Transcript of a podcast with industry practitioners and thought leaders at The Open Group's Enterprise Cloud Computing Conference in San Diego.
Listen to the podcast. Download the podcast. Find it on iTunes and Podcast.com. Learn more. Sponsor: The Open Group.
Dana Gardner: Hi, this is Dana Gardner, principal analyst at Interarbor Solutions and you're listening to BriefingsDirect. Today, we welcome our listeners to a sponsored podcast discussion coming to you from The Open Group's Enterprise Cloud Computing Conference in San Diego, February, 2009.
Our topic for this podcast, part of a series on events and major topics at the conference, centers on cloud computing and its intersection with enterprise architecture. You might consider this a discussion about real-world cloud computing, because this subject has been often discussed across a wide variety of topics, with many different claims, and perhaps a large degree of hype.
We're going to be talking with a few folks who will bring cloud and its potential into alignment with what real enterprises do and will be expecting to do, in terms of savings and productivity in the coming years.
Here to help us sort through cloud computing in enterprise architecture, is Lauren States, vice president in IBM's Software Group; Russ Daniels, vice president and CTO Cloud Services Strategy at Hewlett-Packard (HP), and David Linthicum, founder of Blue Mountain Labs. Welcome to you all.
There's an early-adopter benefit in some technologies. I expect that that might be the case with cloud computing as well. But, in order for us to assert where cloud computing makes the most sense, I think it's important to establish what problem we're trying to solve.
Why don't we start with you, Dave? What are the IT problems that cloud computing is designed for, or is being hyped to solve?
Dave Linthicum: Thank you very much, Dana. Cloud computing is really about sharing resources. If you get down to the essence of the value of cloud computing, it's about the ability to leverage resources much more effectively than we did in the past. So, number one, it's really designed to simplify the architectures that we are dealing with.
Most enterprises out there have very complex, convoluted, and inefficient architectures. Cloud provides us with the ability to change those architectures around any business needs, as the business needs change, and expand and contract those architectures as the business needs require.
Gardner: What problem are we solving from your perspective, Russ?
Russ Daniels: Hi, Dana. For most enterprises today, most of what they are really interested in is exactly what was described. It's a question of, "How can I source infrastructure in a way that's more flexible, that allows me to move more quickly, and that allows me potentially to have more variable costs?"
Maybe I can provision internally for my average demand rather than peak demand, and then be able to take advantage of external capacity to handle those peaks more cost effectively.
We think all that's really quite important. There's something else that's going on that people tend to talk about as cloud, which has different implications and takes advantage of some of that same flexible infrastructure, but allows us to go after different problems.
Most enterprises today are trying to figure out, "How can I improve my efficiency? Rather than having capacity dedicated to each of the application workloads that I need to deliver to the business, can I flexibly bind the pools of resources, whether they are in my data center or in somebody else's?"
Gardner: Okay. Let's rephrase the question slightly for you, Lauren. What business problems are we solving with cloud computing?
Agile response
Lauren States: Thank you very much, Dana. I agree with both what Dave and Russ said. I think the business problem that we're trying to solve is how we can make IT respond to business in a more agile way. The opportunity that we have here is to think about, how to industrialize IT and create an IT services supply chain.
The combination of the technologies available today, the approaches that we're using in the underlying architecture, plus our collective experience gives us a chance to use cloud computing to realize the value of IT to an organization. We can stop having these conversations about, what is the additional cost that you are bringing in, why is IT separate, and why is it such a burden, and really integrate IT with business.
Gardner: As I mentioned, we also want to put this in the context of enterprise architecture. For organizations that see some potential in the cloud models that are emerging, are looking at new ways to develop software and source their services, and where they are located, and deployed in their production facilities, there probably also needs to be some preparation. Jumping in too soon might have some downside as well. Given we are in a tough economy, economics is very much top of mind.
