Category Archives: service providers

Cloud infrastructure Economics: Calculating IaaS cost

In our previous post, we referenced a number of financial factors and operational parameters that we need to take into account in order to calculate some meaningful costs for IaaS services. Let’s see now how these are combined to produce IaaS cost items.

Your mileage may vary on IaaS; you may be renting datacenter space, leasing equipment, operating your own facilities or simply using public clouds to run your business. However, at the end of the day, you need to utilize an apples-to-apples metric to find out which strategy is the most cost-effective. For IaaS, the metric is the footprint of your infrastructure, expressed in terms of virtual computing units: The monthly cost of a single virtual server, broken down to virtual CPU/Memory and virtual storage resources.

You can check online the formulas in this sheet here. If you want to take a peek on how the formulas work, continue reading.

For simplicity, we will not dive into virtua machine OS licensing costs here – they are easy to find out, anyway (those familiar with Microsoft SPLA should have an idea). We will calculate only monthly running costs of IaaS, expressed in the following cost items:

  • SRVCOST: Individual virtual server monthly cost: Regardless of virtual machine configuration, the monthly cost of spinning up a virtual machine.
  • COMPUTECOST: Virtual computing unit cost: The cost of operating one virtual memory GB and assorted CPU resources per month.
  • DISKCOST: Virtual disk unit cost: The cost of operating one virtual storage GB per month.

Almost all IaaS public cloud providers format their pricelists according to these three cost items, or bundle them in prepackaged virtual server sizes. Calculating these can help immensely in finding good answers to the “build or buy” question if you plan to adopt IaaS for your organization, or determine the sell price and margins if you are a public cloud provider.

Let’s see now each cost item one by one.

Individual server cost (SRVCOST)

How much does it cost to spin up a single virtual machine per month? What do we need to take into account? Well, a virtual machine, regardless of its footprint, needs some grooming and the infrastructure it will run on. The assorted marginal costs (cost to add one more virtual machine to our IaaS infrastructure) are the following:

  • C_SRV: Cost of maintaining datacenter network infrastructure (LAN switching, routing, firewall, uplinks) and computing infrastructure software costs (support & maintenance). We do not include here hardware costs since these are related to the footprint of the virtual machine.
  • C_DCOPS: Cost of manhours required to keep the virtual machine and related infrastructure up and running (keep the lights on)
  • C_NWHW: Cost of network related hardware infrastructure required to sustain one virtual machine. These are pure hardware costs and reflect the investment in network infrastructure needed to keep adding virtual machines.

An essential unit used in most calculation is the cost of rack unit. Referring to our older post for the EPC variable, this is expressed as


This gives us an approximation of the cost of one rack unit per month in terms of monthly electiricy and hosting cost (EPC).

C_SRV is expressed as a function of NETSUPP (monthly network operating & support costs), RU_NET (total network infrastructure footprint), CALCLIC (virtualization/computing infrastructure maintenance & software costs) and SRV (total virtual servers running). The formula is:


C_RU*RU_NET is the hosting cost of the entire networking infrastructure (switches, patch panels, load balancers, firewalls etc).

C_DCOPS is straightforward to calculate:


And finally C_NWHW is the hardware cost needed to add one more virtual server. To calculate C_NWHW we take into account the current network infrastructure cost and then we calculate how much money we have to borrow to expand it in order to provision one more virtual server. The way we do this is to divide the total network infrastructure cost with the number of provisioned virtual machines and spread this cost over the lifecycle of the hardware (AMORT), augmented with a monthly interest rate (INTRST):


Computing cost (COMPUTECOST)

As a computing unit, for simplicity we define one GB of virtual RAM coupled with an amount of processing power (CPU). Finding the perfect analogy between memory and CPU power is tricky and there is no golden rule here, so we define the metric as the amount of virtual RAM. The exact CPU power assigned to each virtual RAM GB depends on the amount of physical RAM configured in each physical server (SRVRAM) and the number of physical CPU cores of each server. COMPUTECOST is broken down to two cost items:

  • C_MEM: It is the cost associated with operating the hardware infrastructure that provisions each virtual RAM GB.
  • C_SRVHW: It is the cost associated with purchasing the hardware infrastructure required to provide each virtual RAM GB.

C_MEM depends on running costs and is the cost of compute rack units divided by the total virtual RAM deployed in our cloud:


Note that in some cases (like VMware’s VSPP program) you may need to add up to the above cost software subscription/license costs, if your virtualization platform is licensed per virtual GB.

