I Love the Cloud: My Never-Ending Journey with the AWS
[GUEST POST] I started exploring the cloud computing world around 5 years ago, and I must admit that my initial understanding of the cloud was a disaster. At first, it was difficult to find a comprehensive definition, but I finally settled on one from the National Institute of Standards &...Read more

imageOver the last year I had endless conversations with companies that strive to adopt the cloud – specifically the Amazon cloud. Of those I met, I can say that ClickSoftware is one of the leading traditional ISVs that managed to adopt the cloud. The Amazon cloud is with no doubt the most advanced cloud computing facility, leading the market. In my previous job I was involved in the ClickSoftware cloud initiative, from decision making with regards to Amazon cloud all the way to taking the initial steps to educate and support the company’s different parties in providing an On-Demand SaaS offering.

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As befitting any great online vendor, Amazon cloud product guys listen carefully to their market targets and ensure fast implementation and delivery to satisfy their needs. It is clear that Amazon cloud is eager to conquer the enterprise market, as I already mentioned in my past post, “Amazon AWS is the Cloud (for now anyway)”.

Cloud Reserved Capcity Card

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The IaaS Management Market: Evolution, Vendors and More
A lot has already been said about the false cloud use where the IaaS platform utilized as an hosting extension of the IT organization’s data center and not taking advantage of the elasticity benefits to generate a cost effective and scalable IT operation. Using the public IaaS whether it is...Read more

It always good to start with Wikipedia’s definition as it helps to initiate a structured discussion, here is Wiki’s definition for Lock-In:

“In economics, vendor lock-in, also known as proprietary lock-in or customer lock-in, makes a customer dependent on a vendor for products and services, unable to use another vendor without substantial switching costs. Lock-in costs which create barriers to market entry may result in antitrust action against a monopoly.” Read more on Wikipedia

Does the cloud present a major lock-in ? Does the move create substantial switching costs?

“Yes !” is the common answer I hear for those questions. In this article I will debate it basing my findings on real cloud adoption cases.

Generally in terms of cloud’s lock-in, we face the same issues as in the traditional world where the move includes re-implementation of the IT service. It involves issues such as data portability, users guidance and training, integration, etc.

“I think we’ve officially lost the war on defining the core attributes of cloud computing so that businesses and IT can make proper use of it. It’s now in the hands of marketing organizations and PR firms who, I’m sure, will take the concept on a rather wild ride over the next few years.”

The above statement I bring from David Linthicum’s article “It’s official: ‘Cloud computing’ is now meaningless”. Due to my full consent with Linthicum on that matter, I will be accurate and try to make a clear assessment of the cloud lock-in issue by relating each of the three cloud layers (i.e. IPS aaS) separately.

In this part, I will relate to the most lower layer, the IaaS lock-in.

It is a fact that IT organizations take advantage of the IaaS platforms by moving part or even all of their physical resources to the public clouds. Furthermore, ISVs move at least their test and development environments and making serious plans to move (or already moved) part of their production environment to the public clouds.

Read more about shifting legacy systems to the cloud by Ben Kepes

Discussing with a public IaaS consumers, it always come to the point where I ask “do you feel locked on your cloud vendor ?” most, if not all of the companies’ leaders claim that the public clouds’ values (on-demand, elastic, agility,ect) overcomes the lock-in impact so they are willing to compromise. As a cloud enthusiastic it is great for me to see the industry leaders’ positive approach towards moving their businesses to the cloud (again too general – any of them refer to a different layer). I do not think that the lock-in is so serious.

For sometime this claim sounded pretty reasonable to me though on second thought I find that the discussion should start from a comparison with the traditional data center “locks”. Based on this comparison I can already state that one of the major public cloud advantages is the weak lock-in, simply because you don’t buy hardware. Furthermore, companies that still use the public cloud as an hosting extension to their internal data center, don’t acquire new (long term or temporary) assets that they can’t get rid of without having a major loss. In regards to its lock-in the public cloud is great !

Another important explanation related specifically to Amazon AWS products which support SaaS scalability and operations. Smart SaaS architect will plan the cloud integration layer, so that the application logic and workflow will be strongly tied with the underlying IaaS capabilities such as on-demand resources auto provisioning.

Read more about the relationship between web developers and the cloud

For example, the web can use the cloud integration layer to get on-demand EC2 resources for a specific point when a complex calculation occurs. In a superficial glance, the fact that the cloud API used as a part of the application run-time script holds an enormous lock-in risks. I disagree and let me explain why.

As a market leader, Amazon AWS will be (already is) followed by other IaaS vendors. Those will solve the same scalability and operational issues by the same sense and logic of AWS. Basically this means an evolution of IaaS platform standards. Smart cloud integration layer will enable “plug & play” a different IaaS platform or even orchestrate several in parallel. To strengthen my point I bring as an example several cloud start-ups (solving IaaS issues such as governance, usage and security) that developed their product to solve issues for Amazon AWS consumers and seriously target support of other IaaS vendors’ platforms such as Rackspace cloud and vCloud. In regards to lock-in the public cloud is great !

