Compare Azure to Windows On Prem for Normal Business Workloads
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For many, many businesses, Windows applications are still a requirement. Maybe not for everything that they do, but for lots of things that they do. We keep hearing that cloud options, specifically Azure, might somehow be competitive. But when I look, it never seems to be the case. So let's get some examples to see how real world use cases would match up. Not theoretical, isolated business intelligence, machine learning, or SaaS vendors hosting for others or whatever work loads, but the real stuff that companies run normal servers for. Real, normal workloads used for internal consumption.
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Azure's AAD DS vs On Prem AD DS
This one is a little tough because we are comparing a pure cloud SaaS product versus an internal IaaS product. So the two aren't apples to apples, but the resulting consumption is pretty close. Cloud has a massive architecture advantage under the hood here because of the shared application layer, so this is a bit cheating in cloud's favour as a starting example. But let's try it.
We will assume a small business able to use AAD DS' lowest tier. Here is MS Azure's AAD DS Pricing.
That lowest tier at $.15/hr is $1,314 annual cost. That makes Azure really easy to price. So we have a starting number.
Now, of course, if we were to run AD on prem we need a physical server and we need MS Windows Server licensing. But we don't need much more than that. For a typical small company there is zero need for any kind of AD redundancy, and Azure's uptime record plus ISP issues mean that even a standard server for AD is likely to beat the uptime of Azure to the end point anyway. If absolute reliability is needed, Azure SaaS products aren't on the table point blank, but it's rare that any company needs those. They'll say that they do, but that's hubris most of the time, not business need talking.
But on prem we would usually be running AD as a minor workload tossed in a VM on a server already being used for other things and using only spare capacity. This makes it effectively impossible to compare without specifying the use case. We do this for hundreds of clients and in our cases, at most it uses zero power and maybe a few hundred dollars of hardware that lasts five to either years. To be generous, in the real world, we see AD DCs costing maybe $100/year to operate for small businesses that would have to pay $1,314 for Azure. And the AD DC likely requires less maintenance effort due to many factors (more standard, more predictable, more controllable, no surprise changes, fewer moving parts, etc.)
So in a best case scenario (which also happens to be the one I see for nearly every deployment) the cost of on prem is about 10% that of Azure. Pretty shocking. And keep in mind we are assuming that the ISP costs and all those things associated with cloud are foregone conclusions, not a penny of the infrastructure required to make that work is added into the cost. And that it would be reliable enough is just assumed. All things rarely true, so we are really, really giving the benefit of the doubt here.
But let's look at the worst case scenario. If you needed to buy a server solely for AD needs HPE makes real servers starting at $350 (sans drives) that are way more than you need for AD (double the RAM, gobs spare CPU, etc.) Assume about $600 in drives and that's $950. You don't really need that much, we are being ridiculously generous, but we have so much cushion it isn't funny. So we buy the server for $950, we buy Windows Server for $750, and we spend $100/year on power. We have $2200 over five years or just $440 per year to run a dedicated one to one on premises Windows Server for AD. That's about one third the cost of Azure. And remember, we are giving every possible benefit to Azure in each example. In the real world, on prem would be cheaper to buy, cheaper to operate, have fewer issues, simpler to get support for, and last longer than we projected.
Now CALs aren't figured in, they are a factor, but a small one, and one that will go both ways. Smaller deployments with Essentials will be way cheaper.
And that's all the "assuming we are determined to pay for Windows." Switch to Linux and Samba AD and you can remove all the CALs, and all the Windows licensing costs. But there's more, you can move that $950 server to more like $300 if you want full redundancy and more like $150 if you don't. That's $150 for say five years or just $30 per year, plus let's be generous with another $10 of power per year, to run a tiny, dedicated Linux server just for AD on prem.
As you can see, the cloud cost here aren't just high, they are laughable. Azure isn't even in the same game, cost wise, as on prem. Even when we give it loads of unrealistic advantages.
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Linux AD Cloud vs. Linux AD On Prem
Now this is a comparison that gives cloud some advantages. But it still can't win.
The smallest available Linux VM on Azure is $14.65/mo, and is pretty insanely weak. Just 1 vCPU and 750MB of RAM. Vultr shows just how much more competitive it is here with a generally faster single vCPU, and 1GB of RAM for just $5, barely over a third the cost of Azure. Vultr shows how competitive cloud could be if we are discerning with our providers. Azure is generally expensive to a point of absurdity.
