The truth about cloud storage data transfer costs

It’s commonly said that public cloud storage is cheap, but that its data transfer costs supposedly make it unsuitable for long-term cloud archiving.

Who’s making this argument? From what I’m seeing, it’s coming from vendors selling private cloud or on-premises storage solutions.

They do a good job of making it sound like cloud storage has this hidden cost that makes it more expensive over time. You don’t pay to retrieve your data in the other models, do you? And the argument usually stops there, without any quantification.

It sounds like it could be a legitimate argument. But as we’ll see, it isn’t.

Qualifying data transfer costs

Retrieval activity is initially difficult for an organization to estimate. It isn’t something we measure before going to the cloud. But remember, we’re talking about archiving here, and the fact is that most data becomes low-touch – if not completely inactive – after just 30 days.

Here are a few factors that’ll strongly influence your monthly data transfer activity:

• What workloads are you archiving?
• How aggressive are your archiving policies? If you’re aggressively archiving content created within the past 30 days, then you should expect more retrieval.
• Are you providing end-users access to the archive? Not at all? Just select groups? Everyone? The more users accessing the archive the more overall retrieval costs you should expect.
• What is an average monthly volume of eDiscovery collection?

Quantifying data transfer costs

So, let’s run some numbers and look at data transfer costs specifically, proportionally, and relatively.

For our examples we’ll use 100 terabytes (TB) archived in Microsoft Azure – which is what Veritas Alta™ SaaS Protection uses for storage. The following chart shows data transfer costs in a given month by volume:

Figure 1: Monthly cost to transfer various amounts of data.

Indeed, data transfer costs do not exist when you own and operate the storage. So, at first glance, these data transfer costs likely induce sticker shock. But let’s dig a little deeper. Here are a few initial things to consider:

• The costs shown above are for transfer out of North America or Europe. Cost per GB transferred is higher for other regions.
• The costs shown assuming you’re routing data through your ISP. Costs are slightly higher if you choose to route through the Microsoft Premium Global Network.
• This is purely retrieval data transfer. In our cloud model for a Veritas-hosted deployment of Alta SaaS Protection, which transparently includes the underlying Microsoft Azure cloud infrastructure cost, there’s no cost for data transfer on the way in. Each month provides 100 gigabytes (GB) data transfer out at no cost. Beyond 100 GB per month, there’s a cost (starting at 8 cents) per GB retrieved.
• For a customer-hosted Alta SaaS Protection deployment, costs for the underlying Azure infrastructure are billed directly to the customer by Microsoft. This cost is often offset for customers with a Microsoft Azure Consumption Commitment (MACC) agreement with Microsoft.
• Exceeding 5% retrieval in a month is rare, especially when your archive is larger than 100 TB. Remember, we are talking about archiving here. Active archiving to be more descriptive, which implies day-to-day user access on demand. But even as an active archive, as an organization evolves it begins to retain large volumes of data that simply aren’t touched. We’ve seen customers with 50% of their archive mapping to orphan users – where the data owner is disabled or nonexistent in their directory. The point here is that a typical archive – having content older than 30 days – sees very low retrieval activity, even when the entire knowledge worker community is authorized to access it.
• The 100% retrieval scenario would only come into play if your organization ever decided to leave. A complete migration out. While the data transfer costs seem high for the full 100 TB amount, it’s relatively an inexpensive data migration cost compared to typical data migrations that require professional services and licensing of third-party software (which, depending on the migration scenario, can run anywhere from $500 to several $1,000s per TB).

Depending on which survey you believe, anywhere from 45 to just over 90% of a typical organization’s data is inactive and is a perfect candidate for archiving.

Comparing the total cost of ownership of cloud storage to that of on-premises storage shows that the cloud is the least expensive storage for inactive data even when you take the data transfer costs into account.

Remember, on-premises data storage is a capital expense, and you need to include cost of depreciation, power consumption, cooling, data center space, time employees spend administering and maintaining the storage infrastructure, and technology refreshes every 3 to 5 years. These additional costs aren’t anything you need to concern yourself with for cloud storage.

Depending on your volume of active data, and the amount of activity, cloud storage might even be less expensive for non-archive data, but that will vary from organization to organization.

Conclusion

Data transfer costs can indeed be a significant portion in the cloud archive model. But relative to in-house storage costs, it’s nowhere near being a factor that makes public cloud economics unsuitable for long-term archiving.

Could it be that traditional storage vendors want you to compare apples to oranges? To compare only the upfront purchase price tag of their offering against the complete TCO picture of their biggest threat, the public cloud? Could be. Or it cloud be that too many people only see what’s immediately in front of them rather than considering the long-term.

Several studies from multiple IT analysts show that spending on the cloud is likely to continue at an ever-increasing rate at the expense of traditional on-premises storage.

Although data transfer costs are specific to public cloud storage, there are more cost factors in the in-house storage model that you simply never see in public cloud, as described above. Remember that most storage equipment has a life span – typically 4 years – requiring an expensive (and sometimes painful) data migration at refresh time along with another large capital expenditure on the new gear. Remember this the next time you hear that cloud storage costs are recurring long-term. In-house storage costs are too – just differently.

If you’d like to learn more about how Alta SaaS Protection can help you save money through archiving data to the cloud, contact us today for a discussion or to schedule a demo!

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