Perspectives on Cloud Computing

Thirumal: When it comes to choosing a cloud computing provider, it’s important to be very selective and precise over promised service levels — and to match the service level agreement with the workload. The outage that Amazon cloud users experienced this year is an example of what can happen.  The Amazon offering features a low cost of entry with an appropriate service level promise for that price point.  There are workloads that are right for that environment, but the ‘run your business’ production workloads are not the ones to place in this environment. 

That’s why IBM has announced two flavors of public cloud offerings — SmartCloud Enterprise and SmartCloud Enterprise +. These offerings will give customers the flexibility to match their workloads to the cloud environment that offers the level of service they require. As with everything in life, you get what you pay for and there is a tradeoff between paying a little more to get far better resiliency and reliability. Before committing to run production workloads on the cloud, customers need to be convinced that they won’t suffer business outages. The SmartCloud Enterprise + service, which will be available later this year, is designed to deliver the level of service that production workloads demand. While SmartCloud Enterprise will satisfy workloads like development and test, for example, that require lower SLAs.

Our extensive experience in designing and implementing private clouds has helped shape our SmartCloud Enterprise + offering.  In a prior post on this blog, I referenced our work implementing SAP in a private Cloud.  This was a significant accomplishment given the expectation that sophisticated enterprise applications, like SAP, were too complex to be run in a cloud model. The SAP experience also demonstrated an ability to deliver the highest level of automation to speed not only the deployment of SAP environments, but also how these applications can be refreshed with the latest changes or updates quickly. As a result, we have demonstrated to our customers how we can drive a high level of agility and automation into managing a complex SAP environment on a private cloud.

The SAP experience is one example of the cloud investments IBM has been making to deliver the highest quality cloud services to our customers. With the announcement of SmartCloud Enterprise +, we’re expanding these production capable clouds into a public cloud offering — one that is attracting interest from the marketplace for the benefits that cloud can provide combined with the service level customers require for production workloads.

Mark: As Chris points out below, one of the findings of the IBM Global CIO Study is the growing interest in cloud computing, which is definitely showing up more significantly on the radar screens of IT executives. This suggests that the trend toward cloud computing is real and not just hype. As we move toward cloud adoption to deliver business and IT services, we need to consider carefully the implications both for business models and how IT is managed.  A decision to adopt cloud to increase flexibility, speed of deployment or to better manage costs also forces some basic decisions and fundamental changes into the IT management system.  This is particularly true when moving from a private cloud environment to services provided by an external cloud supplier.

In thinking about the implications of this momentum toward cloud, I’m reminded of the basic notion that information technology — in spite of new approaches and breakthrough technology — is still just a tool. It’s a very sophisticated, complex, incredibly powerful tool, and — like any tool — if you use it properly, you get value from it. However, if you use it poorly, then you won’t. That’s why a move to cloud computing also requires thoughtful and planned adjustments to the IT management system.  It also requires a grounding in the reasons for considering cloud computing, which are supported in another key finding of the study — namely, the varying requirements that organizations set for IT. 

In analyzing the data from over three thousand interviews around the world, the Study team determined that CIOs and their IT organizations fit into one of four different archetypes or profiles based on what value an IT organization is tasked to provide to the enterprise. The Study refers to these four models as mandates and has given each a name.  There’s an Expand mandate, which requires a focus on refining business processes and improving internal collaboration. The Leverage mandate has an emphasis on streamlining operations and increasing organizational efficiency. The third mandate, Transform, requires IT to help change the industry value chain to improve relationships, and the fourth, Pioneer, directs IT to lead radical product and industry model innovation and to help drive expansion into new markets to grow revenue.

Even though each of the four mandates places different requirements on the CIO, the fact is that cloud can be applied to deliver greater value within each of the mandates. However, the motivation behind seeking out cloud solutions will vary depending on the mandate.  For instance, a CIO with a Leverage mandate will primarily be looking to streamline operations,  increase organizational efficiency, and decrease costs. On the other hand, a Transform mandate CIO might find cloud models attractive because of the opportunity to improve interaction, simplify and extend business processes and expand collaboration outside the enterprise to their suppliers and customers. 

An understanding of these mandates can help CIOs select the right approaches and build the appropriate business cases when considering cloud computing.   The Global CIO Study provides in depth information and recommendations around each of the mandates.  And, a Self-Assessment tool on the Study website can help you determine which mandate is primary for your enterprise.

