What is cloud computing and do I need to be scared ?

This interesting question asked by the spouse of Tom Hogan(HP), as he was preparing for the keynote of the Cloud Summit Conference by SandHill (media coverage here, some of the presentations here) While the focus of the conference was not about clouds on Friday the 13th, the discussions were around separating hype from reality (unfortunately a lot of it is going on these days ;o() in a very business sense. As MR pointed out during the introduction, after hearing the talks and discussions at the conference, one can either celebrate or drown one’s sorrows, during the cocktail reception ! MR’s view quoted here sums up some of the points raised in the conference.

The conference started with MR’s introduction and Tom Hogan‘s keynote followed.

Cloud Computing and the Enterprise

Summary of Tom’s talk:

  • Requires shift to new architectural changes including multi tenancy, security and availability as applied to a cloud infrastructure(<KS> [Update: 10/22/08] Addition after Neil’s comments. It is not that security and availability are not part of current IT architecture, but that the mechanisms are slightly different in a cloud environment and architectures need to account for that</KS>)
  • Business value propositions – deliver efficiency, increase speed and agility, mitigation of risk, enable alignment  & outcome based deployment of resources(<KS> [Update : 10/22/08] Addition after Neil’s comments. Naturally all these attributes are part of current IT infrastructures. But a cloud infrastructure has a definite advantage over traditional infrastructure, in terms of business experimentation, efficiency, peak scalability, agility and responsiveness</KS>)
  • [Update : 10/22/08] Good responses from Neil and Kannan below]
  • IT=BT (Business technology)
  • Currently 65% of IT budget goes to operation, 25% application management and 10-15% on innovation. If cloud infrastructures can make a dent in the 65% that is a big advantage as the savings can be applied to innovation
  • There is a chasm (viz. architectural challenges to implement cloud computing, rearchitecting applications to utilize massive parallel processing) between the chatter and the promises of cloud computing (elastic/scalable infrastructure).
  • Look at cloud computing as another service delivery channel (in addition to in-house services and outsourced services)
  • Advise to IT
    • Optimize your service delivery channels and impact to business
    • Map business attributes to the channels and manage a multi-channel environment efficiently
    • Plan for adaptive/flexible/scalable IT
    • Participate in the evolution of the cloud

A Q & A session with Sandeep Johri followed the keynote. HP is looking at applying cloud computng to consolidate data centers operated by EDS. There was a quick discussion around progressive CIOs who are intrigued by the cloud computing and are looking at applying the fundamentals “to radically deliver services at a vastly reduced price point”. <KS> I liked the characterization! </KS>

Selling the Cloud to Wall Street and Main Street

  • This was an interesting session on cloud economics, especially from a technologist’s point of view !
  • While SaaS is being adopted, the companies are spending 50-100% in sales and marketing. A very unprofitable business model with too much $ in the sales/marketng column
  • The innovation in cloud domain should be “not selling software-software is bought!” Focus on bying cycles than selling cycles ! There was a discussion on managing leads – as an example one catalog company, on the web, receives 20,000 – 30,000 leads  and there is no way to manage them by hand. There needs a organic way to manage them!
  • Another innovation is the business volume – sell many $25K than $1 million sales. Also subscription based models than one time sales
  • Cost of customer acquisition is a very important metric
  • In this regard (ales,marketing) cloud is bending the model than breaking the model
  • Enterprises should learn the art of customer acquisition from the consumer side, the on-line strategy
  • The cost of innovation has definitely come down dramatically
  • Big companies will migrate to big/established clouds
  • Which platforms to migrate to depends on the CG of the application – for example SFA would go to salesforce.com
  • One challenge is the inter cloud connectivity allowing connectivity across best-of-breed platforms

The Marriage of Security and Cloud Computing

The keynote by John Maddison [Vice President, Core Technology Solutions, Trend Micro] was interesting.

They see cloud computing as a necessary platform for their applications. He was emphatic that without cloud they will not be able to manage the security threats we face in a few years. They use hadoop for processing now and plan to architect collection, processing and distribution of threat vectors around cloud infrastructure. They predict 233 million threat vectors by 2015 ! If we follow the current paradigm of downloading the signatures, our lines would be choked with ust that function!

