Private Clouds “Surge” for Wrong Reasons?

14 Jul

I read a post by David Linthicum today on an apparent surge in demand for Private Clouds.  This was in turn spurred by thoughts from Steve Rosenbush on increasing demand for Private Cloud infrastructures.

To me this whole debate is slightly tragic as I believe that most people are framing the wrong issues when considering the public vs private cloud debate (and frankly for me it is a ridiculous debate as in my mind ‘the cloud’ can only exist ‘out there, somewhere’ and thus be shared; to me a ‘private’ cloud can only be a logically separate area of a shared infrastructure and not an organisation specific infrastructure which merely shares some of the technologies and approaches – which, frankly, is business as usual and not a cloud.  For that reason when I talk about public clouds I also include such logically private clouds running on shared infrastructures).  As David points out there are a whole host of reasons that people push back against the use of cloud infrastructures, mostly to do with retaining control in one way or another.  In essence there are a list of IT issues that people raise as absolute blockers that require private infrastructure to solve – particularly control, service levels and security – whilst they ignore the business benefits of specialisation, flexibility and choice.  Often “solving” the IT issues and propagating a model of ownership and mediocrity in IT delivery when it’s not really necessary merely denies the business the opportunity to solve their issues and transformationally improve their operations (and surely optimising the business is more important than undermining it in order to optimise the IT, right?).  That’s why for me the discussion should be about the business opportunities presented by the cloud and not simply a childish public vs private debate at the – pretty worthless – technology level.

Let’s have a look at a couple of issues:

  1. The degree of truth in the control, service and security concerns most often cited about public cloud adoption and whether they represent serious blockers to progress;
  2. Whether public and private clouds are logically equivalent or completely different.

IT issues and the Major Fallacies

Control

Everyone wants to be in control.  I do.  I want to feel as if I’m moving towards my goals, doing a good job – on top of things.  In order to be able to be on top of things, however, there are certain things I need to take for granted.  I don’t grow my own food, I don’t run my own bank, I don’t make my own clothes.  In order for me to concentrate on my purpose in life and deliver the higher level services that I provide to my customers there are a whole bunch of things that I just need to be available to me at a cost that fits into my parameters.  And to avoid being overly facetious I’ll also extend this into the IT services that I use to do my job – I don’t build my own blogging software or create my own email application but rather consume all of these as services over the web from people like WordPress.com and Google. 

By not taking personal responsibility for the design, manufacture and delivery of these items, however (i.e. by not maintaining ‘control’ of how they are delivered to me), I gain the more useful ability to be in control of which services I consume to give me the greatest chance of delivering the things that are important to me (mostly, lol).  In essence I would have little chance of sitting here writing about cloud computing if I also had to cater to all my basic needs (from both a personal as well as IT perspective).  I don’t want to dive off into economics but simplistically I’m taking advantage of the transformational improvements that come from division of labour and specialisation – by relying on products and services from other people who can produce them better and at lower cost I can concentrate on the things that add value for me.

Now let’s come back to the issue of private infrastructure.  Let’s be harsh.  Businesses simply need IT that performs some useful service.  In an ideal world they would simply pay a small amount for the applications they need, as they need them.  For 80% of IT there is absolutely no purpose in owning it – it provides no differentiation and is merely an infrastructural capability that is required to get on with value-adding work (like my blog software).  In a totally optimised world businesses wouldn’t even use software for many of their activities but rather consume business services offered by partners that make IT irrelevant. 

So far then we can argue that for 80% of IT we don’t actually need to own it (i.e. we don’t need to physically control how it is delivered) as long as we have access to it.  For this category we could easily consume software as a service from the “public” cloud and doing so gives us far greater choice, flexibility and agility.

In order to deliver some of the applications and services that a business requires to deliver its own specialised and differentiated capabilities, however, they still need to create some bespoke software.  To do this they need a development platform.  We can therefore argue that the lowest level of computing required by a business in future is a Platform as a Service (PaaS) capability; businesses never need to be aware of the underlying hardware as it has – quite literally – no value.  Even in terms of the required PaaS capability the business doesn’t have any interest in the way in which it supports software development as long as it enables them to deliver the required solutions quickly, cheaply and with the right quality.  As a result the internals of the PaaS (in terms of development tooling, middleware and process support) have no intrinsic value to a business beyond the quality of outcome delivered by the whole.  In this context we also do not care about control since as long as we get the outcomes we require (i.e. rapid, cost effective and reliable applications delivery and operation) we do not care about the internals of the platform (i.e. we don’t need to have any control over how it is internally designed, the technology choices to realise the design or how it is operated).  More broadly a business can leverage the economies of scale provided by PaaS providers – plus interoperability standards – to use multiple platforms for different purposes, increasing the ‘fitness’ of their overall IT landscape without the traditional penalties of heterogeneity (since traditionally they would be ‘bound’ to one platform by the inability of their internal IT department to cost-effectively support more than one technology).

