ISG Cloud Comparison Index™: Cost of Public Cloud Linux Highly Competitive with Internal IT

Buyers should comparison shop, factor in cost of enterprise-class OS needs

Price spread among providers for cloud Linux can be as high as 40 percent

Enterprise-class operating systems can cost 33 percent more than cloud Linux

Cost of both public cloud and internal IT continues to drop

Nov 04, 2015, 08:00 ET from Information Services Group

STAMFORD, Conn., Nov. 4, 2015 /PRNewswire/ -- Information Services Group (ISG) (NASDAQ: III), a leading technology insights, market intelligence and advisory services company, today announced the findings of its latest ISG Cloud Comparison Index™, an advisory and benchmarking service that analyzes public cloud costs among providers and against the cost of internal information technology (IT) solutions.

The October ISG Cloud Comparison Index™ shows configurations that are run on a public cloud version of the Linux operating system can be highly cost competitive with those run on internal information technology. However, when deciding between options, buyers need to consider the significant price differences between cloud providers and the added costs of running enterprise-class operating systems on the public cloud, the report said.

Data from the October ISG Cloud Comparison Index™ show the cost of running a configuration on public cloud Linux is cheaper than running it on internal IT until the compute instance usage reaches 78 percent, after which internal IT is cheaper. By comparison, the cost of running the same configuration on Windows Server or Red Hat Enterprise Linux in the public cloud is cheaper than internal IT until usage reaches 57 percent, up from the 55-percent break-even point ISG reported in June – an indication that public cloud costs are decreasing.

As the public cloud price wars continue, the cost of internal IT is dropping as well, ISG said in its latest report. Windows Server instance costs are dropping approximately 6.5 percent a year; Linux instance costs are falling about 4.5 percent a year, and the cost of shared storage is declining about 4.5 percent a year, according to proprietary data from ISG Analytics.

"Buyers with highly utilized workloads running on cloud Linux would be wise to shop around," said Steve Hall, partner and leader, ISG Emerging Technologies. "There is a significant price difference – as much as 40 percent – between the providers we analyzed when running high-usage applications on the cloud version of Linux. To reap the greatest cost savings, enterprises should consider a multi-cloud approach for workloads that can run on such a no-frills operating system."

Hall also cautioned buyers to be aware of the significant price difference between running programs on cloud Linux and running those same applications on enterprise-class operating systems such as Windows Server or Red Hat Enterprise Linux in the cloud.

"ISG Analytics found that using Windows Server or Red Hat Enterprise Linux can increase the public cloud price by 33 percent over cloud Linux," Hall said. "These enterprise-class systems provide a higher level of support and reliability and offer more features than cloud Linux, but buyers will need to factor in the added cost of an enterprise-class license when comparing public cloud and on-premises IT costs."

Additional findings from the latest ISG Cloud Comparison Index™ include:

  • At 100 percent usage, running a Windows configuration in the public cloud can range in price from $768 to $1,096 per month, a 43 percent difference in price – up from a 35 percent price differential in June – depending on the provider. This compares to an internal IT cost of $541 a month, which is slightly lower than the cost of this configuration in June.
  • Running the same configuration at 100 percent usage on the Red Hat Enterprise Linux system in the public cloud can range in price from $796 to $910 per month, a 14 percent difference depending on the provider.
  • Using public cloud Linux, the monthly cost of running the application at 100 percent usage ranges from $532 to $738, a 39 percent differential between providers, compared with an internal IT cost of $510 a month.

The ISG Cloud Comparison Index™ leverages internal IT cost data from ISG's proprietary benchmarking database and compares it with the prices of public cloud configurations from the four major public cloud providers: Amazon Web Services, Google Cloud Platform, Microsoft Azure and IBM SoftLayer. The public cloud data is sourced from Gravitant, a global strategic partner of ISG.

To read the October 2015 report of the ISG Cloud Comparison Index™ in its entirety, click here.

To view an infographic depicting the major findings of the October 2015 ISG Cloud Comparison Index™, click here.

About Information Services Group  Information Services Group (ISG) (NASDAQ: III) is a leading technology insights, market intelligence and advisory services company, serving more than 500 clients around the world to help them achieve operational excellence. ISG supports private and public sector organizations to transform and optimize their operational environments through research, benchmarking, consulting and managed services, with a focus on information technology, business process transformation, program management services and enterprise resource planning. Clients look to ISG for unique insights and innovative solutions for leveraging technology, the deepest data source in the industry, and more than five decades of experience and global leadership in information and advisory services. Based in Stamford, Conn., the company has more than 900 employees and operates in 21 countries.

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