C_SRVHW is calculated in a more complex way. First, we need to find out the cost of hardware associated with each virtual GB of RAM. This is the cost of one physical server equipped with RAM, divided with the amount of physical RAM adjusted with the memory overprovisioning factor:


In a similar way with C_NWHW, we calculate the acquisition cost spread over the period of infrastructure lifecycle, with the monthly interest rate:


Virtual storage cost (DISKCOST)

Calculating DISKCOST is simpler. The two cost items, in a similar way to COMPUTECOST are:

  • C_STOR: It is the cost associated with operating the hardware infrastructure that provisions each virtual RAM GB.
  • C_STORHW: It is the cost associated with purchasing the hardware infrastructure required to provide each virtual disk GB.

C_STOR is based on the existing operating costs for running the storage infrastructure and is calculated proportionally to the provisioned disk capacity:


C_STORHW is the cost of investment for each storage GB over the infrastructure lifecycle period:



One can elaborate on this model and add all sorts of costs and parameters, however, from our experience, this model is quite accurate for solving an IaaS financial exercise. What you need simple datacenter metrics and easily obtained costs.

Cloud infrastructure Economics: Cogs and operating costs

Perhaps the most important benefit of adopting cloud services (either from a public provider or internally from your organization) is that their cost can be quantified and attributed to organizational entities. If a cloud service cannot be metered and measured, then it should not be called a cloud service right?

So, whenever you need to purchase a cloud service or when you are called to develop one, you are presented with a service catalog and assorted pricelists, from where you can budget, plan and compare services. Understanding how the pricing has been formulated is not part of your business since you are on the consumer side. However, you should care: You need to get what you pay for. There must be a very good reason for a very expensive or a very cheap cloud service.

In the past, we have developed a few cloud services utilizing own resources and third party services. Each and every time, determining whether launching the service commercially would be a sound practice depended on two factors:

  • Would customers pay for the service? If yes, at what price?
  • If a similar service already was on the market, where would our competitors stand?
  • What is the operating cost of the service?

Answering the first two questions is straightforward: Visit a good number of trusted and loyal customers, talk to them, investigate competition. That’s a marketing and sales mini project. But answering the last question can be a hard thing to do.

Let us share some insight on the operating costs and cost-of-goods for a cloud service and in particular, infrastructure as a service (IaaS). Whether you already run IaaS for your organization or your customers, you are in one of the following states:

  1. Planning to launch IaaS
  2. Already running your datacenter

State (1) is where you have not yet invested anything. You need to work on implementation and operational scenarios (build or buy? Hire or rent?) and do a good part of marketing plans. State (2) is where you have already invested, you have people, processes and technology in place and are delivering services to your internal or external customers. In state (1) you need to develop a cost model, in state (2) you need to calculate your costs and discover your real operating cost.

In both cases, the first thing you need to do before you move on with cost calculation is to guesstimate (state 1) or calculate (state 2) the footprint of your investment and delivered services. From our experience, the following parameters are what you should absolutely take into account in order to properly find out how much your IaaS really costs.

Financial parameters (real money)

  • EPC: Electrical power and hosting cost. How much do (or would) you pay for electricity and hosting. This can be found from your electricity bill, your datacenter provider monthly invoice or from your financial controller (just make sure you ask them the right questions, unless you want to get billed with the entire company overhead costs). EPC is proportional to your infrastructure footprint (ie number of cabinets and hardware).
  • DCOPS: Payroll for the operations team. You need to calculate the total human resource costs here for the team that will operate IaaS services. You may include here also marketing & sales overhead costs.
  • CALCLIC: Software licensing and support costs for IaaS entire computing infrastructure layer. These are software costs associated with the infrastructure (eg, hypervisor licenses), not license costs for delivered services, eg Microsoft SPLA costs.
  • STORLIC: Software licensing and support costs for your entire storage infrastructure. Include here in their entirety also data backup software costs.
  • SERVER: Cost of a single computing server. It’s good to standardize on a particular server model (eg 2-way or 4-way, rackmount or blade). Here you should include the cost of a computing server, complete with processors but without RAM. RAM to CPU ratio is a resource that is adjusted according to your expected workloads and plays a substantial role in cost calculation. If you plan to use blade servers, you should factor here the blade chassis as well.
  • MEMORY: Average cost of 1 GB or RAM.
  • STORINFRA: Cost of your storage infrastructure, as is, or the storage infrastructure you plan to purchase. Storage costs are not that easy to calculate as a factor of 1 disk GB units, since you have to take into account SAN, backup infrastructure, array controllers, disk enclosures and single disks. Of course we assume you utilize a centralized storage infrastructure, pooled to your entire computing farm.
  • NETINFRA: Cost of data network. As above, include here datacenter LAN, load balancers, routers, even cabling.
  • NETSUPP: Cost of network support (monthly). Include here software licensing, antivirus subscriptions and datacenter network costs.

