Kevin Dean, chief marketing officer of Interxion looks at how the cloud is affecting the datacentre Just as we have begun to get to grips with the challenges brought about by Web 2.0, Web 3.0 is fast approaching, in the shape of cloud computing. Cloud computing is generally acknowledged to be the major force which will drive the IT sector into the future. The concept, a mix of both old and new ideas, is emerging as the most efficient and economic delivery model for IT services, and is rapidly paving the way for an entirely new style of computing infrastructure.
The economics are compelling.  According to some analysts business applications can be made three to five times less expensive and consumer applications five to ten times cheaper.

Cloud computing as a serious tool for business is more than just a possibility, and demand is increasing due to its inherent attractiveness. More and more workers will be able to enjoy a new, fuller form of mobile working, where they move from having a static desk with a computer to having an adaptable and movable user identity or IP address. The appeal of a system that frees the consumer from reliance on hardware and software and by which all their computing needs can be realised on a pay-per-use basis via an Internet connection, is easy to grasp.

In fact, a recent report from analysts at IDC1 has found that demand for Storage-as-a-Service, in particular, is currently very strong in businesses of all sizes as they face budgetary pressures and look for a viable solution for backup and business continuity. IDC also revealed that the same demand is “exploding” in the consumer market, as people face the need to store more and more digital content. Storage-as-a-Service offers an affordable alternative to a product purchase and is, according to IDC, “…a precursor to the longer term cloud storage and cloud computing opportunity.” IDC have predicted that spending on cloud services is set to increase from $16.2bn (2008) to a $42bn industry by 2012.

With such promising demand levels, the cloud appears set to revolutionise computing. But while the concept is strong, the revenue levels are still small. Its full potential has yet to be realised in practice, and much of the information currently available is theoretical. Consequently, important decisions such as how businesses should address and update their IT infrastructure for the future must be made with limited information. Many significant decisions will rely on predictions and analysts’ forecasts.

A working definition
As with many revolutionary theories, a strict definition of cloud computing is yet to be agreed. The term ‘cloud computing’ is being loosely applied and defined in a multitude of different ways, which creates confusion in the market. Common usages include the services provided by, the technologies behind, and the scalability of “the cloud.”
A definition in a recent report by McKinsey2 is more rigorous;
“Clouds are hardware-based services offering compute, network and storage capacity where:

1. Hardware management is highly abstracted from the buyer
2. Buyers incur infrastructure costs as variable OPEX
3. Infrastructure capacity is highly elastic (up or down)”

Afirm distinction also needs to be made between ‘public’ and ‘private’ clouds: A public cloud is accessible to all, whereas a private cloud is one implemented and used within an organisation, much like the traditional differentiation between the Internet, a publicly accessible platform, and a proprietary, internal-facing company Intranet.

The importance of the environment
Whether public or private, all clouds share the same enablers; pay-per-use software; virtualisation and automation; broadband networks; and large, robust data centres.

A growing variety of software and IT service providers are developing innovative solutions in pay-per-use and virtualisation. And carrier-neutral data centres, as a critical enabler for the cloud’s broadband connectivity and infrastructure needs, are creating the ideal environment in which the cloud computing offerings can grow and prosper.

A large carrier-neutral data centre is the perfect environment for any cloud-type service because it meets a number of critical criteria. It provides the opportunity to scale to match fluctuating demand, as well as the power, connectivity, and the secure processes and procedures needed to ensure reliable performance and 24/7/365 availability. It also provides significant economies of scale, which helps keep costs to a minimum at this critical stage in the development of the first wave of cloud services.

Let me quickly review what I believe are the key factors that go into creating a beneficial environment for the incubation of cloud services:

1. Limitless scalability
Public clouds demand higher levels of faster scalability than any previous delivery model. Bandwidth and processing power need to be instantly available for surges in demand and, when the peak of traffic has gone, resources can be reduced. However there are risks. With over-provisioning, you are prepared for peaks in demand but at the same time it means you accept underutilisation. On the other hand, when under-provisioning you take for granted either lost revenue, lost customers, or both. Outsourcing critical delivery systems to a large data centre means that the cloud service provider does not need to over-provision, and the risk of running out of capacity is not his problem anymore.

