revolution not evolution-whitepaper

7/31/2019 Revolution Not Evolution-Whitepaper

1/19

Sponsored By:

The Cloud is confusing well it can be, and thats where CloudU comes in. CloudU is a comprehensive Cloud Computin

training and education curriculum developed by industry analyst Ben Kepes. Whether you read a single whitepaper, watca dozen webinars, or go all in and earn the CloudU Certifcate, youll learn a lot, gain new skills and boost your resum

Enroll in CloudU today atwww.rackspaceclouduniversity.com

Revolution not evolution

Hw Cd Cmpg Dffrs frmtrada it ad Why Mars

CloudU is a service mark/trademark of Rackspace US, Inc. in the United States and/or other countries


2/19


3/19

Revolution Not Evolution How Cloud Computing Difers rom Traditional IT and Why it Matters 2

Diversity Limited, 2011 Non-commercial reuse with attribution permitted

A New Dawn or Just Another Day Ellison vs Benio2010 marked the escalation o the war o words between the respective CEOs

o Oracle and Salesorce.com, Larry Ellison and Marc Benio. In the words o

these larger than lie gures, we can actually see an outline o many o the themes

that will be explored in the ollowing pages. Is Cloud Computing undamentally

dierent rom what came beore? What does it mean or an organization to do

Cloud Computing? Tese are the questions that one must ask to answer the

question Is Cloud Computing a Revolution or simply version 2.0 o a continuous

series o innovations.

For his part, Oracles Ellison has a history o discounting Cloud Computing as no

more than a new name or what has gone beore. In a 2009 interview1

that hasbecome somewhat o a web cult classic, he said:

All the Cloud is, is computers in a network Our industry is so bizarre. Imean, they just change a term and they think theyve invented technology.

In some ways, Ellison is correct. Many o Cloud Computings most common

eatures-virtualization, pay-as-you-go, reduced cost and moving I responsibility

to third parties - have been around much longer than the Cloud. Yet there are

those who argue that despite the similarities to what has come beore, the Cloud is

undamentally dierent.

In this camp, the most vocal oil to Ellison is Salesorce.coms Marc Benio,

himsel a ormer Oracle executive and protg o Ellison. In what was a drama

lled keynote speech at the Oracle OpenWorld 2010 conerence, Benio outlined

his own denition o Cloud Computing:2

Our denition o Cloud Computing is multi-tenant, its aster, hal the cost,

pay as you go, it grows as you grow or shrinks as you shrink. It is extremely

ecient. Were not going to show you computers taller than you. Were not going

to show you a cloud in a box because clouds dont come in a box. Tey never

have. Tats the whole idea.


4/19



Te computers taller than you reers to Oracles Exalogic Elastic Cloud, an

impressive mix o hardware and sotware designed to power web-scale enterprise

applications. Te point that Benio makes with his characteristic color is that

Cloud Computing is not about individual business buying bigger and better

hardware, what Oracle calls a Cloud in a box. Te Cloud is about businesses

giving up the cost and burden o managing and maintaining hardware all together

Tis author agrees with Benio. raditional hardware and sotware vendors,

like Oracle, have a vested interest in arguing that Cloud Computing is best

implemented by doing more o what companies have traditionally done to gain

ecacies. Buy more hardware and sotware. Buy better hardware and sotware. In

support o Benio s position, another well-known I executive, Werner Vogels o

Amazon Web Services, commented that that i you have buy more hardware justto get started it is not a Cloud3

Te Growth of the Cloud

As Ellison and Benio spar over deni-

tions and what constitutes a true Cloud

the market continues to explode.

Cloud Computing covers a range o ac-

tivities rom replacement o on-premise

inrastructure, through development

platorms and on to on-demand applica-

tions. Given such a breadth o areas that

Cloud Computing touches, statistics are

useul as a general indication o trends

rather than a source o accurate predic-

tions. While the numbers that various

analyst rms give as their estimate o the

Cloud Computing markets size dier

(see inographic below), one thing they

all agree on is the rapid growth o all

parts o the Cloud Computing market.4

0

1000

2000

3000

4000

500

1500

2500

3500

August 2009

August 2010

Number of Websites Using Cloud Providers

Amazon EC2

94%Growth

mazon EC GoGrid

188%Growth

rid

o

Rackspace CloudServers

106%Growth

Ra kspace ClS r er

Linode

146%Growth

Linode

Source: Jack of All Clouds

2007 2008 2009 20100

40,000

80,000

20,000

60,000

100,000

Amazons Virtual Computers Created per day

3 month moving average

1020Source: The Economist


5/19



So just what is Cloud Computing, and why it is so dierent rom what has come

beore? Te ollowing pages will detail our main areas in which Cloud Computing

allows businesses to break rom the past:

Virtualization Te ability to increase computing eciency

Democratization o Computing Bringing enterprise scale inrastructure

to small and medium businesses

Scalability and ast provisioning Bringing web scale I at a rapid pace

Commoditization o inrastructure Enabling I to ocus on the strategic

aspects o its role

Each o these areas does not itsel create a computing revolution, virtualization

as Ellison would point out, has been around or some time, but together, they arechanging computing orever. Lets see how.


6/19



From Water-wheel to Utility Power An analogy or the Cloudechnology has a way o grinding on, despite o vested interests o vendors

and industries built upon a particular way o doing things. o understand

the revolutionary qualities o Cloud Computing, it is appropriate to utilize

a well-worn, but accurate analogy that compares Cloud Computing to a

traditional utility service like water or electricity. Nicholas Carrs book he

Big Switch5 is an excellent introductory read to this subject. In a previous

article6 appearing in the Spring 2005 issue o the MI Sloan Management

Review, Carr wrote that;

...As a business resource, inormation technology today looks a lot like electric

power did at the start o the last century [when it was routinely produced by

individual businesses rather than utility providers] executives are routinely

sidetracked rom their real business by the need to keep their companys private

I inrastructure running smoothly.Noting the similarities between computing and a technology that most would

agree is best handled by specialists rather than individual rms, Carr then moves

onto a discussion about the consequences o sel provisioning inrastructure and

the resulting overcapacity that oten accompanies it:

When overcapacity is combined with redundant unctionality, the conditionsare ripe or a shit to centralized supply. Yet companies continue to invest large

sums in maintaining and even expanding their private, subscale data centers.

Why? For the same reason that manuacturers continued to install private electric

generators during the early decades o the 20th century: because o the lack o a

viable, large-scale utility model. But such a model is now emerging...Te model that Carr says in emerging is Cloud Computing. Cloud Computingprovides specic economics that are benecial under many situations especially

anytime demand is erratic, the organization is in a state o change or when

pressure comes to bear to move rom CapEx to OpEx.

While the metaphor comparing Cloud Computing to utility power helps

explain the nearly inexorable orces compelling business to adopt this new


7/19



model, it doesnt position this latest technology in the more recent context

o massive technological shits. For that, we can look at the shit that saw

mainrames transormed into Clouds over the course o only a ew decades.


8/19



Mainrames to Cloud A brie history o technological innovationIt is worth briefy reviewing where Cloud Computing sits in the continuum o

computing innovations, each o which were seen as revolutionary in their time. Initial

widespread corporate computing occurred within a shared resources model where

massive mainrame computers took up acres o space within dingy basements and

users would book time or both the machines themselves and the skilled technicians

who knew how to operate them. Teir use case was generally narrow business analysis

and hence computing had a very narrow sphere o infuence.

With the advent o mini computers and later the personal computer in the 1970s,

we saw the ability to utilize the benets o technology rolled out to a much

broader audience. While still relatively expensive and unctionally basic machines the personal computer put computing onto (almost) any desktop in a reasonably

well resourced organization.

Te advent o the Internet however changed things orever, both rom the

perspective o the network and the perspective o individual computers. Te

increased reliability and reduced cost o the internet (in comparison to proprietary

networks) along with the decreasing cost o computers, led to increased use o web

based applications. Tis along with the demand or application access via multiple

devices using multiple orm actors led to a rapid growth in Cloud Computing at

an inrastructure, a platorm and an application level.