Thinking more deeply about control in the context of this discussion we can see that for the majority of IT required by an organisation concentrating on access gives greater control than ownership due to increased choice, flexibility and agility (and the ability to leverage economies of scale through sharing).  In this sense the appropriate meaning of ‘control’ is that businesses have flexibility in choosing the IT services that best optimise their individual business capabilities and not that the IT department has ‘control’ of the way in which these services are built and delivered.  I don’t need to control how my clothes manufacturer puts my t-shirt together but I do want to control which t-shirts I wear.  Control in the new economy is empowerment of businesses to choose the most appropriate services and not of the IT department to play with technology and specify how they should be built.  Allowing IT departments to maintain control – and meddle in the way in which services are delivered – actually destroys value by creating a burden of ownership for absolutely zero value to the business.  As a result giving ‘control’ to the IT department results in the destruction of an equal and opposite amount of ‘control’ in the business and is something to be feared rather than embraced.

So the need to maintain control – in the way in which many IT groups are positioning it – is the first major and dangerous fallacy. 

Service levels

It is currently pretty difficult to get a guaranteed service level with cloud service providers.  On the other hand, most providers are consistently up in the 99th percentile and so the actual service levels are pretty good.  The lack of a piece of paper with this actual, experienced service level written down as a guarantee, however, is currently perceived as a major blocker to adoption.  Essentially IT departments use it as a way of demonstrating the superiority of their services (“look, our service level says 5 nines – guaranteed!”) whilst the level of stock they put in these service levels creates FUD in the minds of business owners who want to avoid major risks. 

So let’s lay this out.  People compare the current lack of service level guarantees from cloud service providers with the ability to agree ‘cast-iron’ service levels with internal IT departments.  Every project I’ve ever been involved in has had a set of service levels but very few ever get delivered in practice.  Sometimes they end up being twisted into worthless measures for simplicity of delivery – like whether a machine is running irrespective of whether the business service it supports is available – and sometimes they are just unachievable given the level of investment and resources available to internal IT departments (whose function, after all, is merely that of a barely-tolerated but traditionally necessary drain on the core purpose of the business). 

So to find out whether I’m right or not and whether service level guarantees have any meaning I will wait until every IT department in the world puts their actual achieved service levels up on the web like – for instance – Salesforce.  I’m keen to compare practice rather than promises.  Irrespective of guarantees my suspicion is that most organisations actual service levels are woeful in comparison to the actual service levels delivered by cloud providers but I’m willing to be convinced.   Despite the illusion of SLA guarantees and enforcement the majority of internal IT departments (and managed service providers who take over all of those legacy systems for that matter) get nowhere near the actual service levels of cloud providers irrespective of what internal documents might say.  It is a false comfort.  Businesses therefore need to wise up, consider real data and actual risks – in conjunction with the transformational business benefits that can be gained by offloading capabilities and specialising – rather than let such meaningless nonsense take them down the old path to ownership; in doing so they are potentially sacrificing a move to cloud services and therefore their best chance of transforming their relationship with their IT and optimising their business.  This is essentially the ‘promise’ of buying into updated private infrastructures (aka ‘private cloud’).

A lot of it comes down to specialisation again and the incentives for delivering high service levels.  Think about it – a cloud provider (literally) lives and dies by whether the services they offer are up; without them they make no money, their stock falls and customers move to other providers.  That’s some incentive to maintain excellence.  Internally – well, what you gonna do?  You own the systems and all of the people so are you really going to penalise yourself?  Realistically you just grit your teeth and live with the mediocrity even though it is driving rampant sub-optimisation of your business.  Traditionally there has been no other option and IT has been a long process of trying to have less bad capability than your competitors, to be able to stagger forward slightly faster or spend a few pence less.  Even outsourcing your IT doesn’t address this since whilst you have the fleeting pleasure of kicking someone else at the end of the day it’s still your IT and you’ve got nowhere to go from there.  Cloud services provide you with another option, however, one which takes advantage of the fact that other people are specialising on providing the services and that they will live and die by their quality.  Whilst we might not get service levels – at this point in their evolution at least – we do get transparency of historical performance and actual excellence; stepping back it is critical to realise that deeds are more important than words, particularly in the new reputation-driven economy. 

