10 big cloud trends for 2010

Cloud computing is clearly worming its way into the enterprise, especially as a testing and development environment and as a platform for less than critical apps and services. But cloud vendors are, in short, still trying to grow up and become a platform for business-critical applications. They're already working on standards and security issues, improving service level agreements and encouraging vendors to embrace the meter of pricing based on software use — not per-seat cost.

With that as backdrop, 2010 will be all about moving enterprises to the cloud. Here are the trends driving it.

Commodity cloud price slashing continues

Amazon EC2 cut prices up to 15% in November. A small standard Linux-based instance went from 10 cents to 8.5 cents an hour. That same month, Google cut its Picasa photo storage pricing from $20 to $5 for a year. Cloud-based apps are on a similar trajectory. Microsoft's Business Productivity Online Suite, which includes the SaaS versions of Exchange, went from $15 a month per user to $10. Anchoring pricing is Google's Apps Premier Edition at $50 per year. Cloud pricing is getting so low it's “ludicrous,” quipped Jeff Maling, CEO of Roundarch Inc., a Web services consultancy in Chicago.

“They are pricing very aggressively to get volume on the platform,” he said.

A move to simpler cloud pricing models

As providers add in more options and services, the pricing complexity increases. Amazon, for instance, has a calculator for estimating the cost of bandwidth transfers, load balancing and elastic IP. 2010 may see a proliferation of “all-you-can-eat pricing models,” where a user contracts for a set number of hours that includes a range of services, said Ahmar Abbas, senior vice president of remote infrastructure management at CSS Corp., an IT services and consulting firm in San Jose, Calif.

Enterprise application vendors embrace metering

This may be a bit of a reach for 2010, because it will be hard to get application vendors to shift off of predictable licensing and revenue models, such as per-seat or named-user pricing, in favor of metering. But metered billing based on usage will help companies such as Accelera Solutions Inc., which provides a hosted virtual desktop via the cloud. This Falls Church, Va.-based firm combines a variety of software tools that utilize different licensing schemes and charges a flat fee of about $25 a month for basic setup, said Joe Brown, Accelera's president. He believes vendors will adapt.

“They all recognize that the cloud is going to drive business for them,” said Brown. Industry watchers, who are bullish on the idea of metering, believe this model hinges on technology improvements for tracking usage, something that may arrive over the next year. But for now, cloud providers are, in some cases, still forced to negotiate custom deals.

Cloud providers increasingly offer enterprise-caliber SLAs

The 99.9% and 100% uptime claims by cloud vendors are, in a word, marketing. Uptime guarantees do not mean a cloud provider is also capable of meeting business-critical requirements. Imad Mouline, the CTO of performance monitoring firm Lexington, Mass.-based Gomez Inc., which recently became a division of Compuware Corp., says what customers want to know is whether cloud providers can, for instance, deliver content as quickly on the East Coast as they do on the West Coast. How good are their network connections? And being able to add capacity in response to surging business demands isn't enough. What may matter most is how quickly a cloud provider can add this capacity. IT managers will want “>service level agreements (SLAs) with cloud providers that allow them to sleep at night, said Mouline. “Otherwise, the cloud will remain a nice sandbox,” he said. In other words, it'll be used mainly as a place for application testing and development.

New technologies will improve cloud use and performance

Riverbed Technology Inc., a San Francisco-based company that makes WAN optimization technology (and has managed to post doubt-digit growth rates during the recession), is making the core services provided by its hardware appliance into a virtual system for use in the cloud. It plans to release this product sometime in 2010. The trend will be for third parties to increasingly focus on adapting data center technologies to cloud environments, including tools to help reduce the cost of “on-boarding,” or moving applications into the cloud.

Cloud providers address security concerns

In March, a broad range of companies, both vendors and cloud users, formed the Cloud Security Alliance to create a consensus on the issue of security. “Security is the number one inhibitor to cloud adoption,” said Justin Steinman, a Novell Inc. vice president and a member of the Alliance. There are, for instance, a variety of legal and technology issues to address. As an example, if a payroll services provider conducts services in a third-party cloud and there's a breach of sensitive consumer data, who's liable? Who owns the data? And who sues whom?

Steinman envisions these questions being resolved, in part, through tough SLAs with cloud providers that have “drastic penalties” if things go wrong. Users can also expect to see technologies that enable cloud providers to meet different customer security requirements. There may also be a push for regulatory changes that take into account cloud services.

Performance monitoring will become ubiquitous

Cloud services are largely public, consumer-delivery services, and whenever any of the big cloud providers has a data center hiccup it's immediately noticed. Cloud providers are under increasing pressure for tell-all reports on their outages, and there's near-constant scrutiny from a seemingly increasing number of third parties with comparative score cards and glitch reports. Don't be surprised if you turn on the TV in the morning and get not only weather and traffic updates, but news about the performance of cloud services as well. “>Performance monitoring will be as common as rush hour traffic reports.

Open standards for cloud computing advance

Here's the question: Will customers be able to move easily between clouds? The answer depends on how quickly vendors and customers reach agreements on standards. There was a lot of activity in 2009 on this problem. In April, the Distributed Management Task force (DMTF) announced its “Open Cloud Standards Incubator.” Among the problems the DMTF is working on is the lack of standards that enable interoperability between private clouds within the enterprise and hosted or public cloud providers. In December, the Enterprise Cloud Buyers Council was created to work on security, reliability and interoperability. Microsoft, Cisco and IBM are part of that group.

“For cloud computing to really take off, it has to be open,” said Emil Sayegh, general manager of cloud for Rackspace US Inc. Cloud providers will have to allow movement between clouds and interoperability, as well as enabling disaster recovery between clouds, said Sayegh. “Holding people hostage is not something we believe in,” he said.

Politics will drive decisions

Cloud decisions will, increasingly, be made with an eye on politics and not by IT managers. The decision in October by the Los Angeles City Council to approve a $7.25 million, five-year deal with Google Apps, replacing the city's internal Novell GroupWise system — and at least setting up an alternative to Microsoft Office — is a big deal. It engaged the mayor and city council in a very public debate about cloud services; that's the real takeaway from the decision. Cloud-based services have demystified compute services and increasingly, elected officials (and business executives) will ask IT managers about the cloud.

Look for the Los Angeles decision to echo loudly in board rooms and at government meetings in 2010.

The cloud will decentralize IT decision-making

One of the first significant actions by President Barack Obama's federal CIO, Vivek Kundra, was to create a federal app store that allows U.S. government employees to order services and tools without necessarily having to go through an IT approval process for each and every action. The app store is still a work in progress. The ability to order cloud storage, and Web hosting, is still “coming soon,” but the goal is in place. The federal effort, however, is one of the more visible signals of a broader trend. After a drive toward centralization of IT resources and data center consolidation, business units may get a little independence back to add and subtract IT services via cloud providers.