Cloud: Ready or not?

Detractors say there are still too many questions about security, about data privacy, about performance and the stability of some of the players. Proponents say if you pick your partners carefully, you can't beat low upfront costs, speed of deployment, and the fact that you can scale up and down as needed with little penalty.

The Experts
James Staten
James Staten

Principal Analyst at Forrester Research, Forrester Research where he serves Infrastructure & Operations professionals and covers cloud computing. While he is a proponent of cloud computing, Staten argues that there are significant questions that need to be addressed, and if you get it wrong the troubles will outweigh the benefits. View debate

Co-authored by John Hagel III
Co-authored by John Hagel III

Co-chairman at Deloitte LLP Center for the Edge, Deloitte LLP Center for the Edge which conducts original research and develops substantive points of view for new corporate growth, and Chris Weitz, Director, Deloitte Consulting LLP in the Technology Strategy and Architecture practice. They argue that cloud computing is ready for some tasks today, and huge change is just around the corner. View debate

James Staten

Cloud isn’t a panacea

Cloud computing isn't the be-all, end-all that many portray, and it can't suit all uses today, and may not in the future, either.

But I'm still bullish on cloud computing. If you've been following Forrester's analysis of the cloud computing market, you already know this. Forrester believes cloud computing is one of the Top 15 technology trends in 2010 and that it warrants investment now so you can gain the experience necessary to take advantage of its many forms to transform your organization.

Tenancy, shared economics, virtualized deployment, and cloud service-to-service integration are game changers for those who are using these services. Not only do they bring potential cost advantage to applications that might otherwise have been deployed on-premise, but they create opportunities for new business applications that simply aren't feasible any other way.

Like any emerging technology, however, you have to go in with your eyes open. It isn't as easy as some vendors make it sound, and if you get it wrong it can cost you more than you're hoping to save.

Cloud services can, in fact, save you money, particularly if you have applications with highly variable load. An application that normally consumes only 20% of a single server, but during heavy use can consume 10 servers, is a great fit for cloud deployment where you only pay for the VMs you light up. However, if that application has to take credit card transactions and your cloud provider won't let you audit its environment or won't provide the logging and reporting you need for PCI compliance, then it may cost you more to address these issues than what it would have cost to simply run it in your own data center.

Cloud providers will only go so far in providing security, management and reporting for their services. You have to fill in the gaps between what they provide and what your business requires. A recent concern among Infrastructure as a Service (IaaS) customers has been visibility into cloud congestion in order to ensure application performance. There are no guarantees of performance from the cloud providers and certainly not performance as you may define it for a given application.

The same is true for availability. Where most public clouds will alert you when their services are out (and rebate you for time lost) they won't monitor your application. You have to do that. If your application hangs or fails, it is your responsibility to have a redundant deployment that can identify the problem and work around it. Same with cloud outages.

Another issue most enterprises don't think about is the implication of where the cloud resources are based. Most cloud services aren't geographically ubiquitous. They are like any other Internet service, served up from a data center in a specific geography. And if you do business in multiple geographies you'll need to take into account various local privacy and data protection laws.

In fact, in our analysis of just the IaaS space, 90% of the providers have U.S.-based data centers. If you have European clients, you're subject to European privacy laws which state that personal information on EU citizens must be stored in the EU. That makes many of the cloud providers a non-starter for this use (see Forrester's interactive cloud map.

The promise (and delivery) of geographic diversity should be one of cloud computing's value tenets. And if so, the providers will have to provide a simple means of ensuring compliance with privacy laws. Right now, it's simply far too easy to run afoul of these laws. And it's you, not your cloud provider who will carry the liability.

As one IaaS provider told us recently, "Most of our clients don't have a clue about these privacy laws and frankly aren't worried because there's little enforcement." It's an understandable circumstance but a very risky one, as enforcement can become a real concern overnight. All the government in question needs to do is fry one large enterprise for violations to shock everyone into compliance. And claiming ignorance of the laws isn't a suitable defense.

