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Comparing Traditional Data Center and Cloud Data Center Operating Costs

1 of 6 in Series: The Essentials of Managing Data in Cloud Computing

Ultimately, cloud computing services are attractive because the cost is likely to be far lower than providing the same service from your traditional data center, so it helps to understand why cloud data center costs are lower. This economic factor applies to clouds whether they’re private or public.

How much does a data center cost to run? It depends on these things:

  • How big it is.

  • Where it is.

  • What it’s doing.

The cost of running a traditional data center

Although each data center is a little different, the average cost per year to operate a large data center is usually between $10 million to $25 million.

Where’s the bulk of the money going? This might surprise you.

  • 42 percent: Hardware, software, disaster recovery arrangements, uninterrupted power supplies, and networking. (Costs are spread over time, amortized, because they are a combination of capital expenditures and regular payments.)

  • 58 percent: Heating, air conditioning, property and sales taxes, and labor costs. (In fact, as much as 40 percent of annual costs are labor alone.)

The reality of the traditional data center is further complicated because most of the costs maintain existing (and sometimes aging) applications and infrastructure. Some estimates show 80 percent of spending on maintenance.

Before you conclude that you need to throw out the data center and just move to the cloud, know the nature of the applications and the workloads at the core of data centers:

  • Most data centers run a lot of different applications and have a wide variety of workloads.

  • Many of the most important applications running in data centers are actually used by only a relatively few employees.

  • Some applications that run on older systems are taken off the market (no longer sold) but are still necessary for business.

Because of the nature of these applications, it probably wouldn’t be cost effective to move these environments to the cloud.

The cost of running a cloud data center

In this case cloud data centers means data centers with 10,000 or more servers on site, all devoted to running very few applications that are built with consistent infrastructure components (such as racks, hardware, OS, networking, and so on).

What’s the key difference in the cost structure of a traditional data center and a cloud data center? One of the most important factors is that cloud data centers aren’t remodeled traditional data centers.

Cloud data centers are

  • Constructed for a different purpose.

  • Created at a different time than the traditional data center.

  • Built to a different scale.

  • Not constrained by the same limitations.

  • Perform different workloads than traditional data centers.

Because of this design approach, the economics of a cloud data center are significantly different.

Estimates for how much it costs to build a cloud data center include three cost factors:

  • Labor costs are 6 percent of the total costs of operating the cloud data center.

  • Power distribution and cooling are 20 percent.

  • Computing costs are 48 percent.

Of course, the cloud data center has some different costs than the traditional data center (such as buying land and construction).

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