Outra característica elementar do Cloud Computing é o serviço medido pelo uso, um sistema bastante conhecido para serviços de utilidade pública, como a energia e a telefonia.

Em “A Grande Mudança”, Nicholas Carr continua a tese do seu texto/livro anterior “What Does IT Matter?” e compara a evolução dos serviços de TI com os sistemas de energia. Antes de Thomas Edison e seu império oferecer esse serviço como utility e cobrar pelo uso, as industrias do início do século XX e final do século XIX tinham cada uma os seus próprios geradores.

Muita gente torce o nariz para essa comparação. Eu aceito e incorporei radicalmente esse conceito dentro do business plan que desenvolvi pra minha empresa. Penso que é um caminho sem volta. As empresas irão deixar de realizar investimentos em TI (capex) e passar a usar verbas de custeio (opex) para usar os serviços de TI.

A mudança deixa em “xeque” conceitos que estamos acostumados a usar há mais de 20 anos, como ROI (Return of Investiment) e TCO (Total Cost Ownership). Isto porque ao vender uma solução de cloud é necessário que o cliente separe verba de custeio e não investimento para a TI.

Um exemplo que gosto de citar é o de uma empresa de Contact Center. O objetivo dela é ser o mais eficiente em termos de custo e ao mesmo tempo prestar um bom serviços aos seus clientes. É um mercado competitivo e complexo, pois atender pessoas não é algo simples.

Mas o cerne da questão é o custo e eficiência. Tipicamente, se quiséssemos vender uma solução de Service Desk, por exemplo, iríamos usar ferramentas para calcular o ROI e o TCO para justificar a venda, que daria o retorno em “x” tempo para empresa.

Mas pensando em Opex, precisamos compreender que o custo de Posição de Atendimento (PA) é por hipótese R$ 20 mil por mês. Então quando vender a solução de cloud computing, você estaria cobrando por hipótese R$ 5 mil por PA por mês. Ou seja, você aumentou substancialmente o valor (25%) do custo da célula de atendimento. Para justificar isso, você precisa identificar quão eficiente se tornou essa célula.

Parece banal, mas não é. O cliente irá racionalizar em como esse custo que entra direto na operação é indispensável ou necessário para ele se tornar competitivo, produtivo ou mesmo como lhe dá vantagem competitiva. Isso é o que qualquer solução de informática desde sempre se propôs ao seu cliente, a diferença é que o cliente irá desejar esse retorno imediatamente, sem longo prazo de “payback”.

Por isso que para explicar esse conceito, usei uma figura do Wikipédia que gosto muito. Ela também deixa de forma bem evidente que os custos gerais vão ser bem menores, cada vez mais tendendo a zero, devido a constante propensão dos produtos em se tornarem commodities, assim como os serviços de energia e telecom.

Yes, it is cloudy and raining this week, and the media has been reporting a glut of stories about cloud computing already.  But the IBM Center has released a new report “Moving to the Cloud:  An Introduction to Cloud Computing in Government” that is targeted to executives, not technologists. 

The buzz in the technology world around cloud computing is almost deafening, but for good reason.  The report lays out the many reasons for its use, including economies of scale, better collaboration, and usage-based pricing (you pay only for what you use, like electricity).  For example, a school district in Tennessee established a private cloud and was able to cut its IT support costs by 60 percent.  These kind of savings catch people’s eyes.

The author, Dr. David Wyld of Southeastern Louisiana University, notes that “Cloud computing is an emerging concept.  It has many names, including:  grid computing, utility computing, and on-demand computing.  Indeed, one of the hindrances . . . is the lack of understanding of what it is—and isn’t. . . “  He relies on the definition developed by the National Institute of Standards and Technology, which lays out the essential characteristics of cloud computing:  on-demand self-service, ubiquitous network access, locaction-independent resource pooling, rapid elasticity, and measured service.

While still a geeky definition, more importantly, Wyld points to the fact that we’ve all used cloud computing already – Gmail, YouTube, GoogleDocs, Flickr, and Ning are all common examples in the commercial world.  And Wyld says over 4,000 universities have converted their email systems to cloud computing as well.

But government has been a bit more cautious in its adoption.  Wyld gives examples of the use of cloud in government, lays out ten challenges to public managers in the use of cloud computing (like security and interoperability), and offers some predictions on the road ahead.  He also offers links to some useful video primers, like the one from the UK’s Computing Magazine as well as the one from GSA’s Apps.gov.

A key takeaway for government managers:  cloud computing has potential to transform government IT but it won’t be a silver bullet.  It will most likely be more useful for mission support services such as e-mail, web servers, data storage, and for common cross-government services such as accounting, procurement, and collaboration tools.  But agencies will likely be more cautious in using it for core mission business applications such as the Social Security payroll reporting system or the air traffic control routing system.

For folks living in the IT Channel world it was impossible to miss the headline-grabbing news about the big ConnectWise cloud failure late last month.  I have only very limited knowledge of the outage itself from a handful of upset customers and unfortunately the various pundits and reporters that covered the story painted very sketchy details at best.  Having said that, what really matters is that a significant number of IT Service Providers lost access to their mission critical operations application for an extended period.   For the uninitiated, ConnectWise provides an integrated service management, CRM and billing platform for IT service providers.  For the IT Service Providers that use ConnectWise, the business of IT service can’t function without it.  It’s a very important business process automation tool for the operation of a managed service practice.

As I sat back and watched the carnage and horrors unfold for ConnectWise my first thoughts were thoughts of sympathy.  As a company whose services are depended upon for mission critical functions this kind of thing is your worst nightmare.  There is a misconception out there that because something is running in a cloud environment that it is impervious to failure.  I have no idea where this crap originates, but it is exactly that. Crap.  Maybe it’s the marketing rhetoric.  Maybe the hype-cycle is to blame.  I don’t really know.  But what I do know is that outages DO happen, even to the best of us.  So ConnectWise, if you are reading this post – don’t sweat it.  This too shall pass.

Having made that point, the ConnectWise outage does represent a cautionary tale for any Channel service provider:  If you depend on your software vendor to make decisions about hardware infrastructure with zero transparency, you should be comfortable getting whatever you get. Good or bad.  Up or down.  It’s that simple.

This is the problem I have had with the whole SaaS phenomenon since it started to really heat up a few years ago.  Hardware infrastructure is REALLY important to the sustainability of your hosted software.  I don’t care whether your application is used by the CIA, NASA or both.  If you operate that application from inferior infrastructure or after-thought laden infrastructure designs, you are asking for big trouble.

When we ran our MSP practice in the pre-6fusion days we adopted a policy whereby if we could not see into the hardware design and build specs behind a hosted app, it was a show-stopper to doing business with that vendor.  This policy served us extremely well not because we never had any problems our outages.  But rather, when there was an issue we had complete control and understanding of the issue.  This is CRITICAL in managing any IT, internal or external.  What you avoid when you have transparency and control is the type of bedlam that ensued when ConnectWise failed.   Imagine 100 plus IT service providers with hundreds of end user clients all sitting in the dark with NO IDEA what was really happening.  As a cloud service enabler, I shudder at the thought.

This might sound like obvious advice, but the seduction of cheap SaaS pricing is a powerful lure even for the most stringent of service providers.   The market is rife with SaaS peddlers boasting ‘infinite scalability and zero downtime’ as a marketing ploy and that is BAD for everyone in the cloud business in general.   So whether you are an IT Service Provider or an ISV, here are few key pointers if you are considering either running mission critical back office or web applications that use a form of cloud computing infrastructure (or someone’s boxes co-located somewhere):

1)      Ask the vendor to disclose exactly where your data is being stored

2)      Request copies of the service providers’ SAS70 audit summaries to confirm process controls at the data center

1. If there are no SAS70 reports available, request guest access to the data center to see for yourself

3)      Ask for an asset audit report to affirm hardware configurations and designs

4)      Ask for a detailed outage report for the past 12 month history of the service.

5)      Get your lawyer to vet the SLA and limitation of liability clauses in the contract.

1. If no SLA is provided, you shouldn’t be talking to that vendor!!
2. Not all L of L clauses are created equal.  Make sure the L of L doesn’t complete gut the SLA.
3. Make sure the service provider INCLUDES data center network considerations as part of that SLA

If your ‘spidey sense’ is tingling when exploring any one of these points with your prospective SaaS vendor, use your instincts.  Back away!!

