Cloud computing is an opportunity to substantially improve the economics of enterprise IT. We really can do more with less.
I firmly believe that enterprise IT is a competitive weapon and, in all industries, the leaders are going to be those that invest deeply in information processing. The best companies in each market segment are going to be information processing experts and because of this investment, are going to know their customer better, will chose their suppliers better, will have deep knowledge and control of their supply chains, and will have an incredibly efficient distribution system. They will do everything better and more efficiently because of their information processing investment. This is the future reality for retail companies, for financial companies, for petroleum exploration, for pharmaceutical, for sports teams, and for logistics companies. No market segment will be spared and, for many, it’s their reality today. Investment in IT is the only way to serve customers and shareholders better than competitors.
It’s clear to me that investing in information technology is the future of all successful companies and it’s the present for most. The good news is that it really can be done more cost effectively, more efficiently, and with less environmental impact using cloud computing. We really can do more with less.
The argument for cloud computing is gaining acceptance industry-wide. But, private clouds are being embraced by some enterprises and analysts as the solution and the right way to improve the economics of enterprise IT infrastructure. Private clouds may feel like a step in the right direction but scale-economics make private clouds far less efficient than real cloud computing. What’s the difference? At scale, in a shared resource fabric, better services can be offered at lower cost with much higher resource utilization. We’ll look at both the cost and resource utilization advantages in more detail below.
At very high-scale it’s both affordable and efficient to have teams of experts in power distribution and mechanical systems on staff. The major cloud computing providers have these teams and are inventing new techniques to lower costs, improve efficiency, and provide more environmentally sound solutions. This is very hard to do cost effectively at scale of less than 10s of megawatts. Continuing that same argument to other domains, cloud computing providers have teams specialized in server and storage design. And they are deeply invested in networking gear hardware and software. All of this is hard to justify at private cloud scales.
Cloud computing providers have 24×7 staff to monitor the services and to respond to customer issues. Doing service monitoring right is incredibly difficult and I’ve never seen it done well at anything less than multi-megawatt scales.
Cloud computing providers have some of the best distributed systems specialists in the world. They also have open source experts and depend deeply upon both open source and internally produced software. They do this for two reasons: 1) at high-scale, things fail in new and interesting ways – operational excellence only comes from intimate knowledge of the entire hardware and software stack, and 2) when running at the high scale needed for efficiency, software licensing costs give up much of the excellent economics of a cloud service.
Resource utilization is even a stronger argument to move to a high-scale, shared infrastructure cloud. At scale, with high customer diversity, a wonderful property emerges: non-correlated peaks. Whereas each company has to provision to support their peak workload, when running in a shared cloud the peaks and valleys smooth. The retail market peaks in November, taxation in April, some financial business peak on quarter ends and many of these workloads have many cycles overlaid some daily, some weekly, some yearly and some event specific. For example, the death of Michael Jackson drove heavy workloads in some domains but had zero impact in others. A huge eastern seaboard storm drives massive peaks in a few businesses but has no impact on most. Large numbers of diverse workloads tend to average out and yield much higher utilization levels than are possible at low scale. Private clouds can never achieve the utilization levels of shared clouds.
Last week Alistair Croll wrote an excellent InformationWeek article arguing that “the true cloud operators will have an unavoidable cost advantage because it’s all they worry about. They’ll also be closer to consumers (because they have POPs everywhere and partnerships with content delivery systems), and connecting with consumers and partners will become an increasingly essential part of any enterprise IT strategy.” Have a look at Private Clouds are a Fix, Not the Future.
Private clouds are better than nothing but an investment in a private cloud is an investment in a temporary fix that will only slow the path to the final destination: shared clouds. A decision to go with a private cloud is a decision to run lower utilization levels, consume more power, be less efficient environmentally, and to run higher costs.