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Is Cloud Computing
Really Ready
for Prime Time?
Neal Leavitt

Even though the technology faces several significant challenges,

many vendors and industry observers predict a bright future for
cloud computing.

loud computing ha s by providers and shared by numerous firm, said key risks include reliabil-
become a significant tech- users makes cloud computing less ity, security, the additional cost of
nology trend, and many expensive, according to proponents. the necessary network bandwidth,
experts expect it to reshape “The shift to cloud computing and getting locked into specific cloud-
information-technology will dramatically reduce the cost of computing vendors.
processes and the IT marketplace information technology,” said Russ While proponents say it’s only a
during the next five years. Daniels, Hewlett-Packard’s vice presi- matter of time before the technology
With the technology, users on vari- dent and chief technology officer for overcomes these problems, others
ous types of devices—including PCs, cloud-services strategy. “But it goes say the process might not be easy
laptops, smart phones, and PDAs— beyond cost savings. It frees custom- and could continue to hold back
access programs, storage, processing, ers from the expense and hassle of adoption.
and even application-development having to install and maintain appli-
platforms over the Internet, via ser- cations locally.” COMPUTING IN THE CLOUD
vices offered by cloud-computing Cloud computing also lowers the Initia lly, compa nies utilized
providers. Resources are kept on pro- cost of application development and unused general-purpose data-center
viders’ servers, rather than on users’ makes the process more scalable, capacity to provide cloud-computing
systems. noted analyst Simon Heron of Net- services.
Proponents tout the technology’s work Box, an Internet security firm. However, major providers began
advantages, including cost sav- Nonetheless, the approach is still creating separate cloud-computing
ings, high availability, and easy relatively new and has not yet been business units and dedicated data
scalability. widely adopted. IT departments are centers to make sure the systems
Industry observers say the technol- still wary of it because they don’t con- function optimally and maximize
ogy’s growth potential is enormous. trol the cloud-computing platform. their revenue-generation potential.
Market-research firm IDC expects IT So far, venture capitalists have not Smaller providers, on the other
cloud-services spending to grow from invested a lot of money in cloud-com- hand, generally base their services
about $16 billion in 2008 to about $42 puting providers. in bigger companies’ data centers.
billion by 2012, as Figure 1 shows. In addition, the approach has Cloud computing’s precursors
IDC also predicts cloud-computing several important weaknesses that include
spending will account for 25 percent vendors must address before it can
of annual IT expenditure growth by become more popular. • thin clients, which run appli-
2012 and nearly a third of the growth Carl Howe, director of the Any- cations and services housed
the following year. where Consumer Research Group for elsewhere and accessed via a
Working via large platforms owned the Yankee Group, a market research network;

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700 tualization, noted GoGrid technology

evangelist Michael Sheehan.
IT cloud services

Worldwide IT spending (billions of US dollars)

600 On-premise IT Virtualization lets a single PC or
8.5% server simultaneously run multiple
500 operating systems or multiple ses-
4.2% sions of a single OS. Providers can
16 thus run services for multiple custom-
300 ers on individual computers, rather
Growth 451 than having to put each on a differ-
200 367 27% ent machine. This uses the provider’s
5% resources efficiently and effectively
100 separates the services for different
2008 2012 Source: IDC It also enables easy scalability and
the flexible creation and dismantling
of resources that customers need
Figure 1. Industry observers say cloud computing has great commercial potential. only temporarily for special projects
Market-research firm IDC expects IT cloud services spending to grow from about
$16 billion in 2008 to about $42 billion by 2012 and to increase its share of overall IT or peak workloads, said Jim Jones, a
spending from 4.2 to 8.5 percent. managing director with Scale Venture
Partners, a venture capital firm.
Dynamic infrastructure software.
• grid computing, which links dis- vices or tools, according to James Most cloud systems employ infra-
parate computers to form one Staten, principal analyst at Forrester structure software that dynamically,
large infrastructure; and Research. rapidly, and efficiently scales as
• utility computing, a metered ser- needed to meet customer demand
vice in which individuals work Under the hood with little, if any, intervention by
with programs kept on shared At their most basic, cloud-comput- service providers.
servers rather than on individual ing providers’ infrastructures consist Control. Companies use an API
PCs and, like a public utility, pay of Internet-connected servers, at one or Web interface to control their
based on their usage level. site or distributed across several loca- cloud-based IT infrastructures, said
tions, that house applications and GoGrid’s Sheehan. Software devel-
Major cloud-computing services data. They also include virtualiza- opers use the APIs to control the
include’s Amazon Web tion, grid, management, database, systems programmatically.
Services, Google’s Google Apps, and and other types of software; user Virtually all major cloud provid-’s interfaces; APIs; a communications ers use APIs that have the structure of
M icros of t’s Wi ndows A z u re infrastructure for connecting to users Web services standards such as SOAP,
pr ov ide s genera l cloud-ba s e d over the Internet or a private network; said IDC senior vice president and
computing resources to users. and a usage monitoring and billing chief analyst Frank Gens. However,
The company also offers specific mechanism. he noted, the APIs are still proprie-
Internet-based applications such Clients generally use browsers or tary because they use the provider’s
as Dynamics CRM Online for cus- dedicated software to access cloud own semantics within the standards’
tomer-relationship management, applications, which they frequently structures.
Exchange Online for messaging, control via APIs. Implementation and billing. To
Office Communications Online for “Cloud-service infrastructures implement cloud computing, orga-
instant messaging, and SharePoint must be designed to host multiple nizations generally just have to set
Online for collaboration. tenants with high service levels over up a secure account with a provider.
Other cloud providers include long periods of time,” the Yankee In some cases, they must also down-
AppNexus, GoGrid, GridLayer, Mosso, Group’s Howe said. load additional software.
and XCalibre Communications. Grids, blades, virtualization. Some Providers bill users based on the
Cisco Systems and Oracle are companies use grids of distributed number of minutes or hours they
working on the technology. And servers or multiple blade servers run spend on a cloud system or on their
Hewlett-Packard, IBM, and Sun by a master controller to provide level of consumption of resources
Microsystems have shown interest cloud-computing services. such as bandwidth consumed, data
in providing cloud-computing ser- And frequently, they also use vir- transferred, or storage space filled.