Operational parameters (Facts and figures)

  • RUAmount of available rack units in your datacenter. This is the RU number you can use to install equipment (protected with UPS, with dual power feeds etc).
  • RU_STOR: Rack units occupied by storage systems
  • RU_CALC: Rack units occupied by computing infrastructure (hypervisors)
  • RU_NET: Rack units occupied by network infrastructure
  • SRV: Virtual machines (already running or how many you plan to have within the next quarter)
  • INTRST: Interest rate (cost of money): Monthly interest rate of credit lines/business loans
  • TOTALMEM: Total amount of virtual memory your SRV occupy
  • TOTALSTOR: Total amount of virtual storage your SRV occupy
  • SRVRAM: Amount of physical memory for each physical server. This is the amount of RAM you install in each computing server. It is one of the most important factors, since it depends on your average workload. A rule of thumb is that for generic workloads, a hardware CPU thread can sustain up to 6 virtual computing cores (vcpu). For each vcpu, you need 4 GB of virtual RAM. So, for a 2-socket, 6-core server you need 2 (sockets) x 6 (cores) x 6 (vcpu) x 4 (GB RAM) = 288 GB RAM. For a 4-way, 8-core server beast with memory intensive workloads (say 8 GB per vcpu) you need 4 x 8 x 6 x 8 = 1536 GB RAM (1.5 TB).
  • MEMOVERPROV: Memory overprovisioning for virtual workloads. A factor that needs tuning from experience. If you plan conservatively, use a 1:1 overprovisioning factor (1 GB of physical RAM to 1 GB of virtual RAM). If you are more confident and plan to save costs, you can calculate an overprovisioning factor of up to 1.3. Do this if you trust your hypervisor technology and have homogenous workloads on your servers (for example, all-Windows ecosystem) so that your hypervisor can take advantage of copy-on-write algorithms and save physical memory.
  • AMORT: Amortization of your infrastructure. This is a logistics & accounting term, but here we mainly use this to calculate the lifespan of our infrastructure. It is expressed in months. A good value is 36 to 60 months (3 to 5 years), depending on your hardware warranty and support terms from your vendor.

If you can figure out the above factors, you can proceed with calculating your operating IaaS costs. Keep reading here!

Over The Top: Too high to reach?

Recently, Facebook got WhatsApp (a mobile multichannel messaging startup) for $19B. It’s still too early to comprehend the rationale of this move: Buying market share? A bubble effect? An ingenious strategy move that aims squarely at service providers? A stupid buyout that will sink FB stock? Time will tell.

However, we can draw some conclusions on what this means for telco service providers. Over the top services (as they usually call the services they cannot comprehend, and cannibalize their market share) have value. And it’s a train they have to catch. Let me tell a story here:

Some time ago, while working for a small systems integrator, we had been setting up a public IaaS cloud provider for the lcal market. The first approach, based on the free Cloudstack edition was a breeze to work with, very very cheap and quite reliable. The number of customers we attracted was… two. A couple of months later, we revisited our strategy – this time, the platform was based on VMware vCloud directory (the very first deployment in the regional market), targeting mostly enterprise customers (and our own customers as well). Things moved a bit better, slowly gaining sales traction. However, this was not enough. A plain IaaS offering would only sell as fast as customers would face the dilemma “buy or rent” and opted for renting infrastructure.

The way forward was to bundle applications with our cloud. We turned to software vendors, hoping to deliver preconfigured cloud servers bundled with software targeting small and medium businesses, with a SaaS licensing scheme. A good move, don’t you think? Guaranteed SLA 99,99%, with preinstalled popular CRM & ERP apps, licensed as a service, no upfront costs, no commitment. Customers would flock to our cloud. Eventually however, they did not. The problem was the total miss of customer addressable market.

Would you like fries with that?

Would you like fries with that?

Let me explain a few things: Building a cloud does not mean that it will sell by itself. We were a small integrator with a cloud service. Our customers were mostly medium enterprises buying services and infrastructure from us. We managed to upsell IaaS to these customers and attract a few new ones. However, no matter how attractive a SaaS offering would be, we had to address a market we did not have any access to. And that’s why we failed.