I think the lack of control over cloud infrastructure in typical SaaS models also highlights yet again a point I made in a blog post last June about the role of the Channel in cloud computing and the importance of why cloud vendors like 6fusion have a clear demarcation point at the infrastructure level.  I’ll spare you having to go back to sift through that soap-box-like post.  Here is what I wrote then:

“We resisted the temptation to become an apps vendor because we are not the ones that should be deciding what apps to run and where to run them. We simply provide the cloud infrastructure and tools to help you build what YOUR customers want and need to integrate with how they run their businesses today.”

I can tell you ConnectWise customers that run that software on our cloud infrastructure certainly have never experienced the type of outage that ConnectWise suffered (present company included!).  But that is not the point.  The point is transparency and control between software and hardware infrastructure, which is, in my humble opinion, too valuable a component to give up when you go with a multi-tenant software solution (SaaS) for mission critical apps (that hasn’t been thoroughly vetted).  I can’t speak for other IaaS types in the market, but 6fusion shares the hardware design specs, security measures and governance documentation with IT service provider and ISV clients and they have a very clearly documented SLA.   Since we wouldn’t subscribe to anything less we think it’s important that our customers don’t either.

But what is even more important is that users have control over their cloud workloads, from creation to resource allocation to a common reboot.  Control means that standard troubleshooting protocols apply and insight into software and hardware failures can be identified and managed more effectively.  I think as cloud becomes more ‘mainstream’ this type of ‘cloud control’ will become requisite for all service providers in the space.  But until then it is up to IT Service Providers and ISVs to do their risk homework when deciding whether or not SaaS is an acceptable risk model for their customers, and their own, internal operations.

To be honest, this is an “angry” piece of writing. A rant … a diatribe … whatever you might like to call it. But I just couldn’t let this go!

Microsoft (yep, the same company that recently demonstrated that they are unable to manage other people’s data) have come out with a “white paper” outlining their concerns about cloud computing. Here’s an article about that release from a leading Australian Newspaper. Take a few moments to read it, and I DEFY you not to be flabbergasted at the astounding combination of arrogance and ignorance they they are displaying.

… just breathe … in and out … in and out … ok …

The funny thing is – the point they were making about security is a good one – they were just the wrong company to make it, on so many levels! Its like a lion lecturing a herd of gazelles on the virtues of not becoming food. Let me count the ways:

1. Microsoft themselves are notoriously bad at looking after other people’s data
2. The cloud model is in direct competition with the current MSFT business model (no matter how much they talk about their half-hearted efforts in this direction)
3. Let’s remember that this is the company that used to tell us that the internet was a passing fad (until they realized how much money Netscape were making and engaged in some dodgy behaviour to force consumers to use their own product)
4. Their spokesman makes no sense. What does this mean –> “We want to take the initiative in regard to our position on privacy in the cloud” <– that’s a nonsense statement. It means nothing at all!
5. Oh, and what about “Companies should know where their data is sitting in the cloud”? Huh? The whole IDEA of the cloud is that applications and/or data could run anywhere. How would it be beneficial to a company to know where its data is residing? Wouldn’t that actually negate one of the major security benefits of the cloud?

Hard as it may be to believe, I’m NOT a Microsoft-hater … at all! They have been a revolutionary company in the history of computing, and have been almost solely responsible for bringing computing to the masses. But you see, that’s what upsets me most of all – here is a company that many consumers look to for leadership – and it’s disturbing that they see fit to abuse that position by spreading fear, uncertainty and doubt about a market where it just hasn’t tried hard enough.

Sure, you have to watch who has access to your data – there’s nothing new there – just don’t paint the cloud as the bogeyman!

RASS and 6fusion USA, Inc. today announced a partnership to co-deliver cloud hosted desktop and server applications on demand.  The joint offering promises to improve existing performance and cost limitations for customers moving away from a traditional on-site application delivery model. RASS features state-of-the-art technology to allow companies of all sizes to serve business applications to remote users.  RASS is delivered from the 6fusion platform, which provides scalable, pay-per-use utility computing resources for customers around the world as a form of cloud computing.

“The goal of our partnership is to simplify the delivery of Windows, UNIX, and Linux applications to business users, while dramatically improving their performance over common internet connections,” said RASS CEO Christian Johnston.  According to 6fusion CEO John Cowan, “RASS powered by 6fusion’s technology is an example of how IT services are changing with innovative software and scalable, limitless computing resources.  This offering will completely change the game when it comes to desktop applications in the cloud.”

RASSonline is designed to eliminate legacy remote access solutions and securely run almost any application.  “What’s great about RASS is that there really is no limit to the type of applications you can serve up and you don’t need expensive and cumbersome platforms like Terminal Services or Citrix,” said RASS VP of Sales and Marketing, Brad Calli.  “Customers can run their standard office productivity software from companies like Microsoft or complex software systems such as Adobe,” he added.  RASS customers can log into their application servers leveraging standard Remote Desktop Protocol or even using a web browser.   Secure access was a critical design element to the service offering.   Johnston says this is a key feature for any cloud hosted desktop:  “RASSonline features 256 bit encryption, which is must in the new world of cloud hosting.”

The cloud computing back end for RASS is provided by 6fusion.  “6fusion delivers scalable, limitless utility computing resources to IT service providers and software vendors on a global basis,” explained Doug Steele, 6fusion’s Director of Partner Development.  “When you think about the capability of cloud and the valuable business case presented by RASS, you see the basis of powerful business partnership,” he added.  Calli admits the cloud changed their corporate perspective.  “Before we met the team from 6fusion we had our sights set on a regional market.  But by leveraging their platform we can make our technology instantly available to markets all around the world,” he said.  “And we can do it with no upfront capital expense,” he added.

A free 14 day trial of RASS is currently available at www.rassonline.com.    Companies interested in finding out more about partnering with RASSonline or 6fusion are encouraged to email info@6fusion.com or sales@rassonline.com

In an earlier post on this site, I introduced the idea that Utility Computing was such a great idea that everyone should be doing it. A nice postulation … but one that is not being reflected in the real world. Why? I stand by my praise of Utility Computing in my earlier post – and there’s even a good chance that YOU agree with me (seeing as you are a reader of this blog) – but we are not seeing the adoption of Utility Computing that we would hope for. I would suggest that this is due to a number of factors:

1. Utility Computing is relatively new – and people don’t really know about it. There is a mindshift that needs to take place amongst people who USE technology, and this will take time. Getting people to understand that they DON’T need to have a server in their back room in order to run a business means that they have to rethink their approach to technology.
2. Fear of Change – related to the above point is the fact that because people don’t understand how this works, they (naturally) find it hard to trust it. Surely if they give their applications and data to someone else, they will lose control of them? How will they be able to be flexible when they don’t have their own applications on site? Business people will come to learn that they actually GAIN flexibility and control in a Utility Computing model – but this will take time and education.
3. No one else is doing it – this is a common objection – and its just not true. Google Premier Applications (a great example of Utility Computing) has over 1.75 million businesses using their service! We advocates of Utility Computing need to be more vocal about successes like this – this one is entirely OUR fault, and shows that we need to get better at telling the story, and getting the message out to prospective customers.
4. Traditional technology advisors are against it – The technology advisors for many businesses are hardware and software vendors – and many of them (quite correctly) see Utility Computing as something that will be detrimental to their business. As such, its not a high priority for these vendors to educate their customers on the virtues of Utility Computing
5. Security Concerns – Its strange that the same people who keep their server in the back of their office and perform the occasional untested backup are concerned about the security of their data – but I hear this one a LOT. In a Utility Computing infrastructure, data is encrypted along with being physically and digitally protected. Data is replicated to multiple servers (unless you’re Microsoft) in real time – meaning that you (and only you) ALWAYS have access to your data, no matter what disaster may befall one data center
6. We use specialized software – In fact, most people do. And while this may not be as straightforward as replacing your MS-Exchange with Google Applications, it can definitely be done, and there are plenty of great Utility Computing companies out there (like Hoolipot) who can help customers get their non-hosted software into a Utility Computing infrastructure. Technology has caught up with the “dream” of Utility Computing – and its now something we can ALL do.

So, working on the assumption that readers of this blog are fans of Utility Computing, what should we do? I would suggest that our course of action needs to start with Education. We need to teach people what Utility Computing is all about – to counter the propaganda they are hearing from their hardware salespeople – and to demonstrate to them that this is the safest, most economical route for their business. We need to become “evangelists” for Utility Computing (minus the robes) and infect others (minus the H1N1) with our enthusiasm for it.