2. Physical and virtual security
Although the many benefits of the cloud are being realised, so are the risks associated with the technology. The Ethernet-based cloud is not impenetrable or fail-safe and is by no means immune to data loss. Methods of breaching security inevitably advance in parallel with protection techniques, and frequent incidents demonstrate that service providers struggle to manage their third-party-supplier relationships, both within and outside of the cloud.

Organisations must identify operational and security risks associated with cloud-based services, namely data security, integrity and privacy.

Currently, a larger data centre environment is ideally suited to secure delivery of cloud computing applications, such as Storage-as-a-Service and Software-as-a-Service. This is due to the robust nature of the data centre’s infrastructure and the inherent need for high-quality, efficient and up-to-the-minute technologies and hardware. Larger facilities excel in both physical and data security, with multiple security layers and fail-safes, and back-up and recovery systems that protect against data loss.

3. High-density power
While the average corporate server averages 15% utilisation, virtualised servers can run at 60-80%. As a result of this, high-density is becoming more popular. High-density power availability also enables cloud service providers to deploy the very latest and most efficient equipment while minimising the space required and, therefore, the cost to the business.

4. Broad connectivity choices
As the computer ‘becomes’ the network, connectivity becomes synonymous with processing power as far as the user is concerned, so cloud computing will stand or fall on the quality of the end-user connection. Maximum bandwidths and multiple connectivity options will drive uptake of the pay-per-use model, and anything less will have the reverse effect. A carrier-neutral data centre can provide the widest possible range of connectivity options.

5. Keeping cloud costs low
And, on the subject of costs, the greatest benefit of scaling up the infrastructure that supports the cloud is economies of scale. This is something that has already been realised by Internet giants such as Microsoft, Google and Amazon, who are investing hundreds of millions in sizeable new facilities. Large data centres drive down the cost of hosting cloud computing infrastructure, multiplying the economies generated by the cloud delivery model and protecting profit margins for first movers. Once established, they also establish a competitive barrier against second wave competition.

A recent study by the University of California3 showed that, looking ONLY at storage, networking and processing costs, the very large data centre reduces costs by five to seven times.

But not everyone can build a large data centre. Outsourcing cloud services to a larger data centre operator benefits businesses that are unable to raise the funds to build facilities in today’s tough economic climate. Facility costs are growing rapidly and, according to the Uptime Institute4, the true costs of running a server are often four to five times the cost of the server alone over a five- to ten-year lifetime. To hand this over to an outsourced data centre means great savings in cost and administration for the business.

Cloud services: An evolving paradigm
Ultimately, what will be vital to the success of cloud computing, and to those wanting to take full advantage of its benefits, is a reliable infrastructure that can scale and, at the same time, provide the required connectivity and security.

But until the details of cloud computing on a large scale are thoroughly addressed, there will still be a place for both proprietary and on-demand software within the IT industry. The two must enter a period of co-existence before cloud computing is widely adopted as a replacement to traditional delivery methods.

Cloud computing is still an evolving paradigm that will take many years to fully mature. However, with improvements in understanding and awareness of security, infrastructure and regulatory procedures, and with solid infrastructure foundations in place, the cloud looks set to thrive.

Notes

1. Worldwide IT Cloud Services Spending 2008-12. IDC, Oct 2008
2. Clearing the air on Cloud Computing. McKinsey & Company, March 2009
3. Above the Clouds: A Berkeley View of Cloud Computing. EECS Department University of California at Berkeley, Feb 2009
4. A Simple Model for Determining True Total Cost of Ownership for Data Centers, The Uptime Institute, 2007