We found that large enterprises are generally leaning towards private clouds while start-ups and SMB companies are rapidly adopting public clouds. Surprisingly, some SMBs have up to 75 percent of their business services running in the public cloud. Our data shows that SMBs are watching and learning more about the cloud than large enterprises. Most interesting, they are deploying mission-critical applications twice as fast as large enterprises:
In our recent Battle in the Cloud debate forum, I made the case (based on my 70+ hours of one-on-one conversations with large enterprise IT leaders) that corporate data centers are not going away and that cloud computing is not the end of IT. The idea that someday we’re going to throw a switch and move everything out to an external cloud is neither a practical nor a realistic scenario, particularly for large enterprises; it just isn’t going to happen in the foreseeable future. Many industry observers believe that companies will move towards using a combination of private and public clouds in a hybrid architecture based on their business needs and workload characteristics.
In their report Private Clouds: A Taxonomy and Considerations, research firm Saugatuck views this debate on private vs. public clouds “as a carnival sideshow: attention grabbing and entertaining, but having no positive impact on the spectator (customer). The Private Cloud is neither a panacea for all IT ills, nor a thinly disguised evil to be carefully avoided in all situations.”
While the carnival sideshow goes on, some companies are already putting serious effort and investments into understanding, evaluating, piloting, and deploying private (and hybrid) cloud technologies. One such company is eBay, the online auction and e-commerce giant. Recently, eBay signed up to test the Microsoft’s Azure appliance. The Azure appliance is Microsoft’s move toward bringing the public Azure instance to corporate datacenters. This approach is in alignment with Microsoft’s “Software plus Services” strategy. In my recent interview, Microsoft’s Matt Thompson said: “The Azure appliance is essentially a cloud in a box that large government agencies and enterprises can use within their own firewall to run sensitive applications that they can’t otherwise run in a public cloud due to security, data privacy, compliance, or regulatory reasons. In fact, the Azure appliance is a mobile container that can be shipped around easily and can be used to augment an existing datacenter.”
James Barrese, eBay’s VP of Technology on Private and Hybrid Cloud Architectures Over the years, eBay has built a very large world-class mission-critical platform that is highly scalable and available. Today, the eBay platform handles 200 million live listings and 60 billion merchandizing volume. eBay incorporated many elements of cloud technologies into their platform even before anybody had even heard of the term “cloud computing.” Now eBay is upgrading their platform design to take advantage of the latest innovations in private and public clouds. “The best financial architecture is a hybrid solution,” James Barrese, VP of Technology at eBay, states. “You can get significant savings from placing fixed workloads on owned-infrastructure (private clouds) that needs to be locked down for security and privacy reasons and combining that with variable workloads and pay-as-you-go model of vendor-supplied public clouds.”
Without a doubt, Barrese and his team are moving to hybrid cloud architectures by taking advantage of the specific benefits of both private and public clouds. They are pushing out to public clouds variable workloads that are subject to seasonal variations (such as call volumes in customer service) while using steady-state mission-critical workloads to maximize resource utilization of internal infrastructure.
“Based on my math, the private cloud is very compelling,” says Barrese. “Because of the size and scale of my infrastructure, I can drive down costs. If you know your workload, you can financially justify your own private cloud. If you are a very small shop, the public cloud might be appealing, but as you get bigger, the economics of an owned solution is very attractive. If you are big and also have a highly variable workload, the hybrid cloud is the way to go,” Barrese adds. “The decision depends on your business, your size, scale, and your workload characteristics. People confuse the argument based on which shape and size of business they are running.”
The public cloud is a better fit for applications that are new and innovative in nature. It makes perfect sense in situations where you can’t predict how much infrastructure you will need or don’t have a reasonable idea of how successful the whole initiative is going to be. For an example of how eBay is experimenting with new and innovative ideas, see http://garden.ebay.com. “Start out your innovation in a public cloud and if it turns out to be wildly successful and you get to a certain scale, then it could make economic sense to bring it back in-house,” says Barrese. You may not want to spend the time and effort to replatform it and retool the application when you bring it back in-house. So make sure you plan your infrastructure such that you can move your workloads easily between the public to the private environments.
However, it isn’t as easy as it sounds in practice. It’s still in the very early stages and the technologies are all very new and at varying levels of maturity. There isn’t enough standardization to make an interoperable cloud ecosystem a reality. (See my blog post on OpenStack: Will it Prevent Cloud Mono Cultures.) “You need a lot of skills and expertise to pull it off,” says Barrese. “There are very few vendors that can handle the size and scale of eBay infrastructure across multiple data centers and fault domains with the right architecture. We have to partner with the vendors and co-engineer the solution. Importantly, you need to bet on a vendor platform that has enough critical-mass and customers so it becomes cost-effective for the vendor to be in business.”
Microsoft and eBay: Partners in co-engineering a private Azure solution eBay researched the market and vendor solutions (See also my discussion with start-up company Nimbula’s VP of products on their private cloud solution) extensively before landing on the Microsoft Azure appliance. Because the technologies are so new and because both eBay and Microsoft are doing this for the first time, Barrese believes that they really need a joint engineering effort to build out a private cloud that meets the size, scale, mission-critical needs of the eBay platform. There is a good complementary partnership between eBay and Microsoft on this initiative. eBay has lots of expertise in high-volume, mission-critical, scale-out web platforms, and Microsoft has operating systems, Azure, and distributed data center expertise. eBay sees that Microsoft has a huge opportunity to create the right eco-system by leveraging their partners and ISVs in building the critical mass that could allow larger companies to run hybrid cloud architectures. “Microsoft has the right expertise and have made the right technology and architecture decisions,” Barrese concludes.
Like many large enterprises, eBay has a heterogeneous infrastructure and their opportunity is to apply their own engineering to build out a cloud management layer a little up the cloud stack that provides abstraction and governance capabilities and an adapter architecture that provides a “single pane of glass” for managing all the cloud sub-environments.
Key Takeaways This is a very exciting time for the industry. The shift to cloud computing is very real. It’s a fundamental technology change. Of course there’s hype, but there are also real benefits. Cloud reality is catching the hype. Companies should make plans to capitalize on the cost savings, business agility, flexibility, and time-to-market. They can get business agility at costs that are unthinkable without cloud computing. So cloud leaders act now!
Nevertheless, there are several engineering challenges while implementing true enterprise-scale private and hybrid cloud solutions. Since these are early days and the technologies are still not mature, there is considerable technical and execution risk. Consider the top 5 cloud strategies for CIOs and temper your implementations so you don’t introduce unnecessary business risk until you have proven out the solutions.
To hear the summary of the research and other related topics, join us at the “Leaders in the Cloud” Webcast (co-hosted by Ness Technologies) on September 16th, 2010 at 11:00 am EST.
SandHill.com thanks James Barrese of eBay for sharing the leading edge work they are doing with private and hybrid clouds.
Kamesh Pemmaraju heads cloud research at Sand Hill Group and he helps companies—enterprises and technology vendors—accelerate their transition to the cloud. He welcomes your comments, opinions, and questions. Drop in a line to kamesh@sandhill.com. For updates on news, views, interviews, webcasts, events, and blog posts, follow me on twitter @kpemmaraju.