As you might expect, application developers are less concerned about compliance. They're focused on accelerating time-to-market and raising productivity, and they see cloud computing as a significant accelerator.

While IaaS clouds can deliver, the dynamic scaling involved can expose the company to risk if not managed, and that's the role IT needs to fill.

Don't try to stop your company from using cloud computing – that horse has already left the barn. Instead, create a use policy that serves as guardrails to protect your company as they move down this new path.

James Staten is a Principal Analyst at Forrester Research, where he serves Infrastructure & Operations professionals and covers cloud computing. He will deliver a keynote address at Forrester IT Forum, May 26-28, 2010 in Las Vegas.

Co-authored by John Hagel III

An innovation game changer

Cloud computing is already known for its low upfront costs, speed of deployment and on-demand scalability, so yes, the cloud is ready for specific tasks. But this is just the beginning. We envision a whole series of disruptive outcomes that will drive much broader adoption of cloud computing and new ways of thinking about business management.

Cloud computing is facilitating business innovation in ways premise-based computing simply can't. It offers a fundamentally different set of capabilities, creating new ways of obtaining value and inserting more agility into the enterprise.

Already we're seeing an impact on early adopters. Many rapidly growing small- and midsize businesses are using cloud computing services to lower IT investments and increase business agility. They can scale up and down as needed, maximize efficiency, accelerate time to value, and reduce the time to start and complete work. Cloud computing avoids major capital expenditures by using services managed as operating expenses. And it enables a reallocation of resources to other value-creating activities.

Currently, the most adopted cloud utility model is Software as a Service in large enterprises, but cloud-enabled platform and infrastructure services are making market inroads. Many cloud vendors are known quantities with deep pockets, including Google and Amazon — leading disruptive forces — along with, IBM, Oracle and Microsoft.

And those providers just entering the market? The smaller, newer ones with less cash on hand? Well, working with them means enterprises must apply the usual due diligence. But this is standard practice in IT, and similar to the way IT has embraced other innovation waves in the past. Overall, the current cloud players are stronger than those in other service transitions of the recent past.

Even when it comes to security. Early indicators point to cloud security functions being on par with enterprise IT security functions. Granted, enterprises are just now understanding and implementing cloud security, so there will be a learning curve and corresponding exposures.

Looking ahead, the next wave of cloud computing is developing to address unmet enterprise needs. Companies today struggle to create shared platforms to accommodate complex extended business processes. We see widespread adoption of cloud computing coming from the “outside in,” with orchestrators of large business ecosystems -- non-technology companies that coordinate trade among thousands of highly specialized global partners in industries such as apparel and consumer electronics -- becoming early adopters.

Addressing the needs of these orchestrators will require cloud suppliers to develop innovative technology architectures that cannot be easily replicated with traditional premise-based platforms. That could be a catalyst for driving cloud adoption not just by the orchestrators, but by all their business partners. Suppliers such as Rearden Commerce and TradeCard are already responding with newly developed cloud-based architectures to help coordinate complex processes across multiple enterprises.

With increasing scale and critical mass, innovative new architectures will likely position cloud computing vendors to replace large swaths of existing enterprise systems. The scaling of cloud computing to meet growing enterprise demand has the potential to drive a major restructuring of the IT industry.

Cloud computing will likely be a catalyst for disruption in industries like healthcare, biotech, financial services and energy, driving innovative new business models into these diverse industries.

As the technology matures, enterprises that have invested in legacy IT architectures are likely to find transitioning to the cloud a necessity if they are to compete successfully with more agile and innovative companies. Successfully making this transition will require the engagement of the CEO, top strategy executives and leaders of major business units, not just the CIO.

Cloud is ready to handle specific tasks today and it is not a passing phenomenon. It is gaining long-term momentum.

John Hagel III (pictured), Co-chairman, Deloitte LLP Center for the Edge, which conducts original research and develops substantive points of view for new corporate growth. Chris Weitz, Director, Deloitte Consulting LLP in the Technology Strategy and Architecture practice.

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