Will Cloud Data Warehouses Really Help You Cut Costs?

If the first question you consider when thinking about a cloud data warehouse involves how much money you will save by moving your on-premises solution to the cloud, you may not like my answer: There’s no guarantee that you will realize any cost savings at all. But let me suggest, however humbly, that this may be the wrong question. Even if you could save money—and you could—cost reduction shouldn’t be driving your cloud data warehouse strategy. The strategic benefits that arise from moving to a cloud data warehouse should be driving that strategy, and for this reason, your organization can gain valuable operational and strategic advantages even if you don’t reduce your costs.

Caveat Emptor

Several Actian customers have told me that they believe promises of cost reductions in the cloud have proven difficult, if not impossible, to realize. Here are a few of their top reasons:

• Our entire data center needs to be on-premises, so the cost for an on-premises data warehouse is minimal.
• We won’t actually save money by spinning down cloud services during idle processing times because our data warehouse must be up and running at all times.
• We are early in our hardware refresh cycle. Even if we could reduce costs in the cloud, that won’t offset the cost of hardware we just purchased.
• The argument that moving to the cloud can lower costs by enabling us to avoid over-provisioning capacity on-premises is overhyped. Over-provisioning isn’t just an on-premises phenomenon. Expensive “reserved instances” in the cloud can also be overused and are often larger—and therefore more costly—than they really need to be. Conversely, unplanned spikes in demand can lead to paying premium prices for using on-demand resources.
• When cloud data warehouses are used frequently, usage-based billing agreements can quickly rack up expenses greater than we would incur on-premises.
• We would frequently need to move large volumes of data to and from the cloud, which would lead to significant costs that we do not encounter in an on-premises configuration.

Your organization’s needs may enable you to discount each of the points made above—or at least enough of them to justify a migration to the cloud based on anticipated cost savings. Or you might be able to counter these assertions by identifying ways in which a cloud data warehouse would indeed help you cut costs, such as through the use of less expensive storage and the avoidance of hardware and OS maintenance and support costs.

If you can do any of these, consider it the icing on the cake. And to that point, consider that the cake itself isn’t cost savings. The cake is the ability of a cloud data warehouse to help your organization gain advantages that are out of reach in an on-premises environment.

The Real Benefits of a Cloud Data Warehouse

So how could a cloud data warehouse have a significantly more positive impact on your business than an on-premises data warehouse? Let us count the ways:

• Enable Greater Agility: A cloud data warehouse combines the immediate availability of infrastructure with unlimited scalability. And, with the help of automation and orchestration in the cloud, provisioning, de-provisioning, and re-deploying resources can be simpler and far faster than on-premises. Simply put, you can do more—and you can do it more quickly.
• Overcome Resource Constraints: Fully-managed cloud data warehouses are particularly useful when you don’t have a deep bench of database administrators and other in-house resources to manage a data warehouse.
• Accelerate Innovation: The pace of innovation by cloud service provides such as Amazon, Microsoft, and Google is amazing. Rich suites of developer tools and a compelling user experience, coupled with the ability to run DevOps for rapid iterations of features and functionality, are key reasons that the cloud has become the primary incubator for countless new initiatives. In addition, ongoing advancements in analytics, data services, security, and integration are at your disposal immediately when you migrate to the cloud.
• Ensure Availability and Seamless Access: Servers, storage, data servers, or an entire network can easily recover and continue operations in the cloud. The level of resiliency if far greater than physical facilities that are more vulnerable to adverse events and that can take longer to recover from them.
• Expand Your Reach: The cloud makes it easier to facilitate connectivity among locations spread across the world, which in turn empowers more users to derive business value from the data warehouse.

Summary

I’m not stealthily trying to say that the cloud is going to be more expensive than you think or that you won’t really save money. I’m simply trying to say the real value of the cloud lies beyond questions of cost reduction—so don’t let yourself get distracted. For most companies, a mixture of both on-premises and cloud environments will be the norm for the foreseeable future. If you want to learn more about the business and operational benefits to be gained through use of the Actian Data Platform, click here.

About Teresa Wingfield

Teresa Wingfield is Director of Product Marketing at Actian where she is responsible for communicating the unique value that the Actian Data Platform delivers, including proven data integration, data management and data analytics. She brings a 20-year track record of increasing revenue and awareness for analytics, security, and cloud solutions. Prior to Actian, Teresa managed product marketing at industry-leading companies such as Cisco, McAfee, and VMware.