This is an industry we're[0] in. Owning is at one end of the spectrum, with cloud at the other, and a broadly couple of options in-between:
1 - Cloud – This is minimising cap-ex, hiring, and risk, while largely maximising operational costs (its expensive) and cost variability (usage based).
2 - Managed Private Cloud - What we do. Still minimal-to-no cap-ex, hiring, risk, and medium-sized operational cost (around 50% cheaper than AWS et al). We rent or colocate bare metal, manage it for you, handle software deployments, deploy only open-source, etc. Only really makes sense above €$5k/month spend.
3 - Rented Bare Metal – Let someone else handle the hardware financing for you. Still minimal cap-ex, but with greater hiring/skilling and risk. Around 90% cheaper than AWS et al (plus time).
4 - Buy and colocate the hardware yourself – Certainly the cheapest option if you have the skills, scale, cap-ex, and if you plan to run the servers for at least 3-5 years.
A good provider for option 3 is someone like Hetzner. Their internal ROI on server hardware seems to be around the 3 year mark. After which I assume it is either still running with a client, or goes into their server auction system.
Options 3 & 4 generally become more appealing either at scale, or when infrastructure is part of the core business. Option 1 is great for startups who want to spend very little initially, but then grow very quickly. Option 2 is pretty good for SMEs with baseline load, regular-sized business growth, and maybe an overworked DevOps team!
I think the issue with this formulation is what drives the cost at cloud providers isn't necessarily that their hardware is too expensive (which it is), but that they push you towards overcomplicated and inefficient architectures that cost too much to run.
A core at this are all the 'managed' services - if you have a server box, its in your financial interest to squeeze as much per out of it as possible. If you're using something like ECS or serverless, AWS gains nothing by optimizing the servers to make your code run faster - their hard work results in less billed infrastructure hours.
This 'microservices' push usually means that instead of having an on-server session where you can serve stuff from a temporary cache, all the data that persists between requests needs to be stored in a db somewhere, all the auth logic needs to re-check your credentials, and something needs to direct the traffic and load balance these endpoint, and all this stuff costs money.
I think if you have 4 Java boxes as servers with a redundant DB with read replicas on EC2, your infra is so efficient and cheap that even paying 4x for it rather than going for colocation is well worth it because of the QoL and QoS.
These crazy AWS bills usually come from using every service under the sun.
1 - Cloud – This is minimising cap-ex, hiring, and risk, while largely maximising operational costs (its expensive) and cost variability (usage based).
2 - Managed Private Cloud - What we do. Still minimal-to-no cap-ex, hiring, risk, and medium-sized operational cost (around 50% cheaper than AWS et al). We rent or colocate bare metal, manage it for you, handle software deployments, deploy only open-source, etc. Only really makes sense above €$5k/month spend.
3 - Rented Bare Metal – Let someone else handle the hardware financing for you. Still minimal cap-ex, but with greater hiring/skilling and risk. Around 90% cheaper than AWS et al (plus time).
4 - Buy and colocate the hardware yourself – Certainly the cheapest option if you have the skills, scale, cap-ex, and if you plan to run the servers for at least 3-5 years.
A good provider for option 3 is someone like Hetzner. Their internal ROI on server hardware seems to be around the 3 year mark. After which I assume it is either still running with a client, or goes into their server auction system.
Options 3 & 4 generally become more appealing either at scale, or when infrastructure is part of the core business. Option 1 is great for startups who want to spend very little initially, but then grow very quickly. Option 2 is pretty good for SMEs with baseline load, regular-sized business growth, and maybe an overworked DevOps team!
[0] https://lithus.eu, adam@
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