How OpenStack Lowers Total Cost of Ownership

OpenStack can reduce IT costs by up to 60%. We’ve done it time after time for our clients! Here’s a quick rundown through why it’s a smart choice for managing infrastructure:

• No License Fees: OpenStack is open source, eliminating costly software licenses.
• Hardware Savings: Use commodity servers instead of expensive specialized hardware, potentially cutting CapEx by up to 60%.
• Automation Benefits: Automating tasks like provisioning and monitoring reduces labor and operational costs by up to 40%.
• Scalability: Scale compute, storage, and networking resources independently to avoid over-provisioning.
• Vendor Freedom: Avoid vendor lock-in with OpenStack’s flexible, hardware-agnostic design.

A few real-world examples include:

• CERN: After being an “academic institution” customer of Microsoft for many years and receiving the associated service discounts, Microsoft revoked CERN’s academic status and wanted to move them to a per-user model. This would have upped their license costs by 10x! CERN said “no thanks!” and instead started the Microsoft Alternatives project (MAlt) (renamed as the Microservice Architecture on Libre Technology [MALT]) with a goal to help themselves and other businesses in similar situations move to open source software. They moved their infrastructure to OpenStack, building their own cloud which has grown to over 300,000 cores, and saved a ton of money in both usage and license fees.
• Walmart: Walmart currently runs one of the largest hybrid clouds in existence, the private cloud side of which is built upon OpenStack and other open source technologies. Using what they call the “Triplet Model”, “this infrastructure offers us incredible resiliency and disaster recovery capabilities while reducing cloud cost by 10-18% annually to support our everyday low prices.” (Walmart Global Tech article on LinkedIn)
• Convesio: Our own customer, Convesio, transitioned to OpenMetal’s hosted private cloud solution built on OpenStack after facing challenges with high costs, lack of support, and inflexibility from AWS and GCP. This move resulted in a major cost reduction, cutting their public cloud expenses by more than 50%.

OpenStack offers a cost-effective, flexible alternative to proprietary solutions like VMware. Read on to learn how it works and how organizations are saving millions.

OpenStack Features That Save Money

OpenStack is perfectly designed to help organizations lower their operational costs with features that reduce expenses.

No License Fees with Open Source

Because OpenStack is open source, it eliminates the need for expensive software licenses. This means organizations can avoid recurring license payments and redirect funds toward improving infrastructure or other priorities. This cost advantage becomes even more noticeable at scale.

Flexible Resource Scaling

OpenStack’s horizontal scaling gives businesses control over resources, helping them manage costs effectively. Instead of investing in expensive hardware upgrades, organizations can add identical servers as needed.

The platform’s modular design allows different resource types to scale independently. For example, the Nova component handles compute resources, while Cinder and Swift manage block and object storage. This flexibility avoids over-provisioning and keeps costs in check.

Automation Reduces Operational Costs

Automation is another way OpenStack helps save money. By automating tasks like resource provisioning, configuration, and monitoring, it shrinks the need for manual labor and administrative oversight.

The Heat orchestration service simplifies cloud application deployments, helping to reduce human error and manual work. Additionally, OpenStack’s API allows organizations to create custom automation scripts, making operations even more efficient.

OpenStack vs Other Virtualization Tools

Price Comparison with Other Platforms

When it comes to costs, OpenStack stands out compared to public cloud and proprietary solutions. HPE commissioned Constellation Research to interview business cloud users and find out the costs between public/proprietary cloud and private cloud models. After interviewing CTOs and IT decision makers across industries, they found that moving the right workloads to a private cloud delivered a median cost savings of 50%, plus enabled 65% higher workload performance by having access to dedicated resources, along with doubling the speed of DevOps cycles. That is impressive!

Here’s a breakdown of the potential three-year Total Cost of Ownership (TCO) for a business spending millions over that time period:

These numbers highlight the potential for both capital and operational savings. Beyond the cost, OpenStack’s design eliminates reliance on expensive vendor-specific solutions.

Freedom from Vendor Lock-in

OpenStack’s open architecture gives organizations the ability to choose their infrastructure without restrictions. Unlike proprietary platforms that often tie you to specific hardware or software, OpenStack works with hardware from any vendor, supports various hypervisors, and uses standardized APIs for seamless integration. Plus, you can fully customize the source code to meet your needs.

