Cost of running a private “cloud”

I have always remained bullish on the “on-premises” hardware – owning the data versus renting out the “space”. Cost considerations can balloon the expectations of private ownership because in $ terms, it can be very expensive.

Here’s something from Canonical Blog:

It’s time to think about efficiency, and the financial cost of outsourcing to a managed service provider compared to hiring a dedicated team. So first, let us breakdown the operational costs of a self-managed cloud:

  • For 24x 7 operations throughout the year, you require coverage of 8,760 hours
  • A full-time equivalent (FTE), after removing weekends and PTO, has an annual availability of 1,776 hours (222 days x 8 hours/day)
  • Accordingly, 5 FTE are required to operate the cloud with no redundancy
  • For production-level SLAs, 2x FTEs are required at the same time for redundancy, and accordingly, 10x FTEs is the minimum number of engineers required to operate 24x 7 
  • The average annual income of a Cloud Operations Engineer is ~ $ 98.8K, and the minimum is   ~$ 72K
  • Considering the minimum income, operating a private cloud will require an annual human resources budget of at least $ 720K. This does account for any turnover, time and costs for training and development or any other work-related activities.

Mobile applications and cloud requires niche specialists, and entities will well entrenched niche portfolios can afford them. It also means the operations will increasingly get centralised; often with a single point of failure. My obsession with the “private cloud” has to do with the singular idea of owning the complete stack of data. I have heard insider stories of how poorly credentialed public cloud resources can be. Of course, it is not admissible because it’s hearsay but what if someone gets a clear visibility into your healthcare data? Regulations around these will eventually grow; not only enforce localisation, but with the express purpose of avoiding breaches. Healthcare enterprises are in a unique “double-whammy” – financial and healthcare data, a tinderbox to own, but a ripe honeypot for those with malicious intent.

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