The way I see it, cloud computing is not about “internal versus external” services; nor is it a shroud for outsourcing, service bureaus or time-sharing. Cloud computing is a model for enabling convenient, on-demand network access to a shared pool of configurable computing resources (e.g., networks, servers, storage, applications, and services) that can be rapidly provisioned and released with minimal management effort or service provider interaction1.
The reason that cloud computing sometimes manifests itself as outsourcing is simply that many organizations are too rigid, inflexible, and sluggish in responding to IT service requests. When this happens, internal consumers of IT services go looking to the public cloud offerings for on-demand services. So it isn’t really about in-house versus out-of-house service; it is speed to market for internal constituencies that drives the debate. To answer this challenge, internal IT organizations will need to develop a strategy that meets the expectations of their user-base: A well-thought-out transformation strategy to an IT service-utility model that provides speed, agility and control and assimilates the core principals of cloud computing.
The basic premise is that cloud computing has the ability to create the illusion of infinite capacity with consistent service level performance characteristics regardless of scale. Cloud services are on-demand and able to scale up or scale down with near-instant availability. Users pay “by-the-drink,” turning the tap on and off as quickly as needed and with minimal (or even zero) up-front investment cost for technology. The service-utility model provides the abstraction-layer for all of the technological components of cloud computing.
The notion of computing-as-a-utility service has been around for about as long as computing itself and it is now being realized through the convergence of a number of new and existing technologies, i.e. increased high-speed bandwidth; distributed
peer-to-peer architecture; the virtualization of private networks, servers and storage; and the packaging of computing resources as a metered service. The cloud-strategy is an elastic, co-located virtual container environment that offers ubiquitous access of IT services, applications, and information from any access point.
The deployment of cloud services is a growing challenge within the information technology industry today. Services offered through the public cloud appear to be cheap and reliable alternatives to internally delivered IT services. The marketing rhetoric could lead one to believe that cloud-services are as cheap and easy as downloading an app to your iPhone. Unprepared organizations that struggle with the economic value of their services are sitting ducks to these economic claims of well-armed public cloud vendors. It is obvious that public cloud service providers are going to continue to grow – therefore, every IT organization must be prepared to address the public cloud challenge.
There are several cloud computing deployment models:
- Private cloud – The cloud infrastructure is operated solely for one organization. It may be managed by the organization or a third party and may exist on premises or off premises.
- Community cloud – The cloud infrastructure is shared by several organizations and supports a specific community that has shared concerns (e.g., mission, security requirements, policy, and compliance considerations). It may be managed by the organization or a third party and may exist on premises or off premises.
- Public cloud – The cloud infrastructure is made available to the general public or a large industry group and is owned by an organization selling cloud services.
- Hybrid cloud – The cloud infrastructure is a composition of two or more clouds (private, community, or public) that remain unique entities but are bound together by standardized or proprietary technology that enables data and application portability (e.g., cloud bursting for load-balancing between clouds).
Benefits of Cloud Computing
A basic tenet of cloud computing is that the services can be turned on or off as quickly as needed and there is a dedicated team of professionals making sure the service provided is safe and available on a 24 × 7 basis. Best of all, the pay-as-you-go approach to it is economical as you aren’t paying for resources you don’t currently need. There is a low initial investment to get started, additional investment is incurred only as usage increases, and operating costs decrease as usage decreases. This way, cash flows better matches the consumption of resources.
Buying public cloud services might appear similar to buying other utilities; however, it is without the “benefit” of regulating authorities such as “utility boards” that objectively monitor or regulate prices. Public cloud vendors that are tied to tight pricing covenants and fail to realize margin objectives might resort to reduced service levels to achieve their profitability goals. Public cloud vendors tout lower operating costs due to the inherent economies of scale, but there is no overriding incentive to pass back any economies to customers. After all, a vendor has to recover its sales and marketing expenses, as well as maintain a profit margin. In reality, profit motive will always rule.
Except for economies of scale that a public cloud vendor might be able to achieve, every IT organization has the same opportunity as a public cloud vendor to realize lower costs and provide the same cloud service. The primary areas of opportunity for cost reductions are: decreased costs through increased efficiencies, decreased costs through increased environmental standardization, and decreased costs through application re-engineering for improved operability. The cost reductions realized from these three areas should certainly exceed the price for service from a public cloud vendor since an internal service organization does not carry a margin.
Even if the financial benefits of moving to the public cloud are considerable; not everything should be public, nor should it reside in the public cloud. Speed, flexibility, and access are important, but security and control of competitive information is critical. Private clouds are owned and managed by an organization and restricted to particular users. Private cloud services still create the illusion of infinite capacity, consistent service levels and the ability to scale up or scale down. Users will be able to provision their own services with the additional option of maintaining control and security over their information.
One thing is certain: Cloud computing is here to stay. The benefits of cloud computing are significant, and it’s important to develop and implement a cloud strategy. There is too much on the line to dismiss the benefits, or to allow users to blindly dive in without a careful examination. CI
1Cloud computing is a paradigm shift for IT services, however, and every organization needs to develop a cloud strategy.
Dennis Wenk is the Advisory Solution Architect – Private Cloud for EMC Consulting.