Cloud Computing Special Part 1: Looking For The Silver Lining
- 06 July, 2009 10:12
The NSW Department of Planning's major project database holds information on around 150 major projects worth billions of dollars. It keeps track of numerous modifications as they work their way through the approval process.
But getting visibility on the progress of assessments had been a highly manual and time-consuming process.
When it came it came time to update the system last year, the Department of Planning faced the usual choice of building or buying something to manage itself.
Rather than go down the traditional path, the Department signed a deal to use Affinity, a Web-based tracking service from the Australian developer Hiive Systems. Now its database sits in Hiive's cloud, and people like Department of Planning project manager John Ross need no longer worry about it.
"One of the elements that we liked the most was that it linked directly to our Web site," Ross says. "When the status of a major project has been assessed or determined, we can update the database and that will update our Web site automatically, and the public can see that it has been moved on to the next stage."
His group's limited technical knowledge meant it made sense for Ross to have to have someone else take care of the database and ensure that the necessary changes are made. So Ross doesn't mind that the data is offsite or that he pays a quarterly maintenance fee.
"Quite frankly it seemed to be beyond the capability of our IT section," says Ross. "Based on past experiences with maintenance of such systems, it was better to get someone else to do it."
Out of the Data Centre
Affinity is one the thousands of cloud-based services that are beginning to find favour with large organisations in Australia. Ever since Salesforce.com defined the software-as-a-service model back in 2000 there has been no end to the ideas and services launched to entice applications out of the data centre and into the cloud.
The model has evolved significantly, with the emergence of infrastructure-as-a-service providers, offering bare-metal storage and processing power, and platform-as-a-service providers, offering additional value such as a database or user interface. Many companies are setting up their own internal clouds using virtualisation as a service offering for their business users.
According to Gartner's research vice president Brian Prentice, what puts them all in the cloud is the common theme of being Web-hosted and able to scale up and down as the client requires -- and, most importantly, delivered as a service.
"We are talking about relationships established between providers and customers, primarily built off the back of a service level agreement, as opposed to the traditional end-user licence agreement," Prentice says.
This has some interesting ramifications for IT departments. "What starts to happen, if the cloud starts to expand and build, is enterprise IT shops are increasingly put in a position of having to compete with external organisations off the back of the quality of the service level agreement," Prentice says.
In one instance he says a university had been investigating Amazon's Simple Storage Service (S3) service, and found it could not get close to offering the same pricing back to its users.
"Users should have the right to say your service is too expensive for what you are providing, or what you are providing is not competitive with what's out there in the market," Prentice says.
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To date, it has been younger companies, particularly within the technology industry itself, that have adopted the cloud, with established businesses treading more carefully. A classic example is the Australian wiki software maker Atlassian, whose entire business is run in the cloud.
Often these companies turn to suppliers who reflect their own spirit of entrepreneurship. That has been great news for Google and its partner companies, such as Brisbane-based Devnet. Devnet chief executive Craig Deveson says this year has brought increasing interest in Google's hosted services -- including spam filtering and e-mail archiving, and its Google Docs productivity tools -- and not just from start-ups.
"The benefits of cloud computing are coming to be better understood, and companies are facing increasing cost pressures," Deveson says. "But there is a need to look at doing things differently. When you come out of a boom, everything gets questioned. And companies start asking why they are hosting applications internally, and look at what they can move out to the cloud."
Glenn Gore, CIO at hosting company Melbourne IT, agrees that interest in cloud computing is growing rapidly. Within its data centres Melbourne IT runs eight clouds using virtualisation technology from VMware.
"We can now expose those clouds to customers, and do some interesting things," Gore says. "We have them using these clouds for capacity-on-demand, where they have projects or campaigns where they need to have something running for a short period of time and aren't too sure what the loads will be."
A recent example was the Beijing Olympics, where a number of customers wanted to run promotions or specific Web sites tied to the Olympics that only lasted four to six weeks.