Mark: As Chris points out below, one of the findings of the IBM Global CIO Study is the growing interest in cloud computing, which is definitely showing up more significantly on the radar screens of IT executives. This suggests that the trend toward cloud computing is real and not just hype. As we move toward cloud adoption to deliver business and IT services, we need to consider carefully the implications both for business models and how IT is managed.  A decision to adopt cloud to increase flexibility, speed of deployment or to better manage costs also forces some basic decisions and fundamental changes into the IT management system.  This is particularly true when moving from a private cloud environment to services provided by an external cloud supplier.

In thinking about the implications of this momentum toward cloud, I’m reminded of the basic notion that information technology — in spite of new approaches and breakthrough technology — is still just a tool. It’s a very sophisticated, complex, incredibly powerful tool, and — like any tool — if you use it properly, you get value from it. However, if you use it poorly, then you won’t. That’s why a move to cloud computing also requires thoughtful and planned adjustments to the IT management system.  It also requires a grounding in the reasons for considering cloud computing, which are supported in another key finding of the study — namely, the varying requirements that organizations set for IT. 

In analyzing the data from over three thousand interviews around the world, the Study team determined that CIOs and their IT organizations fit into one of four different archetypes or profiles based on what value an IT organization is tasked to provide to the enterprise. The Study refers to these four models as mandates and has given each a name.  There’s an Expand mandate, which requires a focus on refining business processes and improving internal collaboration. The Leverage mandate has an emphasis on streamlining operations and increasing organizational efficiency. The third mandate, Transform, requires IT to help change the industry value chain to improve relationships, and the fourth, Pioneer, directs IT to lead radical product and industry model innovation and to help drive expansion into new markets to grow revenue.

Even though each of the four mandates places different requirements on the CIO, the fact is that cloud can be applied to deliver greater value within each of the mandates. However, the motivation behind seeking out cloud solutions will vary depending on the mandate.  For instance, a CIO with a Leverage mandate will primarily be looking to streamline operations,  increase organizational efficiency, and decrease costs. On the other hand, a Transform mandate CIO might find cloud models attractive because of the opportunity to improve interaction, simplify and extend business processes and expand collaboration outside the enterprise to their suppliers and customers. 

An understanding of these mandates can help CIOs select the right approaches and build the appropriate business cases when considering cloud computing.   The Global CIO Study provides in depth information and recommendations around each of the mandates.  And, a Self-Assessment tool on the Study website can help you determine which mandate is primary for your enterprise.

Chris: IBM has just released the Global CIO Study — an analysis of face-to-face interviews with over three thousand CIOs in 71 countries across the world.  There are a number of interesting findings in the full report, which you can download on the CIO Study website.  However, one specific finding that interests me is the number of CIOs who are planning to focus on cloud computing as a key approach to increasing the competitiveness of their organizations in the coming years.  Six out of ten CIOs indicated cloud models are in their plans over the next three to five years. This represents a sharp jump from the prior CIO Study in 2009 when only around a third expressed interest in cloud computing.   I think this is clear recognition that cloud is moving into the mainstream and will be — for many — the way computing services are delivered in the very near future.

At the leading edge of this trend are some clients who can see the day when they move all their content (applications and data) to the cloud and will no longer need to maintain their own data centers. They recognize that the technology will need to continue to advance before they can make such a move, however, they already foresee the business benefits of doing so. Data centers require capital investment — both to build the facility and acquire hardware — so there is a financial advantage to such a move.  In addition, cloud models can also increase flexibility and their ability to respond to changing business demands. Cloud offers a more agile way of handling new workload growth, and it places the onus of capacity planning on the cloud provider, who will invest in specialized tools and skills for this task.  

As production workloads move to cloud computing, providers will necessarily have to provide higher service levels and enhanced 24 by 7 support. Providers will also have to become expert at security and governance.  Interestingly enough, I think a cloud environment will prove to be be more secure than web-based workloads are today, primarily because cloud will require that each new workload be designed with the governance and the security that it requires.

Now, this move toward cloud providers and away from in-house data centers isn’t going to occur right away, but given the growing interest in cloud that CIOs expressed in our study, it’s clear the momentum for public and private clouds will continue to grow.  In the near term, we continue to expect greater demand for private cloud implementations. The experiences clients have with the technology — and the advances that providers will make in delivering services via the cloud — means the utility-model of computing is a question of when not if.