When it comes to enterprise architecture, what do you need to do or have in place, in order to put yourself at an advantage or be in a good position to take advantage of cloud? Let's start with you, Dave.
Linthicum: Number one, you need to assess your existing architecture. Cloud computing is not going to be a mechanism to fix architecture. It’s a mechanism as a solution pattern for architecture. So, you need to do a self-assessment as to what's working, and what's not working within your own enterprise, before you start tossing things outside of the firewall onto the platform in the cloud.
Number two, once you do that, you need to have a good data-level understanding, process-level understanding, and a service-level understanding of the domain. Then, try to figure out exactly which processes, services, information are good candidates for cloud computing.
One of the things I found out implementing this within my clients is that not everything is applicable for cloud computing. In fact, 50 percent of the applications that I look at are not good candidates for cloud. You need to consider that in the context of hype.
Gardner: Lauren, from your perspective, what organizational management, technical underpinnings, and foundations might put you on a better position to leverage cloud?
States: Just building on what Dave said, I have a couple of thoughts. First, I completely agree that you have to have an aspirational view of where you are trying to go. And, you have to have a good understanding of your current environment, including simple things like knowing all the things in your environment and their relationship to each other. Lay out the architecture and develop the roadmap and the steps that you need to take to achieve cloud computing.
The other aspect that's really important is the organizational governance and culture part of it, which is true for anything. It's particularly true for us in IT, because sometimes we see the promise of the technology, but we forget about people.
In clients I've been working with, there have been discussions around, "How does this affect operations? Can we change processes? What about the work flows? Will people accept the changes in their jobs? Will the organization be able to absorb the technology? "
Enterprise architecture is robust enough to combine not only the technology but the business processes, the best practices, and methodologies required to make this further journey to take advantage of what technology has to offer.
The right environment
Gardner: Let's flip the question over a little bit at this point and look at what would not be a good environment to start embarking on cloud. Is there something you should not do or, if you are lacking something, perhaps be leery of in using clouds? Russ?
Daniels: It's very easy to start with technology and then try to view the technology itself as a solution. It's probably not the best place to start. It's a whole lot more useful if you start with the business concern. What are you trying to accomplish for the business? Then, select from the various models the best way to meet those kinds of needs.
When you think about the concept of, "I want to be able to get the economies of the cloud -- there is this new model that allows me to deliver compute capacity at much lower cost," we think that it's important to understand where those economics really come from and what underlies them. It's not simply that you can pay for infrastructure on demand, but it has a lot to do with the way the software workload itself is designed.
There's a huge economic value you can get, if the software can take advantage of horizontal scaling -- if you can add compute capacity easily in a commodity environment to be able to meet demand, and then remove the capacity and use it for another purpose when the demand subsides.
This is a real important problem. We know how to do that well for certain workloads. Search is a great example. It scales horizontally very effectively. The reason is that search is pretty tolerant of stale data. If some of the information on some of the nodes is slightly out of date, it doesn't really matter. You'll still get the right answer.
If you look at other types of workloads, high degrees of transactionality are critical. When you take an item out of inventory, you really only get to do that once. When you try to scale those things horizontally, you have real issues with the possibility of a node failure or causing a lock not to be released. That then creates some nasty back-operational process that has to be implemented correctly by your IT organization for everything to work.
It's the balance between what are the problems we are trying to solve and how well this particular architectural patterns match up to those. Every IT organization has to keep that in mind.
Gardner: While there's been quite a bit of hype around cloud, there is also a fair amount of naysaying about it here at the TOGAF 9 launch and the practitioners conference for The Open Group.
I've spoken to several people who really don't have a lot of favorable impressions of cloud. They seem to think that this is a way of dodging the IT department and perhaps bringing more complication and a lack of governance, which could then spin out of control and make things even worse.
So, what are some best practices that we could establish at this early juncture of how to approach cloud and bring it into some alignment not only with the business, but with the existing IT services and infrastructure? I guess this is our architecture question. Dave?