The IaaS vendors in the market recognize the common lock-in drawback of moving to the cloud. Vendors such as Rackspace brings the OpenStack which is a cloud software platform, so cloud vendors can build IaaS solutions upon it. Rackspace showing off on their blog site –

OpenStack™ is a massively scalable cloud operating system, powering the world’s leading clouds. Backed by more than 50 participating organizations, OpenStack is quickly becoming the industry standard for public and private clouds. Read More

It should be noted that applications and data switching between clouds is still complex and in some cases not feasible though believing in the public cloud’s future comes with understanding of its weak lock-in and will lead to visionary and long term strategic plans.

What about the private IaaS ?

Following my on going research on what is the best cloud option (i.e public, private or hybrid), I found that outsourcing the IT environment to a private or an hybrid includes a major lock-in. Implementation of a private or an hybrid cloud includes lots of customization, hence lack of standards. Private and Hybrid clouds have their benefits though lock-in is not one of them. The contract with the vendor is for 3 to 5 years at least (a data center’s typical depreciation period) on a non standard environment leads to an extreme, long term lock-in in terms of the “on-demand world”.

In order to decrease lock-in the IaaS consumer must prove the organization need for a private cloud by planning strategically for long term. Besides the ordinary due diligence to prove the vendor strength, the contract must include termination points and creative ideas that can weaken the lock-in. For example renewal of initial contract under re-assessing of the service standards, costs and terms in comparison with the cloud market, including the public one. The private cloud vendor must prove on-going efficiency improvements and costs reductions accordingly.

In his article Keep the ‘Cloud’ User in Charge”, Mark Bohannon, VP at Red Hat, Warns:

by vendors to lock in their customers to particular cloud architecture and non-portable solutions, and heavy reliance on proprietary APIs. Lock-in drives costs higher and undermines the savings that can be achieved through technical efficiency. If not carefully managed, we risk taking steps backwards, even going toward replicating the 1980s, where users were heavily tied technologically and financially into one IT framework and were stuck there.”

Some of the private cloud offering today have similar characteristics as the traditional data center, to me it seems that the former comes with a stronger lock-in impacts. In case of an IT transition companies who decide to go that way should expect a considerable switching costs and long term recovery of their IT operations hence of their business.

The second part will discuss the cloud lock-in characteristics in regards to the SaaS and the PaaS layers.

As the founder of Cloudonomics.com, Joe Weinman is one of the most known cloud computing evangelists in the world. Weinman researches the economics of the cloud. Among other cloud aspects he examines, he also relates to the cloud financial operational costs together with its buisness benefits. Following I Am OnDemand last posts summarizing and discussing several Cloudonomics researches, we asked Mr. Weinman to meet for a brief discussion. Last week I had the honor to interview him for about an hour and hear his clouds’ perceptions and vision.

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The first part of Weinman’s lecture discussing the basic “go to the cloud” and demonstrating cloud environments’ loads of different corporations’ web applications. In this part we will bring 6 scenarios presented by Weinman, each includes a brief analysis and proof of its cost and benefits.

First lets start with several assumptions and definitions:

> > > 5 Basic assumptions Pay-per-use capacity model:

  1. Paid on use – Paid for when used and not paid for when not used.
  2. No depend on time – The cost for such capacity is fixed. It does not depend on the time or use of the request.
  3. Fixed unit cost – The unit cost for on-demand or dedicated capacity does not depend on the quantity of resources requested (you don’t get discount for renting 100 rooms for the same time).
  4. No other costs – There are no additional relevant costs needed for the analysis.
  5. No delay – All demand served without any delay.

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Joe Weinman is well known in the cloud computing community as the founder of Cloudonomics. Presenting complex simulation tools, Weinman characterizes the sometimes counterintuitive business, financial, and user experience benefits of cloud computing including its on-demand, pay-per-use and other buisness aspects. Last month I had the pleasure of participating in Weinman’s webinar. Weinman discussed several interesting points which I would like to share with you.

Weinman started by contradicting what seem to be the fundamental assumptions regarding the Cloud and its benefits. There was nothing radical about what I heard but it made me think and challenge all the things I took for granted –

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Posted by Nir Peled

Last Friday, I attended  MTBC (Metroplex Technology Business Council) Solutions in the Cloud” conference in Dalla, Texas.The main event at the conference was a prestigious panel composed of three IT leaders: Brian Bonner, CIO of Texas Instruments, Toby Pennycuff, CTO of J.C. Penney Company and the panel moderator, Robert Wiseman, CTO of Sabre. 