Any other ideas? Comment below!!

Cloud computing is predicted to be an Internet revolution that will lead to a radical change in the way IT is used in business. You often hear the terms “The Cloud” and cloud services, but what does it really mean – and is there a difference between the concepts?

Utility computing
Utility computing relates to the delivery of computing resources, It is raw processing power or storage and  the recipient pays for consumption. The classic comparison is the supply of electricity, delivered through a wall jack and charged after consumption. You do not tell the electric plant that you need more power. It is just there when you need it. The most common example of optimum use of this business model is Amazon Web Services (AWS).

The primary benefit of utility computing is the economical aspect. Corporate firms have a huge excess capacity because they must be able to perform, even in peak periods. Since a peak only occurs a few days during a year, this results in an excess capacity. Utility computing allows you to pay only for the computing resources you need when you need them. Like so many other IT delivery models before it, utility computing will be driven by a positive financial reputation. Due to the economic aspect, any business will be forced to consider how it can make the best use of the utility model.

Cloud computing
Cloud computing is a broader concept than utility computing. Cloud computing relates to the underlying architecture in which services or applications are designed and distributed. The central idea is that applications run somewhere in “the cloud” – internally or externally.
Companies have used this concept for years to establish their own internal cloud(s) where applications can be developed, tested and distributed. This concept is normally referred to as grid computing.

Applications in the Cloud
Applications in the cloud is what most know as Gmail, Hotmail, WordPress, Google docs, search engines, etc. The company offers an application via the Internet, which many users can join and use simultaneously. It is the same service, same code, and (perhaps) the same server the application runs on. The user of the application experiences it as a unique and isolated application and with the configuration you want. You do not have to worry about where the data is located, how they are stored and who will maintain the application. It is just a place “in the cloud”. You can always log in, wherever you are online. In a more business-oriented perspective it is known as Software as a Service (SaaS).

Platform as a Service (PaaS)
PaaS is developed after SaaS. PaaS is more targeted at developers and programmers. PaaS offers developers to develop applications hosted in “the cloud”. When you upload and run applications, you do not know where it happens. The advantage with PaaS over locally hosted applications is that it is scalable. If you suddenly require four servers instead of just one to run the application the resource supply will increase automatically. This is an infinite buffer, which is never higher than your consumption. The service you actually buy is the network of servers (“the cloud”) which channels requests and commands from one or more applications running in “the cloud”.

Several have tried to define cloud computing by comparing it with previous computing models: outsourcing, pay-as-you-go, On-Demand etc. This may not be entirely wrong, but there is much more in than that. The true business opportunities are slowly surfacing and more and more companies try to experience with cloud computing, often without the management knowing. Cloud computing will probably find its way into the enterprise in a bottom-up approach.

I’m being facetious. Let me just point that out from the start.

Earlier this week, a news article came out about Google and Hotmail (amongst others) email account information being posted online. Not exactly the news you want to hear if you are considering a switch to Utility Computing, right? I mean, if ALL your business applications (not just your email) were online, could people really access them this easily? Possibly.

The account information that was posted was obtained through phishing attacks. People who “phish” pretend to be someone else in order to get access to your information. It’s a classic confidence scam, and would be like someone turning up at your office, telling you they were there to fix the computers, and then walking out the door with them. Unfortunately, that sort of thing happens all the time. In other words, there’s really nothing new about phishing, its just a new word (and some new tools) for something that has been going on since the dawn of time.

But here’s the problem – the internet is the great multiplier. Instead of the bad guy turning up at a single office under the guise of being a computer repairman, he can sit at home and send emails to tens of millions of people with just a few clicks. Even if only a fraction of a percent of the people who get the email “fall for it”, the bad guy now has thousands of pieces of data that he can use to commit further fraud. So, instead of hitting 3 offices a day, he can hit millions of people with less effort, and probably less risk. Its the same multiplier that the spam emailers use – even if only 0.001% of people they email actually decide they need a little Viagra, they have been successful. And they have done all this at virtually no cost. The internet has made life easier for all of us – INCLUDING the bad guys.

So – does this mean that Utility Computing applications are unsafe? Well, it depends on whether you would let someone into your office without checking their ID. It depends on whether your colleagues would give out confidential information without being sure of who was getting it. In other words, this COULD happen to you … and that’s why you need to be careful. Follow all the standard security advice – change your passwords regularly, don’t use passwords that are easy to guess, ensure that you are accessing secure sites … and (unfortunately) be less trusting. Technology alone won’t prevent these con-artists from continuing their efforts – threat models can reinvent themselves in less than a month while technology standards can take up to 10 years to catch up.

But to answer the question posed by the title of this post – does this mean that Utility Computing won’t work? No. This is not a reflection on Utility Computing – it is a reflection on the fact that the bad guys can now reach more people than ever before, and we all have to be more careful – and less trusting – than even before.

I was talking to someone this morning about online financial applications. They made a comment that online versions of financial management software tend to have fewer “bells and whistles” than locally-installed versions … and that the only reason that people would consider an online version would be if they had multiple locations that all needed to access common information. I’m sure that this is a pretty common perspective when it comes to online applications – after all, why would you NOT have something as important as your financial data installed where you could control it best – in your own office? Let me answer that – in two parts:

Fewer Bells and Whistles
I worked for a software company for over 12 years. For most of that time, I worked in Product Management and Strategy – determining future direction of the software products, and deciding which features would be included in the upcoming releases. We always said that product features were determined by studying the market and listening to our customers’ requests … but in reality, that’s not what happened at all. In most cases, WE would (internally) come up with the features that we thought would work in the product, and THEN look for customer requests that supported our decisions. We put in features that WE thought would be cool, or the Engineering team thought would be cool, or the VP of Engineering thought would be cool … and sometimes, that would match customer demand too. After working in this environment for so many years, I would estimate that the average user of our software regularly used about 20% of the functionality that was actually there – because that was all he/she needed. More often than not, the bells and whistles included in a software product are not really there for any good reason at all – its just more code that can contain bugs and more configuration options that can confuse users. So why not keep it simple?

Install Locally as Default
Up until recently, there really was no option. Network bandwidth limitations, security concerns and data storage were all good reasons why local installs were the only way that software was implemented. But let’s look at the facts/fallacies associated with this now:

• Fallacy: Your data is more secure if its on your own computer equipment. Actually, the big data leaks that have made the news recently have happened when people have “lost” laptops containing sensitive data. Companies providing hosting services understand the importance of data security, and spend a lot of money and time making sure that they have the best protection systems in place – after all, its their business. Compare that to the server you have sitting under a desk in the back of your office – which do you think is more safe?
• Fact: The bandwidth limitations of yesterday are gone – network bandwidth is now far cheaper, and more available than it has ever been in the past. This means that applications can now run across the internet at similar speeds to locally installed applications. Look at Amazon.com, Travelocity.com or Hotmail.com as examples.
• Fallacy: You will lose control of your applications if they are hosted . Actually, you will have more ability to control your applications if they are hosted because you are not concerned with software and hardware upgrades, backups and the like. Nicholas Carr¹ made the point that “Ironically, even as many smaller companies are embracing hardware hosting, software-as-aservice, and other forms of utility computing, many others are currently building up their IT assets, drawn by low component costs. I think those companies are going to end up regretting a lot of the investments they’re making. They’ll soon find that the highest IT costs aren’t component costs but labor costs, maintenance costs, electricity costs, and other secondary expenses – and that owning your own gear ends up reducing your flexibility rather than increasing it”.
• Fact: Hosted applications are much cheaper to operate than locally installed ones. Even just considering the basic “office” applications, Forrester Research has estimated that these applications cost the average business $300 per user per year. Once you include labor costs, that estimate becomes even worse – in fact, for a 10 person company, the cost per employee per year for Microsoft Exhange 2007 is in excess of $4500! Compare this to $426 per employee per year (including all labor costs) for a better online solution! That’s a 90% cost saving!
• Fallacy: Your backups will work for you in the case of a disaster. Have you ever tried restoring from a backup and operating your business from it?In around 95% of cases, it doesn’t work. Applications and configurations change over time, and backups are rarely reconfigured to keep up with these changes. Online applications have backup built in – data is automatically replicated so that even if a meteor took out a whole data center, another one containing the same information would be instantly online – without even a blip.

