Unraveling the Cloud, Economics and more

MUMBAI, INDIA: Cloud computing, has been a force which has disrupted the de-facto standards of computing - client/server and the enterprise computing model. It has redefined business paradigms and created scalable and flexible computing solutions for enterprises. By unshackling enterprises from high capital and operating costs, cloud has delivered value by offering on demand scalability, service development agility and pay for use model. Emergence of virtualization, service oriented architecture, automation models, resource provisioning etc. have laid the foundation for the cloud computing architecture.

As defined by National Institute of Standards & Technology (NIST), USA, "Cloud computing is a model for enabling ubiquitous, convenient, on-demand network access to a shared pool of configurable computing resources. These resources: networks, servers, storage, applications and services, can be rapidly provisioned and released with minimal management effort or service provider interaction. This cloud model promotes availability and is composed of five essential characteristics, three service models, and four deployment models". Enterprises considering adoption of cloud must have a good understanding of the architecture and deployment models, to ensure optimal requisition of resources meeting its computing needs, while keeping operating costs under control.

In spite of initial doubts about the viability of cloud, in most surveys today, majority of business indicate an increasing demand for cloud based services for infrastructure, software and storage. Driven by scalability, storage in cloud seems to be delivering the maximum value addition to customers. It is showing the most robust demand growth. There is a positive shift in perception of customers about data security and disaster recovery in the cloud. As per Forrester-Research, enterprises are gradually shifting more traditional, critical business applications and sensitive data like customer information, intellectual property data, and business transactions to the cloud.

However, the biggest concerns for enterprises, with stringent security needs, are cloud outages through cyber-attacks. To address this security need, cloud providers are offering cryptographic key management, intrusion detection services and advanced application firewalls. Developers and service providers have a strong preference for public clouds as it gives them greater flexibility in resource access. Cloud users and providers are building a symbiotic relationship replacing earlier concerns about managing data confidentiality and legal issues.

In the market, war on cloud infrastructure is heating up, as users are opting to choose among public, private, hybrid and open stack environments. The demand for cloud infrastructure usage and technology intensive requirement drives enterprise decision making on cloud deployment models. In order to achieve performance optimization of cloud, users are establishing metrics as per the working requirements of their enterprise. Metrics such as cost of operation, speed of service delivery, customer satisfaction levels etc, allow for objective evaluation of a cloud strategy.

The key question to ask is how cloud operations can be made more efficient to enhance its impact on businesses. According to Adrian Cockcroft, Chief Cloud Architect at Netflix, by switching to Amazon Web Services, Netflix has been able to save considerably on maintaining and updating its datacenter infrastructure which has improved response to business demands. Key optimization techniques being deployed are closely studying traffic patterns, utilizing idle reserved capacity for development and testing, disaster planning and consolidating accounts to minimize costs through creating optimized service delivery architecture. IT department's annual CAPEX model has given way to OPEX based model with monthly/weekly budgets, geared more to enterprise's enterprise ever-changing needs.

There is an intense competition between the likes of Google, Amazon and Microsoft, in the public cloud space. The price for various types of services like on-demand virtual machines and storage is dynamic and is on a downward spiral. Cloud providers are continuously evolving their pricing structure by throwing in value added services. In such a scenario, for a discerning buyer of cloud services, negotiating good deals yields compounding results. A good advisory support for negotiating good services contract leads to optimal results. 

In conclusion, enterprise desiring to move into the cloud business model must have a good understanding of the cloud paradigm, to derive maximum benefit from the strategy. It is important to understand the market trends including demand, competition and security related issues, for optimal roll out of the strategy. Industry price wars and new areas of application deployment, regularly present opportunities to enterprises to evaluate. Business benefits of cloud adoption has moved far beyond cost optimization and scalability to increased flexibility, and driving core business processes. Enterprises must have a good governance structure to manage the cloud deployment supported by proper business aligned SLAs is essential to reap the benefits of the cloud.

(Dr. Pradeep K. Mukherji is the President and Managing Partner at Avasant APAC and EMEA. Paritosh Sharma is a Consultant at Avasant. The views expressed here are of the authors and not necessarily of CyberMedia CIOL.)