Cloud Computing Update

The Peer Group

06/11/2009

Quick Video to get started…

http://www.youtube.com/watch?v=XdBd14rjcs0

Cloud Computing Update

What is Cloud Computing? Why now more than ever? Names to Watch Pros and Cons Risk Mitigation

What is cloud computing?

Cloud computing is a style of computing in which dynamically scalable and often virtualized resources are provided as a service over the Internet.[1][2]

The concept incorporates infrastructure as a service (IaaS), platform as a service (PaaS) and software as a service (SaaS) . Cloud computing services usually provide common business applications online that are accessed from a web browser, while the software and data are stored on the servers.

The term cloud is used as a metaphor for the Internet, based on how the Internet is depicted in computer network diagrams, and is an abstraction for the complex infrastructure it conceals.[6]

Quick facts…

IDC forecasts… The Cloud Computing market to grow from

16B in 2008 to 42B in 2012. Cloud Computing will consume 25% of the

total IT budget by 2012

Why Now? Technically, because we can…

Much better bandwidth Faster & cheaper hardware Multi-tenancy has provided scalability to vendors Web Services protocols (soap, soa) Virtualization

Flexibility Ease of adoption/termination Customization

Economy Financially compelling to the bottom line Pay for what you use (utility)

Why now more than ever?

Economics

Cloud computing users can avoid capital expenditure (CapEx) on hardware, software and services, rather paying a provider only for what they use. Consumption is billed on a utility (e.g. resources consumed, like electricity) or subscription (e.g. time based, like a newspaper) basis with little or no upfront cost. Other benefits of this time sharing style approach are low barriers to entry, shared infrastructure and costs, low management overhead and immediate access to a broad range of applications. Users can generally terminate the contract at any time (thereby avoiding return on investment risk and uncertainty) and the services are often covered by service level agreements with financial penalties.[13][14]

According to Nicholas Carr the strategic importance of information technology is diminishing as it becomes standardised and cheaper. He argues that the cloud computing paradigm shift is similar to the displacement of electricity generators by electricity grids early in the 20th century.[15]

Although companies may be able to save on upfront capital expenditures, they may not be saving much and may actually pay more on operating expenses. In situations where the capital expense would be relatively small, or where the organization has more flexibility in their capital budget than their operating budget, the cloud model may not make great fiscal sense. Other factors impacting the scale of any potential cost savings include the efficiency of a company’s data center as compared to the cloud vendor’s, the company’s existing operating costs, the level of adoption of cloud computing, and the type of functionality being hosted in the cloud. [16] [17]

Names to Watch

Amazon Founded: 1994 by Jeffry Bezos in Seattle Cloud offering: Amazon Web Services, a half-dozen services including the Elastic

Compute Cloud, for computing capacity, and the Simple Storage Service, for on-demand storage capacity.

Amazon is one of the true innovators in Web-based computing, offering pay-as-you-go access to virtual servers and data storage space. In addition to these core offerings, Amazon offers the SimpleDB (a database Web service); the CloudFront (a Web service for content delivery); and the Simple Queue Service (a hosted service for storing messages as they travel between computers). By launching the Elastic Compute Cloud in 2006, well before most of its competitors, Amazon has become almost synonymous with "cloud computing." But negative press is starting to pop up regarding Amazon's reliability and service-level agreements.

How Amazon got into cloud computing: One of the largest Web properties in existence, Amazon always excelled at delivering computing capacity at a large scale to its own employees and to consumers via the Amazon shopping site. Offering raw computing capacity over the Internet was perhaps a natural step for Amazon, which had only to leverage its own expertise and massive data center infrastructure in order to become one of the earliest major cloud providers.

Who uses the service: Tens of thousands of small businesses, enterprises and individual users. Prominent customers include the New York Times, Washington Post and Eli Lilly.

Salesforce.com

Founded in 1999 in San Francisco by Mark Benioff Cloud offering: Salesforce.com's flagship is a set of CRM tools including

salesforce automation, analytics, marketing and social networking tools. A second major offering is Force.com, a platform for building Web applications and hosting them on the Salesforce infrastructure.

Salesforce.com helped pioneer the software-as-a-service market, which has now been lumped into the umbrella term "cloud computing." With Force.com, Salesforce is moving beyond SaaS into the platform-as-a-service market, which could revolutionize the way businesses build and deliver applications to end users and customers.

Who uses the service: 55,400 customers in many industries including financial services, communications and media, energy, healthcare and retail.

Google

Founded in 1998, in Mountain View, Calif. Cloud offering: Google Apps, a set of online office productivity tools

including e-mail, calendaring, word processing and a simple Web site creation tool; Postini, a set of e-mail and Web security services; and the Google App Engine, a platform-as-a-service offering that lets developers build applications and host them on Google's infrastructure.

