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Virtual Jot Pad: The Cloud As a Fluffy Offering In the Consumerization Of IT?

This a post that's bigger than a thought on Twitter but almost doesn't deserve a blog, but for some reason, I just felt the need to write it down.  This may be one of those "well, duh" sorts of posts, but I can't quite verbalize what is tickling my noggin here.

As far as I can tell, the juicy bits stem from the intersection of cloud cost models, cloud adopter profile by company size/maturity and the concept of the consumerization of IT.

I think πŸ˜‰

This thought was spawned by a couple of interesting blog posts:

  1. James Urquhart's blog titled "The Enterprise barrier-to-exit in cloud computing" and "What is the value of IT convenience" which led me to…
  2. Billy Marshall from rPath and his blog titled "The Virtual Machine Tsunami."

These blogs are about different things entirely but come full circle around to the same point.

James first shed some interesting light on the business taxonomy, the sorts of IT use cases and classes of applications and operations that drive businesses and their IT operations to the cloud, distinguishing between what can be described as the economically-driven early adopters of the cloud in SMB's versus mature larger enterprises in his discussion with George Reese from O'Reilly via Twitter:

George and I were coming at the problem from two different angles. George was talking about many SMB organizations, which really can't justify the cost of building their own IT infrastructure, but have been faced with a choice of doing just that, turning to (expensive and often rigid) managed hosting, or putting a server in a colo space somewhere (and maintaining that server). Not very happy choices.

Enter the cloud. Now these same businesses can simply grab capacity on demand, start and stop billing at their leisure and get real world class power, virtualization and networking infrastructure without having to put an ounce of thought into it. Yeah, it costs more than simply running a server would cost, but when you add the infrastructure/managed hosting fees/colo leases, cloud almost always looks like the better deal.

I, on the other hand, was thinking of medium to large enterprises which already own significant data center infrastructure, and already have sunk costs in power, cooling and assorted infrastructure. When looking at this class of business, these sunk costs must be added to server acquisition and operation costs when rationalizing against the costs of gaining the same services from the cloud. In this case, these investments often tip the balance, and it becomes much cheaper to use existing infrastructure (though with some automation) to deliver fixed capacity loads. As I discussed recently, the cloud generally only gets interesting for loads that are not running 24X7.

This existing investment in infrastructure therefore acts almost as a "barrier-to-exit" for these enterprises when considering moving to the cloud. It seems to me highly ironic, and perhaps somewhat unique, that certain aspects of the cloud computing market will be blazed not by organizations with multiple data centers and thousands upon thousands of servers, but by the little mom-and-pop shop that used to own a couple of servers in a colo somewhere that finally shut them down and turned to Amazon. How cool is that

That's a really interesting differentiation that hasn't been made as much as it should, quite honestly.  In the marketing madness that has ensued, you get the feeling that everyone, including large enterprises, are rushing willy-nilly to the cloud and outsourcing the majority of their compute loads, not the cloudbursting overflow.

Billy Marshall's post offers some profound points including one that highlights the oft-reported and oft-harder-to-prove concept of VM sprawl and the so-called "frictionless" model of IT, but with a decidedly cloud perspective. 

What was really interesting was the little incandescent bulb that began to glow when I read the following after reading James' post:

Amazon EC2
demand continues to skyrocket. It seems that business units are quickly
sidestepping those IT departments that have not yet found a way to say
β€œyes” to requests for new capacity due to capital spending constraints
and high friction processes for getting applications into production
(i.e. the legacy approach of provisioning servers with a general
purpose OS and then attempting to install/configure the app to work on
the production implementation which is no doubt different than the
development environment).

I heard a rumor that a new datacenter in
Oregon was underway to support this burgeoning EC2 demand. I also saw
our most recent EC2 bill, and I nearly hit the roof. Turns out when you
provide frictionless capacity via the hypervisor, virtual machine
deployment, and variable cost payment, demand explodes. Trust me.

I've yet to figure out if the notion of frictionless capacity is a good thing or not if your ability to capacity plan is outpaced by a consumption model and a capacity yield that can just continue to climb without constraint.  At what point does the crossover between cost savings from infrastructure that bounded costs by resource constraints of physical servers become eclipsed by runaway use?

I guess I'll have to wait to see his bill πŸ˜‰

Back to James' post, he references an interchange on Twitter with George Reese (whose post on "20 Rules for Amazon Cloud Security" I am waiting to fully comment on) in which George commented:

"IT is a barrier to getting things done for most businesses; the Cloud reduces or eliminates that barrier."

…which is basically the same thing Billy said in a Nick Carr kind of way.  The key question here is for whom?  As it relates to the SMB, I'd agree with this statement, but the thing that really sunk it was that statement just doesn't yet jive for larger enterprises.  In James' second post, he drives this home:

I think these examples demonstrate an important decision point for IT organizations, especially during these times of financial strife. What is the value of IT convenience? When is it wise to choose to pay more dollars (or euros, or yen, or whatever) to gain some level of simplicity or focus or comfort? In the case of virtualization, is it always wise to leverage positive economic changes to expand service coverage? In the case of cloud computing, is it always wise to accept relatively high price points per CPU hour over managing your own cheaper compute loads?

Is the cloud about convenience or true business value?  Is any opportunity to eliminate a barrier — whether that barrier actually acts as a logical check and balance within the system — simply enough to drive business to the cloud?

I know the side-stepping IT bit has been spoken about ad nauseum within the context of cloud; namely when describing agility, flexibility, and economics, but it never really occurred to me that the cloud — much in the way you might talk about an iPhone — is now being marketed itself as another instantiation of the democratization, commoditization and consumerization of IT — almost as an application — and not just a means to an end.

I think the thing that was interesting to me in looking at this issue from two perspectives is that differentiation between the SMB and the larger enterprise and their respective "how, what and why" cloud use cases are very much different.  That's probably old news to most, but I usually don't think about the SMB in my daily goings-on.

Just like the iPhone and its adoption for "business use," the larger enterprise is exercising discretion in what's being dumped onto the cloud with a more measured approach due, in part, to managing risk and existing sunk costs, while the SMB is running to embrace it it at full speed, not necessarily realizing the hidden costs.


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  1. December 2nd, 2008 at 07:29 | #1

    Yeah. What he said… πŸ™‚
    Well put, Chris, and an excellent summary of the same thought process I am working through myself. It's an interesting concept for those of us who've lived through the enterprise sales model, and looked for those with large budgets to be early adopters. The cloud is a different beast, at least for now, and those with capacity to sell are probably looking for models that will close deals with much smaller organizations. Direct sales for cloud computing is probably a bust.
    Thanks for taking the time to "jot" this.

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