"It is very hard for a customer to predict how much infrastructure they should throw at it, compared to when you put it on a cloud it becomes someone else's problem to make sure it scales. You just get charged for what you use."
This capability is playing very nicely against the emerging requirement for agile development, especially among larger companies.
"We see customers using [the cloud] to drive innovation cycles," Gore says. "By removing the two risks around contract length and upfront investment, they can afford to try different things that in the past might not have been feasible or been too risky.
"The other thing about the cloud is it moves you away from a capital expenditure model to an operating expenditure model, which a lot of companies find easier to sustain at the moment."
In the longer term, Gore expects the internal cloud model to fade as companies are driven to the public cloud by the attractiveness of additional functionality available at a lower cost than they can achieve themselves. He cites advanced security services, intrusion detection and protection, and advanced network load balancing.
"Being able to take advantage of some of the features of a virtual environment, like moving it around from host to host, and the fault-tolerance capabilities of the newer products, make it a very quick way of moving to a fault-tolerate architecture at low cost."
But right now the most common reason for adopting the cloud is the ability to avoid paying for equipment and licence costs upfront. For Andrew Fisher, former IT manager at OzMinerals and now a technology consultant for the resources company Citadel Resources, using the cloud has been a logical step in building that company's IT function.
"Citadel is an emerging resources company," Fisher says. "We have a Melbourne head office and are developing a copper and gold mine in Saudi Arabia. There's no formal IT group or function. Not having IT staff, we ideally don't want to have the responsibility of having to host a number of applications and servers in-house when we are still quite a small group."
When it came to implementing e-mail, Fisher opted for Microsoft's Exchange hosted with a cloud services company in the US called NetVigour.
"All of the care and maintenance associated with delivering Exchange to our users globally is handled by a third party. We looked at the cost of bringing Exchange in-house, and the benefit wasn't there. And for the foreseeable future, I don't see why we would change."
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The decision is not without risk. Fisher concedes that he is at the mercy of the Internet in terms of reliability and performance, and still has questions about privacy.
"I feel reasonably comfortable, but it is a bit of a leap of faith that we are investing in a third-party that I haven't even met," Fisher says. "But that is just a comfort thing, and I think in time it will become more reliable and the privacy issues will be sorted out."
Obstacles to Adoption
The big end of town is also getting interested. The director of IBM Australia's development laboratory, Glenn Wightwick, says IBM is working with its clients to determine how they can best take advantage of the various cloud services available.
"Some of the universities are looking at their undergraduate e-mail systems and asking if they can work with Google or Microsoft or other providers for provision of e-mail to students," Wightwick says. "But the reality is you have to do quite a lot of engineering to your business processes to make those changes. To extend your security model out to the public cloud requires a bit of engineering."
Per-user licensing models are another problem. And then there are still the questions about application availability and performance across the Internet.
"Over time many of these things are going to be addressed, but they are some of the impediments that are going to slow down the adoption of cloud computing, to particularly larger enterprises," Wightwick says.
A recent cloud computing survey conducted by the integrator Avanade found that 53 percent of respondents were concerned about security issues, 41 percent were worried about poor support, and 33 percent were unhappy with the underlying lack of control.
According to Avanade's chief technology officer, Tyson Hartman, many of these issues have been faced and overcome before. "Organisations share sensitive data with business partners all the time -- payroll is one example," Hartman says.
"As consumers, we trust our data to banks, brokers and other service providers all the time. What makes this possible? Trust.
"As in past adoption waves, our customers are experimenting with cloud computing now and naturally doing so with non-mission critical data, but that doesn't mean that only non-mission critical workloads should be cloud-based. In fact, customers who move through this learning process the fastest are gaining the most benefit of being early movers to cloud computing."
Early Adopters
Whatever arguments against cloud computing there may be, they haven't been sufficient to dissuade some established companies from embracing cloud computing wholeheartedly.
Sydney-based company Altium has been creating software for the electronic design industry for more than 20 years. But with more than 300 staff spread across offices around the world, its IT group faced constant challenges in terms of supporting staff and customers.