The panelists shared their thoughts and expertise with more than 300 professionals and academic leaders regarding cloud’s most fundamental questions. This event gave us a chance to hear directly from the decision makers regarding moving into the cloud, how they feel about this new innovative approach, what worries them and their predictions regarding organizations going into the cloud.

The panel was unanimous in their approval of what we all suspected was the main concern of large organizations (when considering going into the cloud), cloud security assurance.

“Providers must have a proven security approach. For us, the cloud provider would have to prove the security of our data before even offering its services to us. This is vital”  said Pennycuff.

“What is the exit strategy? What happens to the data after the lease term is over? How do we get it back and how do we know that it is still secure?” asked Bonner.

Bonner was also concerned regarding migration into the cloud of large traditional organizations like the one he comes from. These types of organizations have some old systems. In most of the cases those enterprises would have multiple layers of systems which were added over the years as the technology evolved. In Bonner’s opinion, the cloud migration would and should be systematic and gradual. The new cloud components must support and communicate with the old/current systems.

Cloud.com conducted a survey in the second quarter of 2011 to determine cloud computing usage trends among IT professionals who participate in the BitNami, Cloud.com and Zenoss open source software and user communities. The final results, presented in “2011 Cloud Computing Outlook” document, include a lot of information on cloud adoption including motivations, barriers and trends. The following chart present important findings on one of the today’s common “cloud adoption” question –

> > >    At what stage are your plans for cloud computing in 2011?

The panel and the survey, both discuss the Cost as the most common motivation to move to the cloud and the Security as the most common challenge.

> > >   What benefits do you believe cloud computing provides to your organization ?

In the large organizations the cloud would need to come up with significant advantages (in terms of cost efficiency) in order to convince migrating from the known, functioning IT (referred to as the “old” approach) to the “new” cloud IT. What matters to organizations is functionality together with speed and above all is security. Security must be trusted in the “old fashioned” approach.

Learn about cloud security basics:  The Cloud Security Part 1: For Dummies

If there are a large number of users how would you control and maintain security? In addition, how would you secure the resources used in a virtual system?

Those interesting questions were asked by a PhD from the Texas academic world which is responsible for $5 million research project for the US Air Force. In response to those questions, the panel agreed that while no major attacks have occurred, we should still use several layers of security. All security mechanisms (such as several ID & password combinations timeouts, identity verification etc…) should all be implemented in the cloud security solution. Using a trusted virtual OS in addition to closely monitoring the US military’s network could assist in preventing attacks. They also mentioned that the concept of asking for a `contract for damages` from the cloud providers scares them and limits their services.

Cloud security is still caught as one of the leading adoption barriers, but it is interesting to see that it is not the first according to 2011 outlook report.

> > >   Are there any factors inhibiting your adoption of cloud computing?

Check the following results for the question – 

> > >   What is your biggest challenge with regards to managing your cloud computing environment? 

Can we say that there is a mind shift ? Does security factor changes from adoption barrier to become a challenge while the decision to move to the cloud already made? 

Another very interesting and important subject was brought up during the panel discussion – Privacy and Regulation in a global cloud environment. Every country and, in some cases, every state has its own regulations and utilizes different approaches toward privacy and ownership rights for data, patents, processing of information in its registration, etc.  This issue presents the world with regulatory challenges. If the data is in the cloud, and the cloud can be everywhere (sometimes in several international locations simultaneously) how would the providers protect the data while also guaranteeing their clients’ rights? Where the data being kept and where/how is it being used?

100 years ago, everyone had to drill for water. Today, everyone drilling for water makes no sense. Same for IT, if cloud would be possible and the obvious way for IT, we would be able to concentrate on our core business. No doubt, there is a place for cloud in IT for some companies. The hardest part is finding out whom to trust (which is common when doing any sort of outsourcing).

The final words were shared by all the panel speakers. They agreed on the fact that the world is going towards cloud for platform, infrastructure and services. There are many challenges to confront and issues to deal with primarily regarding security. Today companies and organizations are looking into moving to the cloud and building and/or modifying their current business modules of the last 20+ years.

“Before going into cloud remember to educate yourself, understand the offer, pay attention to security and have a good “exit” strategy.” Pennycuff’s words of wisdom.

“Take it slow, go step by step and in small groups.“ Bonner added

An interesting comment from a participant received unanimous approval from the audience. It was mentioned that cloud provides a good business opportunity for small and new companies.  Cloud services benefit from the fact that their own architecture is not grounded in the old methods of operating, and has not yet suffered from “spaghetti” code infrustructures. 

Check out the following diagram presenting the survey report in a real creative way:

The author of this article is Nir Peled, a reporter and a contributor `I Am OnDemand` .

Nir Peled

What is a typical churn rate for SaaS? How much should I pay my SaaS sales reps? What is a good time frame to recover acquisition costs?

Chaotic Flow is one of the best blogs written by Joel York where you can get very good knwoledge about the SaaS business and industry benchmark.