solution, thereby mitigating some of the security and

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noisy neighbor risks associated with the public cloud while offering many of the same benefits. It is still, however, still hosting with a third party. Unlike with colocation, utilizing the private cloud with a third-party cloud provider limits an organization’s ability to

manage the hardware and its security mechanisms.

Any downtime on behalf of a cloud provider itself will result in downtime for your application. This lack of control over hardware means companies are at the mercy of the timeframe of someone else’s technical support team/ Allowing the cloud provider control over hardware has the additional downside of limiting an organization’s ability to optimize infrastructure. Gone are options such as replacing drives within servers to the latest technical innovations.

It’s also important to note that not all applications will run well just because they’ve been migrated to the cloud. Some may see no change at all, as they must be optimized for the new cloud environment. Adapting an application to function well on the cloud will cost both time and resources, an important consideration for those looking to migrate. Moving to the cloud is as much an organizational change as it is a technical one, requiring a company’s staff to undergo an evolution in workflow philosophy.

Moving workloads off premises requires that an

organization implement an open-source mindset. As applications need to be adapted to the cloud or colocation environment, so too does the company workforce. This may be a larger issue with more traditional companies, as many startups tend to embrace the digital culture. Even still, an environment of collaboration should be fostered to allow good communication, such as when utilizing cloud tools within the organization.

Finally, the recurring cost of utilizing a cloud provider may not be the most cost-effective solution for a growing company. As additional resources are required, a company will need to upgrade to more expensive packages. And while the initial CapEx costs with utilizing a cloud provider is low, the OpEx costs can become substantial. This is when companies should consider colocation as an alternative option.

BENEFITS OF COLOCATIONColocation provides many of the aforementioned benefits of the cloud when compared to owning a data center, however there are potentially even greater cost savings. While cloud solutions are hosted via third-party providers across their many data centers, colocation offers a fixed, dedicated physical location for the client. There are notable benefits and costs with leasing data center space for owned hardware, and whether colocation is a good choice for one’s organization is dependent on its size and capabilities.

Dedicated hardware means greater control and security, making it easier to maintain compliance requirements as necessitated by one’s business or industry. Having a say in the hardware itself offers the increased potential for optimization, while dedicating resources for company growth. For example, vertical NAND SSDs are a notable innovation in flash storage today, stacked flash drives that can write up to two times faster than planar NAND flash memory. These dense chips provide high input/output speeds, low latency, increased reliability and security, and low

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requirements for power and cooling. Utilizing such technology in a data center could result in lower OpEx costs while offering higher performance. With cloud providers, the option for a company to optimize its own servers simply isn’t available.

The most notable benefit of colocation is the reduced OpEx costs, reducing ongoing monthly fees in favor of long-term CapEx, a higher upfront cost for the acquisition of hardware. Like owning a data center, companies that opt for colocation have dedicated infrastructure, however they will not need to worry as much about maintenance, as colocation centers handle server security, power and cooling. In the long term, growing companies find great cost savings with colocation. This requires a deeper dive into the cost comparisons between cloud and colocation, and a look at what point a company should opt for considering colocation.

Moz.com, a SaaS company providing marketing analytics software, utilizes both AWS and colocation and discovered that colocation came at approximately 1/5th the OpEx cost of the cloud. In one year, the company would pay $38,400 for hosting with AWS while it would cost only $8,096 that same year with colocation. In terms of infrastructure resources, the most notable expenditure for colocation is in the initial CapEx investment, the cost of the hardware itself. The company claims, with RAM upgrades to increase capacity, that they can bring down colocation costs to 1/7th that of AWS. (006)

Server Density, a server monitoring company, provided a cost comparison with regards to a smaller organization. They compared the costs of AWS’s Amazon EC2 (c3.4xlarge dedicated heavy utilization reserved) to colocation (1U Dell server stress tested at full server power). With the cloud, they found that the pricing for the first year included a $4,785 initial cost, $0.546 effective hourly cost and a $2 per hour per region additional cost. Extrapolating the costs for a full year, the cost for Amazon EC2 was $27,087.96. With colocation, the cost for Server Density for the first year was $5,454.45 (which included a $3,774.45 one-time payment for hardware) with a $1,680 per year cost for year two and onward. (006)

In both of the examples above, colocation is clearly the winner on a cost basis alone. Of course, the cost of the initial hardware investment depends on the quality of hardware purchased and will vary by company. It should also be noted that the comparisons are based on infrastructure resources alone and assume an organization has the required technical capabilities in place. There is much more to consider than hardware; colocation has its “hidden costs” and drawbacks.

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DRAWBACKS OF COLOCATIONColocation provides many of the aforementioned benefits of the cloud when compared to owning a data center, however there are potentially even greater cost savings. While cloud solutions are hosted via third-party providers across their many data centers, colocation offers a fixed, dedicated physical location for the client. There are notable benefits and costs with leasing data center space for owned hardware, and whether colocation is a good choice for one’s organization is dependent on its size and capabilities.

