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Google: The cloud is cheaper

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McKinsey released a report in April 2009 that concluded small to mid-sized businesses saved money by moving to a cloud computing environment versus a traditional data center; however, large businesses were better off running their own data centers. Companies, they said, could match or even surpass cloud computing savings by applying virtualisation techniques in-house.

Google, one of the cloud computing giants, has fired back. The company says that it has compared the costs of cloud computing to standard enterprise data centers and found cloud computing to be cheaper.

Matthew Glotzbach, product management director, enterprise, at Google said the report was flawed in that it only focused on hardware cost.

“It is only one cost aspect out of a dozen.” Companies also need to consider other costs of the application stack such as licensing and development, said Glotzbach.

Furthermore, he said the report also assumes virtualisation will be able to raise hardware utilisation to 100 percent. Glotzbach said, in reality most companies are only able to achieve 20 to 30 percent.

“Enterprises haven’t been sophisticated enough to plan for that high utilisation level.” Virtualisation, to achieve high utilisation “is good in theory, but in reality it isn’t even close to how enterprises are run”, he said.

In the practical world, Glotzbach argues, companies can adopt newer technology without the cost of investing, learning, installing, and upgrading. According to the Google model, enterprises should move commodity aspects of their organisations, such as email, to cloud computing, while keeping their central applications in-house.

Source: ZDNet Asia
Photo: Flickr

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