If you were to believe all the hype out there about cloud computing, everything can be done in the cloud, so my heading is kind of ridiculous but so are some of the claims we have seen lately. We have spent a considerable amount of time researching how our customers can benefit from a cloud infrastructure and services so I thought I would first clarify cloud computing and dispel some of the misconceptions and then I can build on this in future posts. One of the unfortunate realities is that most of the noise is marketing hype and most companies at this point are not thinking about the cloud in day to day terms.So what is cloud computing and what are the benefits?

Note this is the Wikipedia definition.

“Cloud computing is the provision of dynamically scalable and often virtualised resources as a service over the Internet on a utility basis.[1][2] Users need not have knowledge of, expertise in, or control over the technology infrastructure in the “cloud” that supports them.[3] Cloud computing services often provide common business applications online that are accessed from a web browser, while the software and data are stored on the servers.”

Some of this is made clearer by SaaS offerings such as Salesforce.com, Netsuite etc. but this is only part of the story, these are cloud based applications but the other components of a cloud based infrastructure are as important. You’ll hear the term Platform as a service PaaS more as companies look at their own internal applications and look for ways to move them to the “cloud”. The figure below shows my interpretation of the cloud stack. At the highest level are the currently available SaaS applications below that is the platform PaaS represented by Google, Amazon and soon Microsoft and finally at the bottom of the stack is the hardware, in most cases virtualized. As far as the hardware is concerned in a public cloud scenario the customer would not be concerned with it as the cloud provider manages this layer.

Cloud Stack

The Benefits

OK, now that I described the cloud stack let’s talk about some of the benefits.

Dynamic infrastructure – a cloud based infrastructure supports the ability to dial-up or dial down services as needed to support the business requriements. This is a cost effective way for seasonal businesses to support their peak business with increased resources  and then dial back their use when the peak season is over, of course only paying for the actual use. This differs from today’s environment where a company would need to “size” their environment to support the peak, this also requires in the case of standard ERP systems the need to purchase licenses to support the peak usage.

Cost Savings – In a cloud based environment the business pays for it’s usage, no hardware expenditures, no licenses (there maybe start up fees). A good example where this benefit would be beneficial would be a business dealing with a downturn such as our current “economic reset” would be able to see cost savings as licenses are dialed down and usage is dialed down bringing costs in line with sales etc. In today’s environment companies are struggling to cut costs but most companies are dealing with fixed software maintenance fees not to mention the recent increases in maintenance fees proposed by some vendors.

Sustainability – Over the years it was customary to add a server for each applications, those of us that have managed enterprise environments know that when implementing a critical application we would avoid combining applications on the same hardware to avoid potential conflicts and provide some flexibility, this has contributed to the current state of server sprawl. There was a comment I heard recently that the data centers in the US alone draw as much power as the country of the Netherlands and it is growing at an exponential rate.  As companies review their carbon footprint and look for ways to reduce their impact on our environment reduction in server sprawl is a no-brainer especially since this is one of the few initiatives that actually brings improved business agility while reducing costs, not many initiatives can deliver similar results.

So this is what all the excitement is about, that is why products like VMware and Hyper-V are getting so much press these days. But there is some confusion so let’s talk about that.

Dispelling some of the misconceptions

Hosting is not true cloud computing –We are seeing hosting being relabeled as cloud based computing. Though hosting can be a cost effective alternative to an internally managed infrastructure and some may argue that this is running your application in the “cloud”  this does differ from a true cloud based solution and has some limitations :

  • Administrative effort – Since we are just moving an application from an in-house server to a hosted server, administration effort is the same just is moved to another provider.
  • Dialing up/down services – Since these are not true cloud computing applications there is very little capability to ramp up or down to handle a workload. Normal hosting agreements have a fixed number of servers identified that are configured specifically to your environment. Sizing exercises may still be required and may affect the performance of your solution. In addition unless your software provider is also your hosting provider your license agreements is with a different vendor moving the application to a hosting provider does not affect the number of licenses you pay for a
  • Cost benefit – Normally decisions to host the environment are made as part of the initial implementation once the hardware is acquired the return on investment in moving to a hosting provider maybe limited or require a long term initiative to reduce costs.

Remote access is not cloud computing – another popular use of the term in the cloud is remote access, the reality is that remote consulting, support whatever you want to call it has been in existence for years and unless you count the fact that the application the remote support provider may use to access your environment is a cloud based service ala Webex or Go-to meeting there is nothing new here except maybe a nice marketing twist to get you interested. Nothing wrong in using this to get your attention but we need to separate out what true cloud computing is so that we can truly achieve the benefits of utilizing the cloud.

There is one more platform that is an option and for lack of a better term we can call these VM’s on demand, these have the characteristics of a cloud platform but are similar and have some of the limitations of a hosting provider since what is being provided is a VM in the cloud that can be provisioned as desired by the customer. This could be classified as a good interim step to true cloud computing.

How do we get there from here ?

Moving to a cloud based platform is not something that will happen overnight. It requires careful planning in order to truly achieve the benefits whilst not disrupting business operations. Moving to a cloud based infrastructure either private or public will also entail expenditures but we encourage our customers to develop a road map as soon as possible so they can start to test the waters. We use our cloud based maturity index to understand where a customer stands and whether they are realizing the benefits of a cloud environment. If I get a chance I’ll detail through our maturity index in a future post but it probably is self explanatory.

Well I know this is fodder for discussion as there are more opinions then answers as the cloud based computing industry evolves but I just wanted to add some clarity for our customers so we can focus our discussion  on how we can get there and not get distracted.

Later…..

Links to some additional reading you might find of interest in this discussion.

Dispelling the cloud hype
Pulte CIO Has Cloud Horror Story
ADP’s Formula Determines Cloud Apps
Where Does Hype End and Reality Begin with Cloud Computing

As always though some of the figures are from our company research the opinions are my own.

Phillip Avelar is a Senior SCM consultant at Advanced Solutions, based in Chicago. He shares his passion for solving customers problems in his blog posts, industry articles and talks. When he’s not writing, he’s working with customers to develop and apply innovative solutions to common problems in the supply chain.

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