Next Generation Infrastructure – Optimizing Efficiency & Costs

In our Next Generation Infrastructure Twitter Space, Caylent’s Randall Hunt was joined by Corey Quinn, Chief Cloud Economist at The Duckbill Group to discuss the modern era of cloud infrastructure from the context of cost & efficiency improvements that have been made made over the years as well as how cloud fits in a world more concerned with sustainability.

Below is a paraphrased summary of some of the sustainability focused discussions from this space. For a deeper dive into some of the best modern AWS services, best practices for cost efficiency as well as understanding the role individuals and companies play towards sustainability in their use of the cloud’s resources, please listen to the Twitter Space recording above. 

Do next-generation infrastructures, and their hosting cloud providers, encourage sustainability as a core consideration in their user’s utilization of the cloud? 

Vertically integrated cloud service providers like Azure, Google or AWS, tend to experience a certain loss of efficiency due to an ever-existing delta between the computational capacity they need vs the capacity they have. And there is a time factor involved in the a) allocation of capital and resources, b) delivery of energy, and c) provisioning of servers. The delay that arises from when that investment is made, to when it generates ROI, can be quite big. 

The providers have to plan for growth into particular regions and when thinking from the perspective of sustainability, it begs the question, are datacenter operators incentivized to operate in the most sustainable way? While we can’t speak to if this is the case, what can be said with confidence is that they are incentivized to maximize energy efficiency. 

If one were to consider how energy efficiency ties into sustainability, one could argue that the allocation of real estate, silicon, and energy into a datacenter is more efficient than the allocation of those resources into an individual’s computer. And in a similar way, allocation of resources onto the cloud achieves levels of efficiency that individual data centers cannot. Hence heading towards more cloud adoption, and replacing data-centers with cloud infrastructure goes hand-in-hand with a drive towards sustainability. 

As far as users are concerned, cloud providers such as AWS incentivize people to make the most efficient use of the cloud simply by making it more expensive to be inefficient. And to maximize profitability, a data center provider like AWS is incentivized to source energy as efficiently as possible & utilize state-of-the-art silicon that can maximize the performance output from that energy. Amazon, for example, took a long time to open in South Africa, to ensure that they had a reliable and consistent power infrastructure in place. And their Graviton series of processors offer some of the most power efficient compute available. 

A cloud system is simply more efficient as it allocates energy costs to a greater number of people while simultaneously delivering larger value. 

Do companies have the incentive to operate their workloads as efficiently as possible on the cloud?

Fundamentally, all decisions are highly dependent upon costs. While a company or group or developer’s principles may play a role in their search for the most efficient and sustainable means to leveraging technology, costs are generally a great motivator of decisions and change. As we traverse the waters of an economic downturn, VCs and investors are thinking about the maximization of cloud cost efficiency. With greater scrutiny and increased funding hardships, companies have started caring about efficiency a lot earlier in their growth journey, and more seriously. 

As wasted capacity results in increased revenues for cloud providers, is it perhaps a strategic objective?

While it may seem advantageous in the short term, to sell a service that the buyer never really uses, gained revenue in this form comes with loss of longevity in business, and resentment across your customer base. It also leaves you massively open to disruption. 

Another question to ask is, what is the opportunity cost of eliminating waste, for companies buying from the cloud providers? Can wasted capacity only occur due to negligence in guidance from the cloud providers?

There may be instances where companies may find the financial impact of excess capacity to be more absorbable than any of the issues that may arise if capacity is reduced. Companies are inherently optimized towards generating revenue, and the upside opportunity takes greater priority than cutting waste. So they may choose to knowingly spend more money on the cloud, and focus resources on building their business which will in turn increase their cloud utilization in the future.

Going back to the perspective of the cloud provider, since capacities are shared by more than one user, resources that are not being utilized by one user are used by other users. This eliminates wastage by a significant amount in comparison to an over-provisioned data center where resources are truly idle when not in use. 

Furthermore, these cloud providers draw revenue from many different sources, beyond performance and storage capacity. AWS Services enrich the AWS cloud’s offering to customers, by unlocking new use cases and capabilities that businesses may not be able to independently approach, such as data analytics, artificial intelligence and machine learning or even specialized compute services such as AWS Lambda. These services offer tremendous value, and generating revenue from delivering value is a great recipe for long term success. 

If you think about how cloud providers operate, they have been centers of innovation for a long time. Amazon could have operated Amazon EC2 and Amazon S3 since they started, but have continued to innovate and release bleeding edge technology to improve performance efficiency. When customers work with them, they converse with customers about ways to be efficient, the best services to use and reduce waste. Such efforts further showcase why ensuring a margin of waste may not be in their mandate. 

If you’re interested in taking advantage of improved efficiency and greater capabilities by leveraging next-generation infrastructure on the cloud to access new revenue streams and maximize innovation, get in touch with our team.