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December 23, 2016

Economics of Big Software: What you need to know

While the cost to deploy OpenStack is relatively low, the ongoing investment in maintenance, labour, and operations can be high.

By James Nunns

Buzzwords in IT are prolific, sometimes relevant and often meaningless.

However, today’s IT director is facing significant business disruption from very real concepts including Software as a Service, big data, cloud, scale-out, artificial intelligence, containers, OpenStack and microservices.

Together these trends putting pressure on an IT team to scale out in incredibly complex and constantly growing infrastructure have been termed “big software”.

The amount and complexity of software any enterprise is expected to master has exploded over the last ten years, often with dozens of services making up a single solution. The opportunities offered by these technologies can save companies many thousands of dollars, and offer growth and flexibility to business operations.

Mark Baker, OpenStack Product Manager at Canonical.

Mark Baker, OpenStack Product Manager at Canonical.

However, to address the realities of big software, companies need to think differently. Traditional enterprise applications were monolithic in nature, procured from best of breed providers and installed on a relatively small number of large servers.

Modern application architectures and capacity requirements force companies to now roll out many applications, components and integration points spread across potentially thousands of hosted physical and virtual machines on premise or in a public cloud.

Organisations must have the right mix of products, services, and tools to match the requirements of the business, yet many IT departments are undertaking these challenges with the approaches and tools developed over a decade ago.

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Organisations are now finding themselves falling behind, and ill-equipped to deal with the challenges and opportunities which are arising, with difficulties in hiring and training people with the skills required to both deploy and operate this software.

Some IT Directors have turned to public cloud providers like AWS (Amazon Web Services), Microsoft Azure, and GPC (Google Public Cloud) as a way to offset much of the CAPEX (capital expenses) of deploying hardware and software needed to bring new services online. They wanted to consume applications as services and offset most of the costs to OPEX (Operating Expenses).

Initially, public cloud delivered on the CAPEX to OPEX promise, Moor Insights & Strategy analysts state, with cloud providers touting upwards of 45% in capital reductions in some cases, but organizations needing to deploy solutions at scale found themselves locked into a single cloud provider, fluctuating pricing models and unable to take advantage of the economies of scale that comes from committing to a platform. Forward thinking IT directors realised they must disaggregate their current data centre environments to support scale-out private or hybrid cloud environments.


Challenges and opportunities with OpenStack

OpenStack is a way for organizations to deploy Open Source cloud infrastructure on commodity hardware. Customers look at OpenStack as an opportunity to reduce the cost of application deployment whilst increasing the speed with which they can bring new application services online.

While the cost to deploy OpenStack is relatively low, the ongoing investment in maintenance, labour, and operations can be high as some OpenStack solutions are unable to automate basic tasks such as updating and upgrading their environment. The cost of staff experienced and able to operate OpenStack at scale is high.

One of the main challenges with OpenStack is determining where the year-over-year operating costs and benefits of managing the solution reaches parity, not just public cloud, but with their software licensing and other critical infrastructure investments.

Our experience working with many of the largest OpenStack deployments out there is that in a typical multi-year OpenStack deployment, labour can make up >40% of the overall costs, hardware maintenance and software license fees combined are around 20%, while hardware depreciation, networking, storage, and engineering combine to make-up the remainder according to HDS.

Whilst the main advantage of moving to the public cloud is still the short-term reduction in the cost per headcount and the speed of application deployment that is unhindered by organisation inflexibility, the year-over-year public cloud expenses can be greater than using an automated on premises OpenStack implementation.


OpenStack and Big Software: A new way to deploy

Building a private cloud infrastructure with OpenStack is an example of the big software challenge. Significant complexity exists in the design, configuration, and deployment of all production-ready OpenStack private cloud projects.

While the upfront costs are negligible, the true costs are in the ongoing operations; upgrading and patching of the deployment can be expensive. There is a need for a new breed of tools designed to model, deploy and operate big software. So for example, with our service, Canonical OpenStack Autopilot, we enable the deployment of revenue-generating cloud services by implementing a reference cloud that is flexible whilst minimising operational overhead.

Application service components and the accompanying operations required to run them are encapsulated in code that enable organisations to connect, integrate, deploy and operate new services automatically without the need for consultants, integrator, additional costs or resources. Companies can choose from hundreds of microservices that enable everything from cloud communications, IoT enablement, big data, security and data management tools.


The Future of OpenStack

It is important to keep in mind that OpenStack is not a destination, rather a part of the scale-out journey to delivering scalable services faster than ever before. Organisations now understand the benefits of adopting a cloud strategy, and have to be realistic to know that a hybrid model is going to be a requirement for many businesses.

OpenStack is one of the key drivers and enablers for hybrid cloud adoption, however IT organisations which take a traditional approach will continue to struggle with service and applications integration while working to keep their operational costs from rising too much. Software companies are realising this and are now developing tools to assist companies with the insight, solutions, and leadership to engage and fully benefit from the opportunities big software affords.

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