​Why open-source OpenStack costs can edge above proprietary cloud

Shortages of skilled OpenStack engineers can help price the open-source technology higher than proprietary equivalents, new research suggests.

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Although a small-scale OpenStack private cloud appears cheaper on paper, when skill costs are factored in it may work out more expensive than proprietary alternatives.

OpenStack distributions cost on average $0.08 per virtual-machine hour, a 20 percent saving over the same VMware, Red Hat and Microsoft small-scale enterprise private cloud, which are all about $0.10, according to the Cloud Price Index Private Edition from 451 Research.

"From this particular vantage point, the so-called tax imposed by proprietary code versus open source may be less onerous than supposed," the researchers said.

On top of that, a shortage of OpenStack engineers - and their resulting higher price - can raise the overall cost of the open-source technology.

The researchers argue that for a typical deployment, "buyers could hire three percent more engineers to support a commercial cloud environment, and still have a lower cost of ownership compared with an OpenStack distribution".

OpenStack is an open-source project started in 2010 by Rackspace and NASA to create components for building public and private clouds on standard hardware.

It is now backed by more than 200 vendors, including Cisco, Dell, HP, IBM, Intel, Oracle, Red Hat, and VMware, with a large developer community working on a range of loosely-coupled projects. OpenStack's 11th six-monthly release, Kilo, was out yesterday.

The 451 Research index used a private cloud built on 25 nodes, running a static figure of 500 virtual machines. The research firm accepts that for different scenarios, implementation sizes, use cases and utilisations, its findings may not hold true.

"The legacy commercial offerings from VMware, Microsoft and Red Hat only cost two cents more than an OpenStack distribution. Although this is an uplift of 25 percent, it's perhaps not such a high ceiling as implied when considering the so-called VMware tax, which enterprises are supposedly paying for operating a commercial private cloud compared with using open source," the researchers said.

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"It seems a relatively small tax to pay if this is the cost of the benefits of maturity, additional features and the fact they've been so heavily enterprise-tested in the field."

The 451 Research report said for a proprietary offering to be a better value than a do-it-yourself OpenStack approach, it would need to deliver a 60 percent saving in manpower costs.

"Considering the complexity of installing, configuring and managing OpenStack, this seems achievable. The proprietary offering's total-cost-of-ownership benefit is simply the result of the high cost of OpenStack engineers - the distributions themselves are priced lower than the proprietary offerings," 451 Research said.

However, a factor potentially working against proprietary options is vendor lock-in. According to 451 Research, although legacy offerings may be the better all-rounders at the moment, if support dwindles, pricing increases or reliability fades, consumers are trapped.

"This is a business risk, with a financial implication. OpenStack, in theory, should allow consumers to move as they please without being stuck to a particular vendor, although the number of reference architectures available suggests this might not be as easy in practice - the price of this freedom is greater total cost of ownership and a less mature capability," the researchers said.

The report suggests businesses should reflect on whether the removal of lock-in with OpenStack is reflected in its higher total cost of ownership.

"Enterprises need to ask themselves this question when looking at their overall business strategy. If end users decide to go the OpenStack route, then opting for a distribution seems to be a no-brainer. If they are struggling to manage their mission-critical estate successfully, then managed private cloud is the way to go."

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