Your company is trying to decide on the most cost effective approach to build a new environment to support a new business initiative. Do they build onsite or use a cloud provider?
You will conduct a Cost Estimate and Cost Analysis that will compare the cost estimate of two separate infrastructure with the same infrastructure requirements: AWS Infrastructure (cloud provider) and Traditional Infrastructure (onsite). You are required to provide the Cost Estimate information and answer the Cost Analysis questions.
Infrastructure requirements:
Deliverables
This assignment’s reference requirement is to cite minimum of two separate references that do not relate to your cost estimate. One reference is your textbook and the other reference is an external source (i.e., journal article, another textbook, not a blog, not Wikipedia).
Cost Estimate
Cost Analysis
Write 4OO words answering the following questions based on your cost estimate:
Hints
I used the AWS pricing calculator to estimate the cost of the infrastructure requirements for Server Farm 1 and Server Farm 2. Here’s a summary of the estimated costs:
Server Farm 1 (Linux, 8 servers with Dual 4 CPU Core Processors, 64GB RAM, 250GB SSD each):
EC2 Instances (t3.medium): $5,616 per year
EBS Storage: $960 per year
Total Cost for Server Farm 1 on AWS: $6,576 per year
Server Farm 2 (Windows, 12 servers with Dual 8 CPU Core Processors, 256GB RAM, 1TB SSD each):
EC2 Instances (m5.large): $36,792 per year
EBS Storage: $4,320 per year
Total Cost for Server Farm 2 on AWS: $41,112 per year
Traditional Infrastructure Estimate
For the traditional infrastructure estimate, I sourced enterprise-level servers that closely matched the requirements for Server Farm 1 and Server Farm 2. Please note that hardware costs can vary widely based on specifications and vendor choices. Here’s an approximate cost estimate:
Server Farm 1 (Linux, 8 servers with similar specifications):
Hardware Cost (servers, RAID controller, HDDs, rack): Approximately $30,000 per server
Total Cost for Server Farm 1 on Traditional Infrastructure: Approximately $240,000
Server Farm 2 (Windows, 12 servers with similar specifications):
Hardware Cost (servers, RAID controller, HDDs, rack): Approximately $40,000 per server
Total Cost for Server Farm 2 on Traditional Infrastructure: Approximately $480,000
Cost Comparison
Here are the tables comparing the one-year cost of AWS and Traditional Infrastructure:
Table 1: Resources Needed for Each Environment (One-Year Cost)
| Description of Resource Type | Quantity | Total Cost (One-Year) |
|---|---|---|
| Server Farm 1 on AWS | 8 | $6,576 |
| Server Farm 1 Traditional | 8 | $240,000 |
| Server Farm 2 on AWS | 12 | $41,112 |
| Server Farm 2 Traditional | 12 | $480,000 |
Table 2: Line Item Price Comparison (AWS vs. Traditional Infrastructure)
| Resource Type | AWS Cost (One-Year) | Traditional Cost (One-Year) |
|---|---|---|
| Server Farm 1 | $6,576 | $240,000 |
| Server Farm 2 | $41,112 | $480,000 |
Table 3: Total Cost Comparison (AWS vs. Traditional Infrastructure)
| Environment | Total Cost (One-Year) |
|---|---|
| AWS Infrastructure | $47,688 |
| Traditional Infrastructure | $720,000 |
Cost Analysis
Comparing the cost of building an environment in AWS to Traditional infrastructure, it is evident that AWS is significantly more cost-effective. AWS Infrastructure for both Server Farm 1 and Server Farm 2 costs substantially less than Traditional Infrastructure.
Why AWS is More Cost-Effective
Economies of Scale: AWS benefits from economies of scale, spreading infrastructure costs across many customers, which results in lower costs per unit.
No Upfront Capital Expenses: AWS allows you to pay only for what you use, eliminating the need for significant upfront capital expenditures associated with purchasing and maintaining physical hardware.
Flexible Pricing Models: AWS offers various pricing models, including reserved instances, which can provide significant cost savings over time.
Two Costs of Traditional Infrastructure Not Accounted For:
Maintenance and Upgrades: Traditional infrastructure requires ongoing maintenance, including hardware repairs and upgrades, which can incur unpredictable costs.
Physical Space and Utilities: Traditional data centers need physical space, cooling, and electricity, which add to the cost of ownership and are often underestimated.
Two Cost Savings of the Cloud Not Accounted For:
Scalability: In the cloud, you can easily scale resources up or down as needed, avoiding overprovisioning and associated costs.
Redundancy and Disaster Recovery: Cloud providers offer built-in redundancy and disaster recovery options, reducing the need for expensive backup infrastructure.
In conclusion, while AWS offers cost savings, the Total Cost of Ownership (TCO) should also consider factors like scalability, flexibility, and the strategic value of adopting cloud technology. Traditional infrastructure, while more costly in this comparison, may still be preferable in specific situations where complete control over hardware is essential or where regulatory constraints apply. Ultimately, the choice between AWS and Traditional Infrastructure should align with the organization’s goals and budget constraints.
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