How to get more out of the cloud

A look at some factors to consider when moving into the cloud

Cloud Computing Shopping List: 4 Key Ingredients

Facing strong concerns about control and security, the cloud-computing trend has drifted somewhat— away from the notion that all computing resources can be had from outside, and toward a vision of a data center magically transformed for easy connections to internal and external IT resources.

Sales of cloud-related technology are growing at 26 percent per year—six times the rate of IT spending overall, though they made up only about 5 percent of total IT revenue this year, according to IDC's Cloud Services Overview report. Defining what constitutes cloud-related spending is difficult, the report acknowledges, though it estimates global spending of $17.5 billion on cloud technologies in 2009 will grow to $44.2 billion by 2013.

Hybrid or internal clouds will be the rule, however; even in 2013, only about 10 percent of that spending will go specifically to public clouds, IDC predicts.

Hybrid cloud infrastructure isn't radically different from existing data-center best practices, except that all the pieces are supposed to fit neatly together using Internet-age interoperability standards rather than homegrown kludge, according to according to Chris Wolf, analyst at The Burton Group.

As you prepare spending plans that line up with a move to the cloud, consider these four items as key for your list.

1. Application Integration

Surprise: Software integration isn't the first thing most companies think about when building a cloud, but it's the most important one, according to Bernard Golden, CEO at cloud consulting firm HyperStratus, and CIO.com blogger.

Integration means more than just batch-processing chunks of data being traded between applications once or twice per day the way that was done on mainframes, according to Tom Fisher, vice president of cloud computing at SuccessFactors.com, a business-application SaaS provider in San Mateo, Calif.

Being able to provision and manage user identities from a single location across a range of applications is critical, especially for companies that have never been in the software-providing business before and don't view their IT as a primary product, he says.

"What you're looking for is take your schema and map it to PeopleSoft or another application so you can get more functional integration," Fisher says. "You're passing messages back and forth to each other with proper error-handling agreement so you can be more responsive. It's still not real time integration, but in most cases you don't really need that."

2. Security

The second critical factor in building a useful cloud is the ability to federate—securely connect without completely merging—two networks, Golden says.

That requires layers of security, including multifactor authentication, identity brokers, access management and, in some cases, an external service provider who can provide that high a level of administrative control, according to Nico Popp, VP of product development at Verisign (VRSN), which is considering adding a cloud-based cloud security service.

What it really requires is technology that doesn't yet exist, according to Wolf: an Information Authority that can act as a central repository for security data and control of applications, data and platforms within the cloud. Today, it's possible to assemble that function out of some of the pieces Popp mentions, but there is no single technology able to span all the platforms necessary to provide real control of even an internally housed cloud environment, Wolf says.

3. Virtual I/O

Having to squeeze data for a dozen VMs through a couple of NICs will keep you from scaling your VM cluster to cloud proportions, according to an IT manager at a large digital mapping firm.

"When you're in the dev/test stage, having eight or 10 [Gigabit Ethernet] cables per box is an incredible labeling issue; beyond that, forget it," says the IT manager. "Moving to virtual I/O is a concept shift—you can't touch most of the connections anymore—but you're moving stuff across a high-bandwidth backplane and you can reconfigure the SAN connections or the LANs without having to change cables."

Virtual I/O servers, such as the Xsigo I/O Director servers that his company uses, can run 20Gbit/sec through a single cord and as many as 64 cords to a single server, connecting to a backplane with a total of 1,560Gbit/sec of bandwidth.

Concentrating so much bandwidth in one device saves space, power and cabling, he says, keeps network performance high and ultimately saves money on network gear.

"It becomes cost effective pretty quickly," he says of the Xsigo servers, which start around $28,000 through resellers such as Dell (DELL). "You end up getting three, four times the bandwidth at a quarter the price."

4. Storage

We mentioned it before, but storage continues to be the weak point—the hole into which one pours money—of both the virtualization and cloud-building world.

"Storage is going to continue to be one of the big costs of virtualization," Golden says. "Even if you turn 90 percent of your servers into images, you still have to store them somewhere."

Next: Which apps should go in the cloud

Which Apps Should You Move to the Cloud? 5 Guidelines

Kevin Fogarty

To most people — especially in August — 'Ocean Services' probably conjures visions of boogie boards, sun umbrellas and bringing the drinks without getting sand in the glass.

To Matson Navigation CIO Peter Weis, it means logistics, and the need to gather, analyze and coordinate information so his customers can monitor the location, condition and progress of finished goods in one container on one freighter in the South Pacific, more easily than they'd be able to check on a new phone battery being delivered by FedEx (FDX).

It's not the kind of information or access the ocean services business has been accustomed to offering.

"Shipping is a very traditional industry," Weis says. "There a lot of traditional old-school people, and so many moving pieces, solving global problems using IT is much harder than it might be in another industry."

Weis, who took over as CIO of the $1.5 billion Matson Navigation in 2003, says the company is 75 percent of the way through an IT overhaul that focuses on retiring the mainframes, DOS and AS/400 systems the company has depended on for years in favor of a Java-based application-integration platform and a plan to get as many of Matson's business applications as possible from external SaaS providers.

Moving to a heavy reliance on SaaS applications is a key part of the strategy to reduce the company's risk and capital spending on new systems. Matson is unusual not because of its increasing use of software owned and maintained by someone else -- but because it is selecting those services according to a coherent, business-focused strategy and connecting them using an open platform built for the purpose.

"What we're seeing is companies jumping into SaaS or cloud projects without an overarching strategy," according to Kamesh Pemmaraju, director of cloud research at consultancy Sand Hill Group. "There are a lot of departmental initiatives and they do get some quick returns on that, but it's very local in nature and there's no coordination on how to obtain global benefits to get real value out of the cloud."

