Buy or Build Blockchain Infrastructure-as-a-Service?
In everyday life, we are faced with decisions to either buy readymade solutions or to build something from scratch.
Whether it’s a large purchase like buying a home, or something considerably smaller like choosing between two couches, there are pros and cons to each side. Do you want to stay up until 2:30 in the morning putting together a couch? For the right price, a lot of folks would say, “Absolutely,” while others would say, “No shot!”
With the rise of blockchain as a viable platform, the business community seems to be posed with this question at all levels. Cost, effort, risk, focus, and quality all factor into every decision a company makes, including whether to build the infrastructure that run these applications and platforms, or to pursue a third party vendor that offers blockchain infrastructure-as-a-service.
Risk vs. Reward
The allure of blockchain is real: the technology as a whole promises dramatic cost savings (up to 70%!) to banks and financial institutions. Since up to two-thirds of those costs are attributable to infrastructure, it’s imperative to pursue an infrastructure strategy that captures as much of that cost savings as possible.
But blockchain projects can be deceivingly costly. A recent report of government-sponsored blockchain projects revealed that the median project cost is $10–13 million.
At first glance, building infrastructure in-house seems like the most cost-effective way to approach the blockchain: there are no licensing fees, and your company is in complete control.
Of course, there are always trade-offs: an in-house infrastructure project is very taxing on your organization’s resources.
Your team must have the time and operational skillset to build out a secure infrastructure that is scalable enough to support your blockchain network of choice. Those skills are hard to come by: blockchain skills are among the most sought-after. The rates of a freelance blockchain developer hovers around $81–100 per hour in the US, sometimes going as high as $140+ per hour.
It’s easy to underestimate how much time it will take to create, and whether your team really has the skills and ability to create the offering.
In addition to infrastructure, you’ll also need to build or secure vendors that can address storage needs, network speeds, encryption, smart contract development, UX/UI, and more. Each of those initiatives is going to require additional dedicated budget.
The question then becomes: what kind of advantage does this create? Much of this will depend upon the number of partially or fully decentralized applications (DApps) that you plan to run on it, and how many of them can and will share the same underlying infrastructure.
The ‘aaS’ Revolution
When evaluating your options for a new project, the project planning stage is always tricky. You’ll need to do a full scoping of the project, allocate responsibilities, and create a vendor vetting process.
In the past it was easy: you went out, bought some software and hardware, and got to building. But once the internet made it easier for companies to provide ‘as-a-service’ offerings, it added a layer of complexity for IT and engineering teams as to what options made sense for their project or organization. Salesforce began to displace massive Oracle on-premises implementations. Broadsoft started to displace PBXs and made phone closets a thing of the past. The list goes on and on with applications that replaced their on-prem brethren from years prior because the ongoing maintenance and upkeep was a headache for IT teams to manage. Why keep all of the infrastructure under your management when you could push all that work onto an infrastructure-as-a-service company’s plate, since their primary focus was supporting that exact technology?
This is great from an IT perspective, but what about for engineers and developers? Don’t they need to be able to store their code and applications locally? Don’t they need to own all of the pieces that tie in to their application? Oh and security, THE SECURITY!
Sorry for being dramatic, but the answer is no. These are all valid concerns, however, many of them can be addressed by working with the right service provider that suits your needs.
Uber is a great example of leveraging third-party service platforms to create an application. Did they need to go out and create a maps platform? Nope, they used Google for routing and tracking. Did they need to go out and spin up their own messaging and voice servers? Nope, they use Twilio for their communication services. They took a buy-centric approach which enabled them to focus on their core application and remove the need to focus on things outside of their core skill set.
How We Apply This to Blockchain
How difficult is it to build? How costly is it to manage? Do we have the skillset to support it? These are all questions that companies ask themselves when looking at making an investment for any kind of infrastructure.
On top of the infrastructure, it only takes a few minutes to realize that DevOps is really hard to do well. Making sure that the investments you’re making align with your team’s skill set is critical for your success. So if you’re looking around, saying “We need to bring in DevOps engineers for our Algorand project,” then HARD STOP! Check out below.
PureStake was created with this exact use case in mind. We provide secure and scalable blockchain infrastructure-as-a-service to help everyone from investors to developers better interact with the Algorand network. We’ve recently launched an API service that will provide an on-ramp to Algorand for any application looking to build on their pure proof of stake network. We offer a variety of subscriptions so that, regardless of size or budget (we have free, and free is good), you’ll be able to utilize our service and start interacting with the Algorand network within minutes.
Originally published at https://www.purestake.com on September 12, 2019.
