Using the public cloud as a means of measuring the potential costs and scalabilities of an organization's internal IT is, believes Fellows, a smart move. Public clouds have already begun to replace internal IT infrastructures in many enterprises, so it would be foolish for a company to not at least investigate how cloud-based services could benefit their business.
However, while it is the public cloud environments offered by the likes of Google and Amazon that have captured the public's imagination, much of corporate America is taking a different tack. For most large enterprises, the majority of their IT spend is still going on premise equipment rather than third-party services - Fellows puts the ratio at about 75/25 in most industries - and with a majority of data remaining in-house, the concept of the private cloud is gaining momentum. "Most organizations have virtualized some or all of their data, but the prevailing thought process is that if they had some of the other features of the public cloud at their disposal they could enjoy greater benefits," explains Fellows. "Progressive companies are looking to emulate, replicate or imitate what the public cloud delivers; they are looking at their IT infrastructure and assessing what the total cost and ROI is for hosting and running their own workloads."
The private cloud is seen as a potentially cost-efficient implementation that many businesses can no longer afford to ignore. "Is it more cost-effective to host and store data internally than on a public cloud?" asks Fellows. "This is something that a lot of companies are looking into: whether they are better off investing in their own 'best execution venues', purchasing hosting capabilities that are suitable for their business in terms of price, performance and capacity."
Companies unsure of exactly where to start as they take their first tentative steps into the world of cloud computing should, says Fellows, follow a couple of practical steps in order to first assess their requirements. "The first step I would advise is for companies to simply create a service catalogue in order to at least understand what services are available to end-users in their organization. The next step is to look at the cost of provisioning and deploying to those end-users. Just this action of finding out cost allocation is proving an enormous driver because end-users are discovering the range of services that are available to them, and figuring out the specific cost to their business."
All this points to the adoption of the hybrid cloud, which is a managed cloud computing environment where some services are managed in-house, and other services are provided externally. The hybrid cloud, when implemented correctly, enables businesses to enjoy the best of both worlds: the security and control of internal IT mainframes, and the flexible scalability and cost-effectiveness of the public cloud.
"With the hybrid cloud there are a number of combinations that can be applied," says Fellows. "There will be vertically integrated clouds of IT systems in B2B chains where partners and customers will be able to access elements and process their supplies and data on the cloud. But it is going to take longer for the horizontally federated cloud to come into wider usage because the interoperability of different cloud providers is still problematic at the moment. It's not impossible to move workloads between different clouds, but the industry needs to go through a maturation period before we arrive at that stage."
The ability to easily and safely transfer data across different cloud providers will mark a watershed moment for a number of companies who still harbor reservations about cloud computing. Fellows believes we are about three years away from achieving complete interoperability, and what is currently lacking is the technology to make it happen.
For one thing, security concerns abound in the world of cloud computing. Companies fret over access to the data, control of their data and loss of their data. "We have found is that there is a pretty consistent level of concern regarding the issues of trust, control and security amongst end-users," says Fellows. "However, it is important to distinguish between security and trust. IT security - the security of your actual systems - is obviously a concern, but more important are the regulatory and compliance requirements. These issues are quite distinct and separate, but rolled up and bundled together. The major concern for a great number of companies is overall control and trust. And within that there are data management concerns, auditing, interoperability and so on."
Fellows' research has identified a number of inhibitors to adoption of the cloud, with control and trust forming what he calls the first set of inhibitors, and cultural concerns the second set. "Often reluctance to embrace cloud computing has little to do with technology," says Fellows. "Snagging points revolve around issues of internal resistance to change. Whenever the issue of power, trust and control come up, there are a whole bunch of organizational factors that have to mature or change in order for new practices to be accommodated, new working environments to be embraced and new technologies to be implemented. The cloud brings all three of these inhibitors to change to the very door of the executive decision-makers, so hesitation is understandable."
Overcoming these inhibitors is a challenge that the cloud computing industry must focus on if it is to promote an atmosphere of wider acceptance. Nonetheless, greater adoption of cloud computing will happen regardless, believes Fellows, as more and more companies begin to trust their instincts and take advantage of the wealth of services out there. "Wider use of cloud computing is happening by default because there are people in big organizations who are already using cloud computing to some degree, whether they know it or not," he says. "More pertinently, what we have found is that cost reduction is one of the main drivers to adoption of cloud computing; sorting out that bottom line."
Building flexible IT resources
Mark Settle, CIO at BMC Software, believes the cloud is providing businesses with a great opportunity to get their strategic approach to IT funding in order. "Cloud computing offers to reduce capital expenditure and management burden, but it also reignites the knotty issues of IT chargebacks - an approach to IT funding that, due to its complexity, was in the past somewhat of a recurring nightmare for CFOs and CIOs."
Settle explains that IT budgets can be assigned by business unit, project or overall annual requirements. But cloud computing, as a centralized IT resource charged on a usage-based billing model, blurs traditional budgetary lines, reviving the concept of the IT function charging its costs back to individual departments. "In the past, chargebacks have been difficult to implement, as calculating the full cost of service delivery is an extremely complex process due the range of variables associated with it," says Settle. "With cloud computing, organizations can build flexible IT resourcing into their operational expenditure for managing cheaper, sustained and predictable business workloads.
"At the same time, they can access extra resource on-the-fly, when a business unit needs it, to get a new project up and running quickly for example, without having to factor in the extra hardware, power, maintenance and labor costs usually associated with new IT capital expenditure," he adds.
It is essential, therefore, for any CIO considering a move to the cloud must work hand-in-hand with the CFO to agree standard procedures for procuring, accessing and monitoring cloud resources and service levels to ensure each business unit pays for the IT they need and us, says Settle. "This is also why those IT departments with well-developed business service management (BSM) software deployments that allow them to align IT resource with business demand will already have a head start into the cloud, whether it is public, private or hybrid in its nature."
