>Renting your information infrastructure is a great way to reduce startup costs, but down the road, that information infrastructure runs your company. Trying to outsource it is like trying to outsource upper management.
This isn't a one size fits all thing. For a company like FedEx I don't see the advantage of owning their own data centers. They just don't have the scaling challenges that would require that. Data centers or information infrastructure as you put it does't fall within the core competency of FedEx, so I don't think it's a fair comparison to say its like outsourcing upper management. I think its more fair to so that FedEx building their own datacenters is like building their own roads to deliver packages on.
For a company like Facebook or Google, the difference is clear. They need to handle such a high scale of traffic and volume of data that they need custom infrastructure to be able to scale efficiently at significantly reduced costs. The same reason it made sense for them to invest in building their own databases, because the existing options didn't meet the scaling requirements. FedEx won't realistically be needing their own database or infrastructure any time soon.
> They just don't have the scaling challenges that would require that.
I don’t know about that. They are a global logistics organization that rivals Amazon in scale. They are not parsing web scale data like Google, but as far as meatspace data goes they are they seem to be about as big as it gets?
> I think its more fair to so that FedEx building their own datacenters is like building their own roads to deliver packages on.
Your metaphor is a little bit off. This is more comparable to FedEx renting vs owning their fleet vehicles.
Obviously they aren't going to be setting up foundries to to scratch-build engines and network switches. But it probably makes as much sense for them to own the buildings & computers running their logistics software as it does for them to own the buildings and vehicles running their logistics hardware.
As an aside, I'm sure FedEx would LOVE to get customers locked in to private FedEx roads with private FedEx addresses that no one else is allowed to deliver too. Thankfully, our system of public infrastructure is robust enough to make this infeasible.
In the United States (along with Morningstar Air Express in Canada), FedEx Express operates FedEx Feeder (and for Morningstar, mainline FedEx service) on a dry lease program where the contractor will lease the aircraft from the FedEx fleet and provide a crew to operate the aircraft solely for FedEx
>>They just don't have the scaling challenges that would require that
Scaling is one of the big cloud advantages. Static Known workloads will almost always be cheaper on Prem than dynamic workloads that need automated scaling
One of the big ways an organization can save money is if they can scale up and down their loads on demand
But if you have a static 24/7 workload almost universally I can build a onprem solution that is be 50% or more cheaper than cloud
>For a company like FedEx I don't see the advantage of owning their own data centers. They just don't have the scaling challenges that would require that.
Depends how seriously they're locked onto the postman/route inspection problem. Which is a factor for delivery companies and, depending on how hard you chase it, a driver for almost infinite compute. Once you're playing that game, the economics look very different to most 'not an IT company' IT needs.
That is really not true at least in the USA. There are all kinds of taxes and fees for using the roads with large trucks. Have you ever seen the weigh stations on the sides of the highway in the US? Those are there to fine the trucks for what they are carrying if it is beyond what is allowed among other things. You said km though so you probably are not in the US.
Every state charges their own fee per mile to commercial trucks. Filing taxes as a long distance trucking company that operates in multiple states is pretty annoying.
There's also tax built in to every gallon of fuel.
There are also flat annual registration fees you have to pay as well.
Side point here, but that's a very justifiable cost. The damaged to a road is proportional to the fourth power of the axle weight [1]. That's something that amuses me when drivers complain that bike riders don't pay a "road tax". If they did, it would be a laughably low amount compared to what a car driver would have to pay in proportion.
It's not true in the EU either, plenty of countries have truck and trailer specific tolls. The average truck on the German autobahn, for example, pays €0.15 per kilometre.
This isn't a one size fits all thing. For a company like FedEx I don't see the advantage of owning their own data centers. They just don't have the scaling challenges that would require that. Data centers or information infrastructure as you put it does't fall within the core competency of FedEx, so I don't think it's a fair comparison to say its like outsourcing upper management. I think its more fair to so that FedEx building their own datacenters is like building their own roads to deliver packages on.
For a company like Facebook or Google, the difference is clear. They need to handle such a high scale of traffic and volume of data that they need custom infrastructure to be able to scale efficiently at significantly reduced costs. The same reason it made sense for them to invest in building their own databases, because the existing options didn't meet the scaling requirements. FedEx won't realistically be needing their own database or infrastructure any time soon.