By Gleb Budman
A quiet revolution is on the horizon for the tech industry, but its future impact will be loud.
Businesses have been trapped for too long within the walled gardens of traditional cloud providers, where high egress fees, limited options and unaffordable pricing are holding back their potential. They are seeking an open cloud: The freedom to choose storage from one provider, compute from another and specialized AI services from a third, all working together seamlessly without punitive fees.
The NFL‘s Philadelphia Eagles switched to a specialized cloud storage provider because it worked with their existing systems and cost just one-fifth the price of legacy cloud providers such as AWS.
Combining best-of-breed solutions enables businesses to build the next generation of solutions with greater flexibility and budget control.
As more businesses adopt this modern approach, the cloud industry will move from Cloud 1.0 — defined by walled gardens and last-generation cloud platforms — to Cloud 2.0, an open cloud, defined by interoperable, best-of-breed cloud providers.
The walled gardens are crumbling
Egress fees are the mortar that keeps walled gardens together. Simply put, egress is the cost to customers whenever they use their data in any way that doesn’t keep it within a provider’s platform.
The average egress fee is 9 cents per gigabyte transferred from storage, regardless of use case. For a mid-sized enterprise moving just 50TB monthly between services, that’s an additional $4,500 monthly cost — more than $50,000 annually — just to use their own data.
Because these costs can be difficult to predict, organizations are hesitant to move their data between clouds in line with their business needs for fear of blowing through their budgets. By trapping their data within one cloud platform, companies are essentially forced to operate within these walled gardens.
The big three providers — AWS, Google and Microsoft — have come under fire by regulators for their vendor lock-in approaches. While they’ve recently made over-the-top announcements about eliminating egress fees, those headlines can be misleading.
Each provider is only offering free egress to customers who are permanently leaving their platform, with limitations such as time-constrained windows and minimum tenure requirements.
The cost of leaving a cloud provider is minuscule compared to the cost of using data in multicloud workflows for day-to-day business. These walled gardens don’t just affect IT spending; they impact all capabilities of the modern enterprise to operate at full capacity. The solution is the open cloud movement: allowing customers to use their data wherever and however they choose.
How the open cloud beats walled gardens
The concept of the open cloud is simple: Organizations should be easily able to transfer their data across different cloud platforms and choose whichever cloud solution will be the best fit for their specific needs. While cloud providers argue that their pricing models reflect infrastructure costs and integration benefits, the reality is that egress fees far exceed the actual cost of data transfer.
Perhaps the greatest need for the open cloud is in the realm of AI. Organizations are rushing to build the best possible cloud stack for their missions, but the ecosystem evolves so rapidly that one provider won’t have the best services for long. This is especially true given how AI is equally about who has the best hardware and the best software.
In the open cloud world, enterprises can store the data they need for model building wherever they like and run it through whatever combination of data storage, processing platforms or on-premise servers and processing arrays as they see fit.
For example, if you get locked into a cloud provider who doesn’t have the ability to scale their processing architecture with the latest hardware and software developments, you run the risk of developing a solution that falls behind competitors who do have access to those options.
AI is just one example, but it shows how being unable to access the best-of-breed cloud services freely (and without expensive fees for data transfer) will end up harming innovation for companies and ultimately prevent them from reaching their potential.
Customers want and deserve an open cloud
While skeptics may doubt that the major cloud providers would be willing to give up their traditionally successful fee structures, it doesn’t end with a minor adjustment on specific egress fees. Customers want change. And the data backs it up.
A Dimensional Research survey of more than 400 technology stakeholders with technical or budgetary decision-making responsibilities showed that, when given the choice, more than half of them would prefer a best-of-breed provider versus leveraging hyperscalers.
When the cloud first became available, companies were hesitant to adopt it. But adoption grew steadily as it became clear how much the cloud could improve the way we do business. We expect to see the same perception shift to the open cloud as absolutely necessary to effective cloud services — a future where businesses can freely combine the best technologies without artificial barriers or punitive fees.
Gleb Budman is CEO and co-founder of Backblaze. Along with his team, Budman bootstrapped Backblaze to millions in revenue and profitability. The company won the SIIA CODiE for Best Cloud Storage and secured a spot on Deloitte‘s Fast 500 fastest growing technology companies as a result of its 917% five-year revenue growth. Previously, he led the product teams from pre-funding through acquisition at Kendara and MailFrontier, and founded three companies.
Illustration: Dom Guzman
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