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Enter the cloud

The economic and social motivation for the cloud is high, the business need for speed and agility is like never before, and the technology has reached a level where it makes prudent investments in cloud services not only possible but fast and easy. The number of cloud success stories is growing week by week. The cloud is here, but what is it, really? Where is it headed? What are the risks? And how can IT organizations prepare?

What is Cloud Computing?

Cloud computing is the use of Internet-based services to support a business process. Cloud services typically have the following characteristics:

•They can be rapidly deployed, so they are quick to value

•There is little or no start-up cost and no capital investment

•Costs for services are usage based with no fixed commitment

•Services can be quickly and easily scaled up or down with no penalty

•Services are multi-tenant (many customers leverage the platform)

•Ability to customize a service is limited

The cloud lets users contract for services at three levels:

•Infrastructure as a Service (IaaS): Grids of virtualized servers, storage & networks. Examples include Amazon EC2, S3 and Joyent.

•Platform as a Service (PaaS): The abstraction of applications from traditional limits of hardware allowing developers to focus on application development and not worry about operating systems, infrastructure scaling, load balancing, etc. Examples include Force.com and Microsoft’s Azure investments.

•Software as a Service (SaaS). Applications with a web-based interface accessed via Web Services and Web 2.0. Examples include Google Apps, SalesForce.com and social networking applications such as FaceBook.

Where is the Cloud headed?

When you think about the future of the cloud, the first thing to recognize is that right now investors are focusing their attention and dollars on this space. At the same time, there are several key players—Google and Amazon—with huge footprints in the cloud while other established companies such as Microsoft and IBM are investing billions of dollars. Looking further into the future, cloud standards will emerge that reduce some of the uncertainties of contracting for cloud services. I wouldn’t hazard a guess on exactly when these standards efforts will yield results. However, I expect de facto standards to emerge which will begin to get the job done long before we have fully-sanctioned industry standards.

What are the risks?

As with any service, with the cloud you should always make sure that you know what you are paying for and what measurements exist to show that you are actually receiving the service. You should pay careful attention to:

•Service Levels. Cloud provides may be hesitant to commit to consistency of performance for an application or transaction. Understand the service levels you can expect for transaction response times, data protection, and speed of data recovery.

•Privacy. If someone else hosts and serves your data they could be approached by the U.S. government to access and search that data without your knowledge or approval. Current indications are that they would be obligated to comply.

•Compliance. You are probably already aware of the regulations that apply to your business. In theory, providers of cloud services can provide the same level of compliance for data stored in the cloud, but, since most of these services are young, you’ll need to take extra care.

•Data Ownership. Do you still own your data once it goes into the cloud? You may think the answer to this question is obvious, but the recent flap over Facebook’s attempt to change its terms of use suggests that the question is worth a second look.

•Data Mobility. Can you share data between cloud services? If you terminate a cloud relationship can you get your data back? What format will it be in? How can you be sure all other copies are destroyed?

For a service that’s going to be critical to your company, the best advice is to ask a lot of questions and get all commitments in writing.

What are smart companies doing now?

There are already a lot of opportunities for IT organizations to leverage cloud services. New businesses will in many cases never have a formal IT function.

•Many organizations are enhancing their existing infrastructures to take advantage of “cloud bursting”. When you need extra capacity for an activity, you can quickly leverage resources from the cloud rather than investing in those resources in house.

•Development/test and similar activities are a great cloud opportunity, allowing you to reduce capital spending and related data center costs while increasing speed and agility.

•Companies that hesitate to commit data to the cloud are developing models to store production data in their own facilities to ensure they meet compliance requirements while leveraging massive compute resources in the clouds for processing as needed.

Are you ready?

If your organization is just beginning to explore the cloud, there are a number of mature cloud services such as email that can be considered “low-hanging fruit”. In addition to looking outside for cloud services, you may want to begin to take steps inside your own shop to evolve your internal infrastructure toward a more cloud-like model.

All IT organizations must do some soul searching to determine what role they will play in enabling the business models required in today’s economy. How will you improve speed and agility? How can you support your business operations with fewer fixed expenses? What will you do to engage a new generation of professionals? You should define opportunities and work with your customers to understand what services can best meet your needs or fill gaps in your existing IT portfolio.

First, you should assess your ability to assist in contracting for cloud services. Your job is to make the process simple, repeatable and beneficial to your business.

Second, you need to identify which services can reside in the cloud and which should be internal. Determine what systems and services are core to your business or store your crucial intellectual property. These should be categorized as high risk and not considered cloud opportunities in the near term.

Finally, you need to develop a sourcing strategy to achieve the low cost, scalability and flexibility your business is seeking. This should include all the necessary protections such as data ownership and mobility, compliance and other elements familiar from more traditional IT contracts.

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