Thirumal: To amplify a bit on Chris’ post below, I also consider the recent announcement of SmartCloud Enterprise +,  the cloud service that will be available later this year and is designed to handle production workloads, to be very significant.  This new offering is being built on the experience we’ve had with SmartCloud Enterprise, which provides a cloud solution to handle development and test workloads.  The initial experience with this off-premise cloud helped demonstrate that IBM could provide security-rich access to a set of standardized services that are both more economical and responsive in providing test systems for application development than the traditional approach of making resources available within a client’s data center.

With this new announcement, we’re building on this experience to deliver the resiliency, performance, and high availability that enterprise-class customers require before taking steps to move up from non-critical, lower risk workloads to more critical production-quality workloads. This naturally requires a higher service level agreement with 99.9% availability. This new capability will be available on an IBM provided and delivered cloud service that our enterprise class clients can confidently choose to obtain services that don’t require added capital expense and eliminate the management headache inherent in running their own systems.

Of course, we recognize that many clients want choices, and some continue to prefer a private cloud approach. So, I don’t think there will be a one-approach-fits-all cloud solution.  That’s why we will continue to offer a choice of the platforms and delivery models that customers can select based on the benefits they value most.  Regardless of their choice, we will continue to help clients build private clouds or tap into public clouds that can deliver a similar level of agility, flexibility, and the responsiveness with the high availability required for production workloads.

Chris: Earlier this month, IBM announced a number of new cloud computing offerings — ones that extend IBM’s ability to help clients build and deploy private clouds along with additional public cloud offerings. While the breadth of the announcement was significant, I’d like to point out a couple of aspects that I think offer great potential. 

First, we’re expanding the value to clients by providing cloud infrastructure that can support production workloads. For example, we announced the capability to run SAP in a cloud environment. This is a major move forward from the existing service offering that runs development and test on the cloud into one that now offers full scale production. Given a production workload’s need for high availability, this requires greater resiliency, 24x7 enhanced support, and a commitment to deliver production scale service levels. 

In addition, we’re extending the IBM public cloud portfolio beyond the X86 space with an offering that supports our Power Series, the technology that powered IBM’s Jeopardy! champion Watson, and we’ll now have an AIX public cloud offering.  This is significant because we make the same technology used to build and deploy public clouds available to our clients who are interested in building private clouds. While the interest in cloud computing continues to grow rapidly, many of our clients are still a bit hesitant regarding public clouds because of concerns over network security, resiliency, and latency among other characteristics. So, this move to higher performance platforms available in a private cloud deployment holds great promise. 
 
As this broader capability to support production workloads is understood by clients, the potential benefits of this approach will expand as well. Right now, clients are attracted to the cost savings and speed of deployment cloud promises. However, I think they will now start to assess the new business value that can be created from running production, enterprise-level applications and services on the cloud. The end result is that the amount of content that can move to public and private clouds increases significantly, which will further accelerate the interest in and growth of cloud computing.

IBM is announcing a number of new Cloud services and offerings today at a Cloud Forum in San Francisco.  The announcements include IBM SmartCloud, which is designed for enterprise-level applications, and IBM Workload Deployer, which provides simplified installation and automation capabilities for more rapid deployment.

IBM is also highlighting new clients that are embracing Social Business in the Cloud with IBM’s Blueworks Live and LotusLive offerings.

Coincident with today’s announcement, IBM is unveiling a new SmartCloud website with information on Cloud solutions, case studies, consulting and implementation services, and access to social networking surrounding IBM’s Cloud initiatives.

Ann: It’s no secret that interest in cloud computing is growing rapidly.  Much of the appeal is the promise of greater efficiency and greater speed in deploying IT services.  Some CIOs are also attracted to the possibility of usage-based billing with a charge back system similar to the way utilities, like power and water companies, charge for their services. Even if they don’t issue a formal bill, specific usage information could help CIOs better quantify the value of IT services to their internal clients.

However, this heightened interest needs to be grounded first in a sound understanding of the specific requirements for a cloud solution. It is essential to determine what’s needed, so that the right questions can be asked of Cloud providers. Furthermore, they should be specific, pointed questions that really nail down what’s being promised.   The lure of fast server provisioning, while certainly attractive, isn’t sufficient.  You need to be clear on requirements for availability, data backup, access, and security.

