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Does the private cloud lack business sense?

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As Joe McKendrick brings up in this blog, Does the private cloud 'surge' lack business sense, are private cloud projects being driven too much by IT, and not by business?

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  • Do not necessarily agree with that. I believe private clouds make sense when couple of criteria are satisfied:

    1. There is critical mass to tide over utilization curves within the firewall (not all enterprises will have the scale)

    2. Enough technology presence in house to manage and maintain and keep pace with the rapid adoption of technologies with the "real" cloud.

    3. Prevalence of open source tools and technologies to help further this adoption.

    All of these variables could and must come together (and we have seen them come together) to make the private cloud viable and successful.

  • NO!!! If anything, for many businesses it makes more sense, or is the only real option to take advantage of cloud computing...

    I think private clouds for many organisations make the most sense, it gives them all the flexibility of the cloud but with added sense of security, and knowledge of where data is physically located (needed in many cases for compliance). I think the surge in private clouds shows that organisations love the idea of cloud computing, and the benefits it can deliver, but still want and need to maintain some level of control. The private cloud is the only option in this case...

    I personally see Private Clouds as the future for cloud computing in many organisations. Utilising the big players has too many "issues" in many business cases.

    In addition, do you have to worry about being tied in to google or microsoft for your cloud? No, not if its a private cloud...

  • The only thing that doesn't make sense is strictly limiting Cloud to a "private/public" distinction - it depends on the application or process. For instance, most large companies have an incredible overabundance of infrastructure that could be utilized as private cloud capacity for development and testing teams at the lowest possible cost.

    Yes IT may be driving the move to cloud, and starting with private cloud, but it is driven by business needs for responsiveness and cost reduction. A wise company would think about the ideal architecture and potential usage patterns for the application, instead of making an either/or distinction.

  • While it makes more sense economically to take advantage of the rapidly expanding array of public cloud services, it isn't realistic for most organizations to rely entirely on these services. Therefore, it also makes sense for businesses to do all they can to emulate the best practices and latest enabling technologies which are being employed by the leading cloud service providers to support the aspects of their operations which they currently want to manage internally. However, IT and business decision-makers must remain open-minded about which elements they can offload, or 'out-task', to cloud service providers in the future.

  • What does and does not make business sense it contextual and highly dependent on the meaning of “business.â€? Traditionally, viable cloud computing business models were predicated on some form of cost take out or risk transfer. IT departments transfer capital investment for operational expenses. If the longterm TCO for a cloud-based implementation was less than a private version; well, it made business sense. This kind of cost take down, Business Sense 1.0, was the primary cloud funding model for 2008-2010.

    However, with the decline of the economy, most companies have taken out just about all the cost they can over the last few years. Companies are now looking to the definition of Business Sense 2.0, thinking about business growth in terms of revenue, margin, and market share. The new funding question becomes, “How will a private, or public, cloud help our company grow?� In essence, there is a strong desire to determine the business impact from moving to the cloud.

    Unfortunately, the answer to this version of the business sense question is no. No, most companies are not finding additionally significant business value (revenue, margin, market share, or customer satisfaction) through the adoption of private clouds. Yes, there are marginal cost improvements through increase productivity for highly cyclical operations, but little to no impact on top line goals.

    The private cloud appears to be business enigma that is best understood through yesterday’s lens. A view that has probably seen its better days. Let’s move on to the real work at hand - finding ways to seed the cloud in order to rain top line revenue.


  • Overall, the Private Cloud makes little sense compared to the Public Cloud since it does not offer the controlled pay per usage model, multi tenant economies of scale, and the increased focus on business rather than IT.
    The Public Cloud is a different paradigm because it outsources the IT while the private is just a more efficient data center with visualization.
    Even if for larger companies it appears to balance a bit the books, the business must decide if they want to keep the IT in house.

  • All to the contrary – I find that this is one of the most effective uses of Cloud Architecture by Enterprises.

