So What is Cloud Computing?

It seems surprising, but there continues to be a "profusion of confusion" surrounding what Cloud actually is. What makes a service a Cloud rather than a managed service or indeed an out-source? The United States National Institute of Standards and Technology (NIST) has kindly provided a definition for Cloud Computing which outlines the specific traits and characteristics an IT provision should exhibit to be classed as Cloud Computing.

It is worth noting that in “marketing” terms, and to be fair given the nascent state of Cloud Computing today, many provisions offered in the IT market today do not precisely conform to these standards but are nevertheless advertised as Cloud Computing. They identify a Cloud Computing as:

“a model for enabling ubiquitous, convenient, on-demand network access to a shared pool of configurable computing resources (e.g., networks, servers, storage, applications, and services) that can be rapidly provisioned and released with minimal management effort or service provider interaction.”

They define five essential characteristics:

  • On-Demand Self Service: A consumer can unilaterally provision computing capabilities, such as server time and network storage, as needed automatically without requiring human interaction with each service provider;
  • Broad Network Access: Capabilities are available over the network and accessed through standard mechanisms that promote use by heterogeneous thin or thick client platforms (e.g., mobile phones, tablets, laptops, and workstations);
  • Resource Pooling: The provider’s computing resources are pooled to serve multiple consumers using a multi-tenant model, with different physical and virtual resources dynamically assigned and reassigned according to consumer demand. There is a sense of location independence in that the customer generally has no control or knowledge over the exact location of the provided resources but may be able to specify location at a higher level of abstraction (e.g., country, state, or datacenter). Examples of resources include storage, processing, memory, and network bandwidth;
  • Rapid elasticity: Capabilities can be elastically provisioned and released, in some cases automatically, to scale rapidly outward and inward commensurate with demand. To the consumer, the capabilities available for provisioning often appear to be unlimited and can be appropriated in any quantity at any time; and
  • Measured service: Cloud systems automatically control and optimize resource use by leveraging a metering capability at some level of abstraction appropriate to the type of service (e.g. storage, processing, bandwidth, and active user accounts). Resource usage can be monitored, controlled, and reported, providing transparency for both the provider and consumer of the utilized service.

The Promise of Cloud

The Cloud promises to address many of the issues businesses have in delivering IT services to their internal and external consumers. Lets first examine some of the infrastructural issues that often inhibit a businesses flexibility when delivering IT services:

Business' IT Needs Issues Achieving This Cloud as a Solution
Compliance Posture Maintaining the certifications of data center and IT assets is a significant burden for many businesses. The need in many circumstances to comply with both external regulations and end customer expectations involves a continuous cycle of annual (or shorter period) certifications and testing. Each cycle consumes resources and represents a fixed cost to the business of delivering IT services. Some of those costs are not obvious but often include:
  • ISO 27001
  • SAS70
  • UK GSC
  • SSAE16
  • PCI DSS
  • DDOD 8570
  • Norland
  • Plus innumerable other policies and procedural requirements
The Cloud seeks to alleviate the burden for individual businesses through the economies of scale they can achieve. In essence, a Cloud provider can apportion the fixed costs they incur for maintaining policies, certifications and accreditations across all of their customers thus achieving a far smaller fixed charge for such items. In addition they can choose to focus on the highest level of certification and collaterally achieving other lower level accreditations.
Flexibility of Platform For an individual business the capital engaged in building out and maintaining a platform often accounts for a large proportion of their IT budget. Planning for refreshes and upgrades in a waterfall of timing also commits resources to mundane projects rather than on new revenue generating business. Compounding these issues is the often unplanned needs during any given financial year for new hardware on which to found new business and the potential risk to existing customers of introducing new data center equipment. In addition the flexibility to instance new services within the capacity available is often low. Using the Cloud businesses can instance new workloads as and when they are needed. Capacity planning for future ad-hoc workloads with the associated constraints concerning network ports availability, storage volume sizes and compute resources becomes a nugatory discussion. The promise is that you can simply instance capacity as it is needed.
Scalability of Platform In a very similar vein to 'flexibility' above a single businesses ability to scale on-demand or on-the-fly is generally low. Investments are made in 'chunks' and increasing capacity beyond any current footprint is a long term commitment. In addition, even if capacity is available the ability to 'multi-tenant' or share the capacity among many customers requires a specific infrastructure implementation to have been built in the first place. This is often not the case with legacy infrastructure having grown organically over the preceding years. Cloud does not suffer from a past legacy having been designed specifically from day one for multi-tenancy (shared) resources. Investment in capacity is made in light of future amalgamated demand across many customers so forward planning and existing footprints in place to meet the variances of aggregate demand. The promise therefore is that capacity to scale is there when it is needed.
Service Reporting There is little doubt that service reporting metrics and measurements can be (and often are) captured and reported in fixed cycles within most businesses. That said ad-hoc or online reporting of usage disaggregated by end customer or business unit is less common to find. Why? Once again the overhead for an individual business require to implement a billing & reporting system with the associated resources to manage it are insufficient to make the case for investment. Apportionments are made across the board to simplify the process. By their very nature Cloud businesses had a need from the outset to be able to monitor, report and bill based on the usage of individual customers. Those systems were embedded as part of the initial set-up and are available online in real-time so that cost inputs are fully transparent against each project, customer, workload instance or use case.
Time & Time to Value The time taken by many businesses to implement new projects, especially those with specific IT requirements can be a significant inhibitor to business growth. The period between business case sign-off (of course contingent on the type of project) and actual realization of a live production service can be very long. In addition often businesses want to try an idea out and if it lacks traction in the market they want to pull the plug with low losses, but if it gains traction they want to scale quickly. This time to value equation is problematic in light of those items (flexibility and scalability) mentioned earlier. The Cloud promises to deliver several new levers to the business:
  • to enable new projects to be fulfilled as and when they are required with shortened business case cycles;
  • to increase their ability to 'try' options out in a low risk/cost way while in parallel enabling successful projects to scale on-demand
Taken together just these two new abilities give businesses a powerful new tool to decrease their time to value.
Cost & Total Cost of Ownership(TCO) The cost of IT and its TCO are always a concern for businesses. The increased need for IT in all aspects of every business has led IT to the top of many CEO's agendas over the past decade. Now IT permeates the business as the critical enabler for supply chain, logistics, customer engagement and pretty much all aspects of the business. This also means that the cost of IT is now in the spotlight as never before with savings required without any loss of capability. Cloud provides businesses with a new model to cost IT capabilities. The ability to 'turn on' and 'turn off' cost inputs enables IT to lower the cost of the service while at the same time continuing to deliver the functionality. For instance, in retail, Cloud enables seasonal demand curves to be met in a new way through scaling out for the period of high demand and scaling down again once it has passed. The savings for retailers can be enormous. This is mirrored across many industries with 'number crunching' now capable of being performed in the Cloud and on-the-fly for a period of hours, critically, without any capital investment and significantly reduced operational expenditure.

Cloud Service Models: Explaining IaaS, PaaS & SaaS

The Cloud Computing market is estimated to be worth about $235 Billion in 2017 which is substantial for any emergent technology - not least for a market which only came into being in 2009. As identified at the outset the objective of this portion of this website is to provide material and meaningful assistance those wishing to use Cloud or to those wanting to become a Cloud Service Provider (CSP). There is one final component of background information to relay before diving deeper into the costs of building a Cloud - that of Cloud type or as NIST define it "Service Model".

This Service Model denotes the type of Cloud vendor you are either engaging with or building towards being and provides a meaningful reference point for prospective customers in the market to understand what it is that they are buying. In order to understand the Service Model we need to abstract the components involved when consuming Cloud Computing:

The Incessant Growth of Cloud ($ Billions)

Diagram Icons:
This icon is used to denote the physical server hardware used to process Cloud Computing workloads. This icon denotes the physical storage hardware used to process Cloud Computing workloads. This icon denotes application software either common off-the-shelf (COTS) or bespoke packages deployed within the Cloud Computing service. This icon is used to denote the processes, procedures and resources employed to measure and report on the Cloud Computing workloads.
This icon denotes the processes, procedures and resources employed to manage (provision, orchestrate, & configure) the Cloud Computing workloads. This icon denotes the Cloud service end users or Cloud Consumers. This icon is used to denote the development resources used to program applications delivered as part of the Cloud Computing service.

