Private Cloud Is In For Big Enterprises

Though Private Cloud may ensure security and privacy, and is increasingly preferred by large companies; eventually they will end up being operated only to meet legal or regulatory requirements. Read Nicholas Carr's Afterword to his bestseller The Big Switch: Rewiring the World, from Edison to Google and know what's new in the offering for the CIOs looking for Cloud Computing Services with respect to their own vertical.

What may, over the next few years, represent the largest cloud-inspired area of investment for large companies has little to do with the purchase of web based services from outside utilities. Rather, it involves the construction of so called private clouds highly virtualized, dedicated data centers that essentially serve as in house IT utilities. A private cloud can be owned and operated by the company that uses it or, as is increasingly the case, it can be built and run on the company's behalf by an outsourcing or hosting firm or other IT services company. Because the transformation of traditional data centers into private clouds typically requires substantial investments in new hardware and software, to facilitate high degrees of virtualization and automation, their construction has been a boon to many IT vendors. Deutsche Bank predicts that investments in private clouds will reach $20 billion in 2012.

The case for a private cloud is often compelling today. Because they typically have much higher levels of capacity utilization and scalability than the traditional data centers they replace, they can allow a company to gain many of the scale economies and speed and flexibility benefits of the public cloud while avoiding the security concerns, contracting issues, and other uncertainties that currently surround pure utility computing. Just as many large manufacturers originally constructed their own in house electricity generating stations early in the last century, so many large businesses today are building their own in-house clouds.

FedEx, a long-time IT pacesetter that relies on an array of custom applications to coordinate time sensitive shipments around the globe, is in the process of moving to a private cloud. It is in the midst of a major effort to retool its core apps to run on a standardized and highly virtualized computing platform, drawing on a common data store as well as a shared set of data services, such as the provision of a delivery address. As each app is updated, it is being moved into a large new cloud data center the company has constructed in Colorado Springs. FedEx CIO Rob Carter is convinced that the cloud model represents a fundamental breakthrough in corporate IT. What's happening now, he recently told InformationWeek, is there's truly a general purpose computing environment that's workload agnostic. You can throw different kinds of workloads on the same computing server infrastructure. Despite the significant data center and application investments entailed in building a private cloud, the modernization effort is delivering a very high return on investment, according to Carter. For the first time ever, he explains, you can make investments in a whole new class of technology for about the same price of just maintaining the base.

It's important to recognize, however, that dedicated private clouds will in most cases be a transitional technology, a stepping stone on the way to true multi tenant systems. At some point, after all, private clouds will begin to pay diminishing returns; further gains will require the greater scale that can only come from infrastructure and services that are shared among many companies rather than within just one company. Even today, the divide between private and public clouds can be blurry. It's possible, for instance, to operate a private cloud as a virtual private data center or virtual private cloud a virtualized assembly of network, security, storage, and compute resources that is dedicated to a single client but runs on a multi tenant system. Just as most companies today are comfortable using virtual private networks to ensure secure communication while gaining the scale benefits of shared infrastructure, they may well come to embrace virtual private data centers quickly. In the long run, truly private clouds may end up being operated only when required to meet legal or regulatory requirements for security or privacy.

It is also likely that we'll see the emergence of vertical clouds clouds dedicated to particular industries, or to groups of related government agencies or educational institutions, with resources and performance standards geared to the unique needs of those industries. Bob Rudy, the Avago CIO, has begun talks with other semiconductor CIOs in hopes of creating vertical clouds in that industry. Sundeep Reddy, vice president and head of IT infrastructure at Toys R Us, believes that vertical clouds may provide a way for retail firms to share custom IT infrastructure while also giving them the leeway to maintain competitive differentiation in their applications. It's also easy to see how specialized vertical clouds, providing the benefits of multi tenancy while ensuring tighter controls than is possible with purely public clouds, could be attractive to industries with unique data security requirements such as health care and defense. Vertical clouds could also enable the efficient sharing of infrastructure and applications among state governments, schools, nonprofits, and other organizations serving similar constituencies.

However the tensions between dedicated and multi tenant resources and services play out, one thing seems very clear: for the foreseeable future, most organizations will operate in a hybrid IT environment, using some combination of traditional in-house IT resources, private or virtual private clouds, vertical clouds, public clouds, and software-as-a-service applications. Developing tools and processes for managing that hybrid environment and integrating diverse sets of assets, services, and data stores will be a key challenge for IT departments, and a key competitive battlefield for the IT industry.

One area particularly ripe for innovation is the creation of user interfaces and dashboards that allow companies to easily build, integrate, and monitor complex virtualized systems that draw on the full set of cloud assets and software-as-a-service offerings. HCL's MyCloud, HP's CloudSystem, BMC's Cloud Lifecycle Management, and CA's AppLogic are examples of the kind of cloud management platforms that could fundamentally change corporate IT operations, and further reshape the IT industry, in the near future.

In addition to new tools for integrating and managing cloud services, the fulfillment of the promise of cloud computing will require cloud providers to join together in adopting the kind of clear, coherent, transparent, and measurable performance standards required to support contracts, service level agreements, regulatory compliance, and interoperability. Much progress remains to be made in this area. A 2010 study of current cloud computing contracts, undertaken by the Cloud Legal Project at the Centre for Commercial Law Studies, Queen Mary, University of London, revealed a lack of consistency in terms, and also indicated that most cloud providers currently seek to avoid any warranty of service or acceptance of liability. The World Economic Forum's cloud computing research group has underscored the need for more consistent and comprehensive approaches to accountability for how cloud services are provided as well as the establishment of clear standards for data portability and interoperability across cloud services.

Competition among cloud providers may solve these problems, as those vendors that offer the clearest terms and standards will likely gain a competitive advantage in the marketplace forcing other providers to follow suit. But if the industry fails to address these critical issues, governments may need to establish licensing or other certification programs for cloud providers, guaranteeing a basic level of performance, reliability, and security. Establishing and certifying minimum standards in such areas as privacy, intellectual property protection, and data compatibility will be essential to the broad and accelerated adoption of cloud computing in the future, argues R. Srikrishna, executive vice president and head of infrastructure services at HCL.

An Excerpt from the Afterword
To read entire Afterword, visit http://cloudsrollin.com