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Internet-based services Infrastructure as a service Platform as a service Software as a service
Management Management Management Management
and provisioning and provisioning and provisioning and provisioning
Configurators/ Application
APIs software
Virtual platform Virtual platform
Virtualization Virtualization software software
Disks Servers Disks Servers Disks

• Amazon S3 • Amazon EC2 • Bungee Lab’s Bungee • Oracle SaaS platform

• • Joyent Connect • Salesforce Sales Force Automation
• Google Base • Sun Microsoft’s • Etelos • NetSuite
• Mozy • Coghead • Google Apps
• Amazon SimpleDB • HP Flexible Computing • Google App Engine • Workday Human Capital
• TrackVia Services • HP Adaptive Infrastructure Management
• Microsoft SSDS • IBM Blue Cloud as a Service
• 3tera •
• OpSource • LongJump
• Jamcracker Source: Yankee Group

Figure 2. A number of vendors offer one or more of the four major types of cloud services.

Types of cloud services Cloud computing eliminates the need support of legacy resources and
There are four kinds of cloud ser- to do this. other infrastructure services, he
vices, as Figure 2 shows. Providing excess computing explained.
Services. Some products offer and storage capacity just to handle Flexibility. Most cloud-computing
Internet-based services—such as maximum workloads can be an inef- vendors don’t require contracts and
storage, middleware, collaboration, ficient use of resources. In fact, noted let users work with their services as
and database capabilities—directly Forrester’s Staten, “Most enterprise needed. This makes cloud computing
to users. data centers are using less than 50 a good way to get the extra resources
IaaS. Infrastructure-as-a-service percent of the total capacity of their needed for activities such as testing
products deliver a full computer resources.” new services or products.
infrastructure via the Internet Availability. Cloud-computing
PaaS. Platform-as-a-service prod- proponents say a system run by a Adopting the cloud
ucts offer a full or partial application large service provider that has many Most early cloud-computing adopt-
development environment that users resources and redundant equipment ers have been Web 2.0 companies
can access and utilize online, even in should offer more availability than and start-ups.
collaboration with others. an infrastructure run in-house by a The ability to control costs and
SaaS. Software-as-a-service prod- small or even midsize company. provision infrastructure as needed
ucts provide a complete, turnkey Application integration and sup- particularly appeals to new busi-
application—including complex port. Integrating multiple services nesses with fewer resources, noted
programs such as those for CRM or and assets into a powerful compos- GoGrid’s Sheehan.
enterprise-resource management ite application is more convenient Web 2.0 companies also tradition-
via the Internet. with well-designed cloud platforms, ally have fewer resources and want
said director of plat- the ability to easily ramp demand up
Advantages form research Peter Coffee. or down as needed, he added.
Companies that run their own T he s y s t e m s g e ne r a l ly u s e Bigger companies, which gener-
platforms must buy and maintain SOAP, the Web Services Descrip- ally wait to adopt new technologies,
their own hardware and software tion Language (WSDL), and other are using cloud computing for occa-
infrastructures and hire staff to take nonproprietary Web service pro- sional or temporary projects that
care of the system, all of which can tocols, ma ny XML-ba sed. This demand a lot of additional resources
be expensive and time-consuming. enables easy interaction with and he said.

