[lotsofpulp]

> The only real cost is human time and energy invested in making it work. But for most companies that's not a 24/7 fight so that cost is fairly low. You can do it twice a year and you're likely never going to have problems.

If this were true, what made the cloud providers popular in the first place?

[pdimitar]

Outsourcing culture. Nobody wants to nurture talent -- that would also mean to invest in relations with your employees and not alienating them. Shareholders prefer to sacrifice a little more of their profit so they deal with less potential problems. And the pull of the idea that every human in the org must be an inter-changeable cog is too strong (even if that idea continues to be absurd, and always was).

Hosting apps in the cloud was a fair exchange 10 years ago because operational tooling in general was more immature. Nowadays it's much easier to self-host many pieces of software though.

[colechristensen]

This isn’t it, you might not know or if you haven’t been in an environment like it.

Without a cloud you’re always running up against limits, out of power, out out cooling, out of rack space, out of hardware. You get new resources by adding to wish lists and seeing if the end of quarter budget will agree with your request which might be filled in a few months, maybe next year, often never.

You hoard hardware that ends up doing nothing most of the time so you have it when you do need it. Management spends a lot of time and energy managing the datacenter budget.

With cloud you get what you want without asking too much and management periodically spearheads savings efforts to show off, but ultimately usually spends a lot more than they would have otherwise with less friction.

A big part of cloud adoption, according to my theory, is getting executives out of the way of computing resource needs and freeing up their time to fill with something else like bothering employees for more status updates (which are easier and require less skill).

[oceanplexian]

> Without a cloud you’re always running up against limits, out of power, out out cooling, out of rack space, out of hardware.

I grew up in this era and keep hearing this repeated but it simply wasn’t true. Enterprises would plan ahead and buy enough hardware for years and it would work fine until you bought more. The myth that you need to scale your infrastructure 10x in a day doesn’t apply to 99% of enterprises, and even if it did it’s probably a result of bad planning on the part of leadership. As a result of the current paradigm businesses end up renting servers at a substantial markup for fairly obsolete hardware.

[zrm]

In general it's really the opposite. In 2004 you needed a rack full of $3000 servers to run your medium business. Now it's two physical machines using 5% of the power to virtualize everything that used to run on two dozen.

Over a given period of time, computers get faster/cheaper by more than most businesses expand. When you need to expand, buying a newer, faster machine may cause you to save money because the faster machine uses less power than the existing one.

[pdimitar]

You are talking big businesses here, I've seen people just ask the CEO if they can buy 3 brand new servers and him agreeing, verbally, and the servers arrived next week, and two weeks later were completely setup and were useful.

This lasted for 11 years and only stopped because two of the 5 senior engineers retired and because the company was bought a few weeks earlier.

So again, don't look at this through Silicon Valley lens. Most of the companies in the world have a very different mold compared to SV.

[heisenbit]

Then there are service contracts to make surr the systems keeps running with little downtime. Which may be impossible to get for 11 year old equipment. Then there are pesky details like needing a disaster recovery site.

Professional hardware is expensive and server h/w is a small part of it.

[sangnoir]

> Without a cloud you’re always running up against limits, out of power, out out cooling, out of rack space, out of hardware.

I bet most customers of cloud services are not in a high-growth phase, so this is scenario most organizations aspire to ("What if we suddenly got popular?" is a fantasy that's hard to disabuse someone of internally, if you want to be known as a team player

> Management spends a lot of time and energy managing the datacenter budget. With cloud you get what you want without asking too much...

I fully agree, this is the core reason why most companies gravitate towards cloud: management abdicates control of costs to engineers, resulting in less friction - but its OpEx, not CapEx, so the bean counters are chilled about it. If the same low-friction approach were applied to DC equipment, you'd get similar results, but cheaper.

[hallway_monitor]

I used to be a big proponent of self-hosting. The raw hardware cost makes it look like a great deal. However in my experience hardware is less than 5% of salary cost and having enough admins on hand to make your infra reliable is usually going to end up costing you more in the end.

[ipaddr]

Don't some of those salary costs transfer over to the cloud. Someone still has to manage it

[Jensson]

You need a lot less people per computer when you have millions of computers like big tech has than when you have 10.

The cost of these services is not because big tech has to use that much to run them, but because big tech would make less money if they lowered prices. AWS generates tons of profits, why lower that for no reason?

[zrm]

> You need a lot less people per computer when you have millions of computers like big tech has than when you have 10.

That's not the people we're talking about. Racking a server and setting it up to do virtualization takes maybe a few hours for one person, if that, over a period of years. Maintenance on the host itself is the same.

The real labor cost is in setting up and maintaining applications for your specific needs. None of that goes away by using someone else's hardware.

[kazen44]

> Outsourcing culture. Nobody wants to nurture talent.

Also, outsourcing moves the blame to someone else if things go wrong. (and things in infra go wrong nearly constantly).

The problem with this kind of thinking is ofcourse, that there is no risk taking and innovation in suchs an organisation..

[nthj]

AWS lets me provision servers all over the world at any point, which is required by customers both for compliance and for latency SLAs. Even billion dollar companies are going to find that a huge lift to build out themselves, and they have opportunity cost while they try to do it.