Set the policy
Linthicum: The first thing you need to do is to create, publish, and widely distribute the policy on cloud computing. Someone needs to figure out what it is, the value that it’s going to have for the particular enterprise, and the vision or the strategy or the approach that they need to leverage to get there.
The next thing you do is publish policies around cloud computing. Lots of my clients are building what I call rogue clouds. In other words, without any kind of sponsorship from the IT department, they're going out there to Google App Engine. They're building these huge Python applications and deploying them as a mechanism to solve some kind of a tactical business need that they have.
Well, they didn't factor in maintenance, and right now, they're going back to the IT group asking for forgiveness and trying to incorporate that application into the infrastructure. Of course, they don't do Python in IT. They have security issues around all kinds of things, and the application ends up going away. All that effort was for naught.
You need to work with your corporate infrastructure and you need to work under the domain of corporate governance. You need to understand the common policy and the common strategy that the corporation has and adhere to it. That's how you move to cloud computing.
Gardner: How do we know if companies are doing this right? Are there yet any established milestones or best practices? Clearly, we've seen that with other technology adoptions, we have certain signals that say, "Aha, we're doing something wrong. We need to reevaluate."
Any ideas, Lauren, about how companies would know whether they are doing cloud properly? What should they be getting in return?
States: That's a great question, Dana. Let me just take it from a couple perspectives.
First, we've looked at our own IT transformation within IBM to try to discover what were the activities we did to make sure that we could take out cost and reduce complexity. We feel that looking at the financial aspects helps drive an organization to a common goal.
In our company, we took $4 billion out of our IT infrastructure over the past five years, and that's part of our strategy for our common centralized functions. There's nothing like achieving a specific target to make an organization focus.
Our initial feeling is that you really have to get your arms around virtualization, so you can take out the capital expense and then have the real hard discussions around standardization.
You can reduce the complexity of the application portfolios, reduce the administration and support costs, and take a very serious look at your service management capability, so that you can get at the operations and implement the policies that you described, Dave, and continue to make progress.
I don't think that there's any completely done use-case out there that we can all look to and say, "Oh, that's what it looks like." It's starting to get clearer as we get more experienced. But, as I said, you need a specific target.
Our target was cost. Other organizations have other targets, like shared services or creation of new business models. You can get the whole organization clear and managed to that, and, as in our case, have some of these items be part of the executive compensation structure. Then, you have a better chance of achieving what the business is looking to do.
Gardner: I'm going to take the same question to you, Russ. What should companies be looking for if they do cloud properly? What are the returns?
Key questions
Daniels: This really starts with a couple of key questions. First, why do you have an IT function in your enterprise? Our answer to that is that you need to have someone responsible for the sourcing and delivering of services in a form that is consistent with the businesses needs.
The cloud just represents one more sourcing opportunity. It’s one more way to get services, and you have to think of it in the context of the requirements that the business has for those services. What value do they represent, and then where is the cloud an appropriate way to realize those benefits? Where is it the best answer?
It starts with that. To be able to answer that question is a significant issue for enterprise architecture. It means you have to have a pretty good model of what the enterprise is about -- how does it work, what are the key processes, what are the key concerns? That picture, that design of the enterprise itself, helps you make better choices about the appropriate way to source and deliver services.
There's a particular class of services, needs for the business, that when you try to address them in the traditional application-centric models, many of those projects are too expensive to start or they tend to be so complex that they fail. Those are the ones where it's particularly worthwhile to consider, "Could I do these more effectively, with a higher value to the business and with better results, if I were to shift to a cloud-based approach, rather than a traditional IT delivery model?"
It's really a question of whether there are things that the business needs that, every time we try to do them in the traditional way, they fail, under deliver, were too slow, or don't satisfy the real business needs. Those are the ones where it's worthwhile taking a look and saying, "What if we were to use cloud to do them?"
