The software-defined data center revolution is creating "hyper-efficient" on-premises systems that are becoming, in many cases, more cost effective for workloads and applications than the public cloud, specifically market leader Amazon Web Services, according to IT leaders.
"AWS isn't the cheapest solution. Everybody thinks going to public cloud, going to AWS -- it's cheap. And it's not," said Peter McKay, Co-CEO and President of Veeam, during a CRN software-defined data center roundtable discussion. "Customers are getting smarter about the costs associated with public cloud."
Industry titans are saying customers are realizing the cost benefits of on-premises solutions through new innovations around automation and orchestration solutions such as hyper-converged infrastructure and software-defined WAN.
Paul Miller, vice president of marketing for Hewlett Packard Enterprise's Converged Data Center Infrastructure group, said clients often don't realize the AWS pricing model charges them more for API (Application Programming Interface) calls, which can result in rising and unpredictable bills for customers.
"What's interesting about AWS, [is] AWS will give you your utilization on VMs for performance. To get memory, to get network, to get everything else -- you have to pay for those APIs," said Miller. "One of the problems AWS has is they can't predict usage. So they can't guarantee a performance at all their data centers."
Miller said one of the big "holy grails" in software-defined data center technology is the intelligence it provides around why and where a customer should run a workload. HPE's OneSphere, for example, provides insight into on-premises and public cloud regarding usage, performance and availability.
"Not every AWS data center is always going to give you the same performance. [An example] is noisy neighbors. A noisy neighbor could be chewing up a bunch of cycles in the data center. But if you can understand that and say, 'Okay, when [my noisy neighbor] is in town, I'm going to move my workload to AWS West because I know it's not as noisy over there during this part of the week,'" said Miller. "And this is where lines of business can start to make really, really intelligent decisions."
HPE has teamed with Microsoft Azure as its "preferred" public cloud provider since 2015.
AWS did not respond to a request for comment by press time.
Dell Technologies CEO Michael Dell recently told CRN that with the rise of software-defined data centers, on-premises solutions are more cost effective 85 percent to 90 percent of the time compared to the public cloud. "What we have seen when you automate and modernize the infrastructure, software-define everything, and move up to the platform level, is that for the predictable workloads – which are for most companies 85 percent to 90 percent of their workloads – an on-premises solution is much more cost effective," said Dell.
Solution providers said customers sometimes are paying for workloads and applications in public clouds that they're not even using. Additionally, cloud providers like AWS can't accurately predict consumption costs because of how businesses operate today.
"It is never going to be an 'all or nothing' game in public cloud. Businesses cannot predict utilization, consumption of their apps or how they scale related to business activity," said one top executive from a solution provider who partners with AWS, Google and Microsoft. "Companies need to balance a hybrid environment, much like they need to balance fixed and variable costs."
The executive said a large portion of his company's cloud services business now revolves around helping customers mitigate costs by bringing some items back on-premises.
"Customers can get in trouble with some high costs," he said. "Do they get in trouble in a couple months for the increasing [public cloud] costs? No. But at the end of the year they might look at it and say, 'We're paying 22 percent more this year now than we did when we started. What's happening here?'"
Robert Keblusek, CTO of Sentinel Technologies, a Downers Grove, Ill.-based Dell EMC, Microsoft and VMware partner, said software-defined data center technology has improved over the past few years to become just as easy and flexible to consume as public cloud.
"Some of the automation that you got out of the public cloud that was very appealing, is now more easily available on-premise," said Keblusek. "So some of the things, for example, in VMware's orchestration and automation is available on-premise, which was difficult to do in the past. So those tools have become better, more robust and mature. Some of those same tools will allow you to not only see the costs of what those workloads might be in the cloud, but also assist you with the mobility and provisioning in the cloud."
Chad Dunn, vice president of product management and marketing for Dell EMC, said a few years ago, customers "assumed" that public cloud was cheaper, faster and easier.
"[Customers] said, 'Prove to me why I have to keep this workload on-premises.' That doesn't happen now. Now the customers are well aware that they've got to take a look at pricing. It's going to be determined by what those workloads are, what compliance they need to adhere to, what the transit fees are," said Dunn. "It's not a given anymore that public cloud is better."
Although software-defined data centers are on the rise, AWS is still rapidly growing, reporting sales of $5.1 billion, representing 45 percent year-over-year growth, during its recent fourth fiscal quarter. The public cloud leader's $1.35 billion in operating income delivered 73 percent of Amazon's net profit for the quarter, ended Dec. 31, 2017.
Solution providers said SaaS companies and cloud-native startups are still betting on public cloud, as well as many SMB customers. These types of public cloud buyers aren't looking to build custom applications and don't have the capital expenditure budget or need for a software-defined data center, according to solution providers.
"The nature of cloud use is different for those companies. There's less custom app development happening, and the stuff that is, is the low-code, no-code stuff," said one executive from a solution provider ranked in CRN's Solution Provider 500 list. "It's not custom building core business applications like you'll see in the upper mid-market or enterprise level. [SMB and SaaS companies'] attraction to the cloud is around access, availability, and business resiliency and reliability."
Besides launching new software-defined data center technologies to combat public cloud costs, vendors are creating products for channel partners specifically aimed at better managing and securing public cloud usage.
This week hyper-converged infrastructure pioneer Nutanix launched a new software-as-a-service offering, Nutanix Beam, that provides in-depth analysis of exactly how organizations are consuming public cloud services in order to help channel partners save customers money in public cloud.
"As companies of all sizes have made the leap to public cloud infrastructure, and many people and groups within organizations take advantage of public cloud services, that sort of uncontrolled, undisciplined use of public cloud results in, at times, exceedingly high costs," said Greg Smith, vice president of product marketing for Nutanix, in an interview with CRN. "[Nutanix Beam] provides cost optimization and security compliance for public clouds like AWS and Microsoft Azure."