WIR FORSCHEN FÜR SIE

Do Clouds Compute?A Framework for Estimating the Value of Cloud Computing

(WeB 2008 – The Seventh Workshop on e-Business)Markus Klems, Jens Nimis, Stefan Tai

Forschungszentrum Informatik, Karlsruhe (Germany)

Observations• “Cloud Computing” very popular in 2007 and 2008• Rich ecosystem of Cloud providers, enablers and users• Our understanding: Cloud != Grid

Research questions• What is Cloud Computing?• What is the value proposition of Cloud Computing?

Our approach & contribution• Collect real-world use cases where Cloud Computing is applied• Develop a structured, systematic framework to assist decision makers in

valuating benefits specific to Cloud Computing technology

Introduction

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Since Cloud Computing addresses different usage scenarios than Grid Computing we need a new way to valuate this technology.

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A Short History of Cloud Computing

Amazon EC2(August 2006)

Google App Engine(April 2008)

Microsoft Azure(Oct 2008)

Facebook Platform(May 2007)

Amazon S3(March 2006)

SalesforceAppExchange(March 2006)

Our DefinitionBuilding on compute and storage virtualization technologies, and leveraging the modern Web, Cloud Computing provides scalable and affordable compute utilities as on-demand services with variable pricing schemes, enabling a new consumer mass market.

The classical problem• Under-utilized server resources

waste computing power (and energy)

• Over-utilized servers cause interruption or degradation of service levels

The promise:• Server resources are delivered on-

demand as usage-metered compute utilities

• Cloud-user does not need to forecast demand

• Turn fixed costs into variable costs

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Promises of Cloud Computing

The emerging problems• Highly dynamic scalability

demands• Time to market

Leveraging the modern Web• Evolution of Desktop apps to

Software-as-a-Service• Programmable Web

The promise:• Reduced provision lead times• Scalability• Sophisticated infrastructure is

available as Services

The promise:• A stable, reliable platform to

develop, test and deploy network-centric end-user applications

We propose a basic framework for estimating value and determine benefits from Cloud Computing as an alternative to conventional IT infrastructure, such as on-premise infrastructure.

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Our Framework: Overview

1. Business Scenario

2. Cost Comparison

Value of Cloud Computing Service in opportunity costs

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Qualitative Analysis

1. Business Scenario

Create a list of Cloud Computing providers and their services and evaluate the services that meet your business scenario requirements according to the following criteria.

1.1 Business Case

1.2 Organization

1.3 Compliance

1.4 Business Objectives

1.5 Strategy

1.6 Demand

1.7 Application

1.8 Non-Functional Requirements

1.9 Finance

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Example: Animoto*

1.1 Business Case Animoto Videos Facebook application

1.2 Organization Start-up company

1.3 Compliance (data ownership and privacy regulations)

1.4 Business Objectives Drastically increase user base

1.5 Strategy Viral marketing

1.6 Demand • Linear growth in the first month up to 25,000 users• After a feature change: increase to 250,000 users within three days (1000%)

1.7 Application Generate personalized music videos from users’ images and music files

1.8 Non-Functional Requirements • Scalability• High availability

1.9 Finance Low liquidity, tie costs to growth

*http://aws.typepad.com/aws/2008/04/animoto---scali.html

Quantitative Analysis

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2. Cost Comparison

** e.g. Amazon EC2 and S3, FlexiScale, Mosso (Rackspace), Joyent, etc.* e.g. on-premise IT infrastructure

Infrastructure #1*(world without Cloud Computing)

Infrastructure #2**(world with Cloud Computing)

Define a cost metric for each attribute

Calculate a cost estimate for #1 for each attribute

Define a cost metric for each attribute

Identify comparable infrastructure attributes

Calculate a cost estimate for #2 for each attribute

Aggregate the cost estimates Aggregate the cost estimates

Value of Cloud Computing Services in terms of opportunity costs

Quantitative Analysis: Example

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2. Cost Comparison

** e.g. Amazon EC2 and S3, FlexiScale, Mosso (Rackspace), Joyent, etc.* e.g. on-premise IT infrastructure

Infrastructure #1*(world without Cloud Computing)

Infrastructure #2**(world with Cloud Computing)

Define a cost metric for each attribute

Calculate a cost estimate for #1 for each attribute

Define a cost metric for each attribute

Identify comparable infrastructure attributes

Calculate a cost estimate for #2 for each attribute

Aggregate the cost estimates Aggregate the cost estimates

Value of Cloud Computing Services in terms of opportunity costs

e.g. processing power (ECU), storage capacity, …

On-premise infrastructure Amazon EC2

Cumulative costs for attribute “processing power”

Cumulative costs for attribute “processing power”

Weigh costs for “processing power” with 100%

Weigh costs for “processing power” with 100%

Compare costs

Conclusion• Clouds provide scalable, abstracted IT infrastructure as Services• We propose a structured, systematic framework to value benefits from using

Cloud Computing technology Future Work

• Further categorize use cases and apply our framework• Identify more valuation methods to extend the framework• Develop tools to compare different Cloud offerings and provide decision

support More information

• http://cloudwiki.fzi.de• http://www.eOrganization.de (powered by Google App Engine)• http://www.cloudytimes.com (my blog)

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Conclusion & Future Work

Thank you!

