Why is the public cloud winning over in-house IT?

Public cloud services are growing at an alarming rate, but there has been no similar surge in private clouds. Our Advisory Board explains why.

Private cloud has been a big topic of conversation for years, but it really hasn't taken off as fast as some predicted. In a Forrester survey from last year, 31% of enterprises self-reported having a private cloud in place. But, after some digging, Forrester analysts said the real number that have a "true" private cloud is closer to 13%. Of course, most of this confusion comes from different perspectives on what a private cloud is, but the point is that the number of companies adopting private clouds is still a small minority.

By contrast, over the same timeframe, we've seen the popularity of Amazon Web Services (AWS)  explode. Yes, the comparison isn't really fair – it's much easier to simply spin up a workload in AWS (or for someone outside IT to do it) compared to the long term planning and investment required for a private cloud, but that's also part of the problem. Given the challenges of building a private cloud and the other mature options available, it's now more likely that companies may choose to avoid the challenge of building a private cloud and instead embrace a public cloud or at least turn to a managed private cloud.

Last year, we asked out Advisory Board members to explain when a business needs a private cloud. This month, we're turning the question on its head and asking, "How do you know when a public cloud might be better?"

Maish Saidel-Keesing, Cisco Video Technologies Israel

I still think the biggest obstacle to cloud is not the technology or the software, but the organizational culture.

The biggest obstacle to adopting a private cloud is changing the culture to change IT from a cost center to a profit center. Many traditional organizations and their IT departments do not charge for the services that they provide, because IT's job is to provide services for the entire organization.

Moving to a cloud model will not succeed if this paradigm is not changed. A cloud cannot succeed if it does not also include a model where IT can bill users for resources that they use. I have been in more than one situation where the IT department started to provide these cloud services, but were not allowed to directly bill their customers for the services rendered. It started out as a great freebie, but as soon as requirements grew and demand increased, IT could not keep up with growing resource needs. The path to a degradation in service quality was a very short one.

That is why it is so much easier for departments in the organization to go "rogue" and spin up what they need in a public cloud. All they need to do is pull out a credit card and charge it to the department. They know how much is being used, and all the billing infrastructure is in place.

Public cloud will always be enticing when you need resources on demand for a short time. If a company needs a large number of resources for a week, it can't justify buying huge amounts of hardware for such a short time with no guarantee that these resources will be used thereafter.

Pure performance testing is something that might not be accurate in a public cloud environment, because you have little to no control over the underlying resources and surrounding environment on which you are running your tests. This could make running an accurate performance test quite complicated.

Jason Helmick, Concentrated Technologies

While IT should take responsibility for misinterpreting and misrepresenting a well-run virtualization environment as a private cloud, I think it’s superficial to simply cast away the private cloud in hopes of a better future in the public cloud.

The heart of the issue is that businesses and local IT misunderstands the purpose of cloud computing. Take one of the cloud definition requirements as an example: Measured resources, or as many of us refer to it from the old mainframe days, chargeback. Chargeback is just as much a resource throttling mechanism as a financial model. In other words, it stops people (including IT) from abusing and wasting available resources. Getting charged compute-time for shared resources was once on the mind of every manager in every department. Now that many businesses have lived decades in the luxury of over-available and wasted resources, the return to an optimized model takes some education for both IT and the entire business organization.

The problem explodes if this lack of understanding is allowed to fester and the business moves to the tightly regulated public cloud. The marketing phrase “only get charged for what you use” might sound great, until the first billing statement arrives. The gluttony of unneeded resource usage is expensive and has pushed many businesses lacking this understanding back to a pseudo private cloud. The problem is only solved when a business makes a lifestyle change.

Is cloud computing the future? I believe it is, regardless of whether it is public or private, but only if the business and IT realize they are on the same team, work together to understand the purpose to cloud computing beyond simple virtualization, and apply that knowledge to the operations of the entire business. Only getting charged for what you truly need from the cloud is the cost benefit to cloud computing.

 

Jack Kaiser, Focus Technology Solutions

There is lots of talk and buzz about all things cloud right now.  There is also a lot of confusion  as well. I saw a movie trailer this weekend for the new summer comedy, “Sex Tape,” in which the characters  mistakenly send their private video to all of their friends instead of erasing it. After Cameron Diaz’s character asks Jason Segel’s character if he can just get rid of the video, he states, “It is in the cloud now and no one understands the cloud, it is a mystery.”

I found this so funny and partially true. Who really understands the cloud?

The Advisory Board wrote an answer to a similar question last year on private cloud.  When is a public cloud better? First let’s review the primary advantages and disadvantages of a public cloud:

Pros

  • Agility
  • Flexibility
  • Faster time to market
  • Low maintenance
  • Lower costs

Cons

  • Security
  • Performance
  • Compliance
  • Vendor lock in
  • Higher costs

Cost is included in both lists because I have spoken to customers that started out in the public cloud because of the benefits outlined above and have found that costs can grow out of control – a phenomenon called "cloud creep."  They started spending a few thousand dollars a month on public cloud and, in one extreme case, ended up spending $100,000 a month, forcing them to move back to a private cloud. Another challenge for IT departments is that they are becoming less relevant with business leaders and application developers bypassing centralized IT to get their own network, compute and storage.  They are going directly to Amazon Web Services and other service providers in search of the benefits listed above. This loss of visibility and control is daunting for seasoned IT executives and staff, and unless they provide similar IT services, they will find themselves irrelevant or potentially out of a job. IT executives will eventually need to be cloud brokers or cloud managers as well as understanding internal apps and internal traditional IT offerings.

Hybrid cloud is ultimately what will be best for most companies. If designed properly, it will provide the advantages of both a public and private clouds while minimizing the disadvantages to each option.  In the end, this will be best option for most companies regardless of size.  VMware is heavily promoting their new  vCloud Hybrid Service (vCHS), and we have seen lots of interest and success so far.  AWS, Microsoft, Google and others have a head start with their respective public cloud offerings. It will be interesting to see which companies emerge as winners in this growing market.

This was last published in June 2014

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