As I talk to people about the Cloud, I realize that the first question I still often get is “What is this thing called Cloud?” If you ask more than one person what the Cloud is, you will get more than one answer. The reason is that Cloud Computing is a concept that allows you to move or extend some portion of your information technology into the Internet. It isn’t a product.
Let’s back up and figure out what the problem is. Why does anyone need Cloud Computing? There are really three problems, which I’ll simplify to
We’ll come back to each of these as we wander through this.
What is wrong with continuing to provide computer resources like we have for past decades? After all, everything gets cheaper and more powerful. As one example, the thing at the left is a one-bit adder from a Burroughs B5500 in the mid-1960s. All that did, literally, was add one and one, and 1 + 0, 0 + 1, or 0 + 0, and deal with the carry bit from the identical one-bit adder to its virtual right. The adder plugged into a circuit board in a cabinet the size of a refrigerator. It took between four and eight of those cabinets to make a single computer. Cost: around $1.2M, in 1965 dollars. The thing on the right is my HTC Droid. I think with all the rebates it was less than $200, in 2010 dollars. The Droid has more memory, more processing power, more storage, and much better connectivity then the B5500, by at least three orders of magnitude on each factor.
The real underlying problem is that the need for computer resources is increasing much faster. There are companies who are buying and installing a semi-trailer full of new servers every month. There are companies who have had to move their data centers because they couldn’t get enough additional power to run their additional servers in their existing location.
Aggravation: Managing all those servers is hard. It takes an organization with the right skills, monitoring facilities, and constant attention. Most companies don’t want to have those people – it isn’t part of their core competency.
Along came Managed Services Companies that specialize in doing exactly that, managing hundreds or thousands of servers for each of dozens or hundreds of different companies. With high speed communications, these Managed Services companies could even set up huge data centers in places with lots of inexpensive power, and move the entire data centers of their customers into their own facility, reducing the Managed Services company’s costs even more since they no longer need a dedicated staff at each customer location. As most of you will have realized, this is that evil concept of “outsourcing.” Companies outsourced their data centers, sometimes leaving them in their facility, sometimes moving them elsewhere, like India. Usually the customer retained ownership of the equipment.
Accounting: All of this equipment is capital expense, has to be depreciated over time, and rarely has any relationship to the things that really matter to the bottom line. The capital expense becomes a step function: when it is time to add new equipment or upgrade old equipment, you have a sharp spike in capital expenses, all to support the probability that you will have the revenue over time to cover it.
Some companies dealt with that issue by decreeing that buying a $5K server didn’t count as a capital expense, but was just an operational expense. If a group needed a server to run an internal or external facing application, they just bought a server. Or ten servers. Just for that application. No capital expense, Likely no real approval process. Often not connected up to the corporate server management and backup processes. Thus increasing Aggravation. But at least the cost of those servers could be measured against the revenue or other value the group brought in.
I’ve been talking mostly about servers, but servers are only one piece of the puzzle. Another major component is storage. Most companies are increasing their storage needs by 20%-50% a year. I know of one organization that is increasing its storage needs by 20% a month. Storage has to be backed up. If you think about how long it takes you to back up your own PC’s 500GB (half a terabyte) of storage periodically, think about how long it will take to back up a petabyte of storage (1,000 terabytes or one million gigabytes). Many organizations have many petabytes of storage, some have exabytes of storage (1,000 petabytes). Up goes Aggravation, and Accounting woes.
Agility: When that group wanted those new servers, they needed to make a guess as to how many, go through whatever expense approval process or bid process the company specified even for operational expense items, order the servers, get them installed, get the software installed, get them integrated into the corporate network, … before they could be used. In the best case, this is days. Often months. You had to guess high. You had to have enough resources to match the best possible scenario due to the success of a new marketing campaign, periodic spikes (e.g., quarter-end reporting), and seasonal variations. You were not a very agile organization because you couldn’t react quickly to new needs.
The effect of all of this is that in most companies their servers are running at 10%-40% utilization. Or said another way, they weren’t really using 60%-90% of their servers. Storage was also underutilized, but usually not to the same extent. This adds to both Aggravation and Accounting.
Along comes the dot com bust, and companies found themselves in a real Accounting bind. Data center managers heard “You must cut expenses by 20%” or maybe 50%. And do it again next year. “Do more with less” became the mantra. Oh, but keep up with the competition. Up goes the level of Aggravation, down goes Agility.
Over the hill rides the white knight of Virtualization. Virtualization allows one physical device (computer platform or disk storage unit) to be used for multiple things. Suddenly I need only half or less of the servers or storage systems. When I need to add resources, I don’t actually need to add physical resources, I add virtual resources. “Data center transformation” is the new mantra. Instead of having one server for every application, I have one server for a dozen applications. Server utilization jumps from the 10-40% range to the 70-85% range. Many of those Managed Services companies are offering virtualization services. Other companies provide services to transform your data center. Hooray, we’re done!
Not quite. Needs are still greatly outpacing the benefits of virtualization. That company now just buys a semi-trailer full of servers every quarter instead of every month. Things are much better, but I still have Aggravation, Accounting issues, and a lack of Agility.
Cloud Computing uses the Internet as the means to share resources, software, and information on-demand. Like with the electric utility, you don’t own nor manage the generator or the wires. You just pay for what you use. Don’t use much electricity while you are away on vacation, don’t pay much. Put up 10,000 holiday lights, get a big bill in January. The Cloud takes managed services and virtualization to the next logical step. You don’t own anything other than the workstations on your employees desks. You don’t manage anything but the workstations, and you can outsource that also. You have no capital expense, everything is operating expense. And you can be agile. Most Cloud Service Providers, the companies that actually host all the equipment, will allow your resource utilization to grow as much as it needs to keep up with your business, and then automatically shrink when the resources are not needed.
The Cloud therefore
- Eliminates much of the Aggravation, and at the least gives you a single throat to choke when something goes wrong (the Cloud Service Provider).
- Reduces the Accounting woes by allowing a clear correlation between costs and revenue or value.
- Increases your organizations Agility, its ability to react to change quickly.
The result is that there are lots of companies that rely on information technology to run their business, take their orders, maybe even run their production, but don’t own a single server. Their computer resources are supplied by someone else as a utility.
You have probably been using Cloud services without even thinking about. If you use GMail or Hotmail, or mail from your Internet connection provider (e.g., Comcast, Verizon), then you are using the Cloud. If you are using any of the backup services or conferencing services, you are using the Cloud. Someone else owns it all and keeps it running. You pay for usage, and even sometimes you pay nothing.
The last word:
Hopefully we now know why, and maybe a little of what. Next time we’ll talk more about the “what” and start on the “how.”
Keep your sense of humor.