Capex vs. Opex – The Costs of Storing Your Data

One of the great debates in cloud computing involves business economics and the inherent expense that stocking and running a data center entails.  You may even hear the phrase “Capex vs Opex” in this debate.  This phrase refers to the trade-offs of investing in building and operating your own data center (Capital Expenditure and Operating Expenditure) versus using someone else's data center (Operating Expenditure) on a pay-as-you-go or rental model.

It’s important to consider the financial implications of both approaches in the long run – especially since “renting” costs less in the short term, but the investments in data centers will ultimately be passed on to the end users, making that approach more expensive.

Owning and stocking a physical data center requires capital expenditure (Capex), large amounts of space filled with computer hardware, and the cash flow to pay the power bill.  Many “cloud-based” data centers, like Amazon’s Elastic Compute Cloud (EC2) or iCloud, still rely on physical servers to store data – using the extra server space from other operations.  This artificial “cloud” allows users to access programs and data as a “virtual instance” on physical servers.  Thus Amazon rents space to businesses like Dropbox; but it is still expensive.  Dropbox may not have to invest in creating their own their data center, but they pay a higher operational cost than someone like Carbonite who built their own data center.

The Capex Vs. Opex debate is really a debate on “owning versus renting”.  Either option still has two big issues – they use massive amounts of global energy to run and to cool, and data centers are still subject to the possibility of server outages.

An article from highlights some of the cost  issues of owning and operating servers:

  1.  The direct costs that accompany running a server: power, floor space, storage, and IT operations to manage those resources.
  2.  The indirect costs of running a server: network and storage infrastructure and IT operations to manage the general infrastructure.
  3.  The overhead costs of owning a server: procurement and accounting personnel, not to mention a critical resource in short supply: IT management and its attention.

Of course, neither side of this debate takes into account the “true cloud”.

What is “true cloud?”

Even though Amazon’s Elastic Compute Cloud is called a” cloud”, Amazon still has to host a warehouse of servers to make their “cloud” available to users.  This will always be more costly than using a true cloud service.  In fact, Amazon’s “cloud” is no more than a marketing term, considering the need for a traditional data center to hold their “elastic” storage. For a service to be hosted on a “true cloud”, the architects would have to eliminate the need for large, costly datacenters, completely.

The Digital Lifeboat model is based on a highly secure peer-to-peer “true cloud” – which doesn’t require a data center and the accompanying computer hardware, floor space, and extra power.  This keeps our overhead low so that our service costs less than our competitors. In addition, Digital Lifeboat requires less computer hardware and less energy which makes our company greener than if we were to house your data in a large data center.

We’ve pioneered a method of cloud-based file storage that’s automatic and continuous; self-managing and self-healing – all without a datacenter.  That’s the “true cloud”; that’s Digital Lifeboat’s online backup and recovery service.

For extra reading, check out this interesting Money Magazine article on cloud security.

Centralized File Storage Versus Distributed File Storage

Do you ever wonder where your data goes when it is stored in the “cloud?”  When it comes to online backup, many companies store all your data in one centralized place.  While this approach is simpler for the company, and may make access quicker and easier for the customer, what if the centralized storage fails?   If a server crashes, or a storage hard-drive dies, having all your files in one place means losing everything.  This completely overrides the point of having a backup system in the first place.   As we discussed in our last blog post, what if someone hacks into the data center?  This has happened at Citibank, Sony, Amazon and Visa.

Digital Lifeboat uses automated distributed file storage – breaking your files into small fragments, replicating and encrypting them, and sending them out into the cloud to be stored in multiple locations.  Think of it as putting your eggs in a few different baskets, or diversifying your stock portfolio.   Case in point: if you only schedule a backup to your Western Digital hard-drive, and your house burns down – you lose that data.  Or if you forget to schedule a backup, and your laptop hard-drive crashes, your files are gone.  With our process, your data isn’t all in one place, and it’s always accessible to you.

Maybe you keep all your documents stored on Google Docs; all your photos stored on Picasa; 300mb of CRUCIAL data, stored on Google's cloud; none of which are backed up anywhere else.  Imagine Google unexpectedly deletes your account in error, or you receive a “network server error” (much like the Amazon outage) – where would you turn?

At Digital Lifeboat, we don’t keep all your eggs in one basket, which makes your data easily accessible to you, regardless of power outages and acts of nature.  We understand the nature of backup systems and we keep your crucial data safe with our encryption and online file storage process.

Hacking the Cloud: When Your Data ISN’T Safe…

If you’re a Play Station “fan boy” (or girl), you probably received an email from Sony offering you free games (in exchange for something about account security).  The PlayStation Network shut down it’s cloud after “an external intrusion” that resulted in the theft of personal information belonging to 77 million customers.  In fact, PSN said they’re moving their network infrastructure and data center to a new, more secure location.

Or, you might remember when Amazon's Elastic Compute Cloud and Elastic Block Storage platforms were offline during an April 21 outage that had major websites unavailable for three days.

Outages and security breaches like these have inspired fear that the Cloud may not be secure – or is less secure than a traditional data center; however, points out that major security holes are not unique to cloud services.  PSN uses both cloud services and traditional data centers.  Amazon's outage drew attention to data availability issues and reliability.  Security concerns exist in both cloud and traditional data center environments.  Cloud security is not inferior to data center security, where information can be accessed by a slew of hacking techniques.

eWeek adds, “People generally [haven't heard] about outages in [traditional] data centers because they affected only one organization and were smaller scale, but they often add up to far more lost time, money and business…”

The problem traces back to encryption.  EVERYTHING should be encrypted in both traditional data centers and on the cloud, from network traffic to S3 storage to file systems.  And the sensitive data?  That information should be especially encrypted.  The tools are out there, but companies might not realize just how secure their data needs to be.  An article by George Reese on the O’Reilly community adds:

“You should create a security system with the assumption that someone will gain unintended access to your data. It’s not that the cloud makes it more or less likely; it’s simply that a) there are attack vectors in the cloud that you have less control over and b) it’s a good idea anyways.”