It is worth drawing parallels between the resistance to adoption o Cloud

Computing, and that o adoption o the Internet generally. In his book

Management Strategies or the Cloud Revolution: How Cloud Computing Is

ransorming Business and Why You Cant Aord to Be Let Behind,7 Charles

Babcock discusses the competitive pressures that gradually lead to adoption o the

Internet. As he points out;

At one time corporations built out high-perormance proprietary networksto link dierent locations As the Internet became the deault connection

between universities, government agencies and some companies, the cost o not

having an [Internet protocol] network internally went up and up.


9/19



So too will the economics o Cloud Computing render previous approaches as

increasingly cost prohibitive. Tis step change in the approach to technology will

be caused by our major shits, the rst o which is virtualization.


10/19



Virtualization Te ability to increasecomputing efciencyPicture i you will a traditional server. Housed in a noisy cabinet somewhere, a

server is a computer that can generally do one thing at a time. It may ll the role

o email server, database server or web server but running multiple processes

concurrently risks reliability and eciency so typically severs are operated as

single use machines. While this may be a robust way o providing a service, it is

inecient since many times servers have excess processing capacity above what is

used by a single application.

Virtualization was developed to overcome this limitation o physical hardware as

it enables multiple pseudo-servers to be run on one physical device. Tis division

o a single physical server into multiple virtual servers containing multiple setso segregated data is the backbone o Cloud Computing as it allows or ar greater

fexibility and resource utilization. Virtualization not only brings eciency gains

in terms o processing power but also saves electric power, space and cooling

since the number o physical machines running is greatly reduced. o illustrate

this point, studies8 have ound that Cloud applications consume 90% less energy

than on-premise ones.

While virtualization is an enabler or Cloud Computing, Cloud Computing itsel

enables some major shits within organizations. Te rst o these is the tendency

or Cloud Computing to democratize technology in a way not seen previously.


11/19



Democratization o Computing Bringing enterprise scale inrastructure tosmall and medium businessesCloud Computing is acilitating a seismic shit in terms o business development.

Formerly entrepreneurs who wished to start a business had to invest signicant

capital into hardware and sotware licenses. Even the simplest o businesses

required expensive sotware licenses, a server or two and the associated

administration cost o keeping it all running.

Te availability o Cloud Computing solutions has led to a massive shit in the

availability o computing power. It is now almost eortless or an entrepreneur

to set themselves up with some inrastructure and applications upon which to

run their business. With many Cloud Computing provides, a server capable orunning many o the most common web or business applications can be rented

or around $11/month. A recent study by Github9 indicates that less than 25% o

Y Combinator start-ups are sel hosting their web inrastructure. No longer is

enterprise scale inrastructure the exclusive domain o enterprises.

Tis democratization is analogous to the widespread availability o the word

processor. Formerly the creation o documents was the sole preserve o the typing

pool, an overworked shared resource which, like the mainrame, needed to be

scheduled or booked in advance and needed a skilled operator to make it work.

Oce productivity applications enabled even the least dextrous o executives to

create proessional reports and letters, all rom the comort o their own PC. Tis

move, while arguably detrimental to those who made their living working in a

typing pool, greatly increased the eciencies and timeliness o document creation.

Te ease, economics and speed o provisioning Cloud Computing resources is

enabling an entire generation o businesses to be ounded one needs only look atthe meteoric growth o question and answer site Quora.com which in December

2009 begun to experience usage spikes o 5 10 times its normal load. By

utilizing Cloud Computing or their inrastructure needs, Quora was able handle

the load with relatively ew issues.10 In the same way that most people would

consider it bizarre to have to send work away to have a document created (and to

have to wait days or the work to be done), so too will we regard computing. It is


12/19



our contention that in a ew years time, the need to wait or the provisioning o

inrastructure, the need or skilled engineers to perorm the tasks and the need or

administrative sta to keep the lights on will be but a distant memory.

Tis democratization o computing is paralleled by an ability to rapidly scale

inrastructure to levels previously unobtainable by all but the largest organizations.

Case Study Encoding.com

Encoding.com11 is a company that pro-

vides video transcoding services to allow

or the integration o video transcoding

into workfows. Video transcoding is the

process o converting one video le or-

mat, like Flash, into another ormat, like

Windows Media. What this means is that

content delivery sites such as MV, PBS

and online training establishments are

able to move video processing o their

own servers and onto a third party pro-

vider that is built to allow them to scale up

their processing at will. In order to build a

scalable product, Encoding.com decided

rom the outset to reduce hardware costs

by using cloud computing to meet their

rapidly changing processing needs12

Video encoding is a very processor inten-

sive task and hence they decided to inte-

grate with two separate Cloud Computing

providers to enable video encoding with

almost limitless scale. Teyre also able to

route jobs to the closest processing centre

to the customer to increase eciency.