So I guess, my response to the person I was talking to was predictable. Keep applications simple … and use hosted applications wherever possible … especially in small businesses!

¹ “An IT Sea Change for Smaller Companies” – http://www.roughtype.com/archives/2006/09/an_it_sea_chang.php

In the Perezian sense, as the fervor and hype of a technology revolution gives way to a new technological paradigm – a new order, if you will, to the way in which we perceive and do things – there is tremendous disruption among the supply chain participants across entire industries.  Within this disruption there is equally tremendous risk and potential reward.  It is this change process within which we often refer to clichés phrases like ’survival of the fittest’ and ‘the crème rising to the top’, etc.

Without a doubt, cloud computing – or the idea that I can get all the computing power whenever I need it, wherever I need it,  scale up and down on demand paying only for what is consumed – is going mainstream faster than anyone expected.  And you don’t need to consult Gartner or Forrester to figure it out.  Just tune in to any NFL football game on the weekend and spot the slick new IBM advertisement on TV!  (I felt like calling my Mom in Canada and asking her to tune in, since she’s been asking me for five years exactly what it is I do for a living!).

Mainstream media advertising aside, the real impact of cloud computing is still developing and will be for a while now.

As methodologies and best practices for IT deployment align with fundamental technological changes (such as that represented by the idea of cloud computing), empires built on old-world processes and systems can come crumbling down.  Witness the profound directional changes dumped onto companies like Microsoft in recent years.  The existence of companies like Amazon and Google, purveyors of all things cloud, and Salesforce, the grand poobah of SaaS, have literally forced the largest software maker on the planet to change its direction completely or risk its prestigious 30 year reign of relevance to consumers.  I’m not one of the Chicken Little pundits that think Microsoft’s days are numbered. Far from it. But the changes coming from MSFT these days are arguably like none other in its history.

At 6fusion, we see four critical groups in the supply chain that will live or die with the sea-change of cloud computing.  Those groups include:

• The Channel (IT Service Providers)
• The Network Providers (ISP, Telecoms companies)
• The Hardware Manufacturers (Dell, HP, IBM, etc)
• ISVs (Independent Software Vendors)

Here is what I find amazing about these four groups:  The pendulum for the next several years will be wild and dramatic.  Embrace change and potentially ride a revenue wave like you never thought possible.  Resist change, and leave your fate to chance.  Maybe I need a bit more excitement in my life, but I personally think a front row seat to this action is the best ticket in town! Here are just a few of the major league questions facing industry stewards:

• Managed Hosting Providers and purpose-built SaaS companies want to own the end user customer relationship. The cloud represents the biggest disintermediation threat in recent memory. How will the modern IT Service Provider stave off the biggest threat since Dell’s direct model in the 1990’s?
• The network is the most commoditized resource in cloud delivery. As the role of the modern network provider changes, some of the big telecoms firms have decided to become cloud service providers in order to reach beyond the packet for revenue. What are the risks inherent with Telco’s playing in the cloud space? How can Telco’s and ISPs leverage their position as a key raw material component of the cloud to position themselves for a more profitable future?
• The days of competing on logos and laurels are dead and buried. In a new world where the purchase and supply of hardware is being driven by ROI, footprint reduction, more support for less money and hyper-efficient supply chain logistics, will the big iron shops be agile enough to compete? What are the implications for the big firms that decide to inter the cloud computing service fray, going head to head with other market entrants, possibly even existing clients?
• SaaS is clearly the future business model for the delivery and licensing of business-value software. But two facts remain: 1) getting there takes a complete overhaul of legacy systems, the kind that represents massive strategic shift and 2) the world is full of legacy systems, contrary to the hype cycle in the industry. Where is the bridge between the old order and the new order for software companies and how will they cross it?

Most that know us know our technology is beginning to play a key role in the future direction of these supply chain participants.  We develop technology with an eye for making computing simpler, which removes proprietary silos that only serve to slow down the realization of a world where cloud computing methodologies are included in standard deployment best practices for IT.

Over the next several weeks I plan to dedicate some blog space to each of these core groups and unfold a bit of what 6fusion has been up to as we continue our quest to deliver the promise of this new technology to the widest audience in the cloud.

When comparing Utility Computing to “traditional computing” (for want of a better term), a question that often comes up is around service level agreements, and service level management in general. ITIL (and other IT process guidelines) have ensured that most IT professionals have understood the value of Service Levels, and have used them as a way to broker an agreement between themselves and the rest of the business. The cynical observer would see this just as a way for IT to cover it’s ass, but the smart organizations with SLAs in place actually use them to the benefit of both the business (they know what to expect) and the IT department (they know what is expected of them). SLAs are usually performance and/or availability based (although there are plenty of other ways that service levels can be measured). A performance-based SLA will often state something like:

“A priority one call placed to the Service Desk between the hours of 8am and 6pm will be acknowledged within 5 minutes, and will have a support engineer working on it within 15 minutes”

… while an availability-based SLA might look like this:

“The Oracle Financials application will be available 99% of the time during normal business hours and 99.99% of the time during the end-of-quarter period”

So, when you move to a UC model, what are the SLAs? Who maintains them? What are the consequences of them not being met? If many different businesses are all getting their computing utility from the one resource, how are different SLAs maintained? So many questions … but the answer is pretty simple.

Since a UC provider is just about providing business applications as a utility, there can only be one real measurement – application availability. No other measurement matters. The business (consumer) of a UC service doesn’t care about servers, databases or networks … they just need their business application available when they need it. They don’t even care about how long it takes someone to respond to their call or provide a workaround – because they are just determining factors of application availability. If the application is available as it should be, then everything else will fall into place.

So, if there’s only one measurement … what should it be? As one of the pioneers in the Utility Computing space, Google obviously would have put a lot of thought into this … and they came up with 99.9% availability as their SLA commitment. This means that their applications can be unavailable for 8.7 hours per year – just over one business day in a whole year. If they exceed that, they start giving free service (as defined here) to each of their 1.75 million business customers! 99.9% (often called “three-nines”) seems like a pretty realistic expectation for a UC customer … considering this is probably FAR less downtime than they experience with their self-maintained applications.

So there’s one more thing that UC makes easier for it’s consumers. No complex SLAs to wade through; no IT department trying to use those SLAs to defend itself from the business it is supposed to be supporting; just a simple, measurable, actionable number that actually means something to the business.

Scott Wells

Ever since the early 1990s the information superhighway has helped collaboration among agencies and organizations evolve. Without this communication and data sharing, it would be nearly impossible to meet all the regulations, laws and standards set into place today. There are now countless services and applications that act as road signs along the superhighway, helping guide us toward our end result. As these services become more abundant, cloud computing has become a hot buzz word to describe the range of possibilities at our fingertips.

The metaphor of the cloud to represent Internet-as-a-service has different meaning to various analysts and technology groups. Some narrowly define cloud computing as virtual services available over the Internet. Others consider anything outside the firewall as “in the cloud.” Regardless of the scope of the definition, cloud computing is any subscription-based or pay-per-use service that helps IT meet increasing needs without investing in new infrastructure, software or hardware.

The following are several of the technologies that are encompassed by cloud computing:

• Software as a service (SaaS): Offers a single application through the browser to thousands of customers (Salesforce.com)
• Utility computing: Offers storage and virtual servers that IT can access on demand (Amazon.com)
• Web services: Helps developers create functionality over the Internet, rather than delivering full-blown applications (GoogleMaps)
• Platform as a service: Offers development environments as a service. Developers build applications that run on the providers infrastructure (Google App Engine)
• Managed service providers (MSP): An IT application, rather than an end user application (anti-spam service)

The storage industry is not immune to the changes cloud computing is ushering in. Cloud storage has the potential to lower costs, reduce capital investments and provide increased scalability as it becomes another viable tier of online storage. These benefits hold great appeal to both large and small enterprises as the economic downturn, shrinking IT budgets and reduced staffing put pressure on tech departments to cut costs while also storing and protecting growing mountains of data. However, storage in the cloud, or storage as a service, has its own set of potential issues around performance. Specifically, for applications that require a large amount of data that needs to be accessed instantly, it might still be faster to use physical storage located within the traditional IT data center.

