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On Appirio’s Prediction: The Rise & Fall Of Private Clouds

I was invited to add my comments to Appirio’s corporate blog in response to my opinions of their 2009 prediction “Rise and Fall of the Private Cloud,” but as I mentioned in kind on Twitter, debating a corporate talking point on a company’s blog is like watch two monkeys trying to screw a football; it’s messy and nobody wins.

However, in light of the fact that I’ve been preaching about the realities of phased adoption of Cloud — with Private Cloud being a necessary step — I thought I’d add my $0.02.  Of course, I’m doing so while on vacation, sitting on an ancient lava flow with my feet in the ocean in Hawaii, so it’s likely to be tropical in nature.

Short and sweet, here’s Appirio’s stance on Private Cloud:

Here’s the rub: Private clouds are just an expensive data center with a fancy name. We predict that 2009 will represent the rise and fall of this over-hyped concept. Of course, virtualization, service-oriented architectures, and open standards are all great things for every company operating a data center to consider. But all this talk about “private clouds” is a distraction from the real news: the vast majority of companies shouldn’t need to worry about operating any sort of data center anymore, cloud-like or not.

It’s clear that we’re talking about very different sets of companies. If we’re referring to SME/SMB’s, then I think it’s fair to suggest the sentiment above is valid.

If we’re talking about a large, heavily-regulated enterprise (pick your industry/vertical) with sunk costs and the desire/need to leverage the investment they’ve made in the consolidation, virtualization and enterprise modernization of their global datacenter footprints and take it to the next level, leveraging capabilities like automation, elasticity, and chargeback, it’s poppycock.

Further, it’s pretty clear that the hybrid model of Cloud will ultimately win in this space with the adoption of BOTH Public and Private Clouds where and when appropriate.

The idea that somehow companies can use “private cloud” technology to offer their employees web services similar to Google, Amazon, or salesforce.com will lead to massive disappointment.

So now the definition of “Cloud” is limited to “web services” and is defined by “Google, Amazon, or Salesforce.com?”

I call this MyopiCloud.  If this is the only measure of Cloud success, I’d be massively disappointed, also.

Onto the salient points:

Here’s why:

  • Private clouds are sub-scale: There’s a reason why most innovative cloud computing providers have their roots in powering consumer web technology—that’s where the numbers are. Very few corporate data centers will see anything close to the type of volume seen by these vendors. And volume drives cost—the world has yet to see a truly “at scale” data center.

Interesting. If we hang the definition of “at scale” solely on Internet-based volume, I can see how this rings true.  However, large enterprises with LANs and WANs with multi-gigabit connectivity feeding server farms and client bases of internal constituents (not to mention extranet connections) need to be accounted for in that assessment, especially if we’re going to be honest about volume.  Limiting connectivity to only the Internet is unreasonable.

Certainly most enterprises are not autonomically elastic (neither are most Cloud providers today) but that’s why comparing apples to elephants is a bit silly, even with the benefits that virtualization is beginning to deliver in the compute, network and storage realms.

I know of an eCommerce provider who reports trafficing in (on average) 15 Gb/s of sustained HTTP traffic via its Internet feeds.  Want to guess what the internal traffic levels are inside what amounts to it’s Private Cloud at that level of ingress/egress?  Oh, did I just suggest that this “enterprise” is already running a “Private Cloud?”  Why yes, yes I did.  See James Watter’s interesting blog on something similar titled “Not So Fast Public Cloud: Big Players Still Run Privately.

  • There’s no secret sauce: There’s no simple set of tricks that an operator of a data center can borrow from Amazon or Google. These companies make their living operating the world’s largest data centers. They are constantly optimizing how they operate based on real-time performance feedback from millions of transactions. (check out this presentation from Jeff Barr and Peter Coffee at the Architecture and Integration Summit). Can other operators of data centers learn something from this experience? Of course. But the rate of innovation will never be the same—private data centers will always be many, many steps behind the cloud.
  • Really? So technology such as Eucalyptus or VMware’s vCloud/Project Redwood doesn’t play here?  Certainly leveraging the operational models and technology underpinnings (regardless of volume) should allow an enterprise to scale massively, even it it’s not at the same levels, no?  The ability to scale to the needs of the business are important, even if you never do so at the scale of an AWS.  I don’t really understand this point.  My bandwidth is bigger than your bandwidth?