Tese type o activities and the growing

business that they support would not have

been possible without Cloud Computing.


13/19



Scalability and ast provisioning or I at web scaleTe diagram below13 indicates the traditional boom and bust o inrastructure

provisioning. For any organization where workload is erratic, there will always be

one o two situations;

over capacity

under

capacity

CapacityRisingdemandscenario

Fallingdemandscenario

CAPEX

Time

Demand

Classic Capacity

Cloud Capacity

An over provision o servers creating unused capacity and hence1.

signicantly higher cost per process than is desirable

An under provision o servers that creates signicant impacts in terms o2.

service levels

Neither o these two situations are desirable as both result in direct economic

impacts; either through higher costs or through decreased outputs caused byservice degradation. As we have noted beore, the businesses o today are seeing

ar higher levels o volatility in their computing needs one only need look at the

inographic below detailing the relative growth o both witter and Facebook to

see that a traditional approach towards physical hardware cannot hope to keep up

with scaling demand. While most companies will not see the amazing growth that

witter and Facebook have experienced, the speed at which inormation travels


14/19



around the web has created viral phenomena where company websites can

experience huge trac spikes ater being proled on a television show like Oprah

or evening the local evening news.14

Cloud Computing enables organizations to maintain inrastructure at required

levels at all times, as such it enables cost savings to be gained by virtue o the act

that, despite the per unit price rom a utility service provider potentially being

higher than an owned resource, aggregate cost can be reduced by paying only or

what is required when it is required.

Having the ability to scale is benecial, but not when it comes at the cost o

signicant administration and management. Luckily Cloud Computing also

commoditizes inrastructure which rees up I departments to ocus on their key

strategic objectives.


15/19



Commoditization o inrastructure EnablingI to ocus on the strategic aspects o its roleIts hard to overstate just how much the I role is changing in the ace o Cloud

Computing. Cloud Computing vendors are oten quick to use cost reduction as

their main selling point or the Cloud, but it would appear that users are more

thoughtul than this and perceive the business agility gains to be the number one

benet o a move to the cloud. A recent SandHill report15 ound that around 50%

o respondents consider agility as their primary reason or adopting the Cloud.

A similar result came rom Inormation Week16 which ound that over 65% o

respondents cited agility to business needs as a driver or Cloud Computing

Its not hard to believe these statistics when one remembers the estimates that put I

maintenance at around 80% o total I expenditure.17

When one considers that Cloudinrastructure is still nascent and the vast majority o servers are still managed in-house,

this presents a signicant opportunity and a signicant change agent or traditional I.

Te underlying trend here is pressure upon I departments to produce greater

outputs, with less resourcing Cloud Computing oers the ability or I

departments to apply resource as, and where, they are needed.

Clearly the savings to be gained rom a move to the Cloud ree up I resources

or adding business value rather than simply maintaining the status quo this

change however will require I personnel to embrace the new world order and

learn a new set o skills that the organization will require. I departments, and

individual I personnel, will need to move rom being primarily technologists

with a modicum o business knowledge, to being truly balanced proessionals who

can equally mix technical ability with an understanding o the business drivers.

Its hard to not resort to hyperbole when discussing just how much Cloud Computing

allows organizations to ocus on their core business. Te very act that they are ableto abstract responsibility or what are essentially commodity services to a third party

drives signicantly more value to the organization than any mere nancial benet

through cost reductions that Cloud Computing can bring. Few people would argue

that I departments should be ocusing on high-level strategic work. We contend that

Cloud Computing enables this to occur more readily than ever beore.


16/19



Summary2011, and the decade ater it, will go down in history as the era o the cloud in the

same way that the 60s was the era o the mainrame. Cloud Computing oers a

massive benet to organizations and it is our contention that any organization

or individual who routinely interacts with technology solutions will have to learn

how to work with the Cloud.