JANUARY 2009 17

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CHALLENGES ON THE However, providers can change following standard security prac-
HORIZON it when and how they see fit, with- tices, which requires disclosure and
More companies are starting to out customers’ consent, said John inspection, said Staten. For example,
recognize and realize the benefits Pescatore, chief security analyst users don’t necessarily want pro-
and advantages of cloud computing. for market-research firm Gartner viders to have multiple customers
However, as with any emerg- Inc. sharing the same virtual hardware
ing approach, there is some fear, and network resources.
uncertainty, and concern about the Performance, latency, Also, stated Howe, data stored in
technology’s maturity. reliability the cloud might be used anywhere in
Potential users may be waiting Per for ma nce concer ns may the world and thus might be subject
until more organizations have expe- stop some companies from using to state or national data-storage laws
rience with cloud computing and cloud computing for transaction- related to privacy or record keeping.
have developed best practices, said oriented and other data-intensive Various governments, such as
Forrester’s Staten. applications. those in the European Union, have
privacy regulations that prohibit the
transmission of some types of per-
sonal data outside the EU, said Gens.
“This has caused Amazon and other
Cloud computing is still relatively new
companies to develop offerings using
and has not yet been widely adopted. storage facilities located in the EU,”
he noted.

Related bandwidth costs

He added, “Cloud computing is Some providers, noted Network While companies can save money
maturing slowly, so the business case Box’s Heron, temporarily run short on equipment and software with
is slow in developing.” of capacity—either by provisioning cloud computing, they could incur
A sign that the technology may be too many virtual machines or satu- higher network-bandwidth charges
beginning to mature is that vendors rating their Internet links—in the from their service providers, noted
are starting to offer tools for manag- face of high demand. This hurts their Howe.
ing cloud-based resources. systems’ performance until they can Bandwidth costs might be low for
According to GoGrid’s Sheehan, remedy the situation. smaller Internet-based applications
venture capitalists, who could fund Customers who are a long distance that aren’t data-intensive but could
providers and thereby kick-start from cloud providers could experi- be very high when, for example, a
cloud computing, are cautious right ence latency, particularly if there is company makes a multiterabyte data-
now with any emerging new busi- a lot of traffic and their code is not base available via cloud computing,
ness. Over time, he said, they may optimized for efficient transmission. he said.
invest in cloud computing first with
established companies and then via Security and privacy Vendor lock-in and standards
start-ups. A recent survey of chief infor- There are no cloud-computing
mation officers and IT executives standards for elements and processes
Control by IDC rated security as their main such as APIs, the storage of server
IT departments are wary of cloud cloud-computing concern. Almost images for disaster recovery, and data
computing because an outside pro- 75 percent of respondents said they import and export.
vider, not the organization’s own were worried about security. This is currently hampering
staff, designs and controls the plat- “With their businesses’ informa- adoption by limiting the portability
form, said Rob Enderle, president tion and critical IT resources outside of data and applications between
and principal analyst of the Enderle the firewall, customers worry about systems, said Sheehan. Portability
Group, a market research firm. their vulnerability to attack,” said will become increasingly important
The providers generally don’t IDC’s Gens. as more cloud providers emerge,
design platforms to support spe- This could limit cloud computing’s he noted.
cific companies’ IT and business desirability, said Gartner Fellow and If a company is dissatisfied with
practices. vice president David Cearley. one cloud-computing service—or if
Also, users can’t change the plat- Users want to be confident that the vendor goes out of business—
form’s technology when they want. their cloud-computing provider is the firm cannot necessarily easily

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9% 13%
57% 52%
Business applications
18% Infrastructure software
Applications development 18%
and deployment
2008 Storage 2012
US $ 16.2 billion US $ 42.3 billion Source: IDC

Figure 3. Market-research firm IDC predicts that cloud-computing revenue will not only increase during the next few years, but the
way organizations use the technology will change.

