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October 17, 2016

Brexit forces UK public cloud prices sky high

Falling value of sterling to blame for higher cloud bills.

By James Nunns

UK users of the public cloud should expect to see their bills go up as the impact of Brexit starts to hit home.

Due to the impact the vote has had on the value of sterling, public cloud users in the UK could end up paying £1,750 more than before the referendum.

That’s according to 451 Research in the quarterly Cloud Price Index, which looks at the total price of running a web server application.

The research firm takes into account variables such as the cost of public cloud compute, storage, database, and management required to prop up an application.

The report looks to give businesses an insight into what would be cheaper for them to run, public or private cloud. Essentially the answer boils down to it depending on the use case.

451 Research say that a commercial, open source, managed private and public cloud can all be the best option for different scenarios, with labour efficiency and cloud utilisation the deciding factors.

However, at commodity scale it is OpenStack and public clouds that have the upper hand, while at standard scale commercial platforms and manage private cloud each have their benefits, said the firm.

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The report’s author, Dr Owen Rogers, wrote: “Managed private cloud, at least on average, is going to be more expensive than public cloud. In our 100% utilization case, this premium is tiny – just 6% percent – and should definitely be considered. With 50% utilization, it is now twice the price of public, but again, some would consider this to be good value considering the benefits of single-tenancy, control, performance and security.”

In essence the report found that building a Microsoft or VMware proprietary software based private cloud will deliver a lower total cost of ownership for cases when the number of virtual machines per engineer is below 400.

Labour efficiencies required to achieve price points per hour at 100% utilisation.

Labour efficiencies required to achieve price points per hour at 100% utilisation.

When the VM per engineer figure goes above 400, OpenStack becomes the better financial option.

After the 400 VM point, all private cloud options become cheaper than public and managed private cloud options, the report said.

OpenStack could become a more appealing option in the future if it were to solve the cost of labour. The report found that OpenStack engineers are “significantly” more difficult to come by and cost “far more than VMware engineers.”

Cost is of course not the only factor that is considered by businesses looking to utilise cloud technology, but it is an important one.

Find out where Oracle CEO Mark Hurd thinks enterprise IT cloud spend will peak. 

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