Strategic Decision-Making: Cloud vs. SDDC

In today's digital economy, the strategic decision between opting for cloud computing and investing in a modern software-defined data center (SDDC) can significantly influence a company's agility, cost efficiency, and innovation capacity.

Executive Summary

• Cloud Computing: Provides scalable and flexible IT resources, suitable for dynamic business environments.
• Software Defined Data Centers (SDDC): Offer greater control and cost savings for predictable workloads.

Understanding the Options

Cost Dynamics:

• Cloud: For predictable, consistent workloads, operating in the cloud can be approximately 20-30% more expensive than SDDC solutions, largely due to premium pricing on stable resource allocation.
• SDDC: Potentially reduces operational costs by 25-40% for consistent workloads by optimizing resource utilization and minimizing wasted capacity.

Operational Differences:

• Cloud: Ideal for high elasticity needs, where businesses require rapid scaling capabilities. It provides access to a vast ecosystem of services and technologies that can be leveraged on-demand.
• SDDC: Best for environments where workload demands are stable and predictable, allowing for optimization of the IT landscape to achieve maximum efficiency and performance.

Setting the Stage

The Reality of Cloud Implementations

While cloud computing promises agility, scalability, and rapid provisioning of resources, the reality often falls short of the ideal. Many organizations (53%) struggle to fully realize the benefits of cloud computing due to several limitations like:

• Approval Workflows and Processes: Despite the cloud's inherent capability for rapid service deployment, internal bureaucratic approval workflows can delay the provisioning process, sometimes taking weeks or even months. This negates the cloud's primary advantage of speed and flexibility.
• Customer-Centric Approach: Often, cloud implementations are not designed with the internal customer in mind. Processes and workflows that fail to prioritize user needs can lead to inefficiencies and dissatisfaction.
• Underutilization of Cloud Prerequisites: Many organizations do not fully leverage the concept of immutable infrastructure and Infrastructure as Code (IaC), which are essential for maintaining consistency, reducing configuration drift, and achieving automation.

Modern SDDC: Redefining the Data Center

A modern Software-Defined Data Center (SDDC) is not merely an evolution of the traditional data center but a complete transformation. Unlike traditional data centers that rely on hardware-centric models, SDDCs leverage software to manage and automate resources, aligning with the characteristics defined by the National Institute of Standards and Technology (NIST) for cloud computing:

1. Resource Pooling: SDDCs use virtualization technologies to pool computing, storage, and networking resources, providing a seamless and flexible resource allocation.
2. Broad Network Access: Resources in an SDDC are accessible over the network through standard mechanisms, ensuring easy access from various devices and locations.
3. On-Demand Self-Service: Users can provision and manage resources as needed, without human intervention, through automated management platforms. This, by the way, is one area where many cloud implementations at companies fall short. They often strip away this and other critical characteristics, resulting in a system that reaches the maturity level of a traditional legacy data center (non-SDDC).
4. Rapid Elasticity: SDDCs can quickly scale resources up or down based on demand, providing elasticity similar to public cloud environments. However, in reality, not all companies need such elasticity for all their services. These services could be potential candidates for running their operations in an SDDC.
5. Measured Service: Resource usage is monitored, controlled, and reported, providing transparency and enabling cost-effective management.

To implement a modern SDDC, organizations can choose from various technologies that align with their specific needs. A typical SDDC tech stack includes:

1. Hypervisors and Virtualization: like KVM or VMware vSphere
2. Cloud Management Platforms: like OpenStack or CloudStack
3. Container Orchestration: like Kubernetes or Portainer
4. Pipeline: like Jenkins with buildpacks
5. Infrastructure as Code (IaC): Like Terraform or Pulumni with Ansible

These technologies collectively enable the efficient pooling, management, and automation of resources, aligning with the core principles of an SDDC.

Scenario Analysis for Strategic Decision-Making

• Stable, Predictable Workloads: SDDC can lead to significant cost savings, estimated at 25-40% compared to traditional or cloud setups, by reducing operational overhead and capital expenses.
• Mixed Workload Environments: Stable production demands with separate, fluctuating development and testing needs. Here, the cloud offers a strategic advantage by allowing businesses to scale resources down when not in use or to shift them to low-cost regions during non-production times, leading to cost savings (5-15%).
• Highly Elastic Demands: For significant peaks and valleys in resource requirements, the use of spot instances and pay-as-you-go scaling can dramatically reduce costs (30%-50% compared to SDDC). This scenario leverages cloud services for their core strengths - flexibility and scalability.
• Hybrid Scenarios: Combining both environments might offer the best of both worlds, stabilizing core functions with SDDC while exploiting the cloud's flexibility for growth and innovation efforts.

Test-Driving SDDC

One of the compelling advantages of SDDC is the ability to test-drive the infrastructure on a small scale before full deployment. This trial phase allows organizations to evaluate the effectiveness and efficiency of SDDC in meeting their specific operational needs without a large upfront commitment.

Conclusion

Choosing between cloud and SDDC is a strategic decision that extends beyond the IT department, impacting overall business performance and strategic direction. Leaders should consider both current and future business needs when making this decision.

In case you are struggling with getting value out of the cloud, or thinking about migrating towards the cloud, let’s connect to discuss how your organization can benefit from a tailored approach to be among the 47% who get value out of the cloud, whether through cloud, a modern SDDC (private cloud), or a hybrid solution.