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Cloud Cost Guide Part 1: An Introduction to Cloud Cost Reduction

Updated: Sep 19, 2023

Why Companies are Shifting Gears


In today's fast-paced digital world, businesses are seeking innovative ways to cut costs without compromising efficiency or productivity. One area that has been a significant focus for cost reduction is cloud computing. As companies worldwide continue to navigate their digital transformation, managing cloud costs effectively has become an imperative strategy. This shift is leading to a growing movement known as "Cloud Repatriation" where companies are moving away from costly cloud providers towards more consolidated, cost-effective IT platforms and infrastructures.


One company that has achieved significant cost reductions by exiting the cloud and moving back on premise is Basecamp. They were able to reduce their monthly expenses from $260K to $70K.


Moving back on premise is no small task. It requires a larger upfront cost for hardware purchases, co-location space rental, hiring of specialty staff for managing the hardware and administrating new software. Therefore, it’s not necessarily suitable or preferable for all companies, but rather for companies that reach a scale where it would be vastly more cost effective. The migration requires careful planning and can take over a year to reach success.


Today, we would like to introduce our approach to cloud cost savings: the "Non-Premise DevOps-Data Center" model. This methodology provides smaller companies with a viable alternative to on-premise solutions. The process can be simplified into four stages:

  • Stage 1 Identifying a Dedicated Managed Server provider of bare metal hardware The Dedicated Managed Server provider you choose acts as the foundation of the Non-Premise DevOps-Data Center. Essentially, these resources serve as your “Stand-in” or “Virtual” Datacenter, eliminating the need for substantial upfront costs of equipment, space rental and expertise. To start, you'll need a provider that has a wide range of bare metal hardware. The chosen provider should already have a robust network backbone and infrastructure in place, along with the facility for easy machine rentals.

  • Stage 2 Installing a powerful virtualization hypervisor on all rented servers A hypervisor is a type of software installed on physical servers that creates and manages virtual machines (VMs). It allows you to run multiple virtual machines on a single physical machine, with each virtual machine having its own operating system. Installing a virtualization hypervisor is crucial for bringing agility to your setup. With virtualization, you can quickly spin up new environments, isolate applications, and optimize your hardware usage.

  • Stage 3 Installing data center infrastructure management tools on the Hypervisors These tools serve as the "operating system" of your data center as it is the core set of applications that manage your entire infrastructure, providing a crucial foundation for your operations. They allow for centralized management of your IT infrastructure, including hardware, operating systems, and even application processes. Choosing the right tools can make a significant difference in your data center's efficiency, flexibility, and cost-effectiveness. It's important to choose tools that are open-source and API-based, providing you with the flexibility to build-out automation without the risk of exposure to changes in pricing and policies from software vendors. We suggest choosing tools that are backed by commercial support for those times when you need additional help or expertise.

  • Stage 4 Build infrastructure and app deployment automation using the tools APIs Automation is the key to achieving the highest level of efficiency and cost-effectiveness in your IT operations. It reduces manual work, minimizes the risk of errors, and accelerates the speed of deployment and scaling. More than that, it can free up your IT and DevOps teams to focus on more strategic tasks rather than routine, repetitive work. This stage is all about leveraging the APIs of the data center infrastructure management tools set up in the previous stage.

Completing the processes in these 4 stages can lead to the establishment of high-availability and high-performance data centers that promote stability, security, compliance, and business longevity, all while saving time and money on implementation. Through the utilization of available APIs, this model can also create significant operational cost reductions through automation.


The 10 Steps to Success


In this blog post series, we will reveal to you the exact 10 steps required for you to achieve success:


Step 1: Sign up for an account at OVH.com

Step 2: Install a Virtualization Hypervisor on every rented machine

Step 3: Cluster the Hypervisors in "High-Availability" Mode

Step 4: Install the OPNsense Firewall

Step 5: Setup the FreeIPA Central Authentication Identity Manager

Step 6: Implement the Katello Infrastructure Manager

Step 7: Build the Zabbix Monitoring System

Step 8: Create the OpenVPN server

Step 9: Enable Backups

Step 10: Automate, Automate, Automate!!!


In the upcoming blog posts, we'll dive deeper into each of these steps and discuss specific tools that can help your company reduce cloud costs and embrace automation. Stay tuned for more insights and practical tips on how to navigate this cost-saving journey.


Remember, the goal is not only about cutting costs, but also about empowering your team, streamlining operations, and driving your business forward in the most efficient and effective way possible. Whether you're a CEO, CTO, or CIO, understanding and implementing a well-managed cloud cost strategy can unlock potential business opportunities and pave the way for a more sustainable, profitable future.


The more you know, the better your chances of running a great cloud.


Join us on this journey as we explore the future of cloud cost management and prepare to revolutionize how your technology fits together.


Up next: A deep dive into Step 1 – Signing up for an account at OVH.com for your business.



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