The goal of this document is to outline the economic rationale which drives
SlapOS research and development.
Starting in 2007 many companies whose business is to sell open source
software integration services have migrated their groupware
from open source platforms to proprietary cloud platforms. Industrial
companies that had been using proprietary groupware for many years have
also opted for a similar strategy towards the cloud. Costs seem
to be the driving motivation for change.
This presentation will analyse the cost of different approaches
(on premise vs. cloud) and later introduce a list of economic requirements
for an open source/Free Software cloud solution provider to meet in
order to provide a competitive advantage over proprietary cloud providers.
This section introduces scenarios of groupware implementation in a company
using open source and proprietary software. It will also review the
different commercial offers which are proposed to companies to implement
similar solutions in the cloud.
Until recently (at the time of writing), one of the most cost efficient
ways to implement groupware in a company was to select an open source
groupware suite such as Horde,
OBM, Group Office,
Feng Office, et al.,
purchase two servers (so that one could replace the other in case of a
hardware failure) and ask a system administrator to come one day per month
to make sure everything is working well on both servers. This approach
is quite typical of small companies.
A typical server for 100 users costs about 1000€ and is used in
production for 2 years or 24 months. This represents a cost of 0.8€ per
user and month. A system adminstrator costs 800 € per day and operates on
the server once a month on average to create accounts, make sure there
is enough disk space, install system security upgrades, etc. System
administration represents a cost of 8€ per month and user. Overall,
the total cost is 8.8€ per user and per month
By hosting more users on the server (ex. 1000) and using lower cost
labour (ex. 200 € per day), the total cost per user can be reduced to less
than 0.2€ per month. Therefore, what would cost 8€ in a small company
in a country with high labour costs, could cost 0.2€ in a country with
lower labour costs and in medium sized businesses.
Large organizations used to rely on proprietary groupware such as
Some of these such as Valeo
later migrated to cloud. The cost of traditional groupware implementation
based on proprietary software is similar to the cost of open source with the
additional cost for licensing the software. This can include not only the
groupware application itself but also a complex system environment made of
LDAP directories, proprietary operating systems, proprietary monitoring
tools, proprietary office suite and proprietary asset management.
Typically, annual cost for the groupware environment licenses should be at
least 240€ per user, resulting in 20€ monthly cost.
The total cost per user per month of the groupware environment is thus
close to 30€. Increasing the number of users or reducing labour cost has
little impact on the total cost since most costs are licenses.
Many corporations have opted for free groupware once it became available
on the cloud. It is however quite difficult to estimate the actual borne
cost for such solutions since they are free. However, as solutions are
commonly sponsored through advertising, a measure of the cost can be
estimated through the number of clicks on advertising links
made by each user every month. Another measure can be estimated based on the
use of resources required to provide the cloud service.
Assuming a typical user tends to click a commercial link once per month and
that commercial links are priced between 0.1€ and 1€ with a typical price of
0.5€ a low estimate of the "price" of free cloud groupware can be obtained.
Another estimation is based on the usage of physical and human sources
required to produce the cloud service. The hardware cost of a service depends
mostly on the cost of storage rather than on the cost of CPU. With a typical
cost of 100€ for 1 terabyte of storage on a hard disk and an average of 7GB
allocated per user, one can reach a hardware cost of 0.03€ per month. This
calculation takes into account that storage is duplicated (ie. 14GB are
needed to provided 7GB of redundant storage). It also takes into
account that some users use all the 7GB storage while others mostly nothing,
with an average usage of 3.5GB. The cost of CPU or RAM is considered to be
close to zero as most users are only connected during small part of the day.
Memory is thus shared efficiently by using a kind of multi-tenant architecture.
Intangible costs per user depend on the number of real users, since only
those users are likely to provide advertising turnover through commercial links and
can be considered as equivalent to users of a traditional approach.
