Cloud computing is poised to win the title of most popular, and populist, buzzword of 2009.
It certainly is gaining traction outside of IT. In fact, the idea of cloud computing has become so popular that executives and employees who don't even work in the IT department are starting to ask for it by name.
Budget minded CEOs are telling IT managers to look into cloud computing to reduce the amount of expensive hardware running their data centers, CFOs are interested because they've heard the model can slash costs associated with new IT projects and tech savvy employees are asking for it because they think it sounds cool.
To be clear, the actual number of corporations that have deployed cloud computing remains small. The Corporate Executive Board's Infrastructure Executive Council doesn't expect to see mainstream adoption, meaning at least 50% of corporations have embraced cloud computing, until 2012. And even then, they believe companies will only use some of the services that fall under the cloud computing umbrella.
Still, IT departments large and small feel obligated to at least look into cloud computing's potential to save money, reduce overhead and increase efficiency and flexibility.
What's more, those IT shops that drag their feet might find overeager users are beating them to the cloud, warns James Staten, an analyst at Forrester Research. For example, "application developers are using the cloud and not telling IT," he says. To avoid being caught unaware, IT should take the lead in deciding what goes into the cloud and determining how to get it there, says Staten.
Emerging best practices
In a report published in September, Forrester Research outlined the following best practices for cloud computing:
- Conduct functional and scalability testing and development work
- Deploy short lived and highly volatile web applications
- Run quick, grid-type high performance computing analysis
But where to start? What's the best way for an IT manager to determine whether his company's corporate culture is suited for shipping computing tasks to web-based third parties? What expectations should service providers be required to meet? How should the success or failure of a cloud computing project be measured?
These are not questions to be taken lightly, since the success or failure of a company's foray into the cloud will influence corporate perceptions of the model going forward. We gathered advice from tech execs, analysts and experts on how IT managers should go about determining which of their corporations' applications, tasks or services are best suited for the cloud.
Pick a project - the right project
The Corporate Executive Board, a research and membership organisation designed to support the functions surrounding CEOs, has studied corporate adoption of cloud computing through its Infrastructure Executive Council and its Data Centre Operations Council, both of which are headed by practice manager Mark Tonsetic.
Tonsetic's advice to IT managers: Find a project that supports a business opportunity and could be easily moved into the cloud to save costs and resources, but it should be something that doesn't involve core competencies, and moving it offsite shouldn't create a security risk. In other words, find a project where moving some or all functions to the cloud would improve the bottom line but the company wouldn't face disaster if security or availability was compromised.
Tonsetic isn't alone in advising companies to tread lightly into the cloud. That's because there's plenty for IT departments to lose sleep over with cloud computing, such as the security risks created when companies move sensitive information beyond the limits of their own data centres. And as proven by a number of recent high profile outages of cloud services provided by Google, Microsoft and others, availability is a real concern.
At The Scooter Store, maker of scooters and power chairs for people with limited mobility, Senior Vice President of IT Jay Greene has replaced the Excel spreadsheets that the remote sales representatives used to store contacts with a cloud-based customer relationship management application from Salesforce.com.
Greene's staff has also worked with the company's legal department to launch a cloud-based document tracking application that users can share with outside attorneys, and The Scooter Store's training department uses a cloud-based application to keep employee training records.
None of these projects are mission critical or time sensitive, involve highly confidential information, or need to be integrated with systems running in the internal data centre, Greene says, making them good fits for cloud computing.
And that's as it should be, says Forrester's Staten. "Look at your portfolio of applications and services and decide which are commodities, not core competencies," he advises. "Those are your candidates for cloud."
While Greene has had positive experiences with his cloud computing projects so far, he's not ready to move established, mission critical applications out of his data centre. "We're at a maturity level that we've got our functionality built in house, in a secure manner that's compliant and protects information," he says.
"If we were a startup, it might be more logical to consider" moving mission critical functions to the cloud, Greene says. "You could run your business out of the cloud, you just have to be careful."
Keep the corporate jewels in house
Even companies that have moved big chunks of their business to the cloud are hesitant to trust the cloud with information or functions that give them a competitive advantage. Software maker Modevity has moved two of its three digital rights management (DRM) applications to a software as a service model. After spending a good deal of time searching for a cloud service provider with customer service reliable enough to stake its own reputation on, the software vendor chose Verizon Business to deliver Modevity applications as a service to customers, says Modevity co-founder Thomas Canova.
