BYOC Build vs Buy: TCO and ROI Analysis

Customers asking software vendors to install and manage their products in their customers’ cloud accounts is not new. If there was enough customer demand, software vendors, thinking they have the engineering chops, would design and maintain an in-house, home-spun Bring Your Own Cloud offering. Nuon hears a different story around the challenges and complexities associated with building BYOC in-house when vendors reach out to explore and invest in Nuon’s off-the-shelf BYOC platform.

What Makes Up An In-house BYOC?

There are several aspects to designing and maintaining a BYOC offering including the vendor’s application, the base infrastructure like Kubernetes or containerization, authentication and authorization, networking including DNS and subnets, policies and permissions, provisioning aka installation, secrets management, Day-2 operations including health checks and secrets rotation, application upgrades, and eventually de-provisioning. Layer on top of that, supporting multiple cloud providers and multiple environments for the vendor and potentially per customer like dev, test, staging and production. What may at first glance looks like an application thing, is in fact a big hairy beast of complexity.

Finally, the application must be packaged up with container images and Helm charts for deploying on Kubernetes. For a self-hosted vendor, this most likely is already done but for a SaaS vendor, there is significant labor to produce an installable release including the underlying infrastructure and database setup.

In-house BYOC Costs

There are two situations to consider, and the economics differ for each. The first is greenfield: you have not built anything yet and are deciding whether to build in-house or adopt Nuon. The second is migration: you already run a homespun BYOC and are deciding whether to move to Nuon. The figures below cover both, so read the one that matches where you are.

Not surprisingly, the biggest component of internally building BYOC is labor, specifically engineering and DevOps skills, to design, build and maintain the deployment option.

Assume 3 Full-time DevOps engineers with fully-burdened salaries of $240,000 each, or $923/hour.

Upfront or One-time costs

The BYOC offering would take 9 months to build, so $498k in labor, and add on $100k in software and infrastructure required, for a total of $598k.

Ongoing or Annual costs

Assume 30% of the 3 DevOps team’s time maintains the BYOC offering so $309k/year with recurring software and infrastructure costs of $100k, so $409k annually.

Nuon BYOC Costs

Nuon requires an annual subscription license, upfront labor costs like building the configuration and some DevOps labor to maintain the Nuon platform and performing installs in customer’s cloud accounts.

Assume the same Full-time DevOps engineer and fully-burdened salary of $240,000, or $923/hour.

Upfront or One-time costs

Implementation Services to build 5 Nuon application configurations, at 5 days per configuration, with 2 DevOps staff at $46k.

One-time Conversion Services to migrate or install 50 customers on an existing in-house BYOC to Nuon, where 1 DevOps staff takes 2 days per customer install, at $92k.

So total Upfront costs of $138k.

Ongoing or Annual costs

Nuon licensing of $200k for the control plane and 50 customer installs. Assume $28k for Maintenance Services to do Customer Installs and change Nuon App Configs and $11k for Nuon Software Release Management Services to keep Nuon current, so $238k annually.

Break-even Months

If you have already built BYOC in-house, the question is not whether to build but whether to switch. Treating your existing build as a sunk cost, Nuon's lower annual run rate recovers the one-time switching cost in about 10 months.

ROI Over Three Years

For a greenfield decision, comparing the full cost of building and operating in-house against adopting Nuon, the three-year return is 114%, or $1.14 back for every dollar spent on Nuon.

Appropriate Use

It's important to remember these examples offer a simplified look at Total Cost of Ownership (TCO) and Return on Investment (ROI), designed to highlight the potential cost differences between in-house solutions and investing in an off-the-shelf platform like Nuon. We strongly encourage all prospects and customers to conduct their own detailed TCO and ROI calculations, as every business has unique operational costs and benefits. The cost assumptions used here—such as DevOps engineer salaries, project durations, and the time estimated for Nuon configurations and installations—are illustrative and should be adjusted to reflect your specific organizational context

Conclusion

An in-house build carries heavy upfront labor and ongoing maintenance, and the cost climbs further once you account for supporting multiple clouds and customer environments. For a greenfield decision, where you have not built anything yet, the three-year return on Nuon is 114%. For a vendor already running an in-house BYOC, the question is whether to switch, and Nuon's lower annual run rate pays back the move in about 10 months. The larger cost in either case is the engineering time an in-house build pulls off your core product. That is the resource Nuon frees up, by making customer deployments repeatable rather than a standing infrastructure project.

If your company is in need of a BYOC deployment option, please tell us more in the Demo request or sign up for the Trial.