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Cloud Economics

Summary

Objectives

By the end of this session you should be able to:

  • Explain how websites were hosted before the availability of cloud services (and virtual machines!)
  • Explain what Capital Expenditure and Operational Expenditure is, discuss what the differences are between them, and explain how they are commonly treated differently by companies.
  • Demonstrate how cloud computing costs can be calculated.
  • Discuss the cost difference between cloud computing and traditional "on-premise" deployments.

Key Points

  • Cloud economics is the study of the benefits, costs, and principles of cloud computing.
  • Before cloud computing you needed to have a physical server to store your website, having to buy all the equipment.
  • With cloud computing, you can rent storage. You can pay to have a server storing your files, without having to buy and configure the hardware.
  • Capital Expenditures (CAPEX) are purchases of significant goods or services that will be used to improve a company's performance in the future.
  • Operating Expenses (OPEX) are the costs a company has for running its day-to-day operations.
  • Determining the potential costs of cloud computing can be as complex as the technology itself. The cost is divided in three centers: Compute, Storage, Network.
  • Some providers have a calculator to estimate the difference between TOC and cloud costs.