The myth of the private cloud.

What is a private cloud? I’ll tell you I don’t know. It is a mythical beast. Of course since cloud computing is such a new concept, anyone is welcome to take some liberty on the definition. I would argue that an infrastructure as a service offering should present most of the following characteristics.

• A set of computing resources that are available on a pay-for-use basis
• Computing resources that are managed via an API and require no physical interaction with hardware
• Low variable expense and only pay for what you use
• Scale up and down.
• Immediate server provisioning
• Provision of low-level building blocks services on a pay for use basis
• Converts capex into variable opex
• Self service infrastructure

Private clouds, for my money, are usually little more than virtualised server farms renamed to have the word cloud in the name. This term “private cloud” is one invented just to give people a feeling that they too can have “cloud” and be really modern even if they own all their own hardware and the related complications. There is so much hype around the term cloud that CIO/CTOs and IT professionals everywhere believe they must at least get dressed for the party, so they’re willing to believe in the private cloud. Here the problem is lack of education about what cloud is, and that’s why the term “private cloud” is so annoying I believe. It pretends to offer something it really can’t.

It’s not to say there aren’t benefits for enterprises building a “self service” style virtualised server environment. However, few manage to do so adequately, and even fewer manage to build anything like the higher level services offered by public cloud providers such as storage layers, managed database services and numerous other offerings. I would argue that the reason for adopting a so called “private cloud” is for one or a combination of the following reasons:

• Moving to the public cloud has been put in the too hard basket.
• There is a background, and poorly defined fear of the security implications for moving to the cloud
• There’s a complete lack of expertise in cloud infrastructure inside the organisation
• IT doesn’t want to leave their physical location and tacking a “private cloud” badge on top of their existing infrastructure seems much easier than moving to a public cloud. (often times it is much harder than a wholesale move to public cloud)
• The IT team have convinced management that “private cloud” is really just as good, or *even better* than public cloud, sighting terms like “security” and “data sovereignty” and it’s worked.

Again the issue here is a fundamental lack of understanding of cloud. I truly believe that technology can be a key differentiator for not just tech companies, but many enterprises. This is our advantage, our “cloud advantage” if you will – we have the experience uncovering the benefits of a real cloud adoption in a factual and pragmatic way.

As I’ve said several times before on this blog, the benefits of a cloud adoption usually fall into the following buckets:

• Reduced cost
• Increased operational agility
• Superior technical facilities.

I just don’t see that  a private cloud provides these benefits. Building a private cloud on existing hardware can reduce waste, but fails to deliver the fundamental economic change that cloud does. While on-demand private cloud resources may provide increased flexibility, the organisation still has to carry the overhead of managing their own hardware, or paying someone else to do it. To be sure, users of AWS or Google cloud are paying for others to manage hardware, but the simply answer is, they’re just much better at it and are able to pass on the economies of scale to customers unlike many traditional managed services companies. The final point about superior technical facilities is an interesting one. It’s usually the perception in IT that they’re unable to get the right “technical requirement” in the cloud where as they can certainly build it themselves. What usually ends up being uncovered is that the wins for such a company in using cloud services such as S3 or RDS or BigTable and the like are massive in comparison, and don’t have to be built in house, provided they’re able to alter their applications just a little. They usually don’t see what it is they’re missing out on, and once the technical team become aware of it, they’re sold! A private cloud just can’t offer these sorts of building-block services that engineers and sysadmins are realising more and more they can’t live without. To me cloud means massive economies and specialist technical know-how on behalf of the providers, and as such, private cloud remains a mythical beast indeed.

James

Can Cloud Infrastructure save mid-size companies money?

One of the great things about cloud computing is that allows access to capabilities that were once only accessible for a large company with a large budget. This makes the cloud a no-brainer for start-ups creating their infrastructure from the scratch, but what about the larger companies who have already invested large sums of money into their owned infrastructure? Can they save money and is it wise to take an bearish approach to cloud?

We often have mid-size companies asking us to find the answer to this question for them. We can say: “Yes, it’s possible!”

When we come to a company and start a 2-week analysis to build a business case for a cloud computing model, we often see something like this: The CEO, or another less technical business leader engages us based on a desire to see that his or her company isn’t missing an opportunity or spending too much on IT. Kudos to them!  The IT leader typically says: “Yes, cloud is interesting and we looked already at it, but we are a special case, cloud computing isn’t right for us. We calculated it already and it’s far too expensive.”

This last sentence is it, where the problem begins: An IT team, which spends many hours to keep a traditional system running, does a quick and sometimes half-hearted approach to put the costs for cloud computing together, but following a really traditional and probably the same architecture as they currently have. We see this all the time, and often they’re just off track. Here’s some common mistakes.

• Price the storage based on the same amount of excess capacity the existing  system has. This averages around 40% excess, but is often much worse.
• Price the compute capacity on the capacity required only at peak time.
• The amount of maintenance the existing hardware or virtual environment takes gets often neglected.
• The existing hardware doesn’t run forever (sounds trivial, but we saw quite often that hardware refreshments for the existing system were not considered.

The average utilization of traditional systems is hardly ever above 60%, studies rather talk about the 30% mark. This spare capacity represents inflated infrastructure cost. But also, it’s important to note the cost sourcing, securing funding, negotiating terms on and ordering the hardware, the cost for hosting, for configuring and and building the kit with it’s inherent roadblocks and challenges. There’s also the cost of maintenance, for power and numerous other licensing costs and the like. Another big driver is often the required WAN bandwidth. Buying fixed ISP bandwidth often means waste and this is often a big win in many cloud providers.

We’ll take a deep dive into the technical side of any IT operation we regularly see that the larger and more complex the infrastructure is, the more the savings in the cloud actually can be.

Obviously there are other key drivers for a cloud move like business flexibility and reduced IT complexity, but cost will always be an important question.  Cloud Advantage is currently helping companies to realize 40-70% savings on their IT projects by leveraging AWS. If you would like us to run a company-specific scenario for you, please contact me at +61 2 8003 5048 or askwil@cloudadvantage.com.au.