How to Avoid the Hidden Costs of Cloud Computing

We all know the conventional wisdom about cloud computing: it's cheap, fast and easy. But is it really that much cheaper? Or is it simply optics that make it appear cheaper?

Optics can absolutely change your perception of the cost of something. Just think about your morning jolt of coffee. $3.50 for a no-foam, half-caf, sugar-free vanilla latte doesn't seem that expensive. It's a small daily expense when viewed by the drink. It appears even cheaper if you pay for it with a loyalty card where you don't even have to fork over the dough and the vanilla shot is free. But what if you bought coffee like IT buys technology? You would pay for it on an annual basis. That $3.50 latte would now be about $900/year. For coffee? How many of you would go for that deal? That's optics and it plays right into the marketing hands of the public cloud services your business is consuming today.

But optics aside, is that $99/month per user SaaS application just another $20,000 per year enterprise application? Is that $0.25 per hour virtual machine just another $85 per year hosted VM? No, it's not the same. Because the pricing models are not just optics but an indication of the buying pattern that is possible. If you buy it the same way you do traditional IT, then yes, the math says, there's little difference here. The key to cloud economics is to not buy the cloud service the same way you do traditional IT. The key to taking advantage is to not statically and rotely consume the cloud. Instead, consume only what you need when you need it — and be diligent about turning off when you aren't.

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Are You Like Oracle When It Comes to the Cloud?

Oracle makes itself an easy target for the ire of the cloud community when it makes dumb, cloudwashed announcements like last week's supposed IaaS offering. But then again, Oracle is just doing what it thinks it takes to be in the cloud discussion and is frankly reflecting what a lot of its I&O customers are defining as cloud efforts. 

Forrester Forrsights surveys continue to show that enterprise IT infrastructure and operations (I&O) professionals are more apt to call their static virtualized server environments clouds than to recognize that true cloud computing environments are dynamic, cost optimized and automated environments. These same enterprise buyers are also more likely to say that the use of public cloud services lie in the future rather than already taking place today. Which fallacy is more dangerous?

The latter is definitely more harmful because while the first one is simply cloudwashing of your own efforts, the other is turning a blind eye to activities that are growing steadily, and increasingly without your involvement or control. Both clearly place I&O outside the innovation wave at their companies and reinforce the belief that IT manages the past and is not the engine for the future. But having your head in the sand about your company's use of public cloud services such as SaaS and cloud platforms could put you more at risk.

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EMC Gathers Its Cloud Assets - Will Developers Come Aboard?

It looks that EMC has finally admitted it needs a better approach for courting developers and is doing something significant to fix this. No longer will key assets like Greenplum, Pivotal, or Spring flounder in a corporate culture dominated by infrastructure thinking and selling. 

After months of rumors about a possible spin-out going unaddressed, EMC pulled the trigger today, asking Terry Anderson, its VP of Corporate Communications, to put out an official acknowledgement on one of it its blogs (a stealthy, investor-relations-centric move) of its plans to aggregate its cloud and big data assets and give them concentrated focus. It didn't officially announce a spin out or even the creation of a new division. Nor did it clearly identify the role former VMware CEO Paul Maritz will play in this new gathering. But it did clarify what assets would be pushed into this new group:

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2013 Cloud Predictions: We’ll Finally Get Real About Cloud

 

As the end of 2012 approaches there is one clear takeaway about the cloud computing market — enterprise use has arrived. Cloud use is no longer solely hiding in the shadows, IT departments are no longer denying it’s happening in their company, and legitimate budgeting around cloud is now taking place. According to the latest Forrsights surveys nearly half of all enterprises in North America and Europe will set aside budget for private cloud investments in 2013 and nearly as many software development managers are planning to deploy applications to the cloud.

So what does that mean for the coming year? In short, cloud use in 2013 will get real. We can stop speculating, hopefully stop cloudwashing, and get down to the real business of incorporating cloud services and platforms into our formal IT portfolios. As we get real about cloud, we will institute some substantial changes in our cultures and approaches to cloud investments. We asked all the contributors to the Forrester cloud playbook to weigh in with their cloud predictions for the coming year, then voted for the top ten. Here is what we expect to happen when enterprise gets real about cloud in 2013:

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2012 Cloud Predictions – Winners & Losers

The year 2012 brought a significant amount of growth in enterprise use of cloud services but did it fulfill our expectations? With just five weeks left in the year, it’s time to reflect on our predictions for this market in 2012. Back in November 2011 we said that the cloud market was entering a period of rebellion, defiance, exploration, and growth, not unlike the awkward teenage years of a person’s life. The market certainly showed signs of teen-like behavior in 2012, but many of the changes we foresaw, it appears, will take several years to play out.