  • You can’t teach an old dog new tricks: What do you get when you move legacy applications as-is to a new and improved data center? Marginal improvements on your legacy applications. There’s only so much you can achieve without truly re-platforming your applications to a cloud infrastructure… you can’t teach an old dog new tricks. Now that’s not entirely fair…. You can certainly teach an old dog to be better behaved. But it’s still an old dog.
  • Woof! It’s really silly to suggest that the only thing an enterprise will do is simply move “legacy applications as-is to a new and improved data center” without any enterprise modernization, any optimization or the ability to more efficiently migrate to new and improved applications as the agility, flexibility and mobility issues are tackled.  Talk about pissing on fire hydrants!

  • On-premise does not equal secure: the biggest driver towards private clouds has been fear, uncertainty, and doubt about security. For many, it just feels more secure to have your data in a data center that you control. But is it? Unless your company spends more money and energy thinking about security than Amazon, Google, and Salesforce, the answer is probably “no.” (Read Craig Balding walk through “7 Technical Security Benefits of Cloud Computing”)
  • I’ve got news for you, just as on-premise does “…not equal secure,” neither does off-premise assure such.  I offer you this post as an example with all it’s related posts for color.

    Please show me empirically that Amazon, Google or Salesforce spends “…more money and energy thinking about security” than, say, a Fortune 100 company.  Better yet, please show me how I can be, say, PCI compliant using AWS?  Oh, right…Please see the aforementioned posts…especially the one that demonstrates how the most public security gaffes thus far in Cloud are related to the providers you cite in your example.

    May I suggest that being myopic and mixing metaphors broadly by combining the needs and business drivers of the SME/SMB and representing them as that of large enterprises is intellectually dishonest.

    Let’s be real, Appirio is in the business of “Enabling enterprise adoption of on-demand for Salesforce.com and Google Enterprise” — two examples of externally hosted SaaS offerings that clearly aren’t aimed at enterprises who would otherwise be thinking about Private Cloud.

    Oops, the luau drums are sounding.


    1. August 18th, 2009 at 20:24 | #1

      You were pretty kind…

      "The vast majority of companies shouldn’t need to worry about operating any sort of data center anymore, cloud-like or not."

      This is clearly segment confusion as you say, but do these guys realize that Goldman Sachs is a bigger software company than Salesforce.com under the covers? Have they talked a to Sabre about what it takes to book 41% of every hotel, rental car, and airline in the world every second? Have they walked the 15k node EDA cluster at Broadcom?

      I mean its possible to say that the vast majority of companies already don't have a full scale data-center today…sure…but I feel they are trying to point to a huge and obvious delta.

      Its really about core vs. non core applications to me. The vast majority of collaborative/web/crm applications will eventually move to public clouds–but aps at the heart of industry leadership will remain privately operated…oh well swarm ball away folks.

    2. Christofer Hoff
      August 18th, 2009 at 22:09 | #2

      I *did* say I was on vacation.

      We all have skin in this game one way or another, so it's silly to suggest that Cloud is an either/or when it comes to Public/Private.

      I think it's awesome that Public Cloud is acting as a forcing function & that Private Clouds are a nearfield result…let's hope the innovation continues on both fronts.

      …I know my customers are dying for it.


    3. Jason Noel
      August 19th, 2009 at 02:47 | #3

      Comprehensive post…

      For me, and the customers I have been working with in ASP models for years, the entire concept of Multi-Tenancy and traversing public networks with their data is scary and will be well beyond 2009. Granted, to the hoffinators point, I AM referring to more of the Fortune 500ish type companies.

