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May 2011

The basics of cloud computing Part 2

By Samir Kapadia Chartered Accountant
Reading Time 6 mins
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About this article:
The previous write-up on this topic was intended to be an eye-opener on this subject. This one briefly discusses certain important aspects about cloud computing. This would include key terminology and the some offerings.

Background:
Cloud computing, as explained in the previous issue, is a model for enabling convenient, ondemand network access to a shared pool of configurable computing resources (e.g., networks, servers, storage, applications, and services) that can be rapidly provisioned and released with minimal management effort or service provider interaction. By providing on demand access to a shared pool of computing resources in a selfservice, dynamically scaled and metered manner, cloud computing offers compelling advantages in speed, agility and efficiency.

Moving on, one needs to appreciate that, currently, cloud computing is at an early stage of its life-cycle, and cloud computing as we know it, is the evolution and convergence of several trends. In order to benefit from the fast evolving model, one needs to understand certain important aspects and key terminology being used in the context of cloud computing.

Commonly used models of cloud computing:
The first in the order of things is for the readers to understand the different (common) cloud computing models available in the market. The models currently in vogue are:

  • Private clouds
  • Public clouds
  • Community clouds
  • Hybrid clouds

Private clouds:
These refer to clouds for exclusive use by a single organisation. Such clouds are typically controlled, managed and hosted in private data centers. However, this not a hard and fast rule, there are exceptions wherein the private cloud is for the exclusive use by one organisation, but the hosting and operation of the private clouds is outsourced to a third party service provider.

Public clouds:
These refer to clouds which are leased out for use by multiple organisations (tenants) on a shared basis. These clouds are hosted and managed by a third party service provider. These are fairly common and serve small and medium enterprises. Examples would be Microsoft 365, Google docs.

Community clouds:
These refer to clouds for use by a group of related organisations who wish to make use of a common cloud computing environment. For example, a community might consist of the different branches of the military, all the universities in a given region, or all the suppliers to a large manufacturer. To cite an example: Large Hadron Collider1. (Look this up on the Internet, you may find the facts and dynamics hard to believe.)

Hybrid clouds:
These refer to situations when a single organisation adopts both private and public clouds for a single application, in order to take advantage of the benefits of both. For example, in a ‘cloudbursting’ scenario, an organisation might run the steady-state workload of an application on a private cloud, but when a spike in workload occurs, such as at the end of the financial quarter or during the holiday season, they can burst out to use computing capacity from a public cloud, then return those resources to the public pool when they are no longer needed. (Somebody please wake up the Tax Department, please use this on due dates.)

Of the above, private clouds and public clouds are the most commonly seen and implemented.

Advantages:
While the advantages such as efficiency, availability, scalability and fast deployment are common to both public as well as private clouds, there are certain advantages which would be unique either to public clouds or to private clouds. Some of these are: Some benefits are unique to public cloud computing:

  • Low upfront costs — Public clouds are faster and cheaper to get started, hence providing the users with the advantage of a low-cost barrier to entry. There is no need to procure, instal and configure hardware.
  • Economies of scale — Large public clouds enjoy economies of scale in terms of equipment purchasing power and management efficiencies, and some may pass a portion of the savings onto customers.
  • Simpler to manage — Public clouds do not require IT to manage and administer, update, patch, etc. Users rely on the public cloud service provider instead of the IT department.
  • Operating expense — Public clouds are paid out of the operating expense budget, often times by the users’ line of business, not the IT department. Capital expense is avoided, which can be an advantage in some organisations.


Some benefits are unique to private cloud computing:

  • Greater control of security, compliance and quality of service — Private clouds enable IT to maintain control of security (prevent data loss, protect privacy), compliance (data handling policies, data retention, audit, regulations governing data location), and quality of service (since private clouds can optimise networks in ways that public clouds do not allow).
  • Easier integration — Applications running in private clouds are easier to integrate with other in-house applications, such as identity management systems.
  • Lower total costs — Private clouds may be cheaper over the long term compared to public clouds, since it is essentially owning versus renting. According to several analyses, the breakeven period is between two and three years.
  • Capital expense and operating expense — Private clouds are funded by a combination of capital expense (with depreciation) and operating expense.

Summarising:
To recap, cloud computing is characterised by real, new capabilities such as self-service, auto-scaling and chargeback, but is also based on many established technologies such as grid computing, virtualisation, SOA shared services and large-scale, systems management automation. The top two benefits of cloud computing are speed and cost. Through self-service access to an available pool of computing resources, users can be up and running in minutes instead of weeks or months. Making adjustments to computing capacity is also fast, thanks to elastically scalable grid architecture. And because cloud computing is pay-per-use, operates at high scale and is highly automated, the cost and efficiency of cloud computing is very compelling as well.

In the next write-up:
While cloud computing offers compelling benefits in terms of speed and cost, clouds also present serious concerns around security, compliance, quality of service and fit. There are a number of issues and concerns that are holding some organisations back from rushing to the cloud. The top concern far and away is security. While one can debate the relative security of public clouds versus in-house data centers, the bottom-line is that many organisations are not comfortable entrusting certain sensitive data to public clouds where they do not have full visibility and full control. So some particularly sensitive applications will remain in-house while others may take advantage of public clouds. Another concern is quality of service, since clouds may not be able to fully guarantee service level agreement in terms of performance and availability. A third area of concern is fit, the ability to integrate with in-house systems and adapt SaaS applications to the organisation’s business processes. Organisations are likely adopt a mix of public and private clouds. Some applications will be appropriate for public clouds, while others will say in private clouds, and some will not use either.

Until the next write-up . . . . Cheers!!!!!!

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