With control and dedicated hardware, there is a significant downside to colocation: the necessity of technical staff. Colocation can be compared to a do-it-yourself project, in which the responsibilities of maintenance fall upon the shoulders of the company. For SMBs that aren’t particularly technical, this is a huge drawback that can incur great costs with regard to hiring new staff, as well as the welcoming of potential risks of mishandled infrastructure. Companies must ensure that they have adequate in-house expertise.

While having a more dedicated space means noisy neighbor issues are minimized, only a proportion of the network is dedicated in colocation, thus network issues can still potentially come up. There are options to bypass this risk, as many colocation providers offer systems management tools that can help identify whether a hosted company should consider dedicated LAN connections. Companies can also seek colocation providers that offer multiple WAN options, so that if one connection is troublesome, one can simply switch to another. Networking is an important issue to consider.

Owning hardware has its drawbacks with it comes to flexibility. If the company should downsize for any reason, any un-utilized hardware becomes an efficiency drain. With the cloud, companies are free to scale up or down depending on their needs with little regard to hardware acquisition, most notably with auto-scaling support which makes increasing

and decreasing capacity completely automatic. For companies unsure of future successes, colocation may offer too fixed a solution when compared with the agility of the cloud.

Finally, there are many offerings from cloud providers that aren’t available with colocation. Their continuously growing portfolio of services can be invaluable to SMBs with limited resources. That cloud providers offer 24/7 support can mean the difference between an application succeeding or failing for those with minimal technical staff.

The choice between cloud and colocation ultimately depends on the nature of the organization, its needs

and its technical capabilities. While cost savings are a driving factor for many organizations moving from the cloud to colocation, other organizations find greater success on the cloud. Groupon, for example, is an established giant that required its own resources and found the cloud was no longer economically feasible. On the other hand, Quora is a startup with huge traffic to its website and no guarantee on return, so flexibility mattered more to them in their decision to ultimately choose AWS. (013 / 011) If growth and ROI are uncertain for the future, it may be better to stay nimble and avoid investing in hardware that may go unused should the organization downsize. If growth and returns are expected for the future, the upfront investment in hardware with colocation may be the better bet. Colocation is a good long-term investment for well-staffed organizations when compared to using third-party cloud providers.

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An organization must therefore conduct an assessment on its own technical capabilities. Is there already staff in place to take over any maintenance concerns with dedicated hardware? If so, colocation may be the better opportunity. If an organization itself isn’t very technical and has limited resources, the rich portfolio of services and 24/7 maintenance offered by cloud providers may be more ideal, even if the monthly costs are higher, because money can be saved by eschewing the need to hire more staff and by avoiding potential risks.

The Ponemon Institute averages the cost of a data breach at $4 million (017), the main cause of security breaches being a failure in IT operations. (003) Having capable technical support is especially important with maintaining data uptime requirements. Cloud providers offer uptime guarantees that safeguard against periods of data unavailability. With colocation, a company must rely on its own staff.

CHOOSING THE RIGHT BALANCE

It is important to note that while this white paper contrasts the differences between cloud and colocation, the choice isn’t one or the other. Just as companies can utilize a hybrid approach between the public and private cloud, they can select a mix between utilizing third-party cloud providers and colocation to best suit their needs. Data-sensitive material can be placed in the private environment offered by colocation, while non-critical functions

can be outsourced to the public cloud. In a method referred to as “bursting,” companies will often utilize the public cloud during moments of peak resource utilization.

Before migration to the cloud or colocation, organizations need to consider their business and application requirements. Application mapping is an invaluable exercise to conduct before considering migration. The analysis identifies how different apps, computers and networks are connected within one’s organization, as well as how they perform and how readily available the resources currently are. This can help re-imagine computing processes in the cloud environment, identifying potential weaknesses. Choosing the right balance between the cloud and colocation is therefore a very company-specific decision.

By 2018, 50 percent of large global enterprises will have hybrid environments comprised of the public and private cloud, colocation and on-premise data centers. (012). IT infrastructure needs to match business requirements and not the other way around.

Where do we go from here?So how does an organization prepare itself for a future swimming in evermore data? Consolidation is the key. Whether your organization is preparing to work in the aforementioned sectors or is just looking to make its data center more effective, consolidation is a practice worth pursuing to increase efficiencies and reduce costs.

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SAMSUNG

Samsung’s 32TB NAND SSD, set for release in 2017, more than doubles the storage capacity of the PM1663a SSD, released in 2016, from 15TBs to 32TBs by utilizing 64 vertically stacked NAND storage layers in one chip package, the highest density currently available in an SSD chip. Additionally, the NAND SSD fits 2.5-inch slots (as opposed to 3.5-inch slots), facilitating insertion into smaller drive slots. Performance-wise, the 32TB SSD allows for higher sequential read/write performance in smaller devices with greater power efficiency. These speeds are essential in processing lots of data in real time, using a flash array that blurs the line between caching and storing. Based on 4th Generation vertical NAND (V-NAND) technology, the 32TB SSD will be the largest capacity SSD in the industry.

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