and inexpensively transfer service While most vendors provide service firewalls for use with employees,
to another provider or bring it back credits for outages, said Howe, “those partners, and others.
in-house. credits are cold comfort for sales In addition, IDC says users will
Instead, the company would have opportunities missed and executives work with cloud computing in differ-
to reformat its data and applications, cut off from business information.” ent ways during the ncxt few years,
and transfer them to a new pro- as Figure 3 shows.
vider, a potentially complex process. Other concerns
And if the company brings the ser- At some times and in some areas, Research
vice in-house, it would have to hire Internet connections aren’t fast or HP Labs, Intel, and Yahoo have
employees with the skill necessary reliable enough yet for cloud comput- launched the distributed Cloud
to work with the technology. ing to be dependable. Research Test Bed—with facili-
For example, broadband Internet ties in Asia, Europe, and North
Transparency connections aren’t available in all places, America—to develop innovations
Companies cannot pass audits of such as those that are far from a tele- such as cloud-computing-specific
their capabilities by prospective cli- phone company central office or hub. chips.
ents if they can’t demonstrate who Also, there aren’t enough major HP’s Daniels said they will conduct
has access to their data and how they cloud-services providers yet, which advanced research in areas such as
keep unauthorized personnel from reduces the level of customer choice intelligent infrastructure, dynamic
retrieving information. and marketplace competition. cloud services, and scaling.
Cloud-computing vendors are “And there are some infrastruc- “A fundamental challenge is that
addressing this concern by having tures that simply cannot be translated the cloud depends on handling
third parties audit their systems or transferred into the cloud,” said increasing demand by scaling out,
in advance and by documenting Sheehan. “High-end databases are doing more work simultaneously
procedures designed to address cus- better hosted within a dedicated, in parallel,” he noted. “We know
tomers’ data-security needs. managed server environment.” how to do that efficiently for some
workloads, but it’s generally quite
Reliability WHAT’S AHEAD challenging.”
Cloud computing hasn’t always Because cloud computing is rela- IBM Research has launched the
provided round-the-clock reliability. tively new, particularly for large Research Compute Cloud, an on-
For example, left companies, it promises to change and demand, globally accessible set of
customers without service for six develop quickly. computing resources that support
hours on 12 February 2008. Sheehan predicted there will be business processes. The resources
And Amazon’s S3 (Simple Storage more providers, richer services, are distributed across the company’s
Service) and EC2 (Elastic Compute established standards, and best prac- eight worldwide labs.
Cloud) services suffered a three-hour tices. He also said organizations will IBM is also leading the Resources
outage three days later. develop private clouds behind their and Services Virtualization without

JANUARY 2009 19

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Barriers research initiative with 13 a solution for small and midsize unless security concerns overwhelm
European partners to develop tech- companies to completely outsource the economic advantages.
nologies that automate cloud systems’ their data-center infrastructure and “It will become the essential foun-
response to customers’ fluctuating for larger companies to have a way dation for a greatly expanded IT
demand for resources. The Euro- to get peak load capacity without industry by lowering the economic
pean Union is funding the $17 million building larger data centers inter- and technical barriers for millions
effort. nally,” he said. of developers to bring new offerings
Experts say that it will become to market, and for billions more cus-
Prospects easier this year to move data from tomers to adopt those offerings,” said
The current difficult economic one cloud-computing system to IDC’s Gens.
climate will boost cloud computing’s another and that this will boost the “It’s likely that cloud computing
appeal, particularly to companies technology’s prospects. is a type of deployment architecture
without a lot of money for infra- Also, said Nolet, providers will that will be with us for a long time
structure investment, predicted develop ecosystems that will let com- to come,” said Forrester’s Staten. “It
AppNexus chief technology officer panies in the same private network is becoming a new member of the IT
Mike Nolet. better communicate and share data portfolio of services and choices.”
“The core competency for most via clouds, thereby reducing latency. A key will be whether cloud com-
companies is not designing and However, said Enderle, only the puting can overcome the challenges
building IT a rchitect ure,” sa id biggest providers will have platforms it currently faces.
Nolet. “They don’t want to deal with reliable enough to make cloud com-
middle-of-the-night emergencies, puting suitable for mission-critical
vendor management, the procure- tasks. Neal Leavitt is president of Leavitt
ment cycle, estimating future needs, Communications (www.leavcom.

com), a Fallbrook, California-based
hiring and managing large IT staffs,
international marketing communica-
and everything else needed for in- r aig Mathias, analyst with
tions company with affiliate offices
house infrastructure. If clients can and founder of the Farpoint in Brazil, France, Germany, Hong
trust the uptime, speed, and security Group consultancy, said, Kong, India, and the UK. He writes fre-
of a cloud, we can’t see any reason “I’m bullish on the concept. quently on technology topics and can
not to use it.” It will be the preferred solu- be reached at
In addition, corporate data-center tion over time contingent upon the
managers are facing increasing prob- industry developing a viable set of
lems with power consumption, space, standards. We also need to see more
and IT costs, noted Scale Venture success stories.” Editor: Lee Garber, Computer,
Partners’ Jones. According to Enderle, cloud
“Over the next five years, cloud- computing is likely the way most
computing services will become companies will try to contain IT costs,

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