OpenStack Making Pricing Gains, Index Finds
The OpenStack cloud platform has had plenty of teething problems, none the least of which are its complexity in deployments and a steep learning curve before users reap a return on the investment. Key vendors such as Rackspace (NYSE: RAX) and Red Hat (NYSE: RHT) have responded with managed services designed to make the cloud platform easier to deploy under an OpenStack-as-a-service model.
All this raises the question: What is the tipping point for using a self-managed private cloud in place of a public cloud or managed cloud services? Market analyst 451 Research finds in its latest Cloud Price Index released this week that cloud shoppers and vendors alike finally have some visibility into pricing models that are often as complex as an OpenStack deployment.
The market researcher analyze "total cost of ownership" factors such as workload requirements and IT salaries to determine whether private or public clouds are a better long-term value. It concluded that "labor efficiency" in the form of the number of virtual machines managed per IT engineer was often the key metric.
Hence, the index concludes that the the prevalence of suitably qualified administrators means "commercial private cloud offerings such as VMware (NYSE: VMW) and Microsoft (NASDAQ: MSFT) currently offer a lower [total cost of ownership] when labor efficiency is below 400 virtual machines managed per engineer. But where labor efficiency is greater than this, OpenStack becomes more financially attractive."
Put another way, if you are willing to put up with a steeper learning curve in deploying OpenStack, the resulting scaling could yield savings down the line in terms of metrics like labors costs. For example, the researchers note that just a 5 percent increase in the number of virtual machines an engineer can manage will save money.
Moreover, recent efforts to ease installation and management of OpenStack distributions make small efficiency improvements easier to achieve, the cloud analyst reported.
Many enterprises have addressed the cost and security tradeoffs between public and private cloud deployments by opting for hybrid alternatives that leverage public cloud capacity flexibility while retaining mission critical data and applications in-house. That trend was highlighted last week when public cloud leader Amazon Web Services (NASDAQ: AMZN) announced an alliance with on-premises leader VMware that provides each a play in the other's market segment and greater leverage in the hybrid cloud competition.
Meanwhile, the cloud index found that demand for cloud skills is increasing, as evidenced by a roughly 10 percent rise in cloud administrators' salaries over the last 18 months. Hence, 451 Research projects that more certified OpenStack engineers will enter the job market over the next year. Since the pricing index factors for salaries and labor efficiency along with technology costs, the availability of more certified OpenStack engineer is expected to stabilize average salaries, driving down the costs of deploying OpenStack.
For now, the researcher recommends that cloud buyers continue to hedge their bets: "We suggest buyers consider a hybrid or multi-cloud strategy so they can determine the best execution venue for each workload based on cost, management, technology and location requirements."