However, with such an impressive resume of capabilities, it is hard to understand why everyone wouldn’t jump onto the cloud computing bandwagon. There are a couple reasons that immediately stand out. When you consider the amount of control a company forfeits by moving data and operations to the cloud, the risks become clear. Legal documents, intellectual property and other crucial company data are not easily transitioned into applications that are not located directly on a company’s server due to the risk of theft or accidental misappropriation. Also adding to the mix is the risk of down time. If the Internet goes down, a company’s employees are left without the tools they need to continue daily operations.

Despite these concerns, it is easy to envision a future that has most daily operations taking place in the cloud. Gartner has predicted cloud computing will grow from $46 billion a year to $150 billion by 2013. Corporate IT departments are increasingly drawn in to the benefits and time-saving, budget-reducing aspects that are undeniable. Also, as technology evolves, many of the above concerns are diminished. For instance, many Web applications are now developed with an offline component that enables users to continue working when there is an Internet outage. Little by little, the concerns of cloud computing and the hiccups involved with many of its components are replaced by the benefits.

Amazon, Google, Microsoft, Sun, IBM and other leading technology vendors already offer cloud service capabilities. Amazon invited students, educators and researchers to apply for grants that would give them free access to the company’s hosted computing services. At Microsoft’s Management Summit 2009, the company’s main focus was around the virtualized environments of tomorrow’s datacenters and how mobile devices will connect to the cloud.

Here at BakBone, we are looking at ways to incorporate our technologies into these new cloud architectures. One way we can leverage the cloud is by ensuring our products are cloud friendly so customers can use the cloud as just another choice of backup media or online disk storage with immediate off-site flexibility. As we all fly down the information highway, looking to follow the road signs, it is encouraging to see the new possibilities. However, it is also important to continually check these technologies for the security and reliability necessary to sustain the trip. If cloud computing delivers what many are projecting and finds solutions to security and privacy issues, it could very well be the way of the future.

One of the most common arguments used against Utility Computing is one that states “because my IT is mission critical to my business, it needs to be bulletproof … and I can’t rely on a third-party to provide that level of service”. When using this argument, people even cite examples like the recent GMail outage (which some wags called “GFail”) as an example of why Utility Computing won’t work.

But in reality, how different is this to the expensive corporate email systems many companies use? According to Osterman Research, corporate e-mail systems in mid-size and large organizations have a mean of 53 minutes of unplanned downtime in a typical month. That works out to almost 11 hours a year … and that’s just the UNPLANNED downtime. Also, don’t forget that those corporate email systems are maintained by expensive corporate IT staff. Compare that to GMail – who have just had just a few outages this year (all of which they fixed quickly) on a system that is free for the majority of its users, and very affordable for those businesses who pay for it. Its not hard to see which side of the argument makes the most sense.

Its also interesting to observe the reactions of people after this incident. Most of the comments on the articles written about “GFail” were sharply divided into the two camps of “Business” and “Technical”. The technical guys were indignant that they had lost their email, and threw about suggestions that fellow geeks should “maintain an IMAP client” or “enable POP access” and there were some genuinely worried people out there … “Words and phrases like “apocalypse” and “digital terrorism” really did come to mind when I realized the #gfail” … perhaps a little dramatic? The business perspective was much more level-headed, with people commenting that while the outage was inconvenient, Google’s response was quick and professional. It was the business people making comments like “We use Google Apps for our small consulting business. The outage affected us, but not critically. The question for a business has to be – what do you get in return for the money you pay?” … and this is the crux of the matter. Email – like other Utility Computing applications – is a business tool. It does not exist for the gratification of the “techies”, and it is not about them that we should be worried when an outage is experienced. On the contrary, it’s their job to get things back up and running so that business is impacted as little as possible.

So – if you want to talk about Utility Computing, don’t talk to a techie (at least, not at first) … talk to a business person who understands why these applications exist in the first place. They will tell you that they don’t need bulletproof, just reliable … and there’s a big, and expensive, difference!

Earlier this year I characterised platform as a service as the filling in my ‘cloudburger’:

This isn’t meant to infer that PaaS is the tastiest piece of the cloud, though the recent acquisition of SpringSource by VMWare for $420m would seem to suggest this (well done Rod and team). What I was in fact trying to show with this illustration is that PaaS is a thinner piece of the overall value stack than either the underlying infrastructure as a service (IaaS) where the value comes mostly from the capital assets in the data center, or the Software as a Service (SaaS) that’s built on top – delivering the actual business functions.

My model seems to tally much better with the more modest price of $28m paid by Tibco for the acquisition of DataSynapse. So why the huge gap? Why is DataSynapse a salami PaaS, whilst SpringSource is a juicy fat gourmet burger? Here are some thoughts on what happened:

I started working with DataSynapse around the back end of 2003 just as ‘grid’ and ‘utility computing’ were becoming white hot in financial services IT. At the time it seemed like DataSynapse and Platform Computing would be the next big tech IPOs, but things didn’t work out that way. Grid struggled to escape from the world of High Performance Computing (HPC), despite all the promise that it held to revolutionise development and infrastructure management. I think part of the problem was around flexibility – grid platforms like DataSynapse had too much of it. They didn’t say to the developer ‘this is the right way to do things, and we’re going to help you get there’, but rather ‘you can run anything on this platform’, ‘you can bring out your smelly old legacy code, it will still work’; and by and large that’s exactly what happened – smelly old code got lifted off cobbled together home brew HPC platforms and dropped onto the shiny new grid middleware. The result of this is that there wasn’t anything compelling for developers to get their teeth into. There was also precious little engagement with the developer community on places like TheServerSide.com (which still mattered back then).

I do recall one app where the dev team were persuaded to use the grid rather than building a dedicated infrastructure. They saved months of development time by making use of the PaaS qualities of the grid, and also didn’t have to bother themselves with the usual hassles of buying hardware. I’m still somewhat stunned that more developers weren’t pushed in that direction (especially given the noise about utility computing that my CIO was making at the time), but there was a huge gap between rhetoric and governance.

So… grid failed to escape the HPC gravitation field because it failed to attract developers. Which is exactly what didn’t happen with Spring. Spring began it’s life in the full glare of TheServerSide, it was the community that made it what it became. It was, and remains, compelling to developers because it leads them to the right way to do things, which is also the simple way to do things. Adrian’s work on folding aspect oriented programming (AOP) under the hood of Spring was pure genius (I remain impressed to this day by a presentation he once gave where there were powerful code examples in a large readable font on PowerPoint slides). Open Source was a key factor in Spring’s popularity and success, though I feel that there were times when this didn’t guarantee commercial success. Rod has indeed done an awesome job of turning a consulting firm into a VC backed Open Source firm into the PaaS piece of the worlds most successful virtualisation company. I’m probably not alone in wondering where the rabbit came from when it got pulled out of the hat. Of course it remains to be seen whether VMW get their money’s worth from the deal, but at less than 4% of their present market capitalisation perhaps the PaaS piece is still a thin filling in their burger?

There are more cloudburgers to be made here. Obviously Microsoft’s Azure is going to have a significant impact, especially for all those with a .Net leaning, and makes them an unlikely acquirer of anything else in this space. Citrix now surely has to make a move to get some kind of PaaS story. DataSynapse’s old competitor Platform Computing is still independent and has a reasonably strong customer base. It’s also worth keeping an eye on Paremus, as their service fabric arguably beats SpringDM at its own game.

Every time I (or almost anyone else) talks about Utility Computing, we usually use the electricity utility as a metaphor. Of course, there are many similarities with the growth of both industries, and the manner in which they impacted (or will impact) society as a whole. In Nicholas Carr’s excellent book “The Big Switch” he spends almost half his time explaining the history of the electricity industry, and how it grew across America. Its a really interesting story, and one that clearly demonstrates how something once considered a private resource became a public utility, offered to industry at a fraction of the cost that it was costing them when they were producing it themselves.

So for comparisons about the development of the industry, its actually a really good metaphor. But for people trying to visualize what Utility Computing will actually mean to them on a day-to-day basis, it falls a little flat. You see, the problem with electricity (as a metaphor) is that it is pretty much always the same. Anyplace that you find a standard power socket, you will find the same thing coming out of it – 110v AC @ 50Hz – and that really doesn’t change. And while that’s great for owners of electrical appliances, its less helpful when trying to explain how Utility Computing might be used to support business. After all, every business relies on different computing applications, so providing exactly the same thing to everyone wouldn’t work. Hence the new metaphor.