      Private clouds will be built, invested in, and won't disappear in a flash- if for no other reason than the desire to build the CIO's Kingdom 😉

      Also, the hard facts remain that legislation and regulation will be a stumbling block for years to come. Even simple things like laws that prevent regulated data from leaving the country of origin. Building an infrastructure to support that type of situation is costly and not super efficient. Then on top of that you still have to convince the consumer of the services around the multi-tenancy (or co-mingling as I like to call it) is all good. Maybe a near term solution to this is to have a hybrid cloud where the data can stay in the clients facility all locked up and they can feel warm and fuzzy.

      In any case, customers want it, I do think in the long term that it will be an intra-cloud world, but that will be a while in the making.


    4. August 19th, 2009 at 04:49 | #4

      Chris – here is a more complete viewpoint on our perspectives on private lcoud from a later blog – http://www.appirio.com/blog/2009/06/part-i-beware

      Here is one of the key points – 'Leveraging concepts, standards and technologies from the Internet makes complete sense for enterprises large and small. However that is not equivalent to creating a private Internet; nor could it be a substitute for the real Internet. Similarly, technologies like virtualization, elastic infrastructure, interoperability between internal systems and public clouds all make sense. Yet, these are not the same as being a cloud provider or a substitute for public clouds.'

      We definitely have a strong perspective, but its not at all focused on SMB – our featured customers are mostly 10K+ person companies. Its equally misleading to try to take the examples of the very very largest edge case companies an apply them to the market at large. Also, the list of companies to use as that counterpoint is constantly shrinking – not increasing.

      There is one part of this debate that definitely compares 'apples to elephants' (our view of definition here -http://www.appirio.com/blog/2009/04/cloud-computing-savings-real-or.php). There is another that is more substantive on the future center of enterprise IT.

      Would be happy to have a private or public discussion on either because I do agree the best understanding comes from hearing directly contrasting viewpoints – vs. marketing banter tennis where we take snippets of one another's comments.



      PS – love the combo of BJJ and tech in the blog

    5. August 19th, 2009 at 05:47 | #5

      As I said over there:

      Agreed 100%. Repeat after me: "the evolution of virtualisation is NOT cloud computing".

      If we get this wrong the trough of disillusionment will be longer and deeper as customers realise that the hype of "I can't believe it's not cloud" doesn't live up to the promise of RealCloud™.

      I guess then RealCloud™ will become "Cloud 2.0", and what's a meme without a 2.0? 😛


    6. August 19th, 2009 at 06:48 | #6

      Chris, enjoyed the post and the spirited response to our blog. As Narinder says above, we love the dialog and would love to do it in a live forum. I want to respond to James' assertion above that companies will keep their strategic apps in-house for the forseeable future. We believe that there's a big difference between owning a strategic business process and owning the infrastructure that supports it. A company wants to own the process and IP that drives their differentiation but there's little benefit to owning the underlying stack (unless your differentiation relies on stuff that happens lower in the stack a la a trading network). By moving strategic processes to a platform as a service, a company can focus on the IP rather than the technology, which I think we can all agree is the best outcome for an enterprise (more on this here – http://www.appirio.com/blog/2009/05/do-your-most-….

    7. August 19th, 2009 at 10:59 | #7

      @Christofer Hoff

      "I think it’s awesome that Public Cloud is acting as a forcing function & that Private Clouds are a nearfield result" <– +++

    8. Vijay Ganti
      April 27th, 2010 at 05:20 | #8

      "Private clouds are sub-scale: There’s a reason why most innovative cloud computing providers have their roots in powering consumer web technology—that’s where the numbers are. Very few corporate data centers will see anything close to the type of volume seen by these vendors. And volume drives cost—the world has yet to see a truly “at scale” data center."

      Does salesforce.com have roots in powering consumer web ? Did i miss something here ?

    9. January 12th, 2012 at 23:28 | #9

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