Understanding a provider’s security posture is critical, and really digging in to understand what a provider is offering is a must before proceeding.  Entrusting critical business data to a cloud provider in no way supplants the requirement placed on the owner of the data to comply with all regulations regarding data security and privacy.  So, when selecting a cloud provider, you need to be sure they have the controls and processes in place to protect your information and help you maintain an audit-ready posture at all times.

Thirumal: If you’re on a path to assessing the right cloud model, consider the first step to develop a well articulated cloud strategy – a thoughtful cloud plan that moves beyond the immediate adoption roadmap to a two to three year horizon with a range of workloads that can be moved to the cloud in an incremental fashion.  It’s also important to develop a well-defined architectural blueprint at the start, because it’s likely that before too long a combination of both private and public clouds will make sense.  It will be essential to understand how to interoperate across the cloud models and manage a hybrid approach that includes a mix of public and private cloud models. 

Even with this longer range view to start, I think clients should start small with a pilot project and then expand by adding cloud services as they continue to realize and see the benefits of cloud to their business. The pilot approach not only builds expertise, it also builds confidence in the value of this new delivery model — that the benefits of speed of delivery at a lower cost are real and attainable.

In selecting the right workloads to move to a cloud environment, it’s important to build a business case and conduct an ROI analysis on various workload options that seem right for a cloud delivery model, regardless of whether considering a private or public cloud.  Depending on existing infrastructure, building a private cloud may well incur some additional level of investment — not only to bring in new technology, but also to add the skills and expertise required to run this new environment.  So, an important step is to assess the total cost of ownership and the return on investment of moving to a cloud environment.
 
With a plan and pilot experience in hand, clients can consider moving more complex applications to the cloud. For example, one of the workloads that we initially thought would probably not be a good candidate is an organization’s ERP application, like SAP.  However, as some of our clients have gained experience with cloud, they’re becoming interested in exploring how they might deploy SAP into a cloud delivery model. While SAP is not a good candidate for a public cloud, it can be successfully implemented in a private cloud environment.  The potential payback from moving SAP to the cloud is faster speed to market and, of course, better utilization of IT infrastructure.  Another key benefit is the automation that is inherent with cloud.  Given our experience helping clients pilot an SAP cloud implementation, we’re positioned to help clients automate their current manual processes into a highly automated SAP environments to deliver greater agility and improved responsiveness.

Mark: With apologies to Joni Mitchell and Judy Collins, I do foresee a day when enterprises are able to make excess computing capacity available as part of a dynamic hybrid cloud environment.  This is similar to the notion of homes and businesses with electricity generating capability, for example solar panels on their roof, selling excess electricity to the utility running the grid.  For example, a retail company builds compute capacity to handle its peak selling period from Thanksgiving to Christmas, the capacity not needed the rest of the year could be made available and generate revenue for the provider.   So if 75% of the year I only use 50% of my capacity, why shouldn’t I make the extra capacity available to other companies to tap in and use some of my infrastructure?

With computing resources available in this way, many companies may elect not to invest in a dedicated IT infrastructure when it becomes more efficient to use capacity that’s provided and managed by others.  I think the ultra large IT customers — say the top 1,000 users of IT just to pick a number to talk about — for the foreseeable future are going to have their own infrastructures including the deployment of private clouds.  And, they’re likely to take advantage of a market and a demand for computing resources delivered via the cloud by making their excess capacity available via the cloud. 

It’s also not impossible to see the day when acquiring computing resources via the cloud follows the traditional utility model of a few large concerns with economies of scale providing computing resources when and where needed.  This is similar to the way electrical and telephone utilities evolved in the last century — from local power generation to a grid that can draw power from large power generation facilities many miles away.  When that day comes, we may well see dedicated in-house IT infrastructure giving way to a few large providers able to serve the computing needs of customers efficiently, reliably and securely, utilizing a standard set of applications.  I don’t see this happening overnight, but I do expect that smaller concerns will be the first electing to tap into computing resources delivered via the cloud rather than investing in the infrastructure and skills needed to manage their own dedicated IT environment.

The key to this evolution are standards, including not only the technical interfaces to the cloud, but also standard expressions of service levels, including security, which can be automatically negotiated and enforced. In this respect, information technology will have to evolve beyond even the current standards of more simplistic services such as electricity and telephone. The fact is, there are no global standards for the generation of electricity, or the technical interface (plug) for the user; certain types of cell phones do not work in all geographies. However, one can also look at things like the internet to see how the implementation of standards can quickly accelerate the adoption of new technologies.