Gardner: Back to you, Dave. We've heard quite a bit about private clouds or on-premises clouds. On one hand, what's interesting about clouds is that you have a one size fits all. You have a common set of services or a common infrastructure, but lot of companies are interested in customization and differentiation and they also need to integrate with what's been running underneath the hood inside the organizations anyway.
Tell us how in your practice you see the role of a private cloud emerging, and particularly how that offsets this notion of it's all just a big common denominator cloud.
Linthicum: The value of private clouds is you can take what's best of cloud computing and implement it behind your firewall. So, you get around the whole control and security issues that people deal with -- and also the not-invented-here attitude out there.
The difficulty that people are running into right now is trying to figure out how to leverage cloud-computing environments when their existing architectures are so tightly coupled. They're coming to the conclusion that it's very difficult to do that. They can't use Amazon, Google, or other cloud-based services, because the information is so bound to the behaviors inside those systems and the systems are so tightly coupled. It's very difficult to decouple pieces of them and put them in the cloud. So, private clouds are an option for that.
You provide that on infrastructure that's shareable. You can expand it as you need it, and, as Russ mentioned earlier, give as many cycles as you need to particular applications that need them and take away the cycles from the applications that don't. Therefore, you end up with an architecture that's much more effective and efficient.
It also syncs up very well with the notion of service-oriented architecture (SOA) and is additive to an enterprise architecture and not necessarily negatively disruptive.
Gardner: Do you use your traditional enterprise architecture principles and skills when you construct your cloud on-premises or does it require something different?
It's enterprise architecture
Linthicum: You do. At the end of the day, it's enterprise architecture. So you're doing enterprise architecture and you're doing the sub-pattern of SOA. You're using cloud computing, specifically private clouds, as an end-state solution. So, it's nothing more than an instance of a solution in that matter.
That doesn't degrade it as far as having value, but you get to that through requirements, planning, governance, all the things that are around enterprise architecture -- and you get to the end-state. Cloud computing is in the arsenal of the technology you have to solve your problem, and that's how you leverage it.
Gardner: Lauren, in your presentation earlier today, you described some economic benefits that IBM is enjoying, or beginning to enjoy, as a result of some cloud activities. Tell us about the return-on-investment (ROI) equation. How substantial is it, and is it so enticing, particularly in today's tough economy where every dollar counts, that companies should be moving toward this cloud model quickly?
States: The ROI that we've done so far for one of our internal clouds, which is our technology adoption program, providing compute resources and services to our technical community so that they can innovate, has actually had unbelievable ROI -- 83 percent reduction in cost and less than 90-day payback.
We're now calibrating this with other clients who are typically starting with their application test and development workloads, which are good environments because there is a lot of efficiency to be had there. They can experiment with elasticity of capacity, and it's not production, so it doesn't carry the same risk.
Gardner: Let's just unpack those numbers a little bit. Are you talking about an on-premises cloud or grid that IBM has put together? Or is this leveraging outside third parties; a hybrid? What were you able to do those very impressive feats with?
States: This is an on-premises cloud. It’s at our data center in Southbury, Conn. There are three major levers for cost. First was virtualization. They virtualized the infrastructure. So, they cut down their hardware, software, and facilities cost.
They were able to put in significant automation, particularly around self-service request for the resources. We took out quite a bit of labor through automation, and that was what gave the substantial savings -- particularly the labor cost, from roughly 14 or 15 administrators, down to a couple or three. That's where we saved the cost.
Gardner: Russ Daniels, we have heard quite a bit from HP about transformation in IT, modernization, and consolidation. Do you see cloud as yet another facet of the larger topic, which is really IT transformation, and how big a piece of IT transformation will cloud end up being?
Daniels: It's very easy to get so excited about technologies that you forget about the fundamental challenges that every business face around change management, this concept of transformation.
