D2 3 Computing e-Infrastructure cost calculations and business _models_vam1-final

e-­‐FISCAL: www.efiscal.eu
EC Contract Number: 283449
4.4 Research question 3: Cost of HPC and HTC centres compared to
commercial Cloud Offerings
The pricing policy of a company constitutes a tool in order to fulfil its market and strategic goals. Price is definitely
not synonymous to value and it is not necessarily cost based 53 . Therefore the only reason why we compare costs
with prices is in order to assess whether the cost of resources consumed for in-­‐house computing is above or lower
compared to commercial cloud prices. The outcome of this comparison is expected to provide indirect indications
on the efficiency of in-­‐house computing, under two major assumptions: a) that cloud prices are based on costs
plus a mark-­‐up and b) that clouds services are the “same” with in-­‐house services. While the first hypothesis
cannot be tested as cloud service providers do not reveal their cost structure and profit margins per service
category, we try to challenge the second through the incorporation of the benchmarking results (see section
4.4.2). Another important dimension is that prices usually change more easily than costs in the short run and this
change in prices does not necessarily mean that there have been cost savings achieved. Notwithstanding the
above limitations, having a better insight in the relation between the cost for in-­‐house service provision and
commercial prices would provide useful information for decision making. It should however be noted that this
comparison does not reveal in any way the savings a site could achieve by using cloud services. This is a totally
different exercise that should concentrate on avoidable costs and is out the scope of the project.
In order to compare the costs calculated in e-­‐FISCAL with the prices of commercial cloud offerings we had to make
a selection from a plethora of providers. The prices of commercial cloud offerings in the market vary not only in
monetary terms (i.e. prices charged) but also on the characteristics of the services offered (e.g. mainly technical
characteristics and configuration of hardware). We discuss pricing policies of commercial cloud providers in
section 4.5.2. There are already sites that help potential customers to choose between alternative providers by
identifying the prices charged for a chosen service 54 .
For the purpose of our comparison we have chosen Amazon that provides Elastic Compute Cloud (Amazon EC2) 55
and OVH 56 . The selection is made on the basis of the following criteria. Amazon is considered to be one of the
world’s largest cloud computing operations. Amazon’s prices have been used in several comparative studies
(Magellan report, 2011; Hawtin et al., 2012). Moreover, Amazon has a rather complex but rather transparent
pricing system (provides free trial of services, on demand instances, reserved instances 57 , spot instances and
volume discounts among others) 58 . It is a US based company.
53 For more information about these distinctions please go to the material presented in the final e-­‐FISCAL workshop in
Amsterdam http://www.efiscal.eu/files/presentations/amsterdam/E-­‐FISCAL-­‐Tutorial_Vfinal.pdf.
54
Examples of such sites are: http://www.cloudorado.com, http://cloudpricecalculator.com/, http://cloud-­computing.findthebest.com/,
http://www.cloudsurfing.com/ (sites accessed on 31/1/2013).
55 http://aws.amazon.com/ec2/
56 http://www.ovh.co.uk/cloud/
57 With reserved instances, you pay a fixed up-­‐front cost in order to pay a lower per hour cost. If the instance is used for a
majority of the reserved period (one year in our analysis), this results in a lower effective rate.
58 The analytical pricing information of Amazon is found in http://aws.amazon.com/ec2/pricing/
e-­‐FISCAL : Financial Study for Sustainable Computing e-­‐Infrastructures
Deliverable D2.3 – Computing e-­‐Infrastructures cost estimation and analysis – Pricing and
Business models
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