My new metaphor for Utility Computing is Cable Television. I used this briefly in my last blog post, so the idea isn’t entirely new … but its only a few days old! So, lets compare the two utilities and consider the similarities:

So – you can see the similarities … yes? Is this a better way of explaining Utility Computing? Please comment below, and let me know what you think!

I’ve been off the radar in recent weeks as things around 6fusion have been busy, but few weeks ago we blogged about the Profiler application we’ve been working on. I’ve just come up for a bit of air on the project but while I was in the thick of things we unearthed an interesting sample of real life, multi-faceted, cloud impact. I thought it was worth sharing and my IT Director friend at the company I’m about to tell you about said it was ok to share a tidbit with the world (Special thanks, S.).

What we find intriguing about the report capabilities we’ve enabled is that we are helping the customer cross the cloud chasm by using dollars and cents as the vessel. We believe the price to value ratio trumps even the most innovative of technologies in almost every purchasing decision. So it stands to reason that if you can’t tell a customer ‘what it costs’, you are pretty much just selling to yourself.

So here is how this individual client is using this economic bridge to drive cloud migration priorities for their organization: They identified a set of workloads they urgently need infrastructure to perform vital test and dev processes. Inexpensively and safely, they can operate those workloads in cost-reduced resources located in the U.S. Next, they identified two mission critical systems – Exchange and SQL – that they can duplicate leveraging the public cloud infrastructure located in the Caribbean/Latin America region. This is critical for the customer because things like email and databases must remain in certain jurisdictions only (excluding the U.S).  This issue transcends many enterprise cloud deployment scenarios and the subject has is getting a lot of coverage lately.

We’re in the middle of a pretty severe “economic downturn”. That’s what the politicians call it, anyway. People who have just lost their house/job/savings might be a little less optimistic. Either way, most people would agree that the “bubble” that we were all (apparently) living in in the late nineties has burst – its remnants fallen to the floor, trickled across the cold cement, down a rusty old sewer grate and become part of a much less palatable fluid.

So, with all this economic doom and gloom, people are arguing that now is not the time to introduce something as radical as Utility Computing. Surely in this financial environment, we should be battening down the hatches and securing our businesses to weather out the storm … rather than investing time and money into a new technology? Actually, precisely the opposite is true.

Now is the time that your business needs to:

1. Focus on your Core. Whatever the good/service is that you offer to your customers – focus on that. If you are a dentist, go out of your way to do the best possible job on your patients’ teeth. If you are an attorney, focus on winning cases for your clients. If you are a builder, build the finest houses for your customers. If something isn’t core to your business, work out how to get rid of it so that you can focus on the reason(s) that your customers come to you.
2. Do something different. Chugging along at the usual pace is NOT going to help you in an economic downturn. Your competition will be more hungry, and will actively target your customers. Sit on your hands and you will lose those customers. Your competitors are not doing the same old thing they have always done … and neither can you. Ben Franklin, Albert Einstein and Rita Mae Brown have all be attributed with the quote “Insanity is doing the same thing over and over again and expecting different results” – whoever said it, it’s timely advice.
3. Don’t take unconsidered risks … but take risks. Now is certainly not the time to be foolish about risk – but it IS the time to take risk. In fact, that’s your best route out of this mess. Doing something different is taking a risk, but doing something different that allows you to focus on your core … now that’s a smart risk to take.
4. Understand and embrace your customers. In order to focus on why your customers come to you, you have to know them. Knowing them means understanding why they came to you in the first place, and why they keep coming back. And of course, once you know them, you embrace them to keep them coming back, to bring you new business and to further understand them. Your customers are your business.
5. Do what you are good at doing. I know – this is the same as the first point, but its really important. Now is not the time to waste effort on non-core activities …

… which brings me back to the topic of Utility Computing. For most businesses, managing computer applications is non-core. Sure, you need to be able to access those applications to run your business, and you need to keep the information in those applications safe and secure – but why are you spending valuable customer time maintaining those applications?

A huge benefit of UC is that it removes the headache of computer maintenance from your list of responsibilities. In much the same way that you rely on the electricity to work when you plug in an appliance – or the phone to work when you lift the receiver – you can rely on UC to provide you with the business applications you need when you need them. Think of it like cable TV – you pay just for the channels that you need and that’s what gets served to you when you turn on your television. If your needs change, you call the cable company and you get a different set of channels – maybe more kids shows, or more movies – whatever you need at the time. UC is similar – it provides the applications your business needs when you need them. When your needs change, UC adjusts with you – without you having to worry about buying another server, more disk space or anything else.

Instead of installing another software upgrade, get a new customer. Instead of installing a bigger hard drive, embrace an existing customer. Instead of worrying about whether your backups are working, take some business from your competitors … and focus on your core.

As I scour the web for the latest news on Utility Computing, I invariably come upon software/hardware vendors trying to cloud the truth (pun intended) and tell me that UC, SaaS and Cloud Computing are all the same thing. They are related, but are not the same.

All three of these technologies are going to have a significant impact on the software/hardware vendors – many of whom may even be forced out of business by one or more of them – and so I can completely understand why those vendors would want to shape your thinking around them … but let’s be perfectly clear:

Software as a Service (SaaS)   ≠   Cloud Computing ≠   Utility Computing

Let’s start with the topic closest to the hearts of the software vendors. Software as a Service (SaaS) is an alternative delivery method for software solutions. With SaaS, the customer doesn’t install the software on their own hardware, but instead accesses software “hosted” on other hardware (usually owned or controlled by the software vendor). SaaS has many benefits over traditional software delivery in that maintenance (software upgrades/patches) is usually managed by the vendor – taking a lot of the complexity out of owning a software package. SaaS also means that the customer doesn’t need to worry about storage or server hardware for the application – resulting in applications that can scale quickly and price themselves accordingly. SaaS applications are sometimes delivered using Cloud Computing, and if they are an example of a type of Utility Computing … but they are not the same thing.

How about Cloud Computing? This is probably the most hype-laden term of the three, and is being thrown around with gay abandon by the software and hardware vendors alike. The clearest and simplest way to think about Cloud Computing is to think of it as Hardware-as-a-Service. Cloud Computing is a “technology” that allows you to make use of servers and storage (often operating systems and applications too) that are “rented” to you on a pay-as-you-use basis. Use a lot of computational power for a short time … or a little for a long time, and the price adjusts automatically. Use more storage, or less storage and just pay for what you use. Cloud computing offers developers a way to build and test out new applications without having to invest in lots of machinery … and it offers business owners an alternative to buying their own hardware. Just rent it instead – and pay for what you need to use. If your needs change quickly, so can the hardware in your “cloud”. Cloud Computing is sometimes used to deliver SaaS applications, and its an important part of Utility Computing … but its not the same thing.

Utility Computing (UC) is the topic of this blog, and is the most important of the three technologies. Just like it sounds, UC is about the provision of computing resources as a utility. Plug an appliance into a socket and instantly have available to you the computing resources you need. The applications you need, the storage you require, the computational power you want – all from a hole in the wall. Utility Computing might use Cloud Computing as a way to access the hardware it requires to provide you with your service … and it might use applications that are created in a SaaS mode … but that’s not the point. UC is like the 110v power sockets in your home or office – you can plug anything into them and get the power you need. By comparison, SaaS is more like renting a power tool – its great for a single purpose, but you still need a bunch of other tools of your own. And then there’s Cloud Computing – that’s like the technology that the power station uses to provide you with the 110v in the first place. It’s important to them, but do you really care?

As David Berlind said in his post, “there are those businesses that can probably justify insourcing their infrastructure. But those businesses are fewer and farther between and if you ask me, sales in the SMB infrastructure channel are basically surviving on a myth: the myth that SMBs should be insourcing” … and that’s why the vendors are clouding the truth.

The benefits of technology and more specifically the internet, seem to be endless: information and data accessibility, entertainment, commerce, ease of communication, etc. For me, technology is attractive because it  makes our lives easier to navigate. The innovation of cloud computing has made this even more apparent. The idea of syncing all of your files (photos, music, documents, etc.) and having accessibility wherever you are, is absolutely amazing. When I was in college at Michigan State University, each student received 100MB of AFS space. AFS is the acronym for “Andrew File System,” it is the central MSU network file storage system, which was originally developed at Carnegie Mellon University in 1984. The idea was to provide a campus-wide file system for home directories. With this, I built my first website. I also used this space to save files for all of my different courses. I could then visit the main library or friends’ dorm rooms and still have access to all my files. I thought this was great, but I used it mainly as a FTP service, which wasn’t very convenient. However, cloud computing is now available to everyone and sometimes completely free.

