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929 posts

Ultimate Geek

  #2450381 31-Mar-2020 09:27
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At TradeMe's scale it might actually be cheaper, though they would be one of a very few NZ businesses big enough for that.


What it does do is shift very significant costs from TradeMe's capital account (CAPEX) to the revenue/operational account (OPEX) as they are now renting capacity instead of buying it. Depending on how an organisation is set up, and how easy or difficult it is get big lumps of CAPEX, this can be a big influencer on a decision to "go cloud".



Exactly the point. Not all companies will benefit of "cloud for cloud-sake" in terms of cost, although with current business environment it might end up being an imperative.



Ha! IT capital costs are accompanied by depreciation, which is used to fund future capital costs. It’s not possible to look at TM’s books since they have been de-listed, but in 2011 they had $4m in depreciation and amortisation. So they would be spending a similar amount on capital expenditure across all expense lines.


Also, I would be super surprised if TM wasn’t leasing its hardware and comm’s gear. They would be renting data centre space. So it is almost certainly wrong to suggest TM is using capital for hardware and data centre charges. I don’t know for sure, but I do know the senior executives running TM in 2012 and they are smart enough not to use capital for those sorts of charges.


The direct charges they are incurring that they will be able to save is in manual labour maintaining infrastructure. That won’t be insignificant - a couple of million a year? They will be able to save indirect costs associated with the complexity overflow of maintaining their own infrastructure - their infrastructure profiles will become standardised and they will be able to plan software maintenance more easily - they will be forced partially into a devop’s model as google’s infrastructure evolves irrespectively of TM’s plans.


The benefits of cloud are rarely related to infrastructure costs. Most private businesses, and increasingly Govt businesses, do not use capital for ICT infrastructure as that is a waste of capital at the depreciation rates ICT experiences. The real benefit of “cloud” relate to the standardisation that is forced, and the change of operations that that implies. I don’t know how many public and private organisations that have moved to the cloud, and then been surprised that the provider does an update or upgrade on third Thursday of the month, with limited to no discretion to take that update up.


It’s really only Govt that is shifting capital cost to opex due to moving to the cloud, relative to infrastructure, because the private sector would generally not use capex for ICT infrastructure. Generalised statement of course, and also of course the funding model for Govt capital expenditure not quite like that for private sector.


929 posts

Ultimate Geek

  #2450382 31-Mar-2020 09:33
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I’ve probably done 25 business cases for moving infrastructure to Cloud. Without labour cost savings, i.e. redundancies, the numbers generally don’t stack up.


The raw hardware and operating the raw hardware in a datacentre is a smaller component of the business case. Interestingly, companies moving to the cloud often incur additional software licensing charges - maybe that is usually the case, actually. And usually they don’t consider that until well into the process!



'That VDSL Cat'
12339 posts

Uber Geek


  #2450397 31-Mar-2020 10:10
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Don't you mean Site Reliability Engineering? :)



you make a good point. The Trademe guy mentioned investing, or moving to, devop’s. But maybe they should have a look into SRE? I imagine their overall use-case may be more suited to SRE??


I’m not too familiar with SRE, no real experience. But plenty with devop’s and I’ve seen many many devop’s initiative not deliver the benefits sought, due to under-investment. 


with all of these things - ITIL, agile, devop’s, SRE, test-driven design, blah blah, it’s the cultural change that makes the difference.



blah, those are all outdated roles and terms!

#include <std_disclaimer>


Any comments made are personal opinion and do not reflect directly on the position my current or past employers may have.


1463 posts

Uber Geek

  #2451500 31-Mar-2020 13:21
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blah, those are all outdated roles and terms!



I call them marketing terms.  

Software Engineer
   (the practice of real science, engineering and management)

3595 posts

Uber Geek


  #2451576 31-Mar-2020 14:41
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I don't think cloud stacks up as much as people think it does economically. I looked at the cost of shifting from 5 servers in a rented colocation in Auckland to AWS. The useful life of the hardware is 4-5 years and the electricity and datacentre costs aren't that high. I would be surprised if we spent >$1,000 a year on server maintenance (labour) for them all. It would be much more expensive to go AWS for them all. Each server was 2x 20 core CPU with 128GB RAM running a relatively heavy distributed application. Workloads are managed so they are constantly busy, at night its quiter but still they are working hard :)


Those cloud bills can get really high. AWS is hands down our biggest supplier $$ wise by a big margin now.


I'm just waiting for a major business issue or downtime with one of the hosting providers. It will be like the virus where we were too "complacent" trusting these providers and now the repurcussions of issues with them are huge.

Speedtest 2019-10-14

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