[vidarh]

The thing is, you can buy your way out of most of these considerations by either renting colo space or renting managed servers until/unless you're at a scale where there are savings to doing it yourself. This is a commodity service with margins a tiny fraction of AWS' margins. Buying services at those levels instead of doing hosting on prem still nets you 80%-90% of the savings vs. cloud. Sometimes it nets you greater savings because it makes it easier to move your workloads to cheaper locations (e.g. for a small company in London operating servers somewhere with low energy prices and low property prices is hard; colo space reachable from London in often 30%-50% above what it can be like many other places in Europe, and so you'll find managed servers from providers like Hetzner is often cheaper than on prem if your company is in a location like that)

[stephbu]

I think I covered those poin in calling out the cost model elements - renting the “bottom third” of the costs via managed facilities, BMaaS etc. helps in terms of reducing or eliminating capital expenses and some human toil especially in a more stable business that doesn’t benefit from per-minute lease terms or multi-year. As I called out elsewhere, sizing the hosting model to the economic model is really important.

Even in the pure rental or managed BMaaS, the human cost can quickly dominate the economic model. Owning machines and OS’s is expensive at anything more than a couple of racks of machines. Eliminating people and human change/release from touching things in the datacenter is probably the first priority. Otherwise it is hard to consistently drive that human number down and meet service quality expectations for 24x7.

[vidarh]

If human costs dominate, you're doing something very wrong, and in any case renting the services only obscure this, and you can externalise that just as easily with managed servers by outsourcing the management.

What is truly expensive is buying a bundled service with massive margins.

Sometimes you have the luxury of not caring, e.g. when building very high margin, low scale tools where human costs dominate due to dev or other parts of the business, but for anything that starts requiring hosting costs beyond even as low as a couple of k a month, you're leaving money on the table.