Comment by rickypp
9 hours ago
I worked at an org that had a substantial on-prem GPU datacenter. We transitioned to <Big Cloud Provider> with a substantial negotiated discount rate, with part of the contract being we would sell them all of our hardware and not purchase any more.
> and not purchase any more.
why would anyone sign such a contract?
If you're planning to run in clouds, committing to not buy hardware (during the contract term, presumably) isn't a big imposition. Maybe you switch to a different cloud, and you wouldn't buy hardware for that.
If you want to switch back to on prem, there's probably a way to structure acquiring hardware so it doesn't break the contract. Maybe you lease it, maybe the purchase happens through a related company, maybe there was no way for the contracted cloud to find out...
The usual very short term corporate thinking that maximizes quarter profits while bankrupting the company in the long term. IMO a very shortsighted decision, if not downright stupid.
I don't know if this was IT shrugging me off or if it was something real but some IT person at this big ISP I worked at told me that they cannot just buy an SSD — my windows box at work was running off of a hard disk in 2019 — and that there was some contract that said any computer hardware we bought had to be through HP or something like that and it takes many months it something like that.
Was it a HP Finance thing? Because there are a shit ton of people who can transact through them now. We had HP finance, and it became a game of sorts to see what crazy shit we could get with it. Theres a local mob who sell computer parts who were happy to use HP finance. That said it definitely wasnt everyone and if you didnt do the legwork you could definitely be trapped.
How does this work? Is the OEM giving the cloud provider a big discount or is the cloud provider giving you a teaser rate to lock up your business.
The list price of cloud is 10x higher than the price of hardware itself so that leaves room for some discounting.
Yeah....
Where folks (often) get lazy is the resulting math over what the real bean-counters care about (but are too lazy to check often).
In a past life, I worked on costing models for a Cable/Fiber contract house, to help the company decide 'what was profitable to keep in house' versus 'what do we subcontract' (sometimes that could even mean we just 'rented' a machine and had a qualified operator using it, based on that employee's hourly rate and expected L2R for taxes... so many spreadsheets...)
And from from my 'I don't know all the factors for this but I've seen how people screw up the big ones' view (and frankly, I'm guessing a lot of us have seen and dealt with the same category of 'bad math' around outsourcing IT work...)
An on-prem data center means:
- You need to account for electricity costs - i.e. CA vs midwest electric rates.
- cooling and power backup capability - Smaller factor but real
- personnel cost - e.x. there's probably cases where a smaller org could be better off with 'on-site' server admins that have other roles based on local wages. Kinda case specfic but it's a case.
- whatever the 'space' holding the stuff costs
Still, IMO a lot of orgs don't do the right math around these decisions, or just buy into the 'Well trends can change' as though they can decide as an org they need to suddenly triple capacity in a month and it would be able to organically happen in the first place.
Frankly, the orgs that 'might' need that either have their arch set up where they are in cloud, or they are onprem but can scale to cloud if needed in interim.
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