This week ISG released the first edition of the ISG Cloud Comparison Index™, the industry’s first ongoing analysis of the cost of internal IT infrastructure versus public cloud infrastructure. We continue to see very strong demand from our clients to incorporate Infrastructure-as-a-Service (IaaS) into their ITO delivery models, so we hope this report, as well as future research in this area, will help clients navigate their cloud sourcing journey.
Our analysis found that public cloud IaaS is not always cheaper than internal IT. By using our world-class benchmarking data, as well as data from our new alliance partner, Gravitant, we were able to compare the monthly cost of an internal IT infrastructure configuration to a public cloud IaaS configuration. When public cloud instance usage is very high, the cost of our internal IT configuration is significantly lower than the lowest-priced IaaS offering. However, as IaaS instance usage declines, the business case starts to lean in favor of the public cloud.
We also found that the prices of IaaS providers vary significantly—especially when taking usage into consideration. At 100 percent cloud instance usage, prices vary by as much as 35 percent between cloud providers. When instance usage decreases to 50 percent, the price spread between IaaS providers decreases significantly as well.
While all workload decisions should go well beyond just pricing, and the breakeven point for this analysis will vary dramatically depending on the infrastructure configuration you select for your specific workload, it’s important to note how sensitive price is to usage — something that has not necessarily been the case in more traditional ITO contracts.
We plan on releasing the ISG Cloud Comparison Index™ each quarter, and look forward to hearing your feedback on how this analysis can benefit you on your cloud journey.
Stanton helps enterprise IT and sourcing leaders rationalize and capitalize on emerging technology opportunities in the context of the global sourcing industry. He brings extensive knowledge of today’s cloud and automation ecosystems, as well as other disruptive trends that are helping to shape and disrupt the business computing landscape. Stanton has been with ISG for more over a decade. During his tenure he has helped clients develop, negotiate and implement cloud infrastructure sourcing strategies, evaluate and select software-as-a-service platforms, identify and implement best-in-class service brokerage models, and assess how the emerging cloud master architecture can be leveraged for competitive advantage. Stanton has also guided a number of leading service providers in the development of next-generation cloud strategies. Stanton is a recognized industry expert, and has been quoted in CIO, Forbes and The Times of London. You can follow Stanton on Twitter: @stantonmjones.