Free cloud services usually have many subscribers and much less actual
users, especially simultaneous users. The number of real users is a figure
which is difficult to determine but should be considerably lower than
figures published by marketing departments. One approximation could be
the number of registered users on facebook (2012: 1 billion) and a 1% ratio
for deriving actively engaged users to be 10,000,000. This 1% ratio is
quite typical of Web 2.0 services as users subscribe to them more often than
they actually use them. Still, the 1% ratio is probably overestimated as
many free services actually show a 1:1000 ratio between real users and
If system administration is handled by a team of 100 engineers, the cost
of system administration for 10,000,000 users is equal to 0.1€ per user per
month. If the R&D staff consists of a small team of typically 20 people,
R&D costs are equal to 0.02€ per user per month. The cost of free cloud
groupware is thus equal to about 0.15€ per user per month.
Through various approximations, a monthly cost per user of 0.1€ to 0.5€ is
taken into the calculation. This cost does not directly translate into a
price, because a free cloud is financed by advertising. However, it provides
an estimate target value which any open source cloud solution should match
to be competitive in the long run, or which any open source cloud
solution should match to be compatible with a business model based on
Commercial cloud groupware offers also exist and are much easier to analyse
as their prices are usually public.
Google provides a "Premier"
version of Google Apps at a cost of 5€ per user and month. OVH
provides hosted Microsoft Exchange at a cost of 3.3€ per user and month.
Group Office is a hosted version
of the open source Group Office groupware. It is interesting to note that
the price levels of commercial cloud offers are 30 times higher that their
costs as we calculated them previously. There is thus still a lot of room
By comparing different approaches to implement groupware in a 100 people
company in a developped country, it was found that cloud-based solutions
offer price levels which are 60 times lower than traditional open source
solutions (0.1€ to 0.5€ vs. 8.8€). Paid cloud solutions lower prices by a
magnitude of 10 compared to traditional proprietary solutions. This
explains why many companies (Jaguar, Rover, BBVA) abandon
traditional implementation of groupware and migrate to the cloud, especially
in countries with high labour.
However, the level of profits generated by current paid cloud offerings is
extremely high. Lower cost cloud offers are likely to reach the market
Traditional open source approaches may also remain a competitive option
in countries with low labour costs and in companies with more than 1000
users. Economies of scale and mature open source software packages can
reduce the cost of open source groupware to 0.2€ per month and per user
in some cases.
In this section, the impact of cloud solutions for IT jobs are analysed as
well as the hidden costs of (both traditional) and cloud IT which are often
not taken into consideration.
Per 2012, the cloud will have a major impact on the IT job market by
reducing the number of open positions for system administrators and
A team of 100 system administrators can manage 10 million groupware accounts,
whereas in a traditional approach, a single consultant can serve 100 users
by spending one day per month, which means for a month of 20 working days,
2000 users. This figure of 2000 users compares to 100,000 users per system
administrator for cloud-based approaches.
Thus cloud-based services can improve IT productivity by a magnitude of 50.
In other words, what used to require 100 system administrators in
traditional IT, only requires 2 in a cloud system, leaving 98 system
adminstrators to an unpredicatble destiny.
The cloud plays the same role here as ERP systems did for accounting, or
robots are doing for industry or mechanisation for agriculture: it automates
the work of certain groups, who then become less competitive than machines.
This economic process has been depicted in the essay "The End of Work"
by Jeremy Rifkin. With the cloud, it is probably the first time that a
category of workers (IT engineers) produce tools which will create massive
unemployment for the same category of workers (IT engineers).
Understanding the impact of the cloud on the IT job market is also a better
way to define what "cloud computing" is: the automation through software of
IT processes which used to be managed by humans. Currently, cloud computing
focuses mostly on the automation of system administration. However, research
in cloud computing shows that the process of tailoring ERPs
for small companies can be automated, too and that the configuration of
applications could also be done by software rather than by consultants.
An interesting aspect of cost comparison which is seldomly taken into
account is the risk of data loss. Corporate data can be very valuable.
Losing accounting data or customer data can lead a stable and profitable
company to bankrupcy in a matter of months.
There are already a few examples of data loss on the cloud either for
technical reasons (eg. "Sidekick story")
or for social reasons (eg. "story of erased google account").
