As the founder of Cloudonomics.com, Joe Weinman is one of the most known cloud computing evangelists in the world. Weinman researches the economics of the cloud. Among other cloud aspects he examines, he also relates to the cloud financial operational costs together with its buisness benefits. Following I Am OnDemand last posts summarizing and discussing several Cloudonomics researches, we asked Mr. Weinman to meet for a brief discussion. Last week I had the honor to interview him for about an hour and hear his clouds’ perceptions and vision.
What is a private cloud ?
I started the interview with this basic (?) question. The intuitive answer of most IT managers will be that the private cloud is the company actual own dedicated on-premise resources that are behind a firewall. The advanced ones will probably add that it can be hosted on the MSP premise as well and even managed by a smart virtualization layer. I can add that a private cloud might even be a hosted and outsourced environment inside a public cloud. Furthermore Weinman said that others in the industry relate to this question from aspects such as security, network, performance and architecture. Relating to this question Weinman brought, for my opinion, the best answer as it was driven from the economic side of things. From his perspective and experience, he bases his answer only on the business aspect:
“… the way those cloud resources are priced. Basically the idea of private cloud is owning dedicated servers with a flat fee rate”, Weinman defined.
I think that this answer might wins as the formal definition.
Why hybrid ?
One of the main reasons to move to the hybrid cloud Weinman mentioned, is adoption of cloud by the enterprise. The migration from the on-premise can be a pain point with a lot of risks including adding an enormous weight on the overall cloud costs. The enterprise will want to remove the hassle and the responsibility including unknown economic risks, hence will prefer to outsource it while the costs are known a head and are flat per year. Weinman concluded that using a hybrid cloud leads to a well balanced expense. It can be achieved using a main private cloud and use of the public for load bursts, storage capacity increase or for any other resources that have costs and their demand changes over time. To learn more about cloud bursting I suggest you to Check Weinman’s article ”4 ½ Ways to deal with data during cloud bursts”.
HP, one of the cloud giants presents the hybrid cloud as one of its main cloud services and recently announced its dual bursting, Weinman noted. The dual bursting feature is part of the HP CloudSystem that supports demand changes using on-premise or public cloud resources supported by the pay-as-you model.
Discussing the flat rate model, Weinman noted that Amazon AWS public cloud offers the option to reserve instances though he claimed that:
“It is still not fully inside the flat rate”
and continued with explaining that:
“There are other issues above the infrastructure such as the environment architecture, strategy, integration and maintenance”.
According to his opinion the enterprise (and from his experience I assume) interests on purchasing full managed cloud service solution and get a deal for at least 3 years. I know about a company the closed a cloud deal for 10 years! with HP for $130M. It makes sense that the enterprise will want an external provider to manage its IT environment as it becomes more complex praticulary in the cloud. Another main reason to go with flat rate, is simply because it cost less when there is a stable, maybe fixed need of resources over time, said Weinman. Click here and check his proof for that matter.
Is hybrid cloud a temporary stage ?
The second half of the “hybrid discussion” started with my question about the option that hybrid and even the private are temporary stages and in the long run, the cloud will develop to be fully public. It is a fact that today this matter is still under a major non-consent among the cloud computing leading evangelists. Weinman is obviously one of the leading enterprise cloud evangelists and as I am originally from the SaaS industry it was very educational for me to hear his “cloud vision”.
“… So many things and questions”, Weinman expressed is feeling regarding the current public cloud infrastructure state and capabilities.
Weinman gave as an example the huge cost and complexity of moving the enterprise enormous amount of applications and data to the public cloud. The basic reason for the transition to the public will be only when it is most cost effective for moving all the enterprise applications to the public in comparison to the “do it yourself” approach, though today this is still not align with the public cloud offerings.
The Cloud is just like Airlines, Car Rental and Electricity
Here we entered to discuss the “economies of scale” aspect that the public cloud presents. Weinman started with the basic economic principal saying that you would like to get a better price than the price you currently pay for the same product. Enterprises will buy their IT resources from the public clouds only if those will cost less, hence IaaS vendors try to utilize their economies of scale to get a better price on the infrastructure than the price the medium or the large enterprise can get.
Weinman presented the common analogue of the cloud industry to the air lines company and debated its accuracy:
“When demand grow the airlines company will use bigger airplanes, that is not the case for the public cloud. A better analogue is between the IaaS vendor and the Rental car company”, he said.
When demand growth, the rental car company will not buy bigger cars but will just buy more cars so does the IaaS vendor. This takes me to the post “Cloud made of atomic units” talks about the drive of all the industry participants to increase the granularity of the cloud. Weinman added that if you use a car every day you will want to buy it, though no doubt that we still need the option to rent a car from time to time to fulfill a temporary need and it is a fact that it costs more. Weinman concluded the “transportation part” by saying that the world of car transportation contains rental cars, leasing, taxis and private cars, the same goes for the world of cloud.
When describing the cloud computing evolution most of us will say that the evolution of hosting is the same that happened in the electricity industry. The economies of scale principal is the heart of the major power plant economy. Weinman said that together with the electricity economy of scale, one can also see that there is a trend in enterprise perception, hence changes in the ways the which companies acquire their electricity capacity. Mega enterprises (including the cloud giants themselves) own their power resources or buy chunks of capacity for a flat rate, again the same goes for the cloud industry.
Public cloud use cases
Together with the the economic benefits of the hybrid cloud it is an evident that the public cloud is a game changer.
There are use cases where public cloud is the cause of making them reality, Weinman said.
In his article “Compelling Cases of Clouds”, he presents several use cases for the public cloud. In our conversation and on several interviews I saw with Weinman, he keeps mentioning the telecommunication service provider who should utilize the cloud as it brings a pure economic benefit over its complex private infrastructure hard wire network.
“It’s cheaper to connect to a hub or network once rather than have multiple point-to-point connections” he writes in his article.
He mentions the following use cases as well: collaboration and sharing of data, social networks, cross device access, change from CAPEX to OPEX, support demand peaks, outsource peripheral applications, use of PaaS to accelerate application development , distribute application updates, build a blog and create an online community.
Revolution or Evolution?
Such as almost every industry, Weinman said the move to pay per use model of the industry is an evolution. Even in the money industry you can find the “banking cloud provider” that will sell you a credit.
“Although it is “only” an evolution, the cloud is a truly wonderful evolution and it is proven !”, Weinman concluded with enthusiasm.
I want to thank Mr. Weinman for sharing his knowledge and vision with `I Am OnDemand` readers. I assume that if I will have the chance to continue this discussion with Mr. Weinman I will probably would pick to discuss the implications of the increasing amount of new SaaS applications (pay per use) adoption by the enterprise.
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This interview is one of the important mile stones on the cloud journey of `I Am OnDemand` blog including its readers, authors and contributors. The amount of knowledge that we gather is increasing on a weekly basis as well as the amount of our new readers and it slowly but surely becomes one of the main knowledge resources in the world of cloud computing.
Stay tuned,
Ofir.