So that means that with our numbers from the last example where our on prem Linux was $40 total a year, our price comparison for Linux AD would be:
Azure: $175.80 / year
Vultr: $60 / year
On Prem: $40 / yearAnd it is worth noting that in every example there, the more it costs, the less you get. The Vultr instance is faster and has more resources than the Azure instance by a fair margin. And the on prem example I'm using for the pricing is vastly more powerful with 4 vCPU and 4GB of RAM. Not that we need it, but it's more power for more options in the future. Azure keeps us at "pay more, get less" all around.
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Windows AD on Azure vs Windows AD on Premises
We have the numbers from our first example to give us something to work with here. So all we need to do is to determine how much it would cost to put a single Windows instance on Azure with enough horsepower to run AD adequately.
For a two core, 3.5GB RAM VM for Windows Server on Azure we are looking at $88.33/mo or $1059.96 per year. Pretty much in line with Azure AD DS services. A few hundred dollars cheaper a year, to be sure, but in the same general ballpark. That VM has enough power to run AD for sure.
There is a cheaper option with a single core and just 1.75GB of RAM for $29.20/mo. If you run without a GUI, maybe this will be enough to run your services. It's extremely tight for a Windows instance, but theoretically they do offer it. That would come out to $350.40/year.
If we really can run on an instance that tight, then that beats our $440/year price tag for on premises. But that is only $90/year difference and we were extraordinarily generous with our calculations. To reach the robust price of $440 we were over building drives ($600 allotted just for drives for AD!) and assuming just five years for our server. Make the drives a more reasonable $300 and assume a six year life span (really, eight is more common today) and that annual cost falls to $333. So very much in line.
So this falls way more into a "draw" kind of category. But remember, the on premises system is screaming fast and overbuilt, able to run many additional workloads without blinking and could easily be built in cheaper ways and kept running for longer. The Azure instance is anemic to a point of being absurd and can't run a GUI! So in the real world, while the bottom line "dedicated server" cost is officially a draw, the practicality of the one over the other for most businesses would be enormous.
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AviMark on Azure vs. AviMark on Premises
This is an application that we support every day and is quite indicative of those "real world" applications that real companies have to deal with. It's Windows only, it's client - server, it doesn't use a RDBMS but rather a managed shared file, it requires an SMB share, it's chatty, it's highly latency sensitive. It's what every IT shop complains about, but can't get around. It is far and away the market leader in its field and has more than 10,000 deployments in the US, easily owning a third of all software deployed in its market.
Disclaimer: Cloud is actually a no-go for Avimark, or nearly any program like it, from the get go. Its customers have no physical choices on location and so rarely can get affordable, fast, or reliable Internet. And AviMark requires a Gigabit or faster wired connection for acceptable use. Solid 100Mb/s isn't good enough, it is noticeably slow, and Wifi is out of the question. It's highly chatty database communications over SMB makes it latency sensitive to an incredibly degree.
The smallest Azure instance that would run Avimark is A3 with four cores, 7GB of RAM, and 120GB of disk. In the real world, we normally see new deployments with eight coures, 16GB of RAM and 1TB of disk as the standard for small deployments. The Azure instance would be a little on the weak side, but should be adequate for most deployments. This instance is $224.84/mo or $2,698/year. Not cheap.
A typical on premises deployment is kept for eight to ten years and will never update Windows as it is not required for Avimark. It's common to see Windows 2008 R2 still deployed today, for example. For our calculations, we will assume a server of $5,500 plus a Windows Server license of $750. We will be overly generous and assuming a one time software update halfway through the system lifespan and add a second $750 charge. Making the on premises deployment an easy $7,000. $800 more for CALs for a typical sized business (that's $400, twice, with the upgrade.) And now we have $7,800 spread over eight years. How does that stack up?
Azure for AviMark: $21,584 / 8 years
On Prem AviMark: $7,800 / 8 yearsor...
Azure for AviMark: $2,698 / year
On Prem AviMark: $780 - $975 / yearYou can really seen the non-cloud cost savings quickly, even in a scenario like this one where the on prem works easily, and there is no way to do the cloud instance that effectively works at all. But this is just the beginning.
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Real World Avimark Plus AD Comparison
One of the key reasons that Avimark is often deployed with Windows Standard instead of Windows Essentials is to get the two VM option so that an AD DC can be run on the same hardware, as there is way, way more than enough spare capacity to do so without any additional purchases. You can run the AD DC and Avimark on the same VM with Essentials, and certainly many places do, but it's nice to have the more robust option of having both. If we assume the Essentials path with the aforementioned example, that would shave a lot of cost off of the Avimark deployment there and make the on prem dramatically more cost effective.
So in our example above, the $7,800 for Avimark doesn't just provide for the cost of the hardware and the Windows Server license and the CALs for Avimark, but all of the cost of doing the on prem AD DC is actually included in that. But if we look at Azure, those costs are not overlapping, but have to be added together.
