Cloud burst

To the end user and the general public, the cloud is invisible – something that people can visualise but not grasp. However the cloud is nothing new; email providers like Hotmail and Yahoo have held customer accounts in the cloud since the 1990s. Likewise, your YouTube videos of the dog doing back-flips in the garden and snaps of your two-week holiday in Greece uploaded to Flickr are stored in the cloud. For CIOs, cloud computing purports to deliver agility and flexibility, while also helping to cut costs and environmental impact. A company with a rigid server may be paying for storage costs that it doesn’t need and, conversely, if they experience a sudden spike in business, their server capacity may be inadequately able to cope with the increase in demand, harming their business growth. On one level, a public cloud virtual server is the ideal solution here – it can be incorporated to respond to a single company’s storage and hosting requirements, either in times of growth or contraction.

“I think what we are seeing is the control of the platform as a collaborative tool to be used inside organisations.”

A private cloud can be used within an organisation's firewall and security infrastructure to help enable the business to better manage its data storage needs, the only difference being that no external sources or data are stored on these particular servers. But understanding what the cloud is and how it could work for your company is a perennially challenging task. There are just so many parameters to work within, so many strategies to follow, and so many questions to ask.

"I guess many businesses see the cloud as the next great white hope," says William Fellows, Principal Analyst for The 451 Group. "There is a convergence in the industries of telcos, service providers and IT vendors and integration players who are all competing for this next cycle of spending opportunity, with the majority of them forecasting that servers are going to be increasingly in hosted environments rather than in on-premise deployments. While there is still some way to go before managed hosts are able to reach the gold standard of someone like Amazon, there are plenty of companies out there that are getting close."

With data storage capacity needs growing exponentially at a rate never before seen, companies are falling over themselves to align their business with a suitable cloud strategy. "Companies are now looking at the cloud as something that can manage their increased workloads," says Fellows. "For most large enterprises, the majority of their IT spend is still going on premise equipment rather than third-party services, and it is probably about 75/25 throughout most industries. If an end user is comfortable putting 25 percent of their data into the public cloud that is fine, but that might mean there is still 75 percent worth of data that remains in-house, so the issue of the private cloud becomes more pressing."

Private cloud

Such virtualisation of data is nothing new for most larger corporations, but the benefits that the public cloud bring are starting to be transferred into the private space, such as flexibility and scalability. "Most organisations have virtualised some, or all, of their data, but the prevailing thought process is if they had some of the other features of the public cloud at their disposal they could enjoy greater benefits. So they are doing a couple of things. Firstly, some progressive companies are looking to emulate, replicate or imitate what the public cloud delivers, and they are looking at their IT infrastructure and assessing what the total costs and ROI is for hosting and running their own workloads."

The issue of cost-effectiveness is a hot topic in these times of tight liquidity and negative growth. The private cloud is seen as a potentially cost-efficient implementation that many businesses can no longer afford to ignore. "Is it more cost-effective to host and store data internally than on a public cloud?", asks Fellows. "This is something that a lot of companies are looking into, whether these end-users of cloud computing are better off investing in their own 'best execution venues'; and by that I mean the purchasing of hosting capabilities that are suitable for their business in terms of price, performance and capacity."

Companies unsure of exactly where to start as they take their first tentative steps into the world of cloud computing should, says Fellows, follow a couple of practical steps in order to first assess their requirements. "The first step I would advise is for companies to simply create a service catalogue in order to at least understand what services are available to end users in their organisation. The next step is to look at the cost of provisioning and deploying to those end users. Just this very action of finding out cost allocation is proving an enormous driver because end users are discovering the range of services that are available to them, and figuring out the specific cost to their business."

Using the public cloud as a means of measuring the potential costs and scalabilities of an organisation's internal IT is, believes Fellows, a smart move. Public clouds have already begun to replace internal IT infrastructures in many enterprises, so it would be foolish for a company to not at least investigate how cloud-based services could benefit their business.

Hybrid hints

All this points to the adoption of the hybrid cloud, which is a managed cloud computing environment where some services are managed in house, and others services are provided externally. The hybrid cloud, when implemented correctly, enables businesses to enjoy the best of both worlds: the security and control of internal IT mainframes, and the flexible scalability and cost-effectiveness of the public cloud.

"Clouds are the ring fence that is under the control of a private cloud owner, but they run at a third party," says Fellows. "With the hybrid cloud there are any number of combinations that can be applied. There will be vertically integrated Clouds of IT systems in B2B chains where partners and customers will be able to access elements and process their supplies and data on the cloud, but it is going to take longer for the more horizontally federated cloud to come into wider usage because the interoperability of different cloud providers is quite difficult at the moment. It's not impossible to move workloads between different clouds, but there is a whole bunch of maturing the industry needs to go through before we arrive at that stage."

The ability to easily and safely transfer data across different cloud providers will mark a watershed moment for a number of companies who still harbour reservations about this, and other issues, of cloud computing. Fellows believes we are three years away from achieving complete interoperability; the desire and innovative thought processes are in place already. What is currently lacking is the technology to make it happen.

Trust and security

Security concerns abound in the world of cloud computing. Companies threat over access to the data, control of their data and loss of their data. But the cloud is as much about security as it is about trust: two concerns that can easily be overcome with time, education and improved technological advances. "We've been surveying end users of cloud computing for just over a couple of years now," reveals Fellows. "We have conducted some quantitative surveys of a broad end user base and undertaken a more qualitative assessment of smaller groups of end users, and what we have found is that there is a pretty consistent level of concern regarding the issue of trust, control and security.

