How to compare TCO for cloud and for dedicated solution

1. Milan Petrásek

2. Definitions
 CAPEX – Capital Expenditures
 OPEX – Operation Expenditures
 PUE – Power Usage Effectiveness
PUE is proportion of total power consumption of datacenter (i.e.
including air conditioning/cooling, lightning, consumption of UPS …
to the power consumption of IT equipments)
Commonly is between 1,8-2,5 (the best „green“ datacenters in the
present have about 1,15-1,2 for tens of thousands of servers)
I.e. total power consumption = IT power consumption × PUE

3. Compare the comparable
It can not compare one time
purchase with monthly fee of
service
Why?
 Initial cost of hardware (HW) is only
minority of TCO.
 For correct comparison is necessary to
include all of cost (also non-cash) for
the entire period of operation.

4. What is necessary to calculate to TCO?
CAPEX
• Server cost
• Storage cost
• Infrastructure cost
• LAN (switches, …)
• WAN (firewall, loadbalancer …)
• UPS
• Diesel generator
• Racks
• Cabling
• Air conditioning (cooling)
• Server room (space - m2, raised floor, fire alarm, security
system, fire equipment …)
OPEX
• Electrical energy (see PUE)
• Human resources (see next slide)
• Contracts about support for all of equipments (servers, LAN,
cooling …)
• Leasing of space

5. What is necessary to calculate to TCO?
Separate part is human resources
 Plain IT employer isn't available more than 10,5 month of year,
rather less - 4-5 weeks vacation, trainings, conferences, internal
training, sick days, illness)
 Substitution for absence
 Holidays
 Working hours is 8,5h
 All of this is included in service from cloud provider with guarantee
of availability with penalty (Service Level Agreement SLA).
 24×7×365

6. What is necessary to calculate to TCO?
And others … for thought
• How much cost failure of HW?
• Price of money (inflation, exchange rates)
• Regularly check (revision) of electric cabling
Diesel generator is separate part, if it is needed
• Space for diesel generator (building, external container) – it is
necessary to solve noise, vibration …
• Electrical substation
• Fuel – filling, circulation …
• Emission
• Maintenance

7. Why choose a cloud?
 OPEX vs. CAPEX
 Easier planning expenditures
 Decreasing CAPEX in times of economic uncertainty (crisis)
 The risk of investing in technology
 Protection against investing in technologies that may become
obsolete or unnecessary for me
 Independence on HW suppliers
 Flexibility
 Pay as you growth

8. Cost allocation for example

9. Questions