What does this have to do with telcos and OTT services? A lot. Telcos sell data & voice; they have been doing that forever. On top of their data services lives the entire IaaS, PaaS, SaaS, *aaS ecosystem. The revenue telcos see from the immense value of OTT services is the data rate, nothing more. They don’t capitalize on this market, even though:

  • They own the platform and medium
  • OTT services customers are the same customers they serve,

thigns we lacked when we launched our IaaS and SaaS cloud services. It seems that OTT services are at a cloud reach, don’t they? Every telco can setup an IaaS platform, add some sauce on top (applications, that is) and address their own customer base. We are not referring to telcos-gone-cloud (Verizon/Terremark), we are talking about service portfolios that address a very large part of any telco customer base.

My guess is that all it takes are good synergies here and exploitation of local markets: Upsell services to existing customer by letting other vendors cross-sell their products and services. There are lots of moving parts here, the most important challenge being to build an efficient ecosystem, reach & upsell to own subscribers and produce value to the end consumer. One needs to step into customer shoes, tick the right boxes from a desired service list, find the right partners and deliver these services from established sales channels.


End user chargeback: Why Service Providers do it better

One of the benefits of adopting a cloud strategy is the ability to charge for resource usage back to the end user. From the early days of ISPs where end customers were charged for traffic volume, cloud chargeback has evolved to support a variety of metrics, like virtual machine uptime, disk IOPS and even API calls. Metering engines are present in all popular private and public cloud platforms (Apache cloudstack, VMware chargeback manager, Abiquo to name a few) and produce decent reports that can be directly used as input to billing services or quarterly departmental budgets.

However, charging directly the end user for consuming IT services remains a challenge. It’s easy to meter and charge a departmental virtual server running Sharepoint, but how do you charge individually each and everyone of its 1,100 users? Or, how do you charge MS Office usage all over your user base? (If you think that it’s silly to count how many users are running Office or using Sharepoint services, then take a look at your Microsoft annual bill and think again).

To implement end user chargeback, you need metrics that have affinity to the end user. Such metrics are two:

  • End user right-to-use (or software license)
  • Application or service execution

To make use of these metrics, the underlying infrastructure must be based on a SaaS stack, not an IaaS stack. Charging end users from an IaaS perspective (metering virtual server memory, CPU and disk usage) is like receiving an electricity bill for the entire building and dividing it to the number of the building tenants. On the contrary, delivering SaaS instead of IaaS makes end user chargeback feasible, since you can measure the two metrics stated above.

And here is where service providers truly have an upper hand in measuring consumed software licenses and software usage versus IT mamagers and CIOs running private clouds. The reason? Software vendors.

Most software vendors (Microsoft, Symantec, Citrix, VMware and lots of others) sell their software licenses (rent, to be exact) with a special licensing scheme, targeted at cloud service providers. The “service provider” offering (Microsoft’s SPLA, Citrix CSP, Symantec ExSP, VMware VSPP) bills service providers by the month or every quarter depending on the number of software licenses their end customers consume, without upfront investments in software licensing costs. Given today’s rich cloud software stacks, a cloud service provider can build and deliver software over the wire and charge end users for using just the software license, doing away with virtual server CPU utilization, memory consumption or cloud disk capacity.

An example: Delivering 90% of Microsoft software today is entirely possible for any cloud provider that has a signed SPLA agreement. From MS Office up to Biztalk services, Microsoft imposes a monthly fee for every reported software license. Citrix on the other hand have a flexible service provider licensing scheme, charging per concurrent user, for using XenApp for software execution and ICA for pixel/keystroke delivery over the wire. Put these on a VMware vCloud farm and utilize VMware’s VSPP for licensing your ESX infrastructure, and you have a complete SaaS stack, without any upfront licensing costs: Charge your end users for software usage, collect your payments and pay back your software vendors every month or every quarter. You don’t have to worry if you have 100 customers on January and 5000 customers on February, you don’t pay any upfront licenses.

What is wrong with this? Corporate organizations are not service providers, so they are not eligible for paying for the software they use as a service. They are stuck with inflexible contracts and software support costs, without any agility in paying for the software they use. For organizations that have a steady and fixed number of users this may be OK, but for companies that have fluctuating user numbers, that’s a problem: You just can’t rent 200 MS Sharepoint licenses for three months. If you fall in this category, why don’t you start talking to your cloud provider?