Service Model #1:

Infrastructure-as-a-Service (IaaS) The provision of processing, storage, networks, and other computing resources where the consumer is able to deploy and run arbitrary software, which can include operating systems and applications. The consumer does not manage or control the underlying infrastructure but do control operating systems, storage, and deployed applications; and possibly limited control of select networking components (e.g. firewalls). Often marketed or advertised as Storage-as-a-Service, Compute-as-a-Service, etc. Well known Service Providers include:
  • Amazon Web Services
  • IBM SoftLayer
  • Google Compute Cloud
  • Digital Ocean

Service Model #2:

Platform-as-a-Service (PaaS) The capability provided to the consumer is to deploy onto cloud infrastructure consumer-created or acquired applications created using programming languages, libraries, services and tools supported by the provider. The consumer does not manage or control the underlying Cloud infrastructure including network, servers, operating systems or storage, but has control over the deployed applications and possibly configuration settings for the application hosting environment. Well known Service Providers include:
  • Amazon Elastic Beanstalk
  • IBM Bluemix
  • Google App Engine
  • Microsoft Azure

Service Model #3:

Software-as-a-Service (SaaS) The capability provided to the consumer is to use the provider’s applications running on a cloud infrastructure. The applications are accessible from various client devices through either a thin client interface, such as a web browser (e.g.,web-based email) or a program interface. The consumer does not manage or control the underlying cloud infrastructure including network, servers, operating systems, storage, or even individual application capabilities, with the possible exception of limited user-specific application configuration settings. Well known Service Providers include:
  • SalesForce.com
  • Netsuite
  • ServiceNow
  • MediData

Building a Business Case for Cloud

Some of the most common questions I get asked by companies thinking about building a Cloud service are:

  • How much will it cost?
  • what are the factors I should take into account?
  • How much can I sell out the services for?
  • How can I apportion the fixed vs. variable costs?
  • How can I run scenarios to understand underlying cost changes?

The very same questions arise in a different guise when working with the IT organisations within large enterprise customers, this time phrased as - "help me build a business case for moving to the Cloud (or not)".

In both instances the bottom line is to work through in a logical fashion all of the fixed and variable cost inputs necessary to develop a total cost picture of whats involved in building, maintaining, and operating either the current IT implementation or a new Cloud implementation. In order to make this process simpler I resolved to build a cost modeling tool that would help both types of customer.

The tool itself is built using HTML, Javascript, Jquery, AJAX, Chart.js, MySQL, and OO PHP. It is an early prototype and is available for download on the links below or to give it a try on the Live Demo.

The key stats to build the tool:

2000 +
Cups of Coffee
50000 +
Lines of Code
75 +
Days

This tool is designed to help for CIOs, IT Managers and Service Managers in to fundamentally understand, first, their current cost position and then to enable the analysis of scenarios to understand the cost impacts of proposed changes before executing on the project. The cost categories covered are:

Baselines include the administrative functions for the application, the company name, and contact information. In addition it includes those external cost variables such as:

  • Foreign Exchange Rates
  • Service Credit Costs
  • Risk & Compliance Costs
  • Inflation
  • Supplier Liaison Costs
  • PEN Testing Costs
  • Ethical Hacking Costs
  • Freedom of Information Requests Costs
  • Indemnity & Insurances
  • Internal Audits
  • External Audits
  • Technology Currency
  • Certifications

Direct Costs are those costs directly attributable to the technology and labor associated with delivery of the service and includes:

  • Data Center Costs
  • Office Costs
  • Labor Costs
  • Network Costs
  • End User Costs
  • Server Costs
  • Storage Costs
  • Printer Costs
  • Software Costs
  • 3rd Party Cloud Costs

Finally the tool includes those indirect costs that must be accounted for in either your sell-to price or as part of your internal cross-charges:

  • Product Development
  • Marketing Management
  • Sales Management
  • Channel Management
  • Contractual Obligations

Some Cloud Download Materials

An Introduction to Cloud

This short paper builds on the introduction above to outline in more detail the essential characteristics of Cloud and the emergence of Cloud service models in particular Infrastructure- as-a-Service (IaaS), Platform-as-a-Service(PaaS) and Software-as-a-Service(SaaS).

Read More

Cloud: Some Legal Considerations

This slide deck outlines some of the legal considerations you need to take into account when assessing a Cloud Service Provider. Areas such as supplier due diligence, contractual terms, data protection and interoperability.

Read More

Negotiating a Services Contract

This short presentation seeks to provide an outline of commercial negotiation and to present the Top Ten areas of focus for the services' negotiations. The aim is to provide help both parties avoid (or at least alleviate) deadlocked or protracted negotiations.

Read More

How many Data Centers?

This presentation provides an explanation of how to decide on the optimal number of data centers to lease or own. Why is this important? Well most (if not all) businesses require Disaster Recovery(DR) and will often build a production site and then a DR site. This means they double the amount of cost and hardware. Working in the business continuity area for many large enterprise customers revealed that a different way of thinking about DR can dramatically reduce its costs.

Read More