So the perceived need for service levels as a justification for private infrastructures is the second major and dangerous fallacy.  Businesses may well get better service levels from cloud providers than they would internally and any suggestion to the contrary will need to be backed up by thorough historical analysis of the actual service levels experienced for the equivalent capability.  Simply stating that you get a guarantee is no longer acceptable. 

Security

It’s worth stating from the beginning that there is nothing inherently less secure about cloud infrastructures.  Let’s just get that out there to begin with.  Also in getting infrastructure as a service out of the way – given that we’re taking the position in this post that PaaS is the first level of actual value to a business – we can  say that it’s just infrastructure; your data and applications will be no more or less secure than your own procedures make it but the data centre is likely to be at least as secure as your own and probably much more so due to the level of capability required by a true service provider.

So starting from ground zero with things that actually deliver something (i.e. PaaS and SaaS) a cloud provider can build a service that uses any of the technologies that you use in your organisation to secure your applications and data only they’ll have more usecases and hence will consider more threats than you will.  And that’s just the start.  From that point the cloud provider will also have to consider how they manage different tenants to ensure that their data remains secure and they will also have to protect customers’ data from their own (i.e. the cloud service providers) employees.  This is a level of security that is rarely considered by internal IT departments and results in more – and more deeply considered – data separation and encryption than would be possible within a single company. 

Looking at the cloud service from the outside we can see that providers will be more obvious targets for security attacks than individual enterprises but counter-intuitively this will make them more secure.  They will need to be secured against a broader range of attacks, they will learn more rapidly and the capabilities they learn through this process could never be created within an internal IT organisation.  Frankly, however, the need to make security of IT a core competency is one of the things that will push us towards consolidation of computing platforms into large providers – it is a complex subject that will be more safely handled by specialised platforms rather than each cloud service provider or enterprise individually. 

All of these changes are part of the more general shift to new models of computing; to date the paradigm for security has largely been that we hide our applications and data from each other within firewalled islands.  Increasing collaboration across organisations and the cost, flexibility and scale benefits of sharing mean that we need to find a way of making our services available outside our organisational boundaries, however.  Again in doing this we need to consider who is best placed to ensure the secure operation of applications that are supporting multiple clients – is it specialised cloud providers who have created a security model specifically to cope with secure open access and multi-tenancy for many customer organisations, or is it a group of keen “amateurs” with the limited experience that comes from the small number of usecases they have discovered within the bounds of a single organisation?  Furthermore as more and more companies migrate onto cloud services – and such services become ever more secure – so the isolated islands will become prime targets for security attacks, since the likelihood that they can maintain top levels of security cut off from the rest of the industry – and with far less investment in security than can be made by specialised platform providers – becomes ever less.  Slowly isolationism becomes a threat rather than a protection.  We really are stronger together.

A final key issue that falls under the ‘security’ tag is that of data location (basically the perceived requirement to keep data in the country of the customers operating business).  Often this starts out as the major, major barrier to adoption but slowly you often discover that people are willing to trade off where their data are stored when the costs of implementing such location policies can be huge for little value.  Again, in an increasingly global world businesses need to think more openly about the implications of storing data outside their country – for instance a UK company (perhaps even government) may have no practical issues in storing most data within the EU.  Again, however, in many cases businesses apply old rules or ways of thinking rather than challenging themselves in order to gain the benefits involved.  This is often tied into political processes – particularly between the business and IT – and leads to organisations not sufficiently examining the real legal issues and possible solutions in a truly open way.  This can often become an excuse to build a private infrastructure, fulfilling the IT departments desire to maintain control over the assets but in doing so loading unnecessary costs and inflexibility on the business itself – ironically as a direct result of the businesses unwillingness to challenge its own thinking. 

Does this mean that I believe that people should immediately begin throwing applications into the cloud without due care and attention?  Of course not.  Any potential provider of applications or platforms will need to demonstrate appropriate certifications and undergo some kind of due diligence.  Where data resides is a real issue that needs to be considered but increasingly this is regional rather than country specific.   Overall, however, the reality is that credible providers will likely have better, more up to date and broader security measures than those in place within a single organisation. 

