The Tail (pun intended) of Dorothy-Boy the Goldfish
When my now-adult son was 5, he was constantly enamored in the pet aisle of the local superstore of the vast variety of fish of many sizes and colors and eventually convinced us to buy a goldfish.
We paid under $20, bowl, food, rocks, props and all, and “Dorothy-boy” came home with us (my son’s idea for a name, not mine). Of course, there were several mornings that Dorothy-boy was found upside down and a quick trip to the store and good scrubbing of the bowl remedied potential heartbreak before my son even knew anything was wrong.
Contrast that to my grandmother’s beloved Yorkie Terrier, Sergeant. When Sarge got sick, my grandmother spent thousands on doctor’s office visits, specialized food, and several surgeries. The upfront cost of a well-bred dog was significant enough, the annual upkeep for poor little Sarge was astronomical, but he lived a good, spoiled, and well-loved life.
That is why at AKF we often use the analogy of “goldfish, not thoroughbreds” with our clients to help them make decisions on hardware and software solutions.
If a “pizzabox” 1U Dell or HP (or pick your brand) server dies, no biggie, probably have a few others laying around or can purchase and spin up new ones in days, not months or quarters of a year. Also allows for quickly adding additional web servers, application servers, test servers, etc. The cost per compute cycle is very low and can be scaled very quickly and affordably.
“Cattle not pets” is another way to think about hardware and software selection. When it comes to your next meal (assuming you are not a vegetarian), what is easier to eat with little thought? A nameless cow or your favorite pet?
If your vendor is sending you on annual vacations (err, I mean business conferences) and providing your entire team with tons of swag, you are likely paying way too much in upfront costs and ongoing maintenance fees, licensing, and service agreements. Sorry, your sales rep doesn’t care that much about you; they like their commissions based on high markups better.
Having an emotional attachment to your vendors is dangerous as it removes objectivity in evaluating what is best for your company’s customers and future.
Untapped Capacity at a Great Cost
It is not uncommon for monolithic databases and mainframes to be overbuilt given the upfront cost resulting in only being utilized at 10-20% of capacity. This means there is a lot of untapped potential that is being paid for – but not utilized year-over-year.
Trying to replace large, propriety systems is very difficult due to the lump sum of capital investment required. It is placed on the CapEx budget SWAG year after year and struck early on in the budgeting process as a CFO either dictates or asks, “can you live without the upgrade for one more year?”
We have one client that finally got budget approval for a major upgrade to a large system, and in addition to the substantial costs for hardware and licensing of software, they also have over 100 third-party consultants on-site for 18 months sitting in their cubicles (while they are short on space for their employees) to help with the transition. The direct and in-direct costs are massive, including the innovation that is not happening while resources are focused on an incremental upgrade to keep up, not get ahead.
The bloat is amazing and it is easy to see why startups and smaller companies build in the cloud and use opensource databases and in the process, erode market share from the industry behemoths with a fraction of the investment.
The goal of commodity systems and solutions is to get as much value for as minimal of an investment as possible. This allows us to build highly available and scalable solutions.
Focus on getting the maximum performance for the least amount of cost for:
We often see an interesting dichotomy of architectural principles within aging companies – teams report there is “no money” for new servers to provide customers with a more stable platform, but hundreds of thousands of dollars sunk into massive databases and mainframes.
Vendor lock and budget lock are two reasons why going with highly customized and proprietary systems shackles a company’s growth.
Forget the initial costs for specialized systems – which are substantial – usually the ongoing costs for licensing, service agreements, software upgrade support, etc. required to keep a vendor happy would likely be more than enough to provide a moderately-sized company with plenty of financial headroom to build out many new redundant, and highly available, commodity servers and networks.
Properly implementing along all three axes of the AKF Scale Cube requires a lot of hardware and software - not easily accomplished if providing a DR instance of your database also means giving your first-born and second-born children to Oracle.
Does this principle apply to cloud?
With the majority of startups never racking a single server themselves, and many larger companies migrating to AWS/Azure/Google, etc. – you might think this principle does not apply in the new digital age.
But where there is a will (or rather, profit), there is a way … and as the race for who can catch up to Amazon for hosting market share continues, vendor-specific tools that drive up costs are just as much of a concern as proprietary hardware is in the self-hosting world.
Often our venture capitalists and investor clients ask us about their startup’s hosting fees and if they should be concerned with the cost outpacing financial growth or if it is usual to see costs rise so quickly. Amazon and others have a lot to gain for providing discounted or free trials of proprietary monitoring, database, and other enhancements in hopes that they can ensure better vendor lock – and fair enough – a service that you can’t get with the competition.
We are just as concerned with vendor lock-in the cloud as we are with vendor lock-in for self-hosted solutions during due diligence and architectural reviews of our clients.
- Commodity hardware allows companies faster time to market, scalability, and availability
- The ROI on larger systems can rarely compete as the costs are such a large barrier to entry and often compute cycles are underutilized
- The same principles apply to hosted solutions – beware of vendor specific tools that make moving your platform elsewhere more difficult over time
We have held hundreds of on-site and remote architectural 2 and 3-day reviews for companies of all sizes in addition to thousands of due diligence reviews for investors. Contact us to see how we can help!