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Using Standard Hardware with OpenStack

Standard vs Specialized Hardware

OpenStack’s ability to run on standard hardware significantly reduces costs compared to relying on specialized systems. Here’s a quick cost breakdown:

When scaled up, the savings become even more noticeable. But the benefits go beyond just upfront cost savings – OpenStack’s design allows for a broader range of hardware options.

Hardware Selection Flexibility

OpenStack’s hardware-agnostic approach offers flexibility that turns into long-term savings. A great example is CERN, which manages over 300,000 cores using a mix of hardware types and generations. This setup allows them to efficiently use resources and upgrade incrementally without needing to replace their entire infrastructure.

Some of the advantages include:

• Lower costs: Multi-vendor support keeps procurement expenses down.
• Incremental upgrades: No need for massive, costly hardware overhauls.
• Custom setups: Optimize deployments by choosing components that fit specific needs.

This flexibility also opens the door to adopting new technologies. Whether it’s integrating GPUs for AI workloads or deploying low-cost edge computing solutions, OpenStack ensures you can confidently manage it all under one consistent platform.

Applying FinOps Principles in Your Cloud

OpenStack lends itself well to the principles of FinOps due to all the reasons we’ve discussed here. Regardless of your infrastructure setup, it’s prudent to learn about FinOps and think about how you can make smarter financial decisions when it comes to your IT!

Check out this webinar we presented with 451 Research to help people find alignment with FinOps principles and learn about the benefits of mapping out a fixed cost approach for appropriate cloud services and workloads, especially by using private cloud as a part of their hybrid cloud model.

OpenMetal’s OpenStack Cloud Services

OpenMetal builds on OpenStack’s cost-saving features to create an efficient and tailored cloud solution.

Platform Overview

OpenMetal provides a cloud platform built on OpenStack, combining the best parts of private, public, and bare metal cloud. By integrating OpenStack with Ceph, the platform delivers powerful compute and storage solutions. Here’s how it helps reduce costs:

These features, combined with open source and automation benefits, significantly lower the total cost of ownership (TCO).

OpenMetal Pricing Structure

OpenMetal adopts a fixed pricing model instead of variable rates. This pricing strategy means:

• Predictable Costs: Fixed monthly fees eliminate unexpected charges.
• Efficient Resource Use: No need for constant usage tracking.
• Simplified Budgeting: Easier to plan capacity and forecast expenses.

This pricing model aligns with industry research, showing how private cloud deployments can help businesses find substantial cost savings.

45-Second Cloud Setup

OpenMetal’s cloud deployment process takes less than 45 seconds, thanks to automation and pre-configured components. This rapid setup supports cost efficiency through:

• Reduced Setup Costs: Automation removes the need for manual configuration and specialized expertise.
• Quicker Operational Readiness: Systems are up and running almost instantly, avoiding lengthy setup delays.
• Lower Ongoing Expenses: Pre-configured components and adaptable support options simplify operations.

This approach reflects OpenMetal’s commitment to minimizing both upfront and operational costs while delivering fast, reliable cloud solutions.

Conclusion: OpenStack for Lower Costs

Main Cost Benefits

OpenStack helps organizations cut costs significantly by lowering the total cost of ownership (TCO). Here’s a breakdown of how OpenStack reduces costs:

Evaluating OpenStack for Your Needs

While cost savings are compelling, organizations should also think about operational considerations to maximize OpenStack’s benefits. Here are some factors to weigh:

Infrastructure Scale: OpenStack becomes more cost-efficient as the number of virtual machines increases. Research indicates private cloud solutions like OpenStack are more economical than public cloud services when managing over 400 virtual machines per engineer. Read more about the cost tipping point here and when it makes the most sense to look into private cloud.

Resource Requirements: OpenStack is particularly advantageous for organizations that:

• Handle predictable workloads needing consistent resources
• Require control over data and infrastructure
• Prefer flexibility in hardware choices
• Want to avoid vendor lock-in

Implementation Readiness: Success with OpenStack depends on factors like:

• Availability of technical expertise
• Compatibility with existing infrastructure
• Compliance and security considerations
• Long-term scalability goals

These points highlight why OpenStack is a powerful option for organizations aiming to reduce costs. Being open source, combined with hardware flexibility and automation, supports scalable and agile infrastructure while keeping expenses in check.