  • Depends on what one means by "Cloud".
    If one means "self service" , "charge-back", "easy provisioning" , "Multi-Tenancy" and "Rapid Changes in consumption" these are would be great in any IT environment of an enterprise size and are the next generation of virtualization platforms.
    I believe these "private cloud" like solution would only be applicable to most enterprises 3-5 years from now.
    Current storage and OSS systems are not sophisticated enough.
    Even in 3 years, private clouds will not provide many of the other great benefits of the public cloud : connectivity, PAAS integration, full elasticity, constant upgrades and maintenance and eco-system.

  • Private or public, the cloud is a better way to manage infrastructure than putting in a new box for every new application.

    -economies of scale from shared infrastructure
    -dynamic workload management
    -self-service agility

    A few years from now, we'll be asking "When does it make sense NOT to virtualize?"

  • If by business sense, we mean economics-driven or the quest for greater margins and profits, then to a certain degree a private cloud doesn't offer the advantage of a windfall as much as a public cloud can give. But what it does is to bridge the gap of moving into a new technology and retain a measure of control (and status quo) until such a time that the organization is ready (or is forced by circumstances or lack of alternative) to truly offload to a cloud provider in the future.

  • I always say that you can't take the computing out of the cloud and still call it cloud computing.

    There are lots of good reasons for implementing virtualization and automated provisioning and management, but that isn't cloud computing, it's just common-sense resource management. Cloud computing is shared-services infrastructure that's fully connected and plugged into the global Web. The whole point of so-called 'private cloud' is to avoid being properly connected to the Web, and therefore it defeats the object.

    This makes no business sense because business is done on the Web today. So what is the point of implementing business systems and applications on infrastructure that's deliberately cut off from the Web? This is madness.

    On top of that, it's uneconomic - a new study by Microsoft finds that, even for large enterprises, private cloud is 10x more expensive than public cloud. Not 10 percent, 10 fold! See more here:

    http://www.zdnet.com/blog/saas/private-cloud-discredited-part-1/1204

  • Private cloud computing surely make sense from resource management perspectives. Hence it doesn't have to be business driven. I assume that business people are happy as long as business applications are accessible at reasonable costs regardless of via cloud computing or not.

    Business people have slightly different dimensions, I suppose. For example in retail industries, they are interested in integrating Web front, POS in physical stores and back office systems. A solution can be either Public cloud, Private cloud or a combination of the both. It also can be done without using any could computing. In most cases, using cloud computing should be cheaper and elastic, of course. :-)

  • Usually I agree with Joe, but in this case...well.

    A "private cloud" implementation enables IT to be more efficient, which means they can serve the business better, faster, and more often. How is that not serving the business? The reason to optimize IT in the first place is to more efficiently serve "the business". Just because you can't necessarily tie a cloud computing initiative to a specific business project/case/application doesn't mean it isn't business-focused.

  • A "private Cloud" that you own is not a Cloud; if the Cloud definition means outsourcing in the big world, pay on demand business model, multi-user usage to benefit from economies of scale then the private cloud is not a Cloud but the Data Center you own, using Cloud implementation techniques like visualization and at best services interfaces. I would call it a Virtualised Data Center.

    You also have to take out from the private Cloud the SaaS model which makes sense only for the Public Cloud.
    The name private Cloud is misleading.
    But I can certainly understand the IT resistance to that.

  • I'm seeing the same arguments we saw within the SOA realm. And, yes, SOA absolutely makes business sense -- once it crosses that chasm from delivering IT optimization to business flexibility. The same holds true for private cloud. Yes, of course, there is business sense in lean, flexible IT, because it means lower operating costs. This is well and good, but the world's greatest companies don't get to where they are simply because they operate at lower costs. There's that additional set of qualities -- innovative spirit, sense of mission, ability to take measured risks. Technology needs to deliver more access to opportunities for growth in capabilities and resources. Think about it -- in some cases, robust private cloud may open new lines of business -- the organization may become a cloud services provider itself, as it extends those services to partners and customers. But the business needs to recognize these opportunities -- IT can help, but doesn't have the breadth and scope to push business into new opportunities.

  • Every IT professional should ask themselves, "what business problem am I trying to solve with SOA/Cloud/insert buzzword here". What problems does a private cloud solve? Does it allow a business project - perhaps tied to a new revenue opportunity - to complete in a timely fashion? Does using private cloud/virtualization allow an IT operation to reduce its operation costs and thus improve the overall bottom line? Does it allow improved performance testing?

