Pros, Cons and Beyond: Emil Sayegh Explains How Managed Hosting Fits into the Road Map to Off-Premise Compute

DALLAS, TX – Hybrid IT is all the rage. But it’s far from a homogeneous trend. That’s why panels about enterprise end-users are a staple at CapRE’s Data Center Summits. And these discussions are never quite the same as before, since this topic is so dynamic. CapRE’s Dallas Data Center Summit in August was no different, and that’s why we invited Emil Sayegh, CEO of Hostway Services, Inc to present an opening keynote presentation, titled The Future of Data Centers: How the Cloud Providers are Playing with Traditional Data Centers. And Sayegh had quite a bit to say about the direction – and reality – of the Cloud.

data center summitAnd according to Sayegh, the bottom line is that the Cloud, with all of its hype, will never replace other models of compute, such as colocation or managed hosting. However, it’s vitally important to understand what goes where. For example, let’s start with colocation.

“So with colo, you still have some good customization,” he began. “You have control over your vendors, but it still requires you, if you’re an enterprise, to hire IT experts that are not core to your mission. You still need to hire System administrators to run those servers. You still have to negotiate deals with vendors with Dell and HP for hardware. It’s still kind of your problem, right? And you haven’t really outsourced the headache of running your application.”

Next, Saygeh switched to speaking about managed hosting. “With managed hosting, that’s been around a long time. It does take the headache out of running the application, because the vendor usually takes over the alerting, the monitoring, and the security,” he explained. “The provisioning of the hardware. All you have to do it pick up the phone and say, we need more capacity here or there. and usually the vendor is proactively monitoring to see when you need capacity increased in your infrastructure. They know that you need more compute or what not. Someone is looking over you. They’re the general contractor for your application.”

Emil Sayegh, CEO of Hostway Services, Inc

The weakness, according to Sayegh, is that the billing is not utility, like the Public Cloud. “You’re not paying by the hour or by the minute. Usually there is a monthly fee and so it’s a little static, and then you grow by increments,” he outlined. “You add a certain number of servers to grow. You’re not growing by infitisimal amounts, like in the Public Cloud. And look, it could be expensive for people that are starting up. Because there is a fixed cost that you have to start up with.”

“So with the Cloud, it’s flexible,” Sayegh stated. “But you’re basically paying by the hour. Sometimes by the minute. And you’re paying by the gig. And to get a little bit technical, for databases, you’re paying by the IOP. You’re basically almost paying by the transaction at that point. The issue is that if you have – and this is the punchline – a constant workload, you’re overpaying.”

Next, Sayegh painted an illustrative picture about the reality of the situation. “The example that I always like to give, is that if you live in Dallas, and you’re living in the Renaissance, instead of buying a house, it just doesn’t make any economic sense,” he mused. “It just doesn’t make any economic sense. You can’t just live in a hotel 365 days a year for the rest of your life, and be economical. This is why we own or rent houses or apartments. And the Public Cloud is just like renting a room in a hotel. You just don’t do it 365 days a year, 24×7.”

Finally, Sayegh gave some tough talk to the gathering of 400+ attendees. “And so, the cost of the Public Cloud has been proven, over and over again, for constant workloads, apples to apples, you’re overpaying 2x to 3x more than you would if you had that constant workload in your own infrastructure,” he concluded. “You’re paying for the convenience of being able to go up and then go down very, very quickly. Just like in a hotel. You can fill 200 rooms or use 1 room. It’s all up to you.”

For more coverage of this presentation, check out previous CapRE Insider Reports: