Does it Pay to Move from On-Premises to Public Cloud Storage?

The public cloud continues to grow unabated. Still, only about 30% of enterprises have moved significant amounts of data to the cloud. Certainly, there’s a percentage of workloads that may never be right for the cloud, but if “cloud economics” also apply to cloud storage, more enterprises would have already migrated massive amounts of data off expensive in-house storage. So, what’s going on?

The real cost of cloud storage

According to Amazon’s AWS pricing calculator, the cost to store 10 TB of data in Amazon S3 is $235.52 per month. If you access only 10% of that data every month, it will cost you an additional $92.07 per month for a total monthly payment of $327.59. That’s $32.76 per TB per month for S3 storage.

Amazon and other cloud vendors will also charge for PUT, GET, POST, and other API calls. These can often add another 20-30% to your monthly storage bill. For the sake of simplicity, we’ll stick with the extremely conservative estimate of $32.76 per TB per month for S3 storage.

What does 1 TB of on-premises storage cost?

To compare the cost of Amazon S3 vs. on-premises storage, we need to calculate the cost to store 1 TB of data in-house for one month. Let’s use the market leader Dell EMC as an example:

Capital costs for a 1-petabyte (PB) storage system, such as the Dell EMC Unity 400, is about $500,000 amortized over five years. The maintenance contract to support that system is 20% of the purchase price per year—so another $500,000 for support over the same five-year period.

In addition to your storage arrays, you’ll also be spending money on switches, servers, cable plant, and management software. In total, expect to pay about $50,000 plus another $10,000 in maintenance annually.

Don’t forget the space, power, and people

Power and cooling costs run an average of $1,200 per square foot per year. A 1 PB system will take up at least two racks, so figure about 20 square feet or roughly $24,000 per year.

You also have to pay the salaries of the people that manage your data center. Running 1 PB of on-premises storage will require at least the part-time work of a storage architect, systems administrator, and an IT manager. As a rule of thumb, 1 PB of on-premises storage requires the equivalent of one headcount to manage. We can conservatively estimate an additional $150,000 per year for the personnel required to manage the system.

 

1 PB of On-Premises Storage (Five-Year Cost)

 

Storage hardware (amortized over 5 years) $500,000
Annual Maintenance $500,000
Ancillary hardware/software $50,000
Ancillary maintenance $50,000
Power and cooling $120,000
Headcount $750,000
Total $1,970,000

 

We need a little more math to determine cost per TB per month:

(Five years = 60 months)

$1,970,000 ÷ 60 months = $32,833 per PB per month

(One petabyte = 1024 terabytes)

$32,833 ÷ 1024 = $32.06 per TB per month

 

Conclusion: At $32.06 per TB for on-premises vs. $32.76* per TB for S3 (*does not include costs for API calls, Internet bandwidth, or an AWS-certified architect), there is no financial incentive to migrate to public cloud storage.

Until now.

 

How Wasabi is Changing the Game

If you know anything about our cloud storage pricing, then you know Wasabi is 80% cheaper than Amazon S3 and exponentially faster. Keeping with our example above, at only $4.99 per TB per month (with no additional fees). Storing 1 PB of data for five years in Wasabi would cost you less than $307,000. That’s about 15% the cost of storing the same 1 PB of data in on-premises storage.

To be fair, you still need technical staff to manage your cloud storage, but certainly not as many. Your total savings will still be in the neighborhood of 75-80%. That is a game changer. Suddenly, the economic advantage of moving your data to the cloud is highly compelling.

Beyond price, we know that complexity and the inability to predict total monthly costs also inhibits migration to cloud storage. That’s why we don’t charge for egress, API calls, or anything else. There’s only one line-item on your monthly bill and that is for storage used. So, you can predict your storage costs to the penny.

Performance anxiety?

For those concerned with taking a “performance hit” by migrating to the public cloud, consider this: If you have a 10 Gbps link to the Internet and your latency to either our Virginia or Oregon data centers is less than 20ms, you can expect to transfer data at a rate that will saturate your 10 Gbps link. Compare that with the Dell EMC speed of roughly 120 Mbps and Wasabi should be 6-8 times faster.

For more information on how you can reduce the cost and complexity of data storage, download our new white paper: Wasabi Eliminates On-Premises Storage Cost and Management Barriers.

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