Cloudonomics: The Business Value of Cloud Computing, + Website

Cost Factors

Developing a robust model of provider pricing versus do-it-yourself pricing to understand where or whether there truly are economies of scale and how they will evolve over time requires an understanding of factors that may increase or decrease a service provider’s unit costs relative to your own. Here is a list of cost drivers. They can be categorized differently, you may have different or additional costs, but it’s a start.

• Computing equipment. This equipment includes servers, storage, and networking gear such as switches, routers, and load balancers. Some of this functionality may be virtually implemented as software running on other hardware, but any function requires a physical embodiment and thus equipment.
• Power and cooling equipment. This equipment includes power distribution, generators and uninterruptible power supply systems, heating, ventilation, and air conditioning.
• Supporting equipment. This includes miscellany, such as cable troughs and fire suppression equipment.
• Physical plant and access control. The building itself and/or containers, fences, physical access control and security mechanisms, administrative offices.
• Power costs. This includes electricity, the fuel to generate electricity, and costs to contract for guaranteed delivery across one or more grids or fuel suppliers. These costs are of the utmost concern: Google’s engineers have disclosed that “one of the most important factors [is] energy efficiency. . .[which] is key at our scale of operation.” ...