Change management
Ultimately, if you want an organization to do something different than what it does, you have to take on the real work involved in that change management, getting people comfortable with doing things differently, moving out of their current comfort zones or current competencies, and learning new skills and new ways to do things. So, yeah, we think that that's a major component.
When we think about these kinds of applications of taking advantage of what sometimes is called a private cloud, what we tend to think of as an internal infrastructure utility. What we've discovered is that change management concerns -- getting people comfortable that their workloads will be adequately secure, that their needs will be met, when they are being delivered in the shared form -- has been a real challenge.
A lot of times the adoption of these technologies is slowed by the business' concern that they are going to end up at the end of the queue, rather than getting their fair share.
As you think about all of these opportunities, you have to source and deliver these services. It's critical that you build the right economic models and understand the trade-offs effectively.
If you have an internal shared capacity, you still, as a business, are taking on all of the fixed costs associated with the operation. It's different than if some third party is handling those fixed costs and you're only paying variable costs.
It's also true though that many times the least expensive way to do it is to do it for yourself, to do it internally, in the same way that, if you use a car 20 days a year, renting the car can be a real cost saver. If you use a car every day, it's typically better to just go ahead and buy the car, take on the maintenance responsibilities, the insurance cost, etc., yourself, because if you are using the car a lot over the course of that year, the costs amortize much more effectively.
Gardner: How does a cloud approach help organizations change more rapidly? There's some concern there that going to a cloud model, in this case a third-party cloud, might end up being another form of lock-in, and that you might lose agility. Public or private, what is it about a cloud model that makes your company more agile?
Daniels: Our view is that the real benefits, the real significant cost savings that can be gained. If you simply apply virtualization and automation technologies, you can get a significant reduction of cost. Again, self-service delivery can have a huge internal impact. But, a much larger savings can be done, if you can restructure the software itself so that it can be delivered and amortized across a much larger user base.
There is a class of workloads where you can see orders-of-magnitudes decreases in cost, but it requires competencies, and first requires the ownership of the intellectual property. If you depend upon some third-party for the capability, then you can't get those benefits until that third-party goes through the work to realize it for you.
Very simply, the cloud represents new design opportunities, and the reason that enterprise architecture is so fundamental to the success of enterprises is the role that design plays in the success of the enterprise.
The cloud adds a new expressiveness, but imagining that the technology just makes it all better is silly. You really have to think about, what are the problems you're trying to solve, where a design approach exploiting the cloud generates real benefit.
Gardner: The same question to you, Dave Linthicum. Public-private-hybrid: What is it about a cloud model that makes a company more responsive from a business outcomes perspective?
Key to agility
Linthicum: I don't think a cloud model inherently makes them more responsive. It's the fact that they're leveraging all kinds of technology, inclusive of cloud computing, as a mechanism to provide more agility to the enterprise.
In other words, if they're able to do that with external clouds to get applications up and running very quickly, with the security and the performance requirements still in line, design that into their enterprise architecture, and leverage the private clouds to get virtualization and get at resources in a shareable state among the various entities within the organization, they are able to share the cost. Then, they're going to be able to do IT better. That's what it's all about.
What we're looking to do is not necessarily reinvent or displace IT or throw out the old legacy stuff and put in this new cloud stuff. We're looking to provide a layer of good architecture and good technology on the existing things, as well as get back into the architecture and fix things that need to be fixed and provide good IT to address the business.
Gardner: There's an interesting confluence now with the harsh economic environment. We're looking at this cloud phenomenon largely as a cost benefit. Yes, do IT better, but there is a significant cost, better utilization, perhaps flexibility in services, and how even an IT organization runs itself.
Coming down to the end now. Do you agree, Lauren, that what's going to drive cloud into organizations and its use through a variety of models over the next couple of years is largely a function of cost?
States: Yes, cost will be a huge driver in this. Cost is a conversation that is very active in the C suite. The conversations on cloud have re-established some of the conversations with lines of business, because they are curious about how can they take out cost and achieve the agility that they're looking for.