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Q: Which Apps Should I Move to the Cloud? A: Wrong Question

Out of all the inquiries I get from Forrester enterprise clients, the above question is by far the most common these days. However, the question shows that we have a lot to learn about true public cloud environments. 

I know I sound like a broken record when I say this, but public clouds are not traditional hosting environments, and thus you can't just put any app that can be virtualized into the cloud and expect the same performance and resiliency. Apps in the cloud need to adapt to the cloud - not the other way around (at least not today). This means you shouldn't be thinking about what applications you can migrate to the cloud. That isn't the path to lower costs and greater flexibility. Instead, you should be thinking about how your company can best leverage cloud platforms to enable new capabilities. Then create those new capabilities as enhancements to your existing applications.

This advice should sound familiar if you have been in the IT business for more than a decade. Back in 1999 we did the same thing. As the Web was emerging, we didn't pick up our UNIX applications and move them to the web. We instead built new web capabilities and put them in front of the legacy systems (green screen scrapers, anyone?). The new web apps were built in a new way - using the LAMP stack, scaling out, and being geographically dispersed through hosting providers and content delivery networks. We learned new programming architectures, languages, and techniques for availability and performance. Cloud platforms require the same kind of thinking.

Sure cloud platforms build off the web generation - we still scale out via load balancing, HTML and Javascript are key components, and app servers and databases play key roles - but what's different this time are two key factors that demand your attention:

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You’re Running Out Of Excuses To Not Try Microsoft Windows Azure

If you have dismissed Microsoft as a cloud platform player up to now, you might want to rethink that notion. With the latest release of Windows Azure here at Build, Microsoft’s premier developer shindig, this cloud service has become a serious contender for the top spot in cloud platforms. And all the old excuses that may have kept you away are quickly being eliminated.

In typical Microsoft fashion, the Redmond, Washington giant is attacking the cloud platform market with a competitive furor that can only be described as faster follower. In 2008, Microsoft quickly saw the disruptive change that Amazon Web Services (AWS) represented and accelerated its own lab project centered around delivering Windows as a cloud platform. Version 1.0 of Azure was decidedly different and immature and thus struggled to establish its place in the market. But with each iteration, Microsoft has expanded Azure’s applicability, appeal, and maturity. And the pace of change for Windows Azure has accelerated dramatically under the new leadership of Satya Nadella. He came over from the consumer Internet services side of Microsoft, where new features and capabilities are normally released every two weeks — not every two years, as had been the norm in the server and tools business prior to his arrival.

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The State Of The Cloud Market — SVForum

Curious about where we are in the development of the cloud computing market? Here is my opening keynote from the 2012 SV Forum in Santa Clara, CA.

http://www.youtube.com/watch?v=yXtb2yBbCzo&feature=share&list=PLGl_aAgm1...

Oracle Continues to Make Cloud Progress

Well if you're going to make a dramatic about face from total dismissal of cloud computing, this is a relatively credible way to do it. Following up on its announcement of a serious cloud future at Oracle Open World 2011, the company delivered new cloud services with some credibility at this last week's show. It's a strategy with laser focus on selling to Oracle's own installed base and all guns aimed at Salesforce.com. While the promise from last year was a homegrown cloud strategy, most of this year's execution has been bought. The strategy is essentially to deliver enterprise-class applications and middleware any way you want it - on-premise, hosted and managed or true cloud. A quick look at where they are and how they got here:

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May Your Best Laid Plans Not Go To Waste Any Longer — Selling AWS Reserved Capacity Is A Killer Innovation

From the company that brought shelf space retail thinking and pork belly economics to the world of Internet hosting comes yet another mechanism from another market putting them even further ahead of the competition. Amazon Web Services' new Reserved Instance Marketplace takes the pain of poor guesswork out of cloud capacity planning. The financial side of cloud computing is continuing to get further and further from corporate enterprise IT economics, and this is a change you definitely should embrace.

I hate looking at my AT&T Wireless bill each month, because it tallies up all my unused rollover minutes. Sure, it might be nice to know I have them just in case I decide to have a marathon long-distance conversation, but realistically, it's a reminder that I am overspending on talk time. Even worse is when it reminds me of the expiration date for those minutes. They are basically throwing my inefficiencies in my face. Thanks, AT&T. :(

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