So let's assume the same scenario as for Avimark, but now getting AD DC services in the mix as well and you'll see how in the real world cloud starts to fall down quickly with its "pay in total for each service separately" model.
Azure for Avimark: $2,698 / year
Azure for AD: $1,059 / year
Azure Total: $3,757 / yearOn Prem Avimark + AD: $780 - $975 / year
Paying a $3K premium per annum for the privilege of being on Azure seems crazy for common workloads. That's not a drop in the bucket. That's a lot of money to a small business. And more importantly, it's a huge percentage leap over the cost of doing it the way that they've always done it. That's more than 400% more costly.
Over a ten year time span, this setup would cost $29,770 more on Azure than on premises!
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@scottalanmiller I think you wrote that you "hate anything on prem" in some old thread. What have changed in the meantime?
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@Mario-Jakovina said in Compare Azure to Windows On Prem for Normal Business Workloads:
@scottalanmiller I think you wrote that you "hate anything on prem" in some old thread. What have changed in the meantime?
Well the first really key thing is .... remember cloud != off prem.
Cloud vs. Non-Cloud is unrelated to On Prem vs. Off Prem. So your question is completely unrelated to this discussion of pricing.
I still hate anything on prem, it's a ridiculous way to run things. But when you can't get solid Internet, and you can't move your business, you are trapped. But otherwise, yeah, get away from on-prem, but it is rare that you'd consider going to cloud.
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https://www.datamation.com/cloud-computing/is-cloud-computing-really-right-for-your-business-1.html
I've been really consistent over the years that cloud is an amazing technology, and one that applies to almost no one in the real world. But also that on prem is never going to go away, but that it sucks and you never want to be on prem unless you can't get around it.
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@scottalanmiller I am not questioning your consistency. My company uses on on prem servers because of both, unreliable internet, and calculations similar to yours in this thread.
I was just wandering whether something has changed in your view or not.
You are mentioning on prem here, not colo. I was not asking about cloud, so cloud != off prem does not mean anything here. -
@Mario-Jakovina said in Compare Azure to Windows On Prem for Normal Business Workloads:
You are mentioning on prem here, not colo. I was not asking about cloud, so cloud != off prem does not mean anything here.
Colo adds more complicated pricing to consider. This came from a discussion about an assertion that cloud would just save you money over traditional on premises deployments. I wanted a place to point people to show that no one should be thinking that cloud is a cost saving measure or cheap approach for any normal situation. It has amazing use cases that are just really uncommon and very unique and almost never apply to internal infrastructure.
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@scottalanmiller I agree
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@Mario-Jakovina said in Compare Azure to Windows On Prem for Normal Business Workloads:
My company uses on on prem servers because of both, unreliable internet, and calculations similar tou yours in this thread.
At NTG, we use colo for the majority of our needs and cloud for more specialized needs. But we are always looking at how to pull back from cloud for workloads as there is almost always a big cost savings getting from cloud to colo. But there are definitely cloud advantages for some use cases. We have zero on premises, we are a very modern company and are physical disparate, so we are ideally situated to have nothing on premises. Our design is LANless from the ground up and without good Internet we can't do anything, so that works out for us that we know that that will always be there.
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Applying legacy thinking to cloud and cloud migrations almost always results in increased costs.
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@scottalanmiller said in Compare Azure to Windows On Prem for Normal Business Workloads:
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Azure: $175.80 / year
Vultr: $60 / year
On Prem: $40 / yearVultr and Azure are nowhere near the same. Vultr compares more to AWS lightsail. Which essentially gives you the same VPS functionality without the entire infrastructure benefits in the cloud.
You don't talk about autoscaling or building a multi tiered application so of course you would use something like Vultr or Lightsail.
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I would recommend taking a professional level AWS or Azure course when you get a chance. If it's not something you've done before, it can be eye opening for the multitude of options and capabilities that you get. Even if you've done a course more than 2 years ago, a bunch has changed.
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I work in a cloud only environment and there is so much. I've done 100 hours of so training and I'm still learning.
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All of these scenarios sound like "hobby businesses".
Purchasing a piece of software and then not updating anything for 12 years....
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@scottalanmiller said in Compare Azure to Windows On Prem for Normal Business Workloads:
Disclaimer: Cloud is actually a no-go for Avimark, or nearly any program like it, from the get go.
Elasticity has nothing to do with the clients internet connection. Hopefully you mean hosted here...
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Scott where are you getting the AAD pricing from? Does AAD have some cloud computing non user based pricing? I’m only aware of the $4/u/m option ( or more)
