Private Cloud vs.Public Cloud Adoption Curves
Value Migration from old to new models is happening….Tech research firms (Gartner, IDC, Forrester etc.) are forecasting that the market for cloud services will expand at a dizzying pace over the next several years.
The driver is the need for responsiveness and innovation. Corporations struggle with the fact that it takes months to deploy applications and infrastructure, and too long for IT to respond to change requests. At the same time the rapid consumerization of IT trend is put even more pressure on IT groups.
So, whether you believe in the cloud trend or not, it’s penetrating faster than you think. Many lines of business are procuring cloud services on their own. The issue for companies and IT leadership: do you want to fight the trend or embrace the trend.
Right now most CIOs are not treating the cloud as a priority. Given the backlog of upgrades, Cloud is not a primary focus of IT departments, but another nice-to-have tool in IT’s bag of tricks. I anticipate that over the next 2-3 years, cloud computing will increasingly become a greater part of the portfolio of compute models that IT departments manage, sitting alongside traditional stand-alone computing and virtualization.
State of Cloud Computing Today
If you were to graph the distribution of compute models being used today by IT departments in large enterprises, it would look something like the figure 1 below. Today, traditional computing and virtualization (e.g., VMware) are where most of the activity lies, with a little bit of flirting with the public cloud in the case of software-as-a-service (SaaS) applications for areas like human resources (Workday), customer relationship management (Salesforce.com) and email (gmail).
Additionally, to IT’s dismay, many lines of business are procuring cloud services on their own. That’s how Salesforce.com penetrated the organization thru the Sales organization not the IT organization.
Public cloud usage like Amazon Web Services (AWS) is growing exponentially in the form of unsanctioned use of third-party cloud sites by various business functions and even the development groups.
I think Amazon Web Services is the mega-trend out there that is setting the innovation tone. Amazon has been a cloud pioneer, supplying low-cost cloud services to companies and applications developers. The pace at which AWS is innovating is quite stunning. A factoid: AWS is adding more servers every day than the entire Amazon.com infrastructure in 2000.
On the private cloud side its existence in large organizations is mostly just beginning with VmWare’s VCloud. This is simply an extension of the virtualization trend (server virtualization -> data center virtualization -> multi-data center virtualization).
The standard argument for private cloud investment by CIO’s is the need for “business-grade performance” that can only be offered by their “virtual private cloud”. Unfortunately this argument is bogus as very few corporations can match the innovation and capabilities that are emerging in the public cloud.
Trending the the Next 2 to 3 Years
Over the next three to five years the adoption distribution will flatten out and shift to the right and will resemble the Figure 2. Private cloud will represent the largest compute model utilized, but it will be flanked by virtualization and public cloud.
Given the legacy footprint, there will still be a decent amount of resources that remain in maintaining the traditional compute bucket representing applications that are not worth the effort of rewriting or converting to a cloud platform. This includes Systems of Record like SAP ERP, Oracle E-Business, Oracle Financials and Peoplesoft HRMS.
Most IT groups are still in reactive tactical mode. They are focused on cost-cutting — i.e., data center consolidation and virtualization simply as a form of efficient consolidation.
There’s nothing wrong with saving money, but data center and application virtualization should be driving flexible sourcing and cloud computing. The mature firms tend to focus more on enabling business change with the cloud — e.g., flexibility, agility and speed move to the top of the list.
Most firms will discover that getting the private cloud up and running is only half the battle. Once it’s deployed, you’ve got to also ensure that your cloud services perform as advertised and do not suffer from poor response times or even resource outages. The cost of maintaining high service level agreements (SLAs) comparable to public clouds. Not maintaining the SLAs will be costly due to lost time, lower user satisfaction, and even lost business.
I anticipate that private clouds will eventually blend with public cloud services to create a hybrid cloud— in some cases, the public cloud will replace the private cloud. In other cases, they will remain in a hybrid model, with some resources private and some public.
Executing the Private Cloud: Evolutionary vs. Revolutionary
One of the things to note is that the lines between virtualization and private cloud will start to blur (there will also be a blurring between private and public clouds, as hybrid clouds become more of a reality in the future, but that’s another posting).
There are two ways to go about setting up private clouds, or really any type of cloud: evolutionary and revolutionary.
The evolutionary approach starts with virtualization and is appropriate where large investments in that area have been made and when you are talking about traditional enterprise applications. With virtualization serving as the foundation (see the Figure 2 above), additional capabilities are then layered on, such as usage-based billing/chargeback, workload life cycle management, dynamic resource pooling and a self-service portal for users.
One of the key aspects of the evolutionary approach is that at every step along the way, every capability added brings greater efficiencies and agility. You do not need to wait until you meet the full definition of a private cloud to derive value and you can stop anywhere along the way.
Public Cloud – A Powerful Threat
The other way to get to the cloud is the revolutionary approach. This is appropriate for new greenfield opportunities within organizations, and is targeted at nontraditional, Web 2.0 applications that are “cloud-native” — applications written for deployment in the cloud. These revolutionary solutions will often be delivered as an integrated, turnkey unit (see Figure 3 and 4).
Companies are looking to move to the cloud to solve critical business issues. As everything becomes faster and more real-time, corporations struggle with the fact that it takes months to deploy applications and infrastructure, and too long for IT to respond to change requests. Poor service quality is beginning to be a major problem as demand for new projects outstrips capacity.
A planned, formal shift from traditional methods to a cloud model could solve both problems, but many organizations are reluctant to make such a move because of legacy investments and concerns about security, performance, availability, and total cost of ownership. But this is nothing new. Every generational change had to deal with same issues.
Value migration will happen… different systems will move at different pace to the cloud. Systems of Engagement (CRM, Sales, HR, IT helpdesk etc.) are moving the cloud rapidly. Systems of Record will move slowly to the cloud. Systems of Engagement will move rapidly to the cloud. Fighting this trend is futile. The CIOs who fight this trend are going to get fired as business gets increasingly frustrated with the slow IT progress.
Over the next three to five years cloud computing will become a greater part of IT’s compute portfolio. In the longer term however, the elements and characteristics of cloud computing will be absorbed into IT and it will simply represent the way computing is handled.
Notes and References
- Zynga, the social gaming company had an interesting comment about Amazon Web Services… ” Our games run on a complex distributed system, known as cloud computing. We own, operate and maintain elements of this system, but a significant majority of our game traffic is hosted by Amazon Web Services, or AWS, which service uses multiple locations. ” see Zynga S-1
Created in 2006, Amazon Web Services was born with the purpose of renting the idle capacity of Amazon.com’s global servers. Netflix and Shell are among its customers. The AWS division should end the year with revenue of $1.5bln, still a small fraction of the US$40+ billion in sales of Amazon.com.
- 10 Ways Cloud Computing Will Disrupt our Businesses in 2012 (forbes.com)
- Cloud Management Brokers (cloudblueprint.wordpress.com)
- Moving to the cloud in 2012? Look out for these pitfalls (infoworld.com)