For the past decade Architel has offered various cloud services to clients. In the past we thought of cloud computing as dedicated or shared hosting. Some companies began offering services via the cloud or SAAS. Today the general wisdom is that everything is the cloud – i.e. as long as it isn’t in your office. Cloud computing offers both good news and bad news for companies.

First the good news: It is very cheap to deploy additional server and application resources. In the past it would take four or five servers to handle a company’s computing needs and often those servers would be overtaxed. Today cloud offerings make it easy to deploy the same applications across any number of servers ensuring that the environment is not overtaxed. Many companies that we support who previously needed 5 servers on average are now using as many as 10 – a 100% increase in server utilization. Additionally, in the cloud the incremental cost to add servers is very low – almost free in many cases.

One of our clients (who agreed to let me write about their environment) has 21 servers in our data center. They needed a redundant environment in the cloud which we helped them create in Amazon’s cloud (perhaps the best in the industry today). They use more than 63 servers in Amazon’s cloud to do the same work that 21 servers they own did in our data center. Why so many more? Well the incremental cost of each server was almost $0 – the way Amazon charges customers based on utilization means that you pay the same amount for 1 server doing twice as much work as 2 servers doing about half the work. Two servers doing half the work works better in many cases and since the cost is the same, developers often opt for a bigger environment. We call this ‘server creep’ and it is happening to EVERYONE who is leveraging the cloud.

Now for the bad news: If servers are free your staff will find a reason to spin up a new server in the cloud faster than rabbits have baby rabbits. Your mother might have mentioned to you that there is no free lunch – and she was right. Supporting a single cloud based server is about the same work as supporting a locally based server. Each additional interconnected server added either locally or in the cloud increases the complexity and as a result support costs increase in a polynomial curve upward. For most companies, moving to the cloud can reduce their hardware costs by 50%, while their labor costs increase by 100%. Not surprisingly most cloud companies won’t explain this phenomenon to potential clients. Additionally this increased cost doesn’t show up right away – in fact it usually hits most cloud clients at 6-12 months after moving to the cloud. Most new cloud customer build up a HUGE support ‘debt’ that must be repaid with support.

The decision to move to the cloud is a math problem. Is the hardware cost savings more than the support cost increases? Most companies realize that it is smart to leverage the cloud for certain activities and leverage your server closet for others. What about your company? What are your cloud plans?