Questions & Discussion

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Backup Slides

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The Beauty of Simplicity

Web Development Infrastructure

complex, error-prone, hideous spaghetti code

simple, test-driven, elegant, stable, agile Web development

framework

complex, error-prone,fragile IT infrastructure

simple, elegant, stable, scalable, pay-per-use

IT infrastructure(as a Service)

End-user applications, Software-as-a-Service (SaaS) Platform-as-a-Service (PaaS) Infrastructure-as-a-Service (IaaS)

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Cloud Ecosystem

Google App Engine

Platform as a Service (PaaS)

End-User Applications

Salesforce AppExchange

Facebook Platform

Facebook Apps

Live Mesh

AppExchange Apps

OpenSocial Apps

Amazon Web Services

Rackspace 3tera

Joyent

Infrastructure as a Service (IaaS)

Brokers, Tools and Frameworks

End-User Applications

flexiscale

NASDAQ Market Replay

Jungle Disk Powerset

MossocohesiveFT

RightScale

MLB

zimoryenomaly

Aptana cloud

Grid Cloud

Underlying concept Utility Computing Utility Computing

Main benefit Solve computationally complex problems

Provide a scalable standard environment for network-centric application development, testing and deployment

Resource distribution / allocation

Negotiate and manage resource sharing; schedulers

Simple user <-> provider model; pay-per-use

Domains Multiple domains Single domain

Character / history Non-commercial, publicly funded

Commercial

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Grid vs. Cloud

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Animoto Use Case

http://www.animoto.com

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Simple Cost Calculation (1)Amazon EC2

Extra-large standard instance 1ECU / instance 8ECU 8 * http://aws.amazon.com/ec2/#instancePrice 0.8 $ / (extra-large standard instance * hour)Additional services 0.2 * assumed to be additional 25% of the ECU priceTotal costs 0.125 $ / (ECU * hour)

On-PremiseServers 1 dell.com: Quad Core Intel Xeon 5405ECUs / server 8 dell.com: Quad Core Intel Xeon 5405ECU 8Price / server 1700 dell.com: Quad Core Intel Xeon 5405Additional infrastructure 850 * assumption: 50% of server costsCapEx 850 $ / year (straight line depreciateion over 3 years, no discounting)CapEx / hour 0.10 $ / hourPower 213 * assumption: 25% of infrastructure costs / yearIT management 85 * assumption: 10% of infrastructure costs / yearNetwork fees 85 * assumption: 10% of infrastructure costs / yearOpEx 383 $ / yearOpEx / hour 0.04 $ / hourTotal costs 0.018 $ / (ECU * hour)

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Simple Cost Calculation (2)

IT infrastructure #1 IT infrastructure #2

Description Quad-core servers* Amazon EC2

Scenario Starting with 400 ECU in the first month; 1000% instant traffic increase in the second month; then back to 400

Metric: USD / (ECU * h) 0.02 0.125

Cum. costs of 1st month 56,729 USD 33,600USD

Cum. costs of first 6 months

340,373 USD 277,200 USD

* plus additional infrastructure, power, networking and IT staff; keep 20% empty space buffer to max. predicted demand

Cost Comparison:

Time (month)Demand (predicted) Cloud Cloud costs Cum Cloud costs

Cloud infrastructure / demand

On-premise infrastructure

On-premise infrastructure costs

Cum on-premise costs

On-premise infrastructure / demand

1 400.00 400 8400 8400 100% 4800 14182 14182 1200%400.00 400 8400 16800 100% 4800 14182 28364 1200%400.00 400 8400 25200 100% 4800 14182 42547 1200%400.00 400 8400 33600 100% 4800 14182 56729 1200%

2 4000.00 4000 84000 117600 100% 4800 14182 70911 120%4000.00 400 8400 126000 10% 4800 14182 85093 120%4000.00 400 8400 134400 10% 4800 14182 99275 120%4000.00 400 8400 142800 10% 4800 14182 113458 120%

3 400.00 400 8400 151200 100% 4800 14182 127640 1200%400.00 400 8400 159600 100% 4800 14182 141822 1200%400.00 400 8400 168000 100% 4800 14182 156004 1200%400.00 400 8400 176400 100% 4800 14182 170186 1200%

4 400.00 400 8400 184800 100% 4800 14182 184368 1200%400.00 400 8400 193200 100% 4800 14182 198551 1200%400.00 400 8400 201600 100% 4800 14182 212733 1200%400.00 400 8400 210000 100% 4800 14182 226915 1200%

5 400.00 400 8400 218400 100% 4800 14182 241097 1200%400.00 400 8400 226800 100% 4800 14182 255279 1200%400.00 400 8400 235200 100% 4800 14182 269462 1200%400.00 400 8400 243600 100% 4800 14182 283644 1200%

6 400.00 400 8400 252000 100% 4800 14182 297826 1200%400.00 400 8400 260400 100% 4800 14182 312008 1200%400.00 400 8400 268800 100% 4800 14182 326190 1200%400.00 400 8400 277200 100% 4800 14182 340373 1200%

Sum 24000.00 13200 277200 115200 340373

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Simple Cost Calculation (3)

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(Fictional) Example: Large-Scale Enterprise

1.1 Business Case Internet-scale testing environment

1.2 Organization Complex and heterogeneous IT infrastructure

1.3 Compliance Industry-dependent, e.g.• Financial / accounting: SOX, Basel II• Health care: HIPAA compliance• …

1.4 Business Objectives Reduce time to market by shortening innovation cycles

1.5 Strategy Private or public Cloud?

1.6 Demand Predictable, expected demand

1.7 Application Java EE + JBoss + Oracle DB + …

1.8 Non-Functional Requirements Security

1.9 Finance Taxation