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Microsoft study shows 80% savings by using the cloud

The next big cloud sales pitch will be an age-old Microsoft theme: 'Use us, we’re cheaper.'

Microsoft is trotting out an age-old tactic to try and sell you on its public cloud computing platform, Azure: cost. Private clouds reduce costs over legacy data centers, but public clouds are up to 80% cheaper, according to a recent Microsoft-funded study on the matter. So says Rolf Harms, director of corporate strategy at Microsoft who laid out the “Economics of the Cloud” in a presentation at Cloud Connect, a four-day conference going on this week in Santa Clara, Calif.

Harms touted a November 2010 Microsoft study that concluded using 1,000 servers as part of a 100,000-server data center (a cloud provider’s) is 80% cheaper (TCO) than running your own 1,000-server data center. “That’s too big to be ignored,” he said. [Link to full study, PDF.]

So, how did Harms deal with the main reasons people run their own data centers, security, compliance, reliability? He said eventually public clouds will solve those problems and enterprises will naturally gravitate to the cloud for those cost savings.

He also argued that what some see as a risk in public clouds can actually be an advantage. Take multi-tenancy. Public clouds spread computing costs over multiple tenants but Coke doesn't want to be in the same cloud as Pepsi, the saying goes. And a cyberattack on your neighbor's data could cause collateral damage to yours. But Harms says one advantage to multi-tenancy is that the cost of upgrading or patching apps is amortized over those multiple tenants to the benefit of all.

"With a multitenancy applications, you have a pool of people who do all this upgrading for multiple clients." Harms said.

Interestingly, he also weaved in Microsoft’s previous cloud-computing theme --  “software plus services” -- by saying that the shift from private to public will stair step over time, with most organizations doing both for a while.

“What we’re saying is that there is going to be a shift over time to when you can do more stuff off-premises because of compliance issues that have been addressed, security that’s been addressed and it’s going to become more appealing to do that,” Harms said.

Not so fast, says a cyber security risk assessor. Drew Bartkiewicz is the CEO of CyberFactors, a New York City-based risk analysis firm, who said at Cloud Connect that cloud service providers can say all they want about security, but they still have no answer to the question of what happens if there is a problem. Cloud computing lacks a risk assessment and insurance model that will continue to impede cloud growth. More on that in my next post.

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