If you want something at all customized, it takes longer than that to receive the server. That being said, you can buy a server that will outperform anything the cloud can give you at much better cost.
SME and "a server" is doing some big weight lifting here.
If you want a custom server, one or a thousand, it's at least a couple of weeks.
If you want a powerful GPU server, that's rack + power + cooling (and a significant lead time). A respectable GPU server means ~2KW of power dissipation and considerable heat.
If you want a datacenter of any size, now that's a year at least from breaking ground to power-on.
I think it wins because opex is seen as stable recurring cost and capex is seen as the money you put in your primary differentiation for long term gains.
For mature Enterprises my understanding is that the financial math works out such that the cloud becomes smart for market validation, before moving to cheaper long term solution once revenue is stable.
Scale up, prove the market and establish operations on the credit card, and if it doesn’t work the money moves onto more promising opportunities. If the operation is profitable you transition away from the too expensive cloud to increase profitability, and use the operations incoming revenue to pay for it (freeing up more money to chase more promising opportunities).
Personally I can’t imagine anything outside of a hybrid approach, if only to maintain power dynamics with suppliers on both sides. Price increases and forced changes can be met with instant redeployments off their services/stack, creating room for more substantive negotiations. When investments come in the form of saving time and money, it’s not hard to get everyone aligned.
Which is incredibly difficult in the public sector. Yes, there are various financing instruments available for capital purchases but they're always annoying, slow and complicated. It's much easier to spend 5k per month than 500k outright.
Your numbers don't line up, if you are spending 5k in cloud costs, and on prem is 1/3 of cloud. At 48 month replacement cycle, 1/3 of 5k * 48 months is 80k. So it is 80k vs 5k a month for 48 months.
I think the primary reason that people over fixate on the cloud is that they can't do math. So renting is a hedge.
You hit the nail on the head regarding the math. Most teams treat cloud costs as an inevitable tax rather than an engineering variable. As someone with an accounting background turned Cloud Architect, I see this 'math gap' daily. Usually, it's not a cloud vs. on-prem issue, but a lack of infrastructure discipline—idle resources and unoptimized NATs burn through that 48-month budget faster than hardware depreciation ever would. I’ve been using a 'Hardened by Design' framework to cut this waste by 50% without the overhead of moving back to a data center. Efficiency is often just better IaC.
Even spending 10k recurring can be easier administratively that spending 10k on a one time purchase that depreciates over a 3 year cycle in some organisations because you don’t have to go into meetings to debate whether it’s actually a 2 or 4 year depreciation or discuss opportunity costs of locking up capital for 3 years etc.
Getting things done is mostly a matter of getting through bureaucracy. Projects fail because of getting stuck in approvals far more often than they fail because of going overbudget.
Opex is faster. Login, click, SSH, get a tea.
Capex needs work. A couple of years, at least.
If you are willing to put in the work. Your mundane computer is always better than the shiny one you don't own.
That's because of company policies. An SME owner will buy a server and have it in the rack the next day.
Of course creating a VM is still a teraform commit away (you're not using clickops in prod surely)
If you want something at all customized, it takes longer than that to receive the server. That being said, you can buy a server that will outperform anything the cloud can give you at much better cost.
SME and "a server" is doing some big weight lifting here.
If you want a custom server, one or a thousand, it's at least a couple of weeks.
If you want a powerful GPU server, that's rack + power + cooling (and a significant lead time). A respectable GPU server means ~2KW of power dissipation and considerable heat.
If you want a datacenter of any size, now that's a year at least from breaking ground to power-on.
And multiple years from the boardroom making a decision to build a data center to breaking ground.
Well, capex has a multi-year depreciation schedule and has to cover interest rates. So the simplified "opex wins most of the time" is right.
But we are talking about a cost difference of tens of times, maybe a few hundred. The cloud is not like "most of the time".
It depends. Grant funding (e.g. in academia) makes capex easier to manage than opex (because when the grant runs out you still have device).
I think it wins because opex is seen as stable recurring cost and capex is seen as the money you put in your primary differentiation for long term gains.
For mature Enterprises my understanding is that the financial math works out such that the cloud becomes smart for market validation, before moving to cheaper long term solution once revenue is stable.
Scale up, prove the market and establish operations on the credit card, and if it doesn’t work the money moves onto more promising opportunities. If the operation is profitable you transition away from the too expensive cloud to increase profitability, and use the operations incoming revenue to pay for it (freeing up more money to chase more promising opportunities).
Personally I can’t imagine anything outside of a hybrid approach, if only to maintain power dynamics with suppliers on both sides. Price increases and forced changes can be met with instant redeployments off their services/stack, creating room for more substantive negotiations. When investments come in the form of saving time and money, it’s not hard to get everyone aligned.
True, but for a lot of companies “our servers are on-prem” is not a primary differentiator.
i think we are saying the same thing?
Capex may also require you to take out loans
Which is incredibly difficult in the public sector. Yes, there are various financing instruments available for capital purchases but they're always annoying, slow and complicated. It's much easier to spend 5k per month than 500k outright.
Your numbers don't line up, if you are spending 5k in cloud costs, and on prem is 1/3 of cloud. At 48 month replacement cycle, 1/3 of 5k * 48 months is 80k. So it is 80k vs 5k a month for 48 months.
I think the primary reason that people over fixate on the cloud is that they can't do math. So renting is a hedge.
You hit the nail on the head regarding the math. Most teams treat cloud costs as an inevitable tax rather than an engineering variable. As someone with an accounting background turned Cloud Architect, I see this 'math gap' daily. Usually, it's not a cloud vs. on-prem issue, but a lack of infrastructure discipline—idle resources and unoptimized NATs burn through that 48-month budget faster than hardware depreciation ever would. I’ve been using a 'Hardened by Design' framework to cut this waste by 50% without the overhead of moving back to a data center. Efficiency is often just better IaC.
It’s not really about the numbers though.
Even spending 10k recurring can be easier administratively that spending 10k on a one time purchase that depreciates over a 3 year cycle in some organisations because you don’t have to go into meetings to debate whether it’s actually a 2 or 4 year depreciation or discuss opportunity costs of locking up capital for 3 years etc.
Getting things done is mostly a matter of getting through bureaucracy. Projects fail because of getting stuck in approvals far more often than they fail because of going overbudget.
> It’s not really about the numbers though.
Of course not.