Want to do cloud? You need to sell it, stupid

From a technology standpoint, cloud computing is the convergence of many beautiful things: Think SOA, governance, virtualization, The Web, data management and process automation. All running inside a lean machine, making the delivery of computing as easy as shopping in a mall.

However, building a cloud is one thing and making money out of it is another story. It’s not only about the infrastructure, is a lot more.

A successful and complete cloud stack has lots of moving parts, and most of them are software, not servers, storage and switches. It’s about your network provider and datacenter SLA, your ISO20000/270001 compliance, a decent chargeback and billing system, the applications or vApp templates you build and  a lot more stuff. It’s complex, with many stakeholders and at the end of the day, it’s not cheap to build. It resembles the eTOM model with a twist of ITIL. But if you manage to sell it, it’s a money making machine – either by slashing operating costs more than half or by generating revenue from your customers.

Now, who are you and to whom should you sell?

  • You are an enterprise or a large organization: If you have less than a  hundred internal users, forget it, otherwise, build your own private cloud. The benefits you will get from knowing who owns that IT resource, why, for how long and charging back the resource to the end user are too good to ignore and stick to a break and fix IT mentality.
  • You are a managed service provider/systems integrator: Building a public cloud is something you can do well; you know the technology and have the building blocks. But, to whom would you sell it? Most likely, you are already consuming private cloud services internally; finding external customers for public cloud services is easy, right? Wrong. Your business organization is set up to deliver vertical specialized services, but cannot do volume selling: Successful public clouds are built on customer volume and this is something you do not have (and do not know how to build up). What you can do is to go to your customers and sell your existing services porfolio in a cloudified form: Disaster recovery as a service and secure workload bursting are services you can deliver and successfuly market.
  • You are in the telco/service provider/web hosting business. Excellent, you know pretty well how to deal with lots and lots of customers. You know very well how to sell services in neat packaging. What you don’t know is how to build cloud services – this is the reason that Verizon, Sprint and others have long ago swallowed datacenter builders like Terremark and Savvis. However, public clouds fit very well in a service provider business model: Customer volume is there, charging/billing/provisioning are there, governance and compliance are there, datacenters and networking are in place. The technology stack bits and pieces are missing but they are easy to shop. What are the speedbumps? Telco strategists have known for decades how to market broadband, datapipes and voice. What they do not understand 100% is how to sell software, and cloud computing is, well, software.




Usage metering and charging with Cloudstack

One of the prominent features of an IaaS cloud is that one can meter its resource usage by its consumers. Metrics are everywhere: From the hypervisor, virtual disk size, network I/O, occupied IP addresses, virtual CPUs and RAM, they are all over the place, waiting to be collected. As soon as you can grab a handful of metrics, you can implement chargeback policies and report back on your users on their resource consumption or, if you run a public IaaS shop, somehow transform these metrics to invoices.’s cloudstack comes with an excellect usage server, recording metrics directly from its accounts. During installation, simply select the “Install Usage Server” option and perform some basic configuration, and you are all set to go. The usage server collect no less than thirteen (as of cloudstack release 2.2) metrics, which can be found here. In short, some of the most important ones are:

  • RUNNING_VM: Total hours a virtual machine is started and running on the hypervisor
  • ALLOCATED_VM: Total hours a VM exists (no matter if it’s up or down). Useful parameter for charging OS license usage, for example Microsoft SPLA licenses.
  • IP_ADDRESS: Self evident; applies to public (Internet) IP addresses consumed by a cloudstack account. These addresses are (according to cloudstack architecture) attached to the virtual router of the user
  • NETWORK_BYTES_SENT and NETWORK_BYTES_RECEIVED: Traffic passing through the virtual router of a user
  • VOLUME: Size in bytes of user volumes
  • TEMPLATE and ISO: Size in bytes of user-uploaded VM templates and ISO images
(For those who are not familiar with cloudstack’s architecture, cloudstack users are part of accounts. Virtual machines belonging to a single account live in their own private VLAN, totally isolated from other accounts. Access to the Internet, DHCP addressing, DNS and VPN termination, all take place in a special cloudstack virtual machine, a virtual router. Every account has its own virtual router, not directly controlled by the end user, but via the cloudstack API).

The service (“cloud-usage”) starts along with the rest cloud services on your cloudstack controller and its configuration variables are at the global parameters of cloudstack. The most important are usage.stats.job.aggregation.range and usage.stats.job.exec.time. The first controls the aggregation interval (in minutes) of collected metrics and the second the time the aggregation algorithm kicks in. Remember to restart the usage server service (“cloud-usage”) everytime you play with these variables.