Many people don’t understand what cloud computing is, although many people use it everyday. Whether you save emails from friends or family in your Gmail or Hotmail account, post photos to Flickr or videos to YouTube; you are saving your files on a network other than your personal computer – this is the cloud. But the cloud is much more intelligent than what I just described. These examples describe hosting solutions for you to save content, but the cloud also provides real-time access to save, edit and share documents, spreadsheets, presentations, music and movies. Many companies like IBM, Microsoft, Google, Amazon and Apple offer cloud computing solutions.

The cloud provides many opportunities for brands to create innovative marketing solutions such as Apple MobileMe, Nike+ or Google Maps. But what company will win? What brand will win the great race to brand the clouds?

What is cloud computing?

Cloud computing, also known as utility computing or hardware as a service (HaaS), is the instant access to dynamic and scalable resources to operate software and applications over the internet. The cloud is defined by six elements:

1. Infrastructure (Infrastructure as a Service – IaaS): Is a service providing the seamless architecture and resources (e.g. servers, CPU, memory, etc.) for instant, dynamic and scalable computing power (e.g. Grid computing, virtualization, etc.)
2. Storage: Is a service simply allowing you to store your content (e.g. Rackspace)
3. Platform (Platform as a Service – PaaS): Is the service that provides  hardware and computing software allowing you to remotely access and operate your cloud server to develop, test, deploy, host and maintain applications (e.g. Microsoft Azure Services Platform, Amazon Web Services, Apple MobileMe, Microsoft Live Mesh,etc.)
4. Applications: Are the tools that provide functionality to perform various computing tasks, such as uploading creating, editing and sharing documents, spreadsheets or presentations (e.g. Google Docs: Document, Spreadsheet, Presentation, Form)
5. Software/Service (Software as a Service – SaaS): Is the service that delivers and is utilized in real-time over the internet (e.g. Google Maps, OpenID, PayPal, etc.)
6. Client: Is the computer hardware/software dependent on cloud computing in order to operate (e.g. Mozilla Firefox, Palm Pre webOS, Google G1 Android, Apple iPhone OS)

The idea behind the cloud seems so natural, why not have access to everything you want, whenever you want? Moreover, why not use another network other than your own? Especially if it’s cost efficient. In a Wired article titled “Cloud Computing. Available at Amazon.com Today,” Spencer Reiss and the CEO of Amazon, Jeff Bezos, discuss the cloud:

“Utility computing is Web 2.0’s version of rocket fuel. ‘You don’t generate your own electricity,’ Bezos says. ‘Why generate your own computing?’ The forces driving online apps — internet bandwidth and reliability — also mean that, in terms of data per dollar, servers in your closet or co-location facility can’t compete with industrial-scale bits piped in from hundreds, even thousands, of miles away.”

The Cloud: Strengths

• Accessibility: Cloud-based services allow you to retrieve data and information wherever you are: home, work or play – as long as you have an internet connection
• Captivating: These services become a part of your daily life because they provide utility and convenience
• Convenience: The ability to access files, music and photos no matter where you are
• Content Generation: Users are able to create content wherever they are and in some cases in places they normally wouldn’t
• Inexpensive: The cost to utilize the cloud varies. The current cost structure is either free, based on a monthly subscription or by frequency of use
• Instant Computing Power: Every computer is limited to certain level of power, however with the cloud you can use someone else’s  computing power instantly without purchasing another hard drive
• Scalability: As you require additional space to conduct more work, the cloud allows you to readily increase resources
  
• Synchronization: My personal favorite benefit of the cloud, the ability to sync online and files on other computers
• Usefulness: This is the true strength that every brand should utilize. The cloud can support many different services that provide utility

The Cloud: Weaknesses

• Profit Margins: In a Wired article titled “Microsoft’s Ray Ozzie Sees Lower Margins From Cloud Computing,” Reuters explains that “Microsoft Corp’s chief software architect says the profit margins on providing online services — broadly known as cloud computing — would likely yield a lower profit margin than the company’s existing software business.” This obviously isn’t a disadvantage for consumers, but for companies, the margin from software is greater than cloud computing
• Reliability: The reliability of cloud computing can be an issue. If your internet connection goes down, you won’t have access to your most important files (e.g. Google doc or map)
• Speed: The efficiency of your infrastructure and internet connection will affect performance; and depending on the platform you are using, this may help or hinder performance
• Ubiquity: While the cloud-based service you use for your personal files are technically available all the time, anywhere; you may not always have access due to internet accessibility or connection speed

The Cloud and Branding

Understanding the advantages and disadvantages of the cloud allows brands to utilize the inherent drama of cloud technology to create innovative marketing solutions. In an ADWEEK article titled “Investing in the Cloud” Bob Greenberg, the chairman, CEO of R/GA, explains that “there is absolutely no reason why brands can’t get into this game. At its core, cloud-based marketing is powered by a simple idea: be useful to your customers and they in turn will be loyal to your brand. The cloud is a massive engine of technological utility, with myriad ways to be useful to customers.”  More specifically, the cloud allows brands to create marketing services that:

• Provide utility. Brands have the opportunity to augment current services or create new services that are useful in the daily lives of their customers, which could enhance their brand image and loyalty
• Create an engaging experience. These interactive services captivate customers
• Encourage content generation. As consumers continue to use these services, they are directly fueling the cloud-based service with new content as it is integrated into their daily lives
  
• Utilize a new medium. As Greenberg explains, “…by building cloud-based services, brands create instances of “owned” media. These media channels have reach, frequency and 100 percent relevance with the intended audience.”
• Decrease media budget. As Greenberg explains, “…the old investment model for advertising was based on roughly a 20/80 split: spend 20 percent of the budget conceiving and producing the idea, and 80 percent on media delivering the message. The cloud-based service model inverses this split: spend the lion’s share developing the technology and just a small amount on a bit of paid media to spark awareness. Beyond that, “earned” media takes over and consumers and PR channels spread awareness virally to drive further adoption.”
• Utilize a new financial model. Brands must continue to support advertising campaigns by investing in media otherwise results will be nonexistent. However, production for cloud-based services is inexpensive and continues to reach consumers frequently as they become dependent on these useful services to help navigate their lives. Over time, the cloud will decrease marketing costs

Below are case studies of brands that understand and embrace the cloud as part of their offerings as well as a few brands that just don’t understand the cloud.

Amazon Web Services (AWS)

One of the pioneers of cloud computing is Amazon. Cloud computing became a solution for Amazon when they were on a journey to discover something very different. In 1999, Amazon wanted to open its storefronts up to third-party selling, all in response to eBay. At the time, it seemed odd that Amazon would open the doors to third-parties, but in Jeff Bezos’ words, “If you’re trying to have not just every book but every out-of-print book, every indie-band CD, and every vinyl record, there’s no way you’re going to do it on your own. You have to open up.” The result was Amazon auctions, which later became the current Amazon Marketplace. But to make this idea a reality, they had to solve technical problems with speed, reliability and scalability to support these third-party storefronts on their databases and servers. This resulted in a new architecture with unexpected opportunities. As stated by Spencer Reiss in a Wired article titled “Cloud Computing. Available at Amazon.com Today,” Amazon’s next new business was “opening not just the store in the sky, but the very silicon and software that keeps it aloft.” Reiss further explains that:

“AWS capitalizes on Amazon’s combination of computational skills and operational savvy. It piggybacks on a multibillion-dollar IT infrastructure. And it pulls in a whole new category of customers looking for rock-solid scalable computing on demand — blue-chip startups like Zillow and PowerSet, kids in garages building the next Google, even adventurous corporate IT jocks looking to offload some of the drudgery.”

AWS is an example of a cloud computing platform (platform as a service – PaaS) and leverages all of the cloud’s advantages. What’s interesting about AWS is that it wasn’t created as a product, but as a byproduct from another idea. Regardless, Amazon successfully utilized the cloud to develop a cloud service that companies and individuals will utilize. Further, as Amazon continues to refine its service, the overall brand image will be augmented and hopefully brand loyalty will follow in other Amazon services. I think it will.

