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23 May 2017

Choice of Content Delivery Network & Total Cost of Ownership?

When it comes to Total Cost of Ownership of your Content Delivery Network of choice, make sure to see the whole picture. The devil is in the details.

Jaakko Kontiainen

Recently, one customer asked Nordcloud to help in selecting an optimal Content Distribution Network solution for them. The customer was keen to go beyond a unit price and understand their Total Cost of Ownership going forward. 

Pitfall #1: Focus on price per GB instead of Total Cost of Ownership

CDN is often seen as a commodity service and it is easy to simplify purchase decision to comparing a single number - price per GB. Total Cost of Ownership analysis takes a step back and attempts to estimate what the full economic impact of a CDN choice is.  

It may be worth spending a few hours to estimate the CDN Total Cost of Ownership if you expect to deliver significant amount of data over a CDN. You may save literally thousands per month.

Pitfall #2: Assume that data transfer costs remain constant

One of the (expected) benefits from using a CDN is that you save in your content distribution costs - you cache content closer to your consumption. The caveat is that you will have to transfer the data to your Edge location, or Point of Presence, in order for it to be distributed. You will need to estimate how much your expected content distribution will generate data transfer from your source location.

AWS makes a huge favor to its customers by offering free of charge data transfer from AWS sources to Amazon CloudFront. If you are transferring data from AWS sources to another CDN solution you will need to pay the list price. Free is hard to beat, in our customer’s TCO analysis data transfer costs really tipped the scale for Amazon CloudFront.

Pitfall #3: Assume that a GB is a GB

GB - gigabyte - is the typical pricing unit used for a CDN. The caveat is that all GB’s are not created equal. Some CDN providers use a decimal notation and 1 GB equals 1000 MBs, which are made of 1000 KBs, which in turn are 1000 bytes. Amazon CloudFront uses the binary notation, where 1 GB equals to 1024 MBs, which are made of 1024 KBs, which equals 1024 bytes.

What’s the big deal? When you calculate out the seemingly small differences, you will notice that where Amazon CloudFront delivers 1,073,741,824 bytes at per GB price, a competitor may deliver only a paltry 1,000,000,000 bytes with their per GB price. This in itself will make a 7.4% difference in what you get out from a GB. Please (please, please!) read the fine print!  

Pitfall #4: Ignore flat subscription or use fees

Understanding the Total Cost of Ownership requires you to reach out to every nook and cranny to include all costs. Your CDN offers or terms of use may include additional fees that are not traffic volume dependent. While these may seem innocuous they too impact your Total Cost of Ownership.

Allocating flat one-time or regularly recurring fees is relatively straightforward. You will need to list all the fees and allocate them over the expected traffic volume to get to a fully loaded per GB price. At this point, don’t forget to check the true meaning of a GB - and add or deduct the 7.4% if you are comparing per GB prices against e.g. Amazon CloudFront. Amazon CloudFront pricing is purely based on use and does not have obscure one-time fees.

Pitfall #5: Count on all CDNs to be self-service

The hardest element of a Total Cost of Ownership analysis is estimating the effort your team or your partner needs to put in place in order for the CDN to work. What you want to look for is ability to simply set your distribution up, easily integrate with your other services and maintain your distributions without extensive external professional services support.

Your natural analysis starting points is to discuss with your development team on their skills, experience and perceptions of using a particular CDN. You will be surprised how much collective information usually exists within your organisation already. You may also want to ask your CDN provider about tutorials and tooling - as well as how some expected more tricky changes could be solved. You may find out that some changes can only be done by the vendor’s own team. Regular external support has a price, which you will want to estimate in advance.

How to avoid the pitfalls?

  1. Focus on Total Cost of Ownership instead of Price per GB
  2. Estimate the Data Transfer cost impact of your CDN choice
  3. Adjust per GB prices to compare apples with apples
  4. Allocate all fixed costs to your estimated traffic
  5. Estimate the required effort and external help to run your CDN.

With these tips you should be able to reach a rational and more informed decision on your CDN choice. If you feel uncertain and need help, we are happy to help you out.

About Nordcloud

Nordcloud is a European leader of public cloud infrastructure solutions and services. Since 2012 we've completed over 300 deployments to help our enterprise customers gain the maximum benefits of the cloud including security, agility, scalability and overall cost-savings. As an independent cloud-native company, we are representing all globally leading cloud technology providers neutrally for the customers’ benefit. With a strong Nordic heritage, Nordcloud is headquartered in Helsinki with offices in Stockholm, Malmö, Oslo, London, Amsterdam, Poznan and Munich.

If you'd like to talk with Nordcloud to see how you can benefit from the cloud then contact us and we'll arrange a meeting for you with one of our cloud experts.
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