<KS>It is comforting to know that clouds are the only way for this domain, on the other hand depressing to hear that we need that massive scale to keep up with viruses, bot-nets et al. May be we should drown our sorrows with MR during the happy hour !</KS>

Demystifying the Cloud

The talk by Dr. Vishal Sikka of SAP was another interesting keynote. Earlier, dusring one of the panels, someone mentioned that Oracle and SAP do not get loud; but Oracle has at least a good management … Ouch ;o( Vishal was a little mystified, but went on to give a good speech.

  • We have achieved power, infrastructure and operation optimization
  • But are far awa from integration, integrity and elasticity ! <- all cloud attributes
  • Optimization is not a single dimension, different applications need different types of optimization (Slides 2 and 3)
  • Slide 4 is a good illustration of the breadth of optimization required
  • Slide 5 is a GMail page showing the breadth of elasticity. Different parts of the web page has different characteristic fed by appropriate infrastructures
    • The search area by the GFS, Chubby, mapReduce et al
    • The left side bar by a mail infrastructure and
    • The right advertisement bar by appropriate inference & data infrastructures

He completed the talk with an excellent slide on Timeless Software “Delivering this over containers that span multiple generations of technologies; Minimizing the cost and maximize the ease of its construction, deployment, and life-cycle management; In a landscape that is permanently heterogeneous”. <KS> Just beautiful, brings tears to the eyes of a technologist and well said !Their motto is “every activit, every user, in every business” !</KS>
In the following Q & A session with MR, he talked about “business by design” running “over a collection of processes over a clod infrastructure”

How would clouds evolve ? Mega clouds, cloud outsourcing and entrepreneurs using clouds

Ke customer opportunities ? Early stages of adoption of edge apps, major customers running mission critical systems on dedicated clouds. Need to manage cloud relationships very well. Too early to tell

Impact of cloud on data ? Issue is to maintain visibility/control. It is not that data is out of the enterprise, but need visibility. For example certain legal documents need to be destroyed at certain times, and enterprises need evidence that the content is in fact destroyed. <KS> I thought this is an interesting view. I also am of the view that a lot of enterprise data resides outside an organization – as part of backup, disaster recover plans, with vendors et al. </KS>

Understanding Enterprise Requirements for the Cloud

An interesting panel – three views

  • CIO, government – Government regulations dictate data privacy, locality et al. A cloud operator cannot replicate data to other parts of the world – the CIO will go to jail ! But looking to leverage cloud for hosting public data as well as using public data (for example GIS) for applications. Clouds do give flexibility as she need to go to the legislature for more headcount and resources
  • CIO, University – Most of the apps in cloud ! e-mail, CRM, alumni management, …. Feel that data security is more with clouds than can be achieved by a 40 person IT department. Clouds take low value complexity and they focus on the rest. Doing their own integration; so their infrastructure is the hub and the various clouds are the spokes. See increased liability due to higher vendor risk and vendor dependence on the operational integrity of the business. Per peeve on SLAs, termination clauses et al
  • Director, web publication – Naturally web apps, mixture of clouds. Use clouds for various apps like surveys et al. Will do more clouds in the future

Finding Opportunities in The Cloud

A discussion session between MR and Navin Chaddha [Managing Director, Mayfield Fund]

  • Cloud is evolutionary
  • Makes sense for Amazon to get into cloud space because the need the infrastructure anyway
  • Start-ups should not focus on capital intensive infrastructures, but have opportunities on cloud services like management, billing et al on mega clouds like Amazon’s. ie focus on building value (tools,applications) over basic cloud infrastructures
  • Clouds – definitely provide capital efficiency for start-ups and consumer web 2.0 apps
  • One interesting question was on data ownership and legalese – Would you rather have your lawyers answer a subpoena than your cloud providers lawyers ?
  • Clouds – consumerization of It not commoditization of IT <KS> Interesting and very accurate. I am a big fan of clarity, in terms of concepts, because they have long implications on architecture and business models</KS>
  • Large enterprises will go to mega clouds. Cloud will have bifurcation – large and small
  • Currently there is no major catalyst for cloud computing

In Short

Good conference in the business sense. Excellent keynotes, learned a lot. I felt that the breakout sessions were a little anemic and the breakout presentations we more marketing – YMMV

5 thoughts on “What is cloud computing and do I need to be scared ?

  1. You don’t have to go too far into this (very long) post to find something to comment on. For example:

    # Requires shift to new architectural changes including multi tenancy, security and availability

    So are you saying that security and availability aren’t part of existing data centre designs?


