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The Matthew White column

The cost of cloud – and when to come back from the cloud

An excellent article from Andreesson Horowitz gets the discussion started about the cost of using Cloud Computing.

For those not familiar with AH, they are one of the most influential investors in the computing world. Cofounded by the creator of Netscape, they have invested early in Skype, Github, Lyft, Airbnb and Oculus. They became the first venture firm that held stock in all four of the highest-valued, privately held social media companies at the time: Facebook, Groupon, Twitter, and Zynga.

When these thought leaders in the tech investing world say, “You’re crazy if you don’t start in the cloud; you’re crazy if you stay on it“, it’s worth listening to them.

If you read the article, you see it’s well researched and low on hype, yet shows that the top 50 public software companies are missing out on a conservative $100B in market cap/value because of the high cost of cloud services. They prompt business owners and technical managers to ask the question of when, not if, they should repatriate back to own run hardware.

Flywheel’s customers are far from being top 50 public software firms. Some of our SMB customers like Augean are public companies, but in industrial waste, not software. Even so, we have frequently done the calculations of what it would cost for many of our customers to move to cloud services like Microsoft’s Azure or Amazon’s cloud infrastructure, and every time it comes out staggeringly more expensive to move those applications to the cloud.

Do I believe the cloud is wrong for SMB companies? No, most small to medium businesses use services like email and phone through cloud networks. We actively recommend this because it is cheaper for them, gives greater uptime and allows them to be work-from-home by default compared to on premise email servers. However many customers that go beyond basic office software will need a dedicated server or 3 for their custom applications they need to run their business. It is those that frequently are cheaper to run from a co-location facility, just like Andreesson Horowitz talk about.

Just like AH are saying, going to the cloud and repatriating from it aren’t fads to be done lightly. With a good IT provider (or in house team) you should be able to make proper business decisions whether it’s right for you, or more importantly when the business case will shift to being right to move either direction.

If you don’t have a person who can write you a credible business case, contact one of our senior consultants today to have a brief overview chat to see if it’s worth you giving more time to working through the numbers.

Let’s get started!

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Flywheel IT Services has teams of highly qualified and experienced IT engineers and consultants around the UK.

For over 20 years we have partnered with businesses, schools and major construction companies to provide IT services and to guide and support their IT projects, tech strategies and day-to-day operations.

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