David Merrill

Re-hydrating Cloud Economics Blogs - Part 2

Blog Post created by David Merrill Employee on Oct 15, 2016

Intermediate Steps to Cloud, and Still Reduce Costs

by David Merrill on Aug 30, 2013


In my previous blog I discussed some of the investments and steps people can take to be cloud-ready, or cloud-enabled, without necessarily moving everything to an off-site or consumption based delivery model. There are key ingredients that can help to get cloud-ready. And by cloud-ready I mean the same technology and processes that cloud providers use to deliver superior price and cost models for their customers. Some of these key ingredients include:

  • Virtualized storage
  • Virtualized servers and networks
  • Unified or orchestrated software to manage virtual systems
  • Billing and metering
  • Self-service portals for provisioning, change requests
  • Very strong link from service catalogs (menus items) to the service delivery, SLA, OLA and eventual chargeback

From the point of view of reducing unit costs, these steps can be done internally or organically, within your current organization, and within the current capitalization processes. At HDS we have demonstrated cost reduction with enterprise-class storage virtualization for many years. We have thousands of customers with many stories of improvement in utilization, tiered distribution, and faster migrations that all add up to a lower unit cost.

Extending these options to a pay-as-you-go model can extend savings even further. And if your situation (security, compliance, latency) allows, off-site location of IT resources can move the unit cost needle down even more. This graphic shows some of the OPEX, CAPEX, and other cost saving results that were achieved from a recent analysis I did for a large European client.


The TOP BAR was business as usual as measured in cost per SAPS. The bottom bar was moving into a private cloud offering with a pay-as-you-consume OPEX model. The customer was interested to know what they could achieve on their own (the middle bar) by implementing these advanced architecture elements, but without going to a vendor-assisted consumption/private cloud model. There was certainly space in the middle for unit cost reduction, but in the end they decided to go to the private cloud due to superior unit cost reduction.

Private, Hybrid and Public storage cloud offerings are becoming very popular these days. We see more interest in the pay-as-you-grow OPEX model for storage. Even if you are not completely ready for this extended reach, you need to understand that you too can use the same ingredients as cloud providers to produce superior unit cost reductions, right now in your current storage environment.