Director of research projects Alan Perkins says the issue was made more urgent by the realisation in the mid part of this decade that Altium's proprietary ERP system wouldn't cut it.
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"There was an enormous opportunity to see our business grow immensely, but we weren't sure how we would scale with our existing systems," Perkins says. "So we were looking for something that would cope with very fast scaling."
At that time Perkins was the company's CIO. He began looking for possible solutions, and quickly identified Salesforce.com, but not just as a customer management tool. By March 2006 Altium had gone live with sales, support and marketing applications, but on top of those wrote a series of custom applications, including purchase requisitioning, project issue tracking, and a multilingual quoting system.
"We wrote nine or ten applications for all different sorts of areas of the business, and since then we have extended this significantly," Perkins says. "We were told by Salesforce.com that we were the first company in the world to use it as a business platform."
Most of these applications are hosted on Salesforce.com's Force.com service. Altium has also built extensions to Amazon's Elastic Computing Cloud (EC2) and S3, in particular for an application that tracks client activity. There are ties back into Altium's electronic library component systems within Salesforce.com, which are also tied through Web services to the systems of electronics vendors.
Despite the heavy reliance on Salesforce.com, Perkins does not consider himself locked in, and believes the value proposition of the monthly subscription model works in favour of Altium.
"We've taken the decision that every single employee has a Salesforce.com unlimited edition licence," Perkins says. "And it enables us to think about the system without limits. If we want to write an application we can do that without worrying about whether or not the person fits within the scheme of things. So it really is a true business platform for us.
"Yes, that costs money, but it's inexpensive in comparison to the freedom it gives us to think in a broad way, and that allows us to be very versatile and very agile."
Perkins has even been able to take some of his infrastructure support people and retrain them to write and maintain applications. The company has also moved all of its e-mail worldwide to Google's Gmail, and makes extensive use of Google's calendaring and chat capabilities, as well as Google Docs.
"That has been a really significant improvement in terms of streamlining our communications infrastructure," Perkins says. "We were able to kill about six servers around the world. But the most compelling thing that we are finding is the collaboration within documents."
On Perkins' desk sits a map of 55 servers, which he has already reduced to 30, and he expects in the six next months to get that down to five or six. The whole business is run through a 100 Mbps connection.
"By having all of this in the cloud, when we recently moved head office, almost nothing was affected by that," Perkins says. "We were able to shut everything down on a Friday morning, and have everything back up and running by midday Sunday."
The only thing he is not considering putting into the cloud are the company's 18 million lines of source code that run in its internal test farm, and the work of its internal graphic design team, which works with files that are terabytes in size.
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Despite some initial nerves, Perkins says he has not had cause to be concerned with either the security or the reliability of any of his service providers. He likens some of the resistance to being similar to that which greeted the computer industry in the first place, where something on a screen was not as trustworthy as something on paper.
"My view is we cannot do as good a job of security as these service providers can," Perkins says. "The way these companies work, we can never achieve the economies of scale they can with man-traps and other things. I feel that we have improved our availability, improved our security by putting this stuff out there into the cloud.
"I think CIOs need to put their egos aside, and if they think they can do a better job of this stuff then they are probably in the wrong business. We are in the business of providing top-notch electronic design tools, and our tools are designed to change the way the world sees electronic design. I will never be able to provide the same level of service those cloud guys provide."
A Roadmap to the Cloud
That future may be a long time off, however. According to Avanade's Hartman, while CIOs shouldn't expect to see their responsibilities eroded in the short term, they do need a governance model and cloud roadmap to guide the transition.
"These are exciting new technologies that innovators will take up in order to best to serve their business," Hartmann says.
"Cloud is a powerful extension of their existing IT footprint. We don't expect customers to all go to the cloud tomorrow, but this is the time to understand which portions of their IT portfolio will get the most benefit from the cloud computing model, and put the roadmap and governance in place to make the transition while reducing their risk."