    # Business value propositions – deliver efficiency, increase speed and agility, mitigation of risk, enable alignment & outcome based deployment of resources

    Are these factors not also part of any enterprise design?

    If the answer to both is yes, then there is no shift as you imply.

    Let’s face it, the idea of cloud computing is uncomfortable for IT tinware providers and software vendors. They stand to lose a great deal of revenue and license fees by no longer being able to hold their customers over a barrel and locking them into expensive and restrictive in-house architectures that don’t respond to business demands.

    Whatever any of us say, the ludicrous and ultimately self defeating re-invention of the wheel we have now where companies are forced to create platforms and environments to simply process information cannot continue.

    The cloud is coming. Make no mistake about that.

  2. Disclaimer: I work for HP, though these opinions are private and do not represent HP’s point of view.

    Tom Hogan definitely has an interesting perspective, though seems like something that HP has been pushing for a while.

    I like to think of things along three dimensions for managing IT environments:
    People (can be shared or dedicated),
    Technology (can be standard or custom), and
    Processes (can be manual or automated)

    Now, you may say there is a continuum along all these dimensions, and you are right. But, go along with me for the moment..

    Cloud computing implies: shared resources, standard technology, and automated processes.

    Most IT shops at an aggregate (there are clear exceptions, but I am trying to make a point here) are closer to the opposite end of the spectrum, i.e.,
    People are likely to be dedicated
    Technology is likely to be custom
    Processes are likely to be manual

    In theory, cloud is an enabler, for both in-house IT Shops and outsourced service providers to dramatically reduce the operating cost and move to the opposite end of the spectrum.

    In theory, there is nothing ‘fundamentally new’ in cloud computing if you abstract it enough. However, the actual realization can cause dramatic difference on how IT solutions are created, delivered, managed, etc.

    In theory, one analogy that I find interesting is the airline one, especially Southwest. It is not an accident that Southwest is more profitable than any other airline, in no small part because of standardizing on 737s. However, the flip side of it is that they dont do long-hauls, esp international long-hauls.

    So, the point I want to make is that cloud computing may work well for some parts of the IT, and not so well for others..

    Here are some things to think about though..

    1. If you are a company that already has a lot of investment in IT, you have many applications supporting many business processes, and you are looking to get the same ‘functionality’ but at a lower cost point. That is you have a ‘defensive’ strategy as it relates to IT, or to put it another way, the business and functional requirements dont change (or at least dont change a whole lot), but you want the technical and implementation components to transform to provide you a new cost point, while cloud computing seems to fit that bill very well, the challenge is in transforming the existing IT hair-ball that the customer likely has into the standards-based cloud platform. Of course, there are specific areas in your IT environment where this transformation is easier, e.g., messaging and collaboration, and maybe that is a good foothold for cloud computing to take hold. But, i dont think one should generalize to all of IT before we can at least get a clear picture of the problems we will need to solve.
    (If you have only 737s, you can do only short hauls)

    2. If you are an outsourced service provider who has taken over someone’s ‘mess for less, and you think that you can do the same, you will have the same issues. The issue is transformation. And more importantly, who pays for it. So, unless cloud computing providers provide ‘on-ramps’ for migrating onto the cloud platform, they may severely limit the impact of cloud computing on existing IT solutions.

    3. If you are an IT shop that is willing to invest in new capabilities, either because there are processes that you can ‘automate’, or because you can open up new revenue possibilities through technology, then the cloud platform is a platform definitely worth considering from the beginning. The problem in this case is only integrating this specific ‘cloud app’ with other things in your enterprise, and that is a relatively easier problem to solve. So, cloud computing folks should focus on creating the next generation of these apps. Anticipate the next gen of IT spending and enable the alternative economics on that.

    4. If you are an outsourced service provider, one way you can ‘innovate’ is by enabling these new apps on the new platform, else all you will be doing is ‘your mess for less’, squeezing squeezed lemons, trying to make lemonade, etc.. 🙂
    Most clients expect outsourced service providers to expose them to the new platforms, and shield the client from technical disruptions. And it is indeed the responsibility of the service provider to do that.

    Happy clouding…


  3. Pingback: Cloud Feed » Blog Archive » Daily Cloud Feed - Oct 22, 2008

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