Cloud Cost is next… actually it’s now

The clouds and technologies we use in 2019 are a by-product the last decade of low interest rates. As these rates change it dramatically alters the way we use cloud and shapes the technologies that will define the next decade.

Money has been effectively “free” since 2008, and this last decade of low rates coincided with the growth of public cloud and the emergence of “big data.” AWS, GCP, and Azure began, respectively, in 2006, 2008, and 2010. The bulk of the migration to public started after the financial crisis in 2008, and low interest rates enabled this expansion. As the world signed on to social media and the industry migrated to public it has been relatively cheap to borrow money for data center expansion.

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While public cloud might appear infinite, limitless, and immediate, it is not. Someone has to pour concrete, lay fiber, and purchase hardware. At scale public is very similar to private — there are limits and there are procurement realities. The cost to build and maintain data centers is heavily influenced by the federal funds rate, and this is starting to change in unpredictable ways.

As the economy and these rates evolve cost is going to become more apparent to technology companies and public cloud providers. As the cost to serve increases, more developers will be forced to consider the financial impact of architectural decisions. If you understand what we’ve done in the last decade you will understand that this will change *everything* — the tools and technologies that came of age in the last decade were enabled by “free infrastructure:”

  • Hadoop ushered in the Age of “Big Data.” It was invented in 2006 (just like AWS.) Did the low cost to borrow influence the ability to construct the massive data centers it required?
  • GPUs, machine learning, ubiquitous encryption, and horizontal architectures that enable scale. Would these be as widespread today had the cost to borrow been higher?
  • At a higher level than technology would we have the internet we have today — Would we be throwing exabytes of media at Instagram and Twitter had the cost to borrow to invest in infrastructure been higher?

Don’t get me wrong, I’m not saying cloud will disappear, it has transformed the way we architect systems. What I’m saying is that many of you will be forced to think about the cost of your architectures for the first time as interest rates increase. This new focus on efficiency will change the way we store and query data.

Twenty three years ago Greenspan testified to Congress and talked about “irrational exuberance.” What I’m sensing is that we’re about to understand that the industry is full of “irrational architecture” — systems that were designed during a decade that had no limits — a decade where developers and architects didn’t have to think about cost. The game is changing.

I write and I code. Not always in that order. I do infrastructure and architecture at Walmart. (Opinions are my own.)

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