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 CIO.com 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.

What is the Cloud?

What is the Cloud: www.educationatlas.com

What is the Cloud: from www.educationatlas.com

You may have heard by now that Digital Lifeboat offers cloud-based online backup systems. But you’re probably wondering just what is “the cloud” and how is it better than backing up to an external hard drive, for example?

Let's start with how your PC works. You open an application, like Microsoft Word, and you type a letter, and save the content on your hard drive. The application (Word) and the data (your letter) are on your PC. Cloud computing is an approach which involves the creation and deployment of services and applications over the internet, supported by a coordinated infrastructure. When you open your email, the application is “in the cloud” and when you send the email to a friend, the email is stored “in the cloud.” Lots of services like search engines, YouTube, Flickr and Facebook operate this way.

The popular buzzword, “cloud” simply means storing digital files on someone else's computer and accessing it by internet.

What people like about “the cloud” is that they can access content on-demand. What businesses like about “the cloud” is that it shares computing resources (networks and servers), that requires minimal management and effort to both access and release. With cloud computing, it’s easy to partition resources for you to use, and when you’re done using those resources, it’s easy to re-integrate those resources back into the cloud for others to use. Cloud computing is an efficient way to increase network capacity and utilization, without having to go out and purchase more equipment that – in the end – will just contribute to the growing problem of e-waste.

With all the different methods and applications used in cloud computing, it would be more accurately described as “sky computing”, with little grouped clouds for each application or service – one for Facebook, another for Salesforce.com, another for YouTube, etc.

 

Next up: What's up with “hacking” the cloud?