Evaluating the relative cost of edge computing

Edge computing is a distributed computing paradigm that includes infrastructure and applications outside of centralized, dedicated, and cloud datacenters located as close as necessary to where data is generated and consumed.

The ability to provision IT service at the edge is increasingly a requirement in our digital-first world. It can help companies be more responsive, lower the cost of transmitting and storing data, and improve compliance with regulations related to data sovereignty. IDC’s Worldwide Edge Spending Guide (February 2024) finds that worldwide spending on edge computing will reach $232 billion this year, an increase of more than 15% over 2023. Continued growth is expected over the next several years.

On the surface, the cost argument for deploying edge infrastructure is fairly straightforward: By processing data closer to where it is generated, organizations can reduce spending on network and connectivity while improving performance. Yet the scale and scope of edge projects can quickly escalate costs.

Is investing in edge infrastructure and operation always the right choice? Making the right decision for a specific implementation requires evaluating the hard and soft costs.

The hard costs of edge computing

In many ways, this is the easy part. IDC’s Evaluating the Costs and ROI of Edge Computing (June 2024) lays out the hard costs.

Hard costs include:

• Setting up the infrastructure (servers, connectivity, storage, gateways, sensors/input devices, and hardware) and integrating the edge deployment with it. The hardware required alone ranges from very basic to enterprise-class rack-based systems that consist of standalone, converged, or hyperconverged infrastructure. If these systems aren’t already installed in the required location, they can be very expensive to set up.
• Software to facilitate computing at the edge. This includes an operating system or operating environment, remote management and security tools, analytics and data management solutions, and application-specific software.
• Managing and orchestrating the resources flow between multiple devices, infrastructure and network at the edge.
• Reworking or rebuilding applications so they can work better in edge environment and be automatically deployed, patched, updated, and monitored
• Data transport and storage
• Power and cooling at the edge location
• Remote monitoring platforms
• Deployment and ongoing management services

Indirect or hidden costs of edge computing

Indirect or hidden costs are just as important, but much harder to quantify. They include:

• The additional cost of remote system maintenance, troubleshooting, and upgrades
• Cost of labor at the edge location
• Long-distance management
• Data transmission costs

Ways to lower edge computing costs

One of the best ways to lower edge computing costs is by deciding which application scenarios are best suited for the edge, with cost as the major factor. Take an inventory of the applications you plan to build or use over the next five years, along with their performance requirements. Those with the highest, most critical performance requirements, large amounts of data, and latency-sensitive workloads are good candidates.

Instead of implementing and running an edge deployment internally, some organizations find that it’s less expensive to use an as-a-service model. But there are reasons other than cost to consider a service-based approach to edge computing. It’s often a good idea for businesses that don’t have a lot of expertise with edge deployments, or for edge locations that don’t have readily available tech experts to troubleshoot if needed. That’s especially true of sectors like healthcare and retail, where edge locations can be very remote and distributed without IT staff available in all locations. This model also allows organizations to start out small with a few use cases at the edge and scale up over time without overspending.

The three options are:

• Managed edge services. This model is similar to an outsourcing arrangement, where a partner owns and operates the infrastructure and applications. IDC’s EdgeView 2024 survey found that 36% of businesses say new investments in edge will include managed edge services.
• Edge as a service. With this model, a partner owns and maintains the equipment, but the company operates it. Companies pay a monthly fee.
• Cloud services for edge. One type of service in this category is a dedicated offering like Amazon Outpost, where a public cloud provider places equipment dedicated to one customer at a location of the customer’s choosing, and all workloads that run on it are for that customer. Another type of service is shared cloud resources where a public cloud provider provides resources in a location near to where the customer needs them. The same IDC survey found that 49% of organizations say their edge investments will include cloud service provider edge solutions.

Here’s a good way to evaluate it: If your organization can afford to buy the infrastructure and connectivity solutions for all locations, it can probably handle owning and self-managing edge deployments. If it can’t, it’s probably worth considering colocation or some type of managed edge services.

Edge computing is having a moment, and it’s doubtful that it will disappear anytime soon. Considering the costs on a case-by-case basis is the best way to glean value from the edge model without breaking the bank.

Learn more about IDC’s research for technology leaders.

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Karen D. Schwartz is an adjunct research advisor with IDC’s IT Executive Programs (IEP), focusing on IT business, digital business, disaster recovery, and data management. She has extensive experience both as a researcher and a business and technology journalist, covering a broad range of issues and topics. She often writes about cybersecurity, disaster recovery, storage, unified communications, and wireless technology. Karen holds a Bachelor of Arts degree from UCLA.