"It is important to distinguish between security and trust. IT security - the security of your actual systems - is obviously a concern, but more important are the regulatory and compliance requirements, and basic protection. These issues are quite distinct and separate, but rolled up and bundled together. The major concern for a great number of companies is overall control and trust. And within that there are data management concerns, auditing, interoperability and so on."

Fellows' research identified a grouping of inhibitors to adoption of the cloud, with control and trust what he referred to as 'the first set of inhibitors', and cultural concerns the second set. "Often reluctance to embrace cloud computing has little to do with technology," says Fellows. "Snagging points revolve around issues of internal resistance to change. Whenever the issue of power, trust and control come up, there are a whole bunch of organisational factors that have to mature or change in order for new practices to be accommodated, new working environments to be embraced and new technologies to be implemented. The cloud brings all three of these inhibitors to change to the very door of the executive decision makers, so this hesitation is often understandable."

Overcoming these hesitations and inhibitors is a challenge that the cloud computing industry must focus on if it is to promote an atmosphere of wider acceptance. Greater adoption of cloud computing will happen regardless though, thinks Fellows, as more and more companies begin to trust their instincts and take advantage of the wealth of services out there. "Wider use of cloud computing is happening kind of by default because there tend to be lots of people in big organisations who are already using cloud computing to some degree, whether they know it or not. So over time what we have found is cost reduction has become one of the main drivers to adoption of cloud computing; sorting out that bottom line. Cost of ownership is seen as just as important, if not more so, than flexibility and agility. But the two issues are connected, because the ability to move tasks and workloads flexibly both internally and into the cloud is really the thing that has proved to be the key attraction adopter, because efficiency helps lower costs."

Another issue is that the hype around the emergence of cloud computing has highlighted a more far-ranging and longstanding issue felt in many an enterprise IT department: namely that of ownership. Mark Settle, CIO at BMC Software, believes the cloud is providing businesses with a great opportunity to get their strategic approach to IT funding in order. "For all the promise cloud computing offers to reduce capital expenditure and management burden, it also reignites the knotty issues of IT chargebacks - an approach to IT funding that, due to its complexity, was in the past somewhat of a recurring nightmare for CFOs and CIOs."

Settle explains that IT budgets can be assigned by business unit, project or overall annual requirements. But cloud computing, as a centralised IT resource charged on a usage-based billing model, blurs traditional budgetary lines, reviving the concept of the IT function charging its costs back to individual departments. "In the past, chargebacks have been difficult to implement, as calculating the full cost of service delivery is an extremely complex process due the range of variables associated with it. With cloud computing, organisations can build flexible IT resourcing into their operational expenditure for managing cheaper, sustained and predictable business workloads." Settle continues: "At the same time, they can access extra resource on-the-fly, when a business unit needs it, to get a new project up and running quickly for example, without having to factor in the extra hardware, power, maintenance and labour costs usually associated with new IT capital expenditure."

It is essential, therefore, for any CIO considering a move to the cloud must work hand-in-hand with the CFO to agree standard procedures for procuring, accessing and monitoring cloud resources and service levels to ensure each business unit pays for the IT they need and us, says Settle. "This is also why those IT departments with well-developed business service management (BSM) software deployments that allow them to align IT resource with business demand will already have a head start into the cloud, whether it is public, private or hybrid in its nature."

Cloud evolution

As cloud computing has steadily emerged from the backrooms of IT offices into the consciousness of every committed businessperson around the world, its focus has been mainly on infrastructure service: how it runs and works, security concerns and hosting. Fellows believes that the sector's evolution will move away from initial questions about understanding and penetration, to more software-type concerns. "The next big step for cloud computing will be concerned with platforms of service, whereby you basically have one type of environment, you show the code and it gets run.

"I think what we are seeing is the control of the platform as a collaborative tool to be used inside organisations. So where, for example, Spring Source is a collaboration between VM Ware, Force.com and Google, we are now seeing Microsoft working with Azure. The developed world is divided into three camps, basically. Java, dot-net and open source (Python, Ruby, etc.), and systems staff are looking to create big developer environments and communities and to take advantage of their platforms that support the execution of those code bases. And this again rides on top-off infrastructures of service because you need this kind of flexible infrastructure behind it to create that platform service."

Recognising where the cloud is drifting to and ensuring your business is best placed to take advantage of the ever-evolving service it offers is another challenge that lies not too far over the horizon. "You can identify the cloud computing model when you see IT organisations afforded the ability to provide some automated governments in a way that they haven't been able to before," says Fellows. "It is not so much a case of exerting control, but by offering, for example, the developer a black box that they can develop against without having to be concerned with what happens in getting the tasks done. This is manifest in the trend we are seeing for developer and IT operations functions coming together in what we call the 'devox'."

These changes will inevitably lead to widespread restructuring of IT departments, but are most organisations ready for these various stages of upheaval? "To date it has mostly been champions for the cloud pushing through change by utilising end examples to show their bosses," says Fellows. "But I think going forward, the greater their peer experiences, the better the collective understanding about the benefit of the cloud. And as more and more competitors adopt and reap the rewards of the cloud, more and more in your organisation will begin asking questions, and will want to enjoy the same benefits too."

Cloud computing: the numbers that count

In 1997, NetCentric attempted to patent the term 'cloud computing' but abandoned this idea two years later.

A survey of 1800 IT professionals found that only 10 percent plan to use cloud computing for mission-critical IT services.

45 percent of those surveyed say the risks outweigh the benefits.

Yankee Group report that 75 percent of enterprises are allocating no more than a third of their 2010 IT budgets to the cloud.

IDC forecasts public cloud computing will be a US$33.5 billion industry