New York Times

Similar to how Google Books allows users to search full text from millions of books, the New York Times as digitized over 150 years worth of newspapers into searchable PDFs all of which are hosted on Amazon’s cloud servers. This is a great example of a brand facing pressure to remain relevant as emerging media changes the landscape. Again, providing useful information in a convenient manner and planning for future growth. FYI: Twitter and Justin.tv also utilize AWS to host data and information.

Google Docs

If you are not familiar with Google Docs, the video above by Common Craft provides a great explanation, in plain English. Google Docs provides every benefit that the cloud can offer, everything from convenience to scalability to synchronization. And actually, scalability will be even more evident with the future release of the GDrive, which will allow consumers to purchase additional space for their Gmail, Docs or Picasa photos. Search was the main service that Google provided, however they saw the opportunity in the clouds and beat Microsoft to claim the cloud-based word processing and spreadsheet market. While Microsoft’s cloud-based Microsoft Office Live Workspace is available, it was Google that really took advantage of the cloud. Of course hindsight is always 20/20, but the inherent problem with word processing and spreadsheet files was that you didn’t have one central version – the cloud made this possible. Google saw this opportunity and seized the moment.

Nike+

Nike+ is a perfect example of what brands can accomplish by utilizing the cloud to augment or create products/services that become a part of people’s lives and change it in a positive way. For those runners that have a Nike+iPod, upon completing a run, they can sync their iPods and upload their data to the Nike+ website. Here is where the beauty of the cloud works. Once runners visit the site, they can review a dashboard of recent runs, set goals and create challenges or training programs. And even sign-up for online and offline events, such as The Nike+ Human Race. All of this information is saved in the clouds and users have the ability to access it via the Nike+ application (i.e. website). The Nike+ sensor and chip may technically be the product Nike sells, however it is the service and experience they provide that makes this an amazing brand experience. On a personal note,  I have been using Nike+ for almost three years now and absolutely love it. Only a few months ago, shortly after Wired featured Nike+ on the cover for unleashing the power of personal metrics, Nike with the help of R/GA completely redesigned the Nike+ website. It’s beautiful. Usability has been enhanced. And social media tools have been integrated to help extend awareness of the product/service to a larger audience.

Fiat eco:Drive

Together, AKQA and Fiat created a Nike+ for Fiat vehicles called Fiat eco:Drive. Utilizing a USB drive, this technology tracks your driving technique and the online application than analyzes your driving style to help you improve how efficient you drive in order to use less fuel, which will reduce your CO2 emissions and save you money. Similar to Nike+, users can share their information with a community, called Ecoville. Again, it’s this cloud-based application that allows users to reference data and better understand how they can change their driving style to help the environment. Users do not save their information on their personal computers, but in the clouds. Very impressive.

Kodak Gallery

Similar to Flickr, Kodak provided a free online photo gallery service where users could save, print and share their photos. This business model was sustained on the hope that customers would at some point, opt-in for premium services to offset the free users, also known as the “freeium” model. However, Kodak Gallery decided to change their business model. In an AdAge article titled “This Cloud (Computing) Has No Silver Lining,” Matthew Knell explains that Kodak began requiring “users to make minimum purchases in order to subsidize the use of its websites and kill its “freemium” model. The new plans range from $4.99 to $19.99 per month. And if you don’t pay the fee or provide a minimum purchase by a given date? Your photos will be deleted.” This is a problem many online newspapers are experiencing right now. As newspapers continue to lose subscribers, many online versions of the newspapers (e.g. Wall Street Journal) are asking users to subscribe for premium online services. But even the Wall Street Journal still provides some free online services. Kodak essentially implemented a bait and switch tactic to lure customers in and quickly changed their business model. By changing their business model, Kodak ruined their brand image and may have ended the loyalty that many of the users had. While the cloud service that Kodak initially provided fulfilled the users’ expectations of accessibility, convenience and price – by changing their service, Kodak removed what may have been the most important benefit to its customers. Before brands develop cloud services, they must plan for the future. If you foresee that you may have to charge your users in the future, do so at the onset and provide a service that is worth the financial commitment.

Evernote

And now for the number one reason I love the cloud, data synchronization. There are many brands out there right now that are developing apps or services around this benefit: Apple MobileMe, Microsoft Live Mesh and Evernote. This technology allows users to sync files, folders and other data across multiple devises. Evernote’s tag is “Remember Everything” and this is completely true. Users are able to create content, sync it on their computer, mobile phone or online and then access it anywhere. I downloaded the Evernote app for my Palm Pre, but I have to wait until I purchase Leopard for my Mac.

The Great Race to Brand the Clouds

The cloud inherently provides many opportunities for brands to create innovative marketing solutions such as those listed above. To answer the question I posed earlier, what company will win? What brand will win the great race to brand the clouds? The answer is every brand that embraces the cloud and creates new services that are engaging and encourage content generation, and utilize a new medium that is cost effective. Lastly, as Bob Greenberg explains in an ADWEEK article titled “Investing in the Cloud” the cloud “is about the democratization of technology – and democracy is a good thing. Make sure your brand participates.” However, while it is a democracy, I believe a few brands make it a monarchy:

• Amazon branded the clouds as a platform (Platform as a Service – PaaS). Interesting note, Amazon was the first company to sell cloud computing as a service
• Google branded the clouds for utility applications. While Microsoft does have their full Office suite available online, Google made a bigger impact
• Nike+ branded the clouds for entertainment applications. As of yet, we have not seen anything as integrated into the lives of its users

So, let’s start this off with some honesty. The name of this blog is just a little tongue-in-cheek. Of course IT will continue to exist … it will just be somewhere else (and strangely, it doesn’t matter where). Which means that it WON’T exist in the form of servers / hubs / switches / databases / hard drives sitting in YOUR back room. Instead, you will plug in your computer and your applications will be available.

No installations. No upgrades. No backups. No more IT.

How does that sound? A little far-fetched? Actually, you are probably using more Utility Computing now than you realize. When you upload your photos to Flickr, you are using their servers to store your photos. When you check your Gmail or Hotmail accounts, you are reading emails stored somewhere else, in an application running somewhere else. When you write a blog using WordPress (like this one), you are using their applications to store your blog and serve it to your readers. You don’t know where those applications are running, nor do you know where your data and photos are being stored – and it doesn’t matter. As long as your email/photos/blog is available when you need it, why WOULD you care? Do you know where the electricity you are using right now is being generated?

It seems to me that Utility Computing is one of the most revolutionary things to happen in the history of technology. Here we have an opportunity to change the world – in the same way that other utilities like electricity, rail transport and piped sewage have transformed our society in the past. None of those things changed the world through their invention NEARLY as much as they did through their transformation into utilities.

So … what do you think?

For the past several months the team at 6fusion has been working directly with a select group of customers using a prototype software tool called the UC6 Profiler.  The UC6 Profiler is an agent we created that uses our patent-pending algorithm for measuring utility computing consumption.  The UC6 Profiler meters live client applications running in their own offices or data centers, recording resource usage as though the applications were all running within 6fusion’s federated cloud infrastructure. The report output paints a clear cost picture, application by application, giving the customer an unprecedented set of data to guide and support their decision to migrate any or all applications to the cloud.   We’ve provided an example of the output report here.  It’s early stages yet for this, so the info is pretty raw. We’ll ‘gloss it up’ when it goes into production later in the year.

In our experience, the number one customer question about the cloud is “what does it cost.“  Like others in the field, we see the ability to profile consumption and report running costs to be one of the missing links to cloud computing adoption.  As you can see in the sample report provided, this customer can identify that the application called “CUSTMAIL01″ would cost the ‘most’ to run in the cloud.  Conversely, the application called “CUSTAAC001″ would cost the least.

Going beyond the customer implications, the UC6 Profiler could also be the missing link for the IT Service Provider community to truly take the reins of the cloud and leverage it to build significant new revenue opportunities.  But the implications don’t stop there.  Profiling can play a huge role for ISVs looking to plan and price SaaS offerings.  I’ll elaborate on this in another blog post.  We’ll focus on moving one mountain at a time!

Here are a few other tidbits we can share with you for now:

• The Profiler agents will work with both virtualized an non virtualized applications
• Users can profile web applications or traditional client/server applications
• There are no significant O/S limitations
• The Profiler will be a completely free download for registered 6fusion partners.

Stay tuned for more to come regarding the UC6 Profiler in the coming weeks!