    Cloud computing is nothing more than a technology architecture tactic to address the quality attributes of performance, scalability, and perhaps a few others. Cool the hype, think through the filter of business objectives.

    Cheers!

  • Hi all,

    I believe it could be regarded as lacking some sense. Let's stop and think for a moment.

    First of all the cloud is _not_ all about technology. In fact the cloud _will disrupt your business_ by forcing it to become more specialised and work with an increasing number of partners. As a result the cloud is inevitable and we all need to look at the big picture rather than limiting our view to IT issues and trying to create barriers. I wrote about this subject after being inspired by a different question a couple of weeks ago: http://wp.me/p3Ou1-35

    Putting this inconvenience to one side and limiting this comment purely to technology platforms for now, however, we can see that cloud platforms are large scale, integrated, automated, optimised and social offerings organised by value to wrap up complex hardware, networks, software, middleware, development tooling, operations, staff, geographies, security, provisioning, monetisation, reporting, catalogues etc etc and deliver them as an apparently simple service. Again, cloud is not just some virtualisation software :)

    Looking at the companies that have _really_ built and operated such platforms on the internet we can see that there are not a large number due to the breadth of cross functional expertise required to package and operate a mass of technologies coherently as a service, the scarcity of talent and the prohibitive capital investment (I'm sure you know who they are already :)). These issues also become far more complex once you progress beyond the _relative_ simplicity and low value of IaaS. These providers don't appear to have any desire to live the distracting nightmare of scaling down, repackaging, delivering and then offering support for on-premise versions of their platforms across multiple underfunded IT organisations (or are not yet mature enough to do so in the case of MS - who I would guess will have to strip back Azure considerably for any packaged 'appliance' to make it viable).

    Without the productised expertise of organisations who have delivered a cloud platform, however, how will you build your private cloud? Ask yourself how you have the knowledge to do so if you haven't actually implemented and operated all of the complex components as a unified service at scale? Whilst I'm personally unconvinced by the whole concept, surely any notion of 'private' cloud has to be a repackaging of expertise from someone who has successfully built, operated and 'productised' a public cloud? Trying to blindly build a 'cloud' from the ground up with disparate traditional products, the small number of use cases visible internally and a lack of cross functional expertise and talent - probably with some consulting and systems integration thrown in for good measure to help you on your way - could be considered to sound a little like an expensive, open ended and high risk proposition with the potential to result in a white elephant.

    Finally - go into most IT shops and check out how current most of their hardware and software is and how quickly they are innovating their platforms, processes and roles. Ask yourself how much time, money and commitment a business invests in enabling its internal IT department to pursue thought leadership, standards efforts and open source projects. Even once the white elephant lands what's the likelihood that it will keep pace with specialised cloud platform providers who are constantly improving as part of their value proposition?

    So let's recap; it's certainly the case that internal initiatives targeted at building a private cloud are embarking on a hugely complex and multi-disciplinary bespoke platform build – even more so once you move beyond low value infrastructure. Furthermore it is an increasing imperative that any business platform supports the secure exposure of an organisation's core services to the internet in a standards based, multi-tenant and elastic manner to deliver emerging collaborative and pull-based business models. In the context of the above discussion, it could perhaps be suggested that 'private cloud' providers and adopters are attempting to do this:

    a) Without proven and packaged expertise from a provider who's actually done it;

    b) On budgets way below those of public cloud companies;

    c) Somewhat lacking the necessary skills;

    d) Under the constant distraction of wider day to day development and operational demands; and

    e) Without support from their business for the activities required to support ongoing innovation and development of the wide variety of technologies included in the platform and their joint optimisation.

    Oh and the costs to operate whatever comes out the other end of the adventure - according to Microsoft at least - could allegedly be anywhere between 10 and 80 times higher than those they could get externally without bothering (and those figures are probably based on the unlikely assumption the internal project has done a great job in realising the maximum achievable internal savings).

    I may be in the minority but I'm not yet convinced by the business case :)

    Ian

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