So finally – at least for me – weak cloud security is the third major and dangerous and fallacy.

Comparing Public and Private

Private and Public are Not Equivalent

The real discussion here needs to be less about public vs private clouds – as if they are equivalent but just delivered differently – and more about how businesses can leverage the seismic change in model occurring in IT delivery and economics.  Concentrating on the small minded issues of whether technology should be deployed internally or externally as a result of often inconsequential concerns – as we have discussed – belittles the business opportunities presented by a shift to the cloud by dragging the discussion out of the business realm and back into the sphere of techno-babble.

The reality is that public and private clouds and services are not remotely equivalent; private clouds (i.e. internal infrastructure) are a vote to retain the current expensive, inflexible and one-size-fits-all model of IT that forces a business to sub-optimise a large proportion of its capabilities to make their IT costs even slightly tolerable.  It is a vote to restrict choice, reduce flexibility, suffer uncompetitive service levels and to continue to be distracted – and poorly served – by activities that have absolutely no differentiating value to the business. 

Public clouds and services on the other hand are about letting go of non-differentiating services and embracing specialisation in order to focus limited attention and money on the key mission of the business.  The key point in this whole debate is therefore specialisation; organisations need to treat IT as an enabler and not an asset, they need to  concentrate on delivering their services and not on how their clothes get made. 

Summary

If there is currently a ‘surge’ in interest in private clouds it is deeply confusing (and disturbing) to me given that the basis for focusing attention on private infrastructures appears to be deeply flawed thinking around control, service and security.  As we have discussed not only are cloud services the best opportunity that businesses have ever had to improve these factors to their own gain but a misplaced desire to retain the IT models of today also undermines the huge business optimisations available through specialisation and condemns businesses to limited choice, high costs and poor service levels.  The very concerns that are expressed as reasons not to move to cloud models – due to a concentration on FUD around a small number of technical issues – are actually the things that businesses have most to gain from should they be bold and start a managed transition to new models.  Cloud models will give them control over their IT by allowing them to choose from different providers to optimise different areas of their business without sacrificing scale and management benefits; service levels of cloud providers – whilst not currently guaranteed – are often better than they’ve ever experienced and entrusting security to focused third parties is probably smarter than leaving it as one of many diverse concerns for stretched IT departments. 

Fundamentally, though, there is no equivalence between the concept of public (including logically private but shared) and truly private clouds; public services enable specialisation, focus and all of the benefits we’ve outlined whereas private clouds are just a vote to continue with the old way.  Yes virtualisation might reduce some costs, yes consolidation might help but at the end of the day the choice is not the simple hosting decision it’s often made out to be but one of business strategy and outlook.  It boils down to a choice between being specialised, outward looking, networked and able to accelerate capability building by taking advantage of other people’s scale and expertise or rejecting these transformational benefits and living within the scale and capability constraints of your existing business – even as other companies transform and build new and powerful value networks without you.

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11 Responses to “Private Clouds “Surge” for Wrong Reasons?”

  1. Michael Davison July 14, 2010 at 5:56 pm #

    Thank you so much for this analysis. I am currently managing a Cloud R&D project for a Canadian financial services firm and am confronting the same dubious concerns you dissect so well.

    • ian July 23, 2010 at 2:05 pm #

      Hi Michael – thanks for the feedback! Helping people understand the ‘real’ purpose and opportunities of cloud can sometimes be a thankless task – good luck with your endeavour and let me know how you get on!

  2. PC September 25, 2010 at 9:55 am #

    Great analysis …. what’s FUD?

    • ian September 27, 2010 at 4:56 pm #

      Fear, Uncertainty and Doubt 🙂

  3. Walter Adamson October 1, 2010 at 1:07 am #

    Brilliant! Best post I’ve read on the subject particularly the myth of the “private cloud”. I’ve been googling and watching alerts on this topic and I’m amazed by the paucity of critical thinking, aside from “Enterprise Matters”. I’m an IT guy from way back and this “private cloud” thing is a giant con and as I wrote recently “four years forward 3 years behind” describing the push towards the “next generation” data center e.g. “private cloud”

    http://www.walteradamson.com/2010/09/next-generation-data-center-4-years.html

    Subscribed!!

    Walter Adamson @g2m
    http://xeesm.com/walter

    • Walter Adamson October 1, 2010 at 1:17 am #

      a giant con FOR BUSINESS I should have said, aided and abetted by IT via FUD exactly as you said…

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