From The Expert Feature Article
February 18, 2014

Alien Technology: How Cloud Is Killing the Enterprise

Cloud makes everything look easy. The last three years have seen an exponential explosion of technology innovation, including advances in maximum 1u and 2u server density, infinite storage scalability, ultra-low latency networking performance, platinum power efficiency, and financially driven technology cost models that would make even the most ardent Wall Street banker proud. No doubt, there’s some serious genius at work, as the world’s largest infrastructures deal with previously enterprise-centric problems on an epic scale. Global namespaces, software defined networking, replacing centralized RAID based storage arrays with distributed object oriented storage capable of unifying object, block, file, and everything else is just a start. You kill the rest of what’s left of your brain by looking at nifty diagrams such as all the new APIs in HTML5. Only then do you begin to understand why there’s so much industry hype around applications like webRTC, webHVD, and others.

Dream Brochure, Nightmare Vacation

Prior to 2014, a lot of VARs, MSPs and multi-national corporations dreamt of running their own private clouds, VDI farms, and mass storage only to find out they had transported themselves to a new kind of hell. When I spoke at VMworld in 2011, the theme was, “Your Cloud, Own It." Even then, I wondered if everyone was crazy. Yet, with enough marketing and no calculator for Christmas, everyone thought it was a great idea…so they try. The real world result in many cases? A lot of CIOs got fired; companies were stuck with a mountain of invoices that yielded few useful solutions, and too many failed VDI, private cloud, storage, and other projects. These CIOs were caught in the unfortunate position of being stuck between the demand to meet the business challenges of efficiency and cost cutting while finding new ways to leverage technology as a bridge to revenue that the business couldn’t - but desperately needed – to capture. The nice journey to the cloud brochures promising an all-inclusive vacation on your own private cloud island far too often turned out to be a Brothers Grimm adventure fraught with monsters behind every tree.

How Cloud Kills the Enterprise

It’s easy to see that technologically, cloud has the edge:






VMware hypervisor, 2 CPU, 16 cores total, 128GB memory, 80% power efficiency

Hyper-V/KVM hypervisors, 8 CPU, 128 cores total, 2TB memory, 90-95% power efficiency


EMC (News - Alert), NetApp, HP, Hitachi, or others on iSCSI, FC SAN, etc.

Distributed Object Based Storage that scales to Exabytes & beyond while unifying object, block, file, & more into objects often shared using erasure coding techniques


1gbps access, 10gbps uplinks

10gbps access, 40gbps uplinks


Enterprise Agreements with Microsoft (News - Alert), retail licensing on others. Multi-year commitments to get discounts or high one-off pricing without it

Unlimited VMs per server for things like Windows server, SPLA monthly licensing on any app, add, change, and cancel at any time.  Much more flexibility to try before you buy.


45mbps, single carrier peering

multi-gigabit, multi-peered


anti-virus, anti-malware, network monitoring,  limited or no application metrics, expensive or no disk encryption, limited or no multi-tenant capabilities, QoS only for VOIP, limited budget means a yearly battle of priorities

IP reputation filtering, Intrusion (News - Alert) Prevention Services, anti-virus, anti-malware, disk encryption, multi-tenant (but can easily create isolated virtual & physical elements), network monitoring, application metrics, QoS for voice, video, data, and more


limited or varying expertise on staff

world renowned experts on staff, deep pool of talent via channel partners to assist

Why Calculators Make Great Stocking Stuffers

At the end of the day, we must evaluate the inevitable maxim known as “bang for the buck." If I told you that a rack full of the world’s most powerful blade systems can’t outclass a rack full of 2u pizza box cloud servers by more than 15 percent performance, yet cost 5 times as much due to their voracious appetite for 30amp 208v circuits, would you believe me?  It’s about the difference of $8,000/month per rack! But, I digress…  

Let’s take enterprise class storage vs. cloud distributed object oriented storage as a quick example on cloud vs. enterprise economics:


Enterprise Cost


Cloud Cost

Raw $/GB



Protected $/GB

$4 (RAID6+2)

$1.50 (3 copies)

Usable (90%)




$8.88 (Main+Replica)

$1.67 (3 copies)

Relative Expense

533% storage cost

Baseline (100%)

When you examine the cost of enterprise storage, you’re typically (even with huge discounts) buying it for around $3/GB, then running RAID6, which increases the cost to $4.44/GB. Then, as the storage gets large enough, paranoia sets in. It should! So, naturally, you replicate all your data to yet another array you buy from the same salesman at “Vendor X” (he owns a yacht *and* a plane by now thanks to you) and now the total cost (drum roll please…) is $8.88/GB. Divide that by 36 months (most technology refresh intervals are 36-48 months) and you arrive at 24.6 cents per GB, per month total hardware cost. Forget about the guys you pay to actually run the storage, maintenance contracts, future forklift upgrade, etc. Plus, you only have two copies of the data, period. Now, compare that to the cloud doing the same math with $1.67/GB as your starting point. Even with three copies of the data, you’re at 4.6 cents per GB per month! Cloud storage is infinitely faster than enterprise storage too. There are no bottlenecks at the “storage heads” as there can be hundreds of them in object storage. This is one of the reasons that when you lose a 1TB hard disk using RAID6 on an enterprise class storage array it can take days (during which you’re exposed to further failures which may lead to a complete loss of all data) to recover vs. in the cloud this operation takes 20 minutes!

Relax, Don’t Do It

I don’t think anyone should bother running a private cloud. Yet, the latest company to fuel the private cloud fantasy is Nutanix, pumped with $172M in VC funding and a $1B valuation, they have taken a page out of “Dr. Cloud’s” playbook to offer you some very good cloud-like features – at a cost. But, unless you’re a cloud provider, or an enterprise guy with a cloud eye, then in my opinion, Nutanix might be your only real choice for something cloudy enough to be called cloud, even if it’s like buying a Lexus at Ferrari prices. But consider this: thanks to software defined networking, your infrastructure can live anywhere. The real question to ask yourself becomes: “How many public clouds should I leverage to protect my enterprise since it’s not cheaper, faster, or better to do it on my own?”  In the words of movie character Dr. Alfred Lanning in iRobot, “*That*, Detective, is the right question. Program terminated.”

Mike L. Chase is the EVP/Chief Technology Officer for dinCloud, a cloud service provider and transformation company that helps businesses and organizations rapidly migrate to the cloud through the hosting of servers, desktops, storage, and other cloud services via its strong channel base of VARs and MSPs. Visit dinCloud on LinkedIn (News - Alert):

Edited by Cassandra Tucker