But I'd also be mindful that there is an opportunity for us to drive innovation and economic growth with new business models, new businesses, new service deliveries, and new workloads. This will be something that large organizations look for, but it will unlock IT for many smaller organizations that don't have the resources within their organizations to provide these services to their constituents.
Gardner: Okay. Russ Daniels, same question. In an economic maelstrom, what are the economic drivers for cloud, and is that going to be the primary driver?
Daniels: I've not seen any time in the industry where the conversation between business and IT didn't have a significant cost component. Certainly, when the times become more difficult, that intensifies, but there's never a point at which that isn't an interesting question.
A few years ago, when Mark Hurd came in as our CEO, HP started to go through a very significant reduction in the cost of IT. Economic times were fine, but that was a very important focus.
A great opportunity
Cloud is relevant to that, but, as Lauren was saying, there is a great business opportunity as well. Every IT organization that's having those cost conversations would love to be able to have a value conversation, would love to be able to talk about how technology cannot just help control cost but can generate new business opportunities, open new markets, help the business gain share, improve the region and relationship that it has with its customers, and differentiate from its competitors better.
We think that cloud is really very suitable for many of those kinds of concerns. The ability to understand better what your customers care about and to tailor your offerings to those is something the cloud is particularly well suited to do, and allows the business to have a different conversation with IT, and one that the IT organization yearns for.
Gardner: This is probably a question that would be good for an entire hour-long additional podcast, but Dave Linthicum, on this notion of additional business and revenue, innovative processes that can create new wealth creation, what do you see as the top opportunities and using cloud in that regard, in creating new business?
Linthicum: Consulting companies are benefiting from it right now. They're getting a wealth of new business based on a new paradigm coming in. Lots of people are confused about how the paradigm should be used and they are building methodologies and those sorts of things.
The primary cloud component and the benefit that businesses will get will be the ability to leverage the network effect from the cloud-computing environment. In other words, they'll benefit if they're willing to engage infrastructure that's outside their firewall that they don't control in their host, and use that as a service -- in essence rent it -- and then they're able to see some additional value that the Internet web can bring, such as the social networking things and the ability to get analytical services.
I thought you put it great, saying that ultimately people are going to realize huge cost savings based on the ability to leverage what they have in a much more cost effective way. That's really where things are going right now.
So, I think the consultants are going to make the additional money and I think the hardware and software vendors are going to make some money, even though cloud computing will displace some hardware and software.
People are retooling right now and actually buying stuff, especially cloud providers that are building infrastructure. Then, it will come down to the core benefits that are being built around the private clouds and the public clouds that are being leveraged out there.
Gardner: So, it's perhaps a win-win-win just at the time in the economy when we need that. We'll have a win perhaps in being able to further leverage existing resources and assets and architectural methods and processes, further reduce the overall operating costs as a result of cloud, and at the same time, conjure up new business opportunities and models and ways of driving income across ecologies of players in ways we hadn't before.
That's a fairly auspicious position for cloud computing, and that's perhaps why we are hearing so much about it nowadays.
I want to thank our panelists. We have been joined by Lauren States, vice president in the IBM Software Group; Russ Daniels, vice president and CTO cloud services strategy for Hewlett-Packard; and Dave Linthicum, founder of Blue Mountain Labs.
Our conversation comes to you today through the support of The Open Group from the 21st Enterprise Architecture Practitioners Conference and Enterprise Cloud Computing Conference in San Diego in February, 2009.
I'm Dana Gardner, principal analyst at Interarbor Solutions. Thanks for listening and come back next time.
Listen to the podcast. Download the podcast. Find it on iTunes and Podcast.com. Learn more. Sponsor: The Open Group.
Transcript of a podcast with industry practitioners and thought leaders at The Open Group's Enterprise Cloud Computing Conference in San Diego, February, 2009. Copyright Interarbor Solutions, LLC, 2005-2009. All rights reserved.
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