Is cloud-first strategy always the best approach to optimizing the infrastructure costs? Does adopting cloud-first strategy guarantee great ROI immediately and when business scaled?
Quick Illustration on cloud cost. (Ignore other costs such as data transfer, etc. for this quick illustration)
Small compute unit (2 vCPU, 4 GB Memory, 40 GB space): ~$25/month, $300/year
Qty: 1 | 1-Month: $25 | 1-Year: $300 | 3-Year: $3,600
Qty: 50 | 1-Month: $1,250 | 1-Year: $15,000 | 3-Year: $45,000
Qty: 1,000 | 1-Month: $25,000 | 1-Year: $300,000 | 3-Year: $900,000
Note: not all solutions work if they are not designed and built to run on a small compute unit.
As illustrated, cloud cost climbs up quickly. Ease of deployment could also lead to uncontrollable cloud sprawling (funny that this topic used to be server sprawling) and surprises in I&O cost.
When you are deep into cloud, the SaaS service offering and SLA are relying on cloud, there is no end of sight. The high I&O cost (OPEX to be more specific!) will result in gross margin and EBITDA impacts, affect company valuation…
As such, adopting cloud-first strategy should not be a technology-driven initiative aiming to optimize infrastructure cost, especially for SaaS companies. Cloud-first strategy must be a well thought through business and financial strategy.
Share your cloud strategy in the comment below.