[AzzieElbab]

What about scaling down? Once you bought hardware for self hosting you are stuck with it.

[pdimitar]

What about it? We're talking small businesses here, this will not be a warehouse full of racks worth of machines to try and sell. We're likely talking 3 to 10 PC-sized machines in a closet or storage room. You can sell those on 2nd hand market pretty quickly and even if you sell them at 30-40% loss you are extremely likely to have already paid off the other 60-70% during the machines' service time.

[AzzieElbab]

old laptop is fine then :)

[naasking]

The costs the OP described are pretty minimal.

[JBlue42]

You never know. While working in an ITAM role, I've had a manager point out a line item asking why we need 30 DisplayPort cables. This was in an org with multiple sites, 2000+ employees, using dual monitor setups both in house and remote. Whether physically, or in the cloud, companies whose primary business isn't tech-related see the IT side as an annoying cost center rather than a cost of doing business in the 21st century.

[Lamad123]

This selfish outsourcing culture is killing all the Gilfoyles out there!

[BbzzbB]

I'm curious as a hosting and cloud noob, do you have an estimate how much that would cost monthly or yearly if hosted on a cloud?

[pdimitar]

Not really, because AWS costs aren't transparent. You can't drill down properly and even where you can, the prices are disappointingly high.

It gets really tempting to setup a backup/failover node on one of my spare laptops lately...

[lotsofpulp]

Interesting. I am not intimately familiar with the subject matter, so I will be curious then to see how the next 10 years play out.

[rossmohax]

Beancounters love OPEX and avoid CAPEX

[kazen44]

beancounters are not in charge of the direction of the company. In a lot of cases, it makes a ton of sense to go for capex vs opex.

My old employer had a strategy which basically boiled down to owning everything inside this company expect for the coffee machines and cleaning crew. His reason being? This made it possible to run on very thight margins when the economy takes a downturn without having to scramble for money because of leased/loaned equipment etc.

In the 2008 crisis, this is how he stayed afloat with his company, and even made a pretty profit during a time of crisis too.

[lotsofpulp]

Surely the beancounters can also see the effects of capex on the valuations of the cloud providers.

[ethbr0]

If they're publicly traded, no one's going to give Bob's Consolidated Widgets a 65x PE or 2x+ PEG ratio, even if they have the best IT strategy in their market.

[abecode]

Curious, can you explain why? In my experience (just one company where I had some interaction with accounting), there was a preference toward CAPEX. The costs of building a product, ie software development, was prefered over OPEX, in this case, analytics. Since I was doing both development and analytics, they preferred me to account part of my time as CAPEX. Not sure if this is normal but for context it was a non/pre-public company.

[xunn0026]

OPEX is just an expense in the current fiscal year. CAPEX depreciates over N years. This alone means that a one-time payment is much simpler on the books.

I don't think your salary counts as CAPEX, it's a normal monthly expense for the company.

[Nextgrid]

Keep in mind that most big clients of cloud providers are startups running on VC money. It's not their money and they don't care about wasting it, and VCs don't particularly care either.

This has now created an entire ecosystem of developers and "devops engineers" (what we used to call sysadmins) who know little beyond the cloud and have to keep using it for career-related reasons. This in turn pushes companies to use the cloud as finding talent for old-school on-premises infrastructure is difficult.

[mindslight]

Infinite scale up (direct fan-out to mass market), high margins (able to overpay for commodities), and outsourcing production work to stable businesses are all facets of the Hollywood business model that Surveillance Valley adopted. Once the concept was socially proven, then nobody gets fired for buying IBM.

[nicoburns]

That human time happens to be quite expensive.

[pdimitar]

Not in small companies.

[ghaff]

It's most of the cost at small companies. A lot of people underestimate the total cost of having employees perform tasks at unpredictable scale with unpredictable problems versus just writing a check each month.

It's true that cloud providers aren't reliably cheaper as some assumed at one point. But there's something to be said for cutting out the fully burdened costs of some number of employees (especially given everyone is saying tech talent is expensive and scarce at the moment) and just letting AWS deal with it even if you could theoretically do it cheaper yourself.

[13of40]

Not only that, but if you have a business that actually makes, sells, and ships something, your AWS bill is probably a tiny fraction of your expenses. Switching to physical servers would be a little like getting solar installed on your house - great in theory, but if the most expense it will displace is $150/month, is it the right problem to focus on?

[nicoburns]

True. Although I’d argue most companies are small enough that AWS itself represents more overhead than is optimal. They’d be better of on Heroku, or even just a single VM.

[ghaff]

Certainly you can overcomplicate things with any of the big public cloud providers. As you say, many smaller companies would be better off with a SaaS, maybe a PaaS, and some VPSs, whether from one of the big guys or someone else.

I had to laugh at someone's comment around re:Invent last week that just because Amazon has to offer 17 types of databases for its customers (or whatever the exact quote was) doesn't mean you have to collect them all as if they were Pokemon.

[rcpt]

What if the cheap guy quits?

[pdimitar]

I'm aware of the risks. That's why I said a culture of long-term relationships must be fostered if you want to pull such operations off.

Where I work right now people don't just quit two days later. They like the company and if they feel they want to go someplace else they're not being difficult about it. They cooperate in passing down their knowledge to colleagues before they go.