There are also numerous stories of companies that use Storage Area Network (SAN)
device and backup solutions from reputable makers but still lost their data
because they did not monitor the alarms of either system well enough.
The SAN filesystems got currupted and the backup solution had no longer
been running for several months.
Is the cloud safer or not than traditional IT from this point of view?
It is hard to tell without numbers. Some companies with perfect backup
plans could bear less risk than the cloud. Many companies implement a poor
backup plan and could reduce their risk by migrating to cloud.
One thing is certain however: current cloud centralized architectures
are based on large data centers and are operated by the same company all
over the world. Centralized architectures are quite weak in case of
strike, critical bugs, virus or terrorist attack. It is not only a matter
of lack of technical redundancy but also of lack of management redundancy.
Also, the perceived risk of data loss in cloud is becoming higher and
higher. Just like with air transportation, which is the safest
transportation system, fears of accidents can lead some users to reject the
cloud. A Cloud disaster, which is already predicted to happen in 2012 could generate
a lot of distrust for the cloud.
This section defines SlapOS requirements by combining an architecture
which reduces the risk of data loss and at the same time matches or surpasses
the best cloud offers in terms of costs.
The goal of SlapOS is to provide a competitive cloud solution which does
better in reducing risks of data loss than any other solution.
A simple word summarizes the requirements to build such a solution: share.
Application R&D is shared by using open source applications such as
Horde or Wordpress
which are widely spread and maintained by communities. The cost of R&D
is thus close to zero for end users and competes with the costs of R&D of
companies with million users.
Automation software, the core of SlapOS, is based on existing open source
tools maintained by communities such as Buildout
or supervisord. This reduces
the cost of development of automation tools by a magnitude of 10 or more. Other
automation components are shared among all applications, through a concept of
a stack which is itself open source. All LAMP (Linux, Apache, MariaDB, PHP)
could for example share the same stack and benefit from improvements made
to the stack, which provide enough freedom for each application to
implement fine tuning.
There are already more than 100 LAMP applications in SlapOS. Adding one more
application with complete automation of deployment, backup, resilience and
front-end acceleration taks less than four hours.
Hardware capacity should be shared (and waste eliminated) by efficient
system design and capacity sharing among providers.
A single 1000€ server should be able to host at least 1000 to 10,000 instances.
Some form a multi-tenancy must thus be provided by default in SlapOS,
since most open source applications are not multi-tenant. This form of
multi-tenancy is called POSIX in SlapOS: it is an operating system which
allows multiple processes with different users to share the system RAM, CPU
and also the same application code through shared libraries. By using POSIX
processes (rather than virtual machines), it is possible to implement
policies which can be split from a single server into 100 containers,
each of which with a groupware instance of Horde
and 10 users. By starting and stopping POSIX processes automatically, the
number of containers can be increased to 200 or more. The cost of a
complete groupware suite for a single company can be as low as
This figure should be compared to approaches
based on Amazon EC2 which price is 10 times higher if not 100 times.
And since a kvm virtual machine
can be a POSIX process, using POSIX processes as the common model for cloud
services can cover more possibilities than cloud models based on virtual machines.
Another form of hardware capacity sharing consists of one cloud provider
supplying available unused capacity to another cloud provider. This approach
reduces the cost of hardware resources for every cloud provider since it
optimizes their usage.
Risk of data loss should be reduced by sharing risk accross continents.
Every SlapOS hosted application should be replicated in 2 or 3 regions in
the world. In case of a failure of SlapOS cloud resources in one
region (electricity, connectivity, natural disaster, etc.), another replica
of the application can provide continued service.
SlapOS should be designed to resist management mistakes. Taking a wrong
management decision on a single SlapOS node should not destroy the entire
system. Management should thus be distributed and shared accross multiple
organizations in the world, each running its own SlapOS cloud.
By meeting all requirements, SlapOS can compete in price with the lowest
cost proprietary cloud yet provide higher resilience and data protection
than any other solution.