Defining goals is an obvious step, but not one every company realizes it needs to take, according to Michael West, vice president and distinguished analyst for Saugatuck Technology.

Below are a few more necessary steps to take before deciding to move from a traditional app to a Web-based one.

1. Decide Why You Want SaaS

Weis was hired in 2003 to revamp Matson's IT infrastructure, so part of his mandate was to design an infrastructure and draw up a strategy to coordinate the company's use of SaaS and internal applications.

Business agility, not cost savings, is the leading reason U.S. companies are interested in cloud computing, according to a survey of 500 senior-level IT and business-unit managers Sand Hill released in March. Forty nine percent of respondents listed business agility as their most important goal; 46 percent listed cost efficiency. The No. 3 response — freeing IT resources to focus on innovation — got less than half that support, with 22 percent.

SaaS is spreading quickly among business units and departments, not usually with the help or strategic guidance of IT to make sure the functionality isn't duplicated or conflicting with the company's other tools.

"People tend to think of SaaS as a technology choice, which it's not," Pemmaraju says. "It's a business choice, to allow you to access technology to respond to business demands in real time. If you just look at it as technology, you have to answer how you're contributing to your business goals."

2. Think Architecture

Before Weis started signing on SaaS providers and ramping down internal applications, he and his staff spent a year taking inventory of all the company's existing systems and building a reference platform that provided middleware and application servers to connect new and existing applications.

"Our endpoint was that all our apps would run on the target IT platform based on distributed architecture, J2E based middleware and apps servers," Weis says. "That year was spent laying that foundation but also restructuring the legacy organization, hiring the skills we needed, building a QA group, test group, architecture group -- a lot of things the legacy organization didn't have."

That kind of thoughtful architectural planning will help any organization in the long run, though it is becoming less necessary as SaaS providers begin to provide more ways to integrate SaaS and legacy applications, sometimes with another SaaS choice, West says.

More than half the transactions on SalesForce.com come through APIs, meaning the software is programmatically connected to other systems, usually through manual integration work on the part of the customer.

SaaS providers like SalesForce are building much better integration into their apps, however. And third parties such as Boomi and recent IBM (IBM) acquisition

Third-party integrators such as Appirio, ModelMetrics, and BlueWolf also offer integrated sets of SaaS applications, sometimes selected by menu from a Web interface, sometimes built in custom engagements.

"You end up with a constellation of functionality, with multiple SaaS providers linked, available on a subscription basis, " West says.

3. Take Inventory and Throw Out Apps

Few companies with significant IT infrastructures have total control over the number of applications they run. Every consultant has horror stories.

West's story: a company with three divisions, one of which had 26 separate ERP systems, mostly from acquisitions in which the company was merged but the software was not. Pemmaraju cites a Fortune 500 finance-company CIO who admitted to an IT portfolio of between 15,000 and 20,000 applications and no idea what they were all for or to what they were connected.

Maintaining duplicate applications costs more for everything IT touches — storage, licensing, training, support, Pemmaraju says. The problem is incredibly common, and unlikely to go away.

Pemmaraju estimates that one quarter of most corporate apps contain critical data or functions that have to remain inside the firewall. The rest are generic or commoditized enough to be shifted outside or consolidated into a much smaller number of brands.

That's only the first step in matching internal and cloud-based apps, however, Weis says. Back-office applications are good candidates for SaaS-ification, as are finance, HR and accounting apps.

Those that have to meet specific requirements may not be, however.

"In ocean shipping, there are 30 or so major carriers, which isn't a big enough market to have a ton of developers building products for it," Weis says. "So things like core booking systems and order systems — those are absolutely custom builds because the documentation, the bill of lading, the business rules and requirements are so specific."

4. Check More Than a Provider's Books

In SaaS relationships it's critical to know if a software provider is financially stable, well managed and uses secure, well maintained data centers. So it's important to do due diligence checks on a provider's financial health and ability to pass audits for privacy or financial-reporting regulations, Weis says. Picking the right SaaS provider requires a lot more than that, however, Pemmaraju says.

SMB companies or individual departments might rely on Boomi or CastIron for integration. More ambitious projects require SaaS providers that offer the right tools for tight connections into existing applications, he says.

"I have clients who say if a SaaS company doesn't have Web Services frameworks built in, I don't talk to them," Pemmaraju says. "Being able to manage a lot of SaaS applications from one management console is a big deal. So is identity management. If you have to go to different consoles for every administrative task and to create or change user information, and someone leaves the company, what happens to all that information in all those unconnected places."

"Scale is an issue in the cloud; If there's not a common place to manage them it becomes difficult very quickly to keep tabs," Pemmaraju says.

5. Compare the Right Costs

On-premise software looks expensive because customers have to pay the bulk of the cost upfront or across the first three years they use it, Pemmaraju says. After that the customer's financial interest is to keep what it has paid for until long after the cost is amortized. That means relying on aging software and missing out on potentially beneficial functions in newer versions.

SaaS applications look inexpensive because the subscription cost is far lower than the payout of an acquisition, and they begin delivering useful functionality more quickly than it would take IT to spec, build and test an on-premise application, Pemmaraju says.

Without a coherent strategy and set of criteria for success, however, it's impossible to know if a SaaS application is delivering real value, Pemmaraju says.

Without good integration tools and the ability to use them, customers have to repeat the same cycle of evaluation, testing, deployment and management with each application, rather than streamlining that process with better process and management integration, West says.

That's the real challenge with SaaS, according to Weis. He must make sure that the platform on which the applications are deployed can connect them easily and the end result of many SaaS contracts is less confusion, greater efficiency and a better handle on practical aspects of the business. That means what container is on what ship and how long will it take to get to port, not where data is stored and whose server is running the application.

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