While some practitioners may eel threatened by this changing paradigm, we

believe the opportunities are ripe or the creation o a new breed o I worker

one who is in equal parts a technician and a business person, someone who is o

true strategic value to the organization and someone who is much more than a

simple maintainer o technology assets.


17/19



About Diversity Analysis

Diversity Analysis is a broad spectrum consultancy specializing in SaaS, Cloud

Computing and business strategy. Our research ocuses on the trends in these

areas with greater emphasis on technology, business strategies, mergers and

acquisitions. Te extensive experience o our analysts in the eld and our closer

interactions with both vendors and users o these technologies puts us in a unique

position to understand their perspectives perectly and, also, to oer our analysis

to match their needs. Our analysts take a deep dive into the latest technological

developments in the above mentioned areas. Tis, in turn, helps our clients stay

ahead o the competition by taking advantage o these newer technologies and,

also, by understanding any pitalls they have to avoid.

Our Oerings: We oer both analysis and consultancy in the areas related

to SaaS and Cloud Computing. Our ocus is on technology, business strategy,

mergers and acquisitions. Our methodology is structured as ollows:

Research Alerts

Research Briengs

Whitepapers

Case Studies

We also participate in various conerences and are available or vendor briengs

through elephone and/or Voice Over IP.


18/19



About RackspaceRackspace Hosting is the service leader in Cloud Computing, and a ounder o

OpenStack, an open source Cloud platorm. Te San Antonio-based company

provides Fanatical Support to its customers, across a portolio o I services,

including Managed Hosting and Cloud Computing. Rackspace has been

recognized by Bloomberg BusinessWeek as a op 100 Perorming echnology

Company and was eatured on Fortunes list o 100 Best Companies to Work For.

Te company was also positioned in the Leaders Quadrant by Gartner Inc. in the

2010 Magic Quadrant or Cloud Inrastructure as a Service and Web Hosting.

For more inormation, visit www.rackspace.com.

About the AuthorBen KepesBen Kepes is an analyst, an entrepreneur, a commentator and a business adviser.

His business interests include a diverse range o industries rom manuacturing

to property to technology. As a technology commentator he has a broad presence

both in the traditional media and extensively online. Ben covers the convergence

o technology, mobile, ubiquity and agility, all enabled by the Cloud. His areas o

interest extend to enterprise sotware, sotware integration, nancial/accounting

sotware, platorms and inrastructure as well as articulating technology simply

or everyday users. More inormation on Ben and Diversity Limited can be ound

at http://diversity.net.nz
http://diversity.net.nz/http://diversity.net.nz/


19/19

Endnotes

[1] http://www.youtube.com/watch?v=KmXJSeMaoY

[2] http://www.cbronline.com/blogs/cbr-rolling-blog/salesorcecom-res-back-at-oracles-ellison-benio-oracle-

openworld-220910

[3] http://twitter.com/Werner/status/25005220624

[4] http://www.economist.com/node/17797794

http://www.jackoallclouds.com/201%8/state-o-the-cloud-august-2010/

[5] http://www.amazon.com/Big-Switch-Rewiring-Edison-Google/dp/0393062287

[6] http://www.nicholasgcarr.com/articlesmt/archives/endocorporatecomputing.shtml

[7] http://www.amazon.com/Management-Strategies-Cloud-Revolution-ransorming/dp/0071740759

[8] Cloud Computing Emissions Comparison, Nucleus Research, 2010

[9] http://jp.github.com/domain-proler/ycombinator.html?2010

[10] http://techcrunch.com/2011/01/05/quora-surge/

[11] http://www.encoding.com/

[12] see video http://www.youtube.com/watch?v=n6l0kMLYP6c&eature=player_embedded

[13] http://www.chades.net/

[14] http://www.penn-olson.com/201%2/10/inographic-acebooks-amazing-growth/, http://blog.acebook.com/blog.

php?post=409753352130, http://socialmediatoday.com/dirktherabbit/162555/twitter%E2%80%99s-growth-doubles-

becomes-more-international

[15] http://www.reuters.com/article/idUS144602338520100818

[16] http://www.inormationweek.com/news/sotware/showArticle.jhtml?articleID=211300562

[17] http://www.gartner.com/it/page.jsp?id=497088

revolution not evolution-whitepaper

Documents