"There are a lot of strong cloud computing services out there that have a reasonable price point, but because of the nature of the business we're in, because we're a software provider to our customers, we wanted to make sure that the service provider we selected could provide the same high level of customer service that we provide our customers," says Canova.
Modevity moved to a cloud model to cut down on the infrastructure costs involved in running its software, and it has been able to put the savings toward future product development, Canova says. However, although testing applications under development can be another good use of cloud computing, particularly when developers don't use real data but instead gauge performance levels and work out kinks, that's not something Canova is willing to outsource.
Since software development is the company's true core competency, Canova says he can't see putting that task into the cloud. His concerns? That the move might open the door to unauthorised access to unreleased products, and that the process of integrating the application under development back into Modevity's quality assurance and release processes would become too complicated.
"Our focus is really around further product development and software development, as well as help desk and customer support, so those will continue to be maintained by Modevity," he says. "What we outsourced is classic cloud, hardware and networking services that support the business."
Perfect for the cloud
Other functions that make good candidates for cloud computing include modular data crunching, where companies outsource the computation of data that can be sent to a cloud provider for processing but can't be identified out of context, thus satisfying security concerns.
For example, a petroleum company doing geographical analysis to search for new oil fields might benefit from moving modular data crunching tasks to the cloud. In such a situation, the geographical information system would be critical to the project and therefore shouldn't be outsourced. But when the company needs to run compute intensive models on that geographical data, it could ship just those models to a cloud provider to process and return, says Forrester's Staten. "That is a low risk way to be highly efficient," he says.
Another common use of cloud computing is to deploy web applications that are temporary or experience erratic traffic patterns. If a site will only be up for six months or will be prone to high traffic volume spikes, the reasoning goes, why spend the money and resources to sustain the site indefinitely or at maximum capacity?
Fast food chain Wendy's International recently decided to promote a 99-cent value meal by establishing a website that held auctions for various items starting at 99 cents. The site is only heavily accessed when the auctions are going on, and the company initially couldn't accurately predict how many visitors it would attract.
Since it wasn't sure what kind of performance was needed for the site, Wendy's employed WhiteKnight, an interactive marketing agency, to set up a web application with a database back end hosted by Rackspace. WhiteKnight claims that it had the site up within 24 hours, attracted 40,000 registrants in 10 days and was able to handle a sustained load of 400 database transactions per second. Once one round of auctions ends, the costs to keep the site running significantly decrease until the next round begins.
Does the cloud fit the corporation?
When reviewing their IT portfolios to find good cloud candidates, IT managers need to consider how well the function or service would fit into the greater corporate environment if it was outsourced.
For example, if a company is in a heavily regulated industry, it should choose a cloud service provider that adheres to the same regulations it does. The cloud provider should be able to prove its compliance and detail how audits will be conducted so customers don't put themselves at risk of unknowingly violating the law by, say, shipping HIPAA-protected data to a service provider that isn't in compliance with HIPAA's data privacy rules, says Greene of The Scooter Store, which partners with health insurance companies and is therefore subject to HIPAA regulations.
"What does your particular industry require as far as locking down and securing information? You need to pick a vendor that matches that, as well as your own company policies," says Greene. "Otherwise you can get yourself in a jam quickly."
When examining cloud options, businesses also need to consider what their tolerance is for latency, and determine how one slow application could affect the entire environment.
Beyond just setting a minimum acceptable response time for cloud-based applications, companies should test applications in the cloud and get a feel for what typical usage will be like, so users will know what will be considered "normal" once an application is moved to the cloud, says The Corporate Executive Board's Tonsetic.
"What really affects the customer experience is the level of variation in what [performance] they're experiencing," he says. "It's like commuting. My commute may not be fun, but it's consistent."
Cloud computing: Worth doing right
Embarking on a cloud computing project may take extensive research and preparation, but the payoff can be significant when everything is done correctly. In order to realise the promised reductions in cost, complexity and time to launch, companies need to make sure they pick the right projects to send to the cloud.
"From a business point of view," says Tonsetic, "it's important to understand cloud computing's capabilities and match those to opportunities, then evaluate different technologies and vendors."