All metrics are stored in a second database, called “cloud_usage”. To see if your usage server really works, connect to that database and see if its tables start to fill (all metrics tables start with “usage_*”). Data can be retrieved from the database, however, a more elegant way is to use the cloudstack API. The most useful API calls are:

  • listUsageRecords: Takes as arguments account, start & end date and returns usage records for the specified time interval.
  • generateUsageRecords: Starts the aggregation process asynchronously

Accessing the API is a breeze: Generate the secret and API keys from the console and pass them as arguments to a python script or a simple wget and target the API port (which is 8080 for plain http, or a designated SSL port).

So, what do you do with all these collected metrics? Well, there are two ways to deal with them. The first is to write a few complex scripts that collect the metrics from the API, sanitize them, implement your billing scheme and export to your reporting tool or ERP to generate invoices.

The second is to use an off the shelf charging/billing solution. As of January 2012, Amysta have a product in beta and Ubersmith offer complete cloudstack billing in their product, Ubersmith DE.

Breaking up with your cloud provider

Suppose you run an average SMB business and you’re proud of having achieved a fairly low TCO by hosting all your operations on your favorite cloud provider, AcmeCloud, who do an excellent job running your virtual machines flawlessly with a 100% uptime and perfect network latency figures. All is well, you have no IT in house and your computing geeks funnel their resources developing new services and bringing in new customers every day. AcmeCloud does all the chores for you (operating VMs, allocating storage, snapshoting and replicating volumes, maintaining SSL certificates and network load balancing) and charging you only for what you use. Until that day…

It started with a 2-hour outage, attributed to a lightning strike. Then, two months later in the peak of the holiday season, you are notified that you must change your SSL certificates due to an intrusion to AcmeCloud secure server – and inform your customers, all 2000 of them, to do the same. And a few weeks later, due to a mishap during a network upgrade, your data volumes suddenly become unresponsive for a whole day causing data loss and forcing a rollback to 2-day old snapshots. Time to find a new home for your data services.

As easy as it is to start using cloud services, that’s how difficult it becomes to change to a new cloud provider. Downloading VM images and uploading them to another provider over the Internet is expensive – you have to utilize high bandwidth for a long time. Exporting data sets from an SaaS data repository and importing them to another is even more difficult, since you may have to adjust data schemas and types. Hoping that all will go smooth and you will be done in a few days is equally possible to finding a pink elephant grazing in your back yard.

In the traditional, old-fashioned IT world we all love to hate, where you have your servers in your little computer room backing them up to tapes and NFS volumes, the story described above is equal to a disaster recovery event. Something breaks beyond repair and you have to rush to find new servers and Internet uplink, then restore everything – well, everything that’s possible – to the new systems and restore services. This has happened once or twice to IT veterans and it’s quite painful to recall.

One could argue that a disaster recovery site and a BC plan would be the solution to this, but, how many average SMBs do you know that can afford a second datacenter? Very few. But, what would be the analogy of a disaster recovery site in the cloudified enterprise? Simply, a second cloud provider. Let’s take some time and weigh the pros and cons of moving your SMB to the clouds, using two cloud providers from day one.

The bad stuff first:

  • Costs will double: You pay two providers. That’s straightforward (really?)
  • Complexity will also double. Each provider has their own interfaces and APIs, which you have to familiarize with.
  • You have to maintain data consistency from one provider to the other. If you go for an active-passive scheme, you have to transfer data from one provider to the other on a frequent schedule
  • You have to control your DNS domain so that you can update your domain entries when you have to switch from one provider to the other


The good stuff:

  • Costs will not necessarily double! By utilizing both providers at the same time, you can split services among both. When either fails, utilizing their elastic cloud infrastructure you can instantly fire up dormant Vms on the other.
  • You have the luxury to make tactical decisions at your own time, not under time pressure. For example, you can tune your online services at your own pace by balancing them across both or preferring one of them that offers better network latency, while keeping data services on the other that offers cheaper storage.
  • You can plan a cloud strategy, by eliminating one of two providers and migrating to a third without losing deployed services.
  • By being forced to move data back and forth from one provider to the other, your IT skills in data governance and transformation will be enriched, mandating your organization to retain control over your data lifecycle and not delegate this function to the cloud provider.


Planning a cloud strategy with two cloud providers instead of one is the same pattern that cloud providers themselves utilize: Reliable services built on unreliable resources. You cannot trust 100% any cloud provider, but you can trust a service model that is built on redundant service blocks.