The assumption that the public cloud is inherently cheaper than the private cloud has been challenged in a white paper jointly published by high density colocation provider Colovore, OpenStack cloud management software firm Piston Cloud Computing Co., network virtualization vendor Plexxi and server vendor King Star Computing.

The paper shows that for constant, non-bursty loads, Amazon EC2 can become cost prohibitive with a deployment of as little as 129 cores, or seventeen (17) Amazon EC2 m3.2xlarge instances (a $7,644 monthly spend), when compared to a typical modern architecture using:

• OpenStack-based private cloud
• Modern server equipment
• Affinity-driven networking gear
• Purpose-built high density colocation

Though the rapid speed of deployment, and reduced capital expenditure has made services such as Amazon EC2 very attractive, the study shows that the rate of cost increase is often higher than that of a self-hosted private cloud solution.

IT teams need to know when the public cloud makes financial sense versus doing it themselves. The assumptions of the past no longer apply. The competitive advantage of the public cloud has diminished significantly. The reasons for this are outlined in the whitepaper too.

This paper’s real world case study also shows that a single server cabinet deployment can save up to $388K or 44% over a typical 36 month equipment cycle when compared to Amazon.

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