No one knows the Internet quite like Google. While the company's main focus is crawling the Web and delivering advertising-supported search results, Google's foray into software-as-a-service applications for businesses is hastening the industry's move from packaged software to Web-hosted services, and App Engine provides a credible alternative in the platform-as-a-service market.

Pros and Cons

Beth Schultz 5/ 18, 2009 — Network World —

ON THE UPSIDE

1. Fast start-up: “a no-brainer for any start-up because it allows you to test your business plan very quickly for little money. Every start-up, or even a division within a company that has an idea for something new, should be figuring out how to use cloud computing in its plan," says Brad Jefferson, CEO of Animoto, in New York"Cloud computing has changed the game for entrepreneurs; on launch day, you have the confidence that you can scale to the world.“

2. Scalability: Consider variability of the resource utilization IT structure, says Tom Nolle, CEO of CIMI, a high-tech consulting firm. Peaks and valleys are hard to manage " you're forced to oversupply IT resources to address the peaks, when it might be less costly for you to outsource at that time" he says.

3. Business Agility: “ you don't need a long-term commitment and get quick access” when you need to horsepower. "Cloud computing changes the whole pattern of agility at a much lower cost." Michael Crandell, CEO of RightScale, a cloud management and support company

4. Faster product development; Since moving some applications and data to Amazon's cloud last April, Eli Lilly & Co. has seen provisioning time drop from weeks to minutes, says Dave Powers, associate information consultant at the Indianapolis company. "If I can give scientists eight weeks back on their research, that's a huge value there," he adds. “ We're starting to reduce cycle times in research, which is critical for us. That's a trickle-down effect of technology that we can make available “

5. No capital expenditures; Are you out of space in your data center? Have your applications outgrown the infrastructure? Cloud computing services allow a company to shift from capital to operational expenses even in do-or-die cases, says Bernard Golden, CEO of HyperStratus, a consulting firm specializing in advanced IT technologies.

ON THE DOWNSIDE

1. Bandwidth could bust your budget; Such was the case at Sony Pictures Image Works, which considered then ruled out an external cloud service to address storage scalability challenges, says Nick Bali, senior systems engineer at the Culver City, Calif., company. Every day, Sony animators access and generate between 4 and 12 terabytes of data. "The network bandwidth we'd need to put that into someone's cloud and to read it back is tremendous, and the cost would be so large that we might as well buy the storage ourselves rather than paying someone else for it," he says. Now Sony is evaluating a private storage cloud, using ParaScale's cloud storage software

2. App performance could suffer; A private cloud might, but a public cloud definitely wouldn't lead to improved application performance -- not when taking network latency into account, says Tony Bishop, CEO of Adaptivity, a consulting firm specializing in next-generation IT infrastructure. 

3. Data might not be cloud-worthy; "On Day 1, we probably had eight to 10 applications that we would have loved to take into the cloud," says Eli Lilly’s Powers. "But, knowing the type of data we had and the classification [of who could see it], we decided going through internal governance and rigor around taking care of that data would be appropriate." And, definitely don't put an application that provides competitive advantage or contains customer-sensitive information in the public cloud, Bishop adds.

4. Too big to scale: "The bigger you are, the bigger your IT resource pool. And the

bigger your IT resource pool, the less likely it is that you'll see any enormous financial advantage in outsourcing to the cloud," CIMI's Nolle says. "Cloud computing promotes better resource utilization, … but the gains are greatest when moving from relatively small consumption of resources upwards. If you're a very large enterprise, you might find you can achieve better economy by doing your own cloud than going to an outsourced one.“

5. Human capital may be lacking: Exploring next-generation IT models requires

an adventuresome spirit and technical astuteness, says HyperStratus' Golden. "If you don't have the human capital that's willing to stretch and learn new things, taking on cloud computing can be very frustrating

Risk Mitigation

Risk Mitigation: Seven issues to be aware of from Gartner Privileged User Access: Inquire about who has specialized access to data and

about the hiring and management of such administrators Regulatory Compliance: Make sure a vendor is willing to undergo external

audits and/or security certifications Data Location: Ask if a provider allows for any control over the location of data Data Segregation: Make sure that encryption is available at all stages and that

these "encryption schemes were designed and tested by experienced professionals"

Recovery: Find out what will happen to data in the case of a disaster; do they offer complete restoration and, if so, how long that would take

Investigative Support: Inquire whether a vendor has the ability to investigate any inappropriate or illegal activity

Long-term Viability: Ask what will happen to data if the company goes out of business; how will data be returned and in what format[34]

Data Availability: Ensure that the vendor can move your data onto a different environment should the existing environment become compromised or unavailable