Is the Tide turning against Cloud Computing?

Posted on June 10, 2009

By George M. Tomko:

As the hype continues regarding “Cloud Computing”, there are now tales from those who have recently experienced the current offerings of these services.

Also, there are more and more seasoned, veteran practitioners of information technology (“IT”) that have been at conferences, had prosepctive suppliers call on them and, in a number of cases, carefully “dipped their toe” in the water on a self-contained project.

But, at the end of the day, does anyone really know what cloud computing really is? I am sure this video with a number of well-known names will clear it up for you:

Further evidence that the hype is doing little to clarify or capture the mind share of IT leaders, except, perhaps for curiosity, comes from Tim Anderson and his recent post “Cloud Computing Survey: More Fog Than Cloud” :

“…the survey was undermined by the fact that most of those surveyed admitted to not knowing what cloud computing is. The reason is not ignorance, but the many and various ways the term is used. The common strand is that it is something to do with the internet, but even that is undermined if we describe virtual on-premise servers as a “private cloud”.


Looking at it another way, as James Urquhart recently posted: “Cloud computing is an operations model, not a technology”.

And, for now, we need to leave it there. Rather than being dazzled with the details of the underlying technologies that are being strung together to form new product offerings, we should be focusing on what this means for fundamental computer operations.

The first thing that people seem to be realizing is that the vendor-supplier relationship has some new (and perhaps re-ignited old) dynamics that are now highly-sensitised. One of the first that comes to mind is the issue of “trust”.

For IT people, trust is built on a number of foundational elements. In some ways, there is an unspoken knowledge between technically-oriented individuals about whether the person they are dealing with has been-there, done-that, in terms of delivering the “goods” on a project or two. More respected are those that have had to live with their “creations”. That is, they had to stick around and live with the results by supporting things post go-live. In other words, the solution had to work. It is great when it happens that the person(s) you are dealing with on the other side know what they are doing and can back it up with the real-world cuts, scrapes and bruises of putting these solutions in place.

When it comes to something like cloud computing, though, you are not only reliant on others to deliver something (like a product or solution). You are going to be entrusting some very valuable assets (i.e. data) behind the unknown bastions of the cloud sourcer’s world. [I think I just "coined" a phrase: "cloudsourcer".]

As Bruce Schneir put it in his recent blog post:

“IT security is about trust. You have to trust your CPU manufacturer, your hardware, operating system and software vendors – and your ISP. Any one of these can undermine your security: crash your systems, corrupt data, allow an attacker to get access to systems. We’ve spent decades dealing with worms and rootkits that target software vulnerabilities. We’ve worried about infected chips. But in the end, we have no choice but to blindly trust the security of the IT providers we use.”

Of course, the simple recognition that trust is a key factor is not enough. Those of us who have put together and been responsible for large-scale outsourcing contracts know a bit about how bad things can get on the inside of these service delivery “factories”. It is simply a nightmare management issue.

Anyone who thinks that taking out your credit card and ringing up Amazon to stand up some servers real quick probably feels pretty good about not having to traverse the enterprise gauntlet for capital or project funds and their project is well on its way.

But, unless you are a start-up or other entity that has little to no legacy applications, integration issues, highly-sensitive data, multi-national compliance issues, customer service level requirements that you can guarantee to your own customers, etc., cloud computing is going to be something that you nibble around the edges on for a long time. After a while, there will be settling of standards and the market will judge the winners and losers.

But making a full-blown decision now to put it all on the line is simply out of the question. It is not about the paint not being dry. The wall hasn’t even been sanded and primed and is not even ready for paint.

To continue Bruces Schneier’s thoughts:

“Trust is a concept as old as humanity, and the solutions are the same as they have always been. Be careful who you trust, be careful what you trust them with, and be careful how much you trust them. Outsourcing is the future of computing. Eventually we’ll get this right, but you don’t want to be a casualty along the way.”

Is the tide turning against cloud computing? In its present form, I think “Yes”. Already, we are seeing new morphing of the idea of the cloud computing construct known as “SaaS” (Software-as-a-Service). Now, of course, we see “CaaS” for computing-as-a-service as a new marketing spin.

How many names can we give to the old idea of time sharing, network computing, etc.? The answer is probably “endless”. The bottom line is that customers are currently dealing with a curiosity that will someday have to be a bulletproof, industrial strength for of outsourcing. For that, it has a long, long way to go.

I have a lot more to say on these matters as you will see in future posts. Our companion blog, CIO Rant, is also full of some deeper discussion into some of these issues. I invite you to take a look.

In any case, I would greatly appreciate comments, which are easy to post.

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  • Too much attention is paid to the term "cloud computing". Cloud Computing is the current buzz term and half the reps don't even understand it. We have been able to successfully leverage the cloud for 50-60 perecent of our processes and have been doing it for over 4 years now.

    As a mid size business we are able to leverage data center solutions and "cloud" solutions. Our data center solutions end up becoming a "cloud" solution for businesses we outsource business processes to.

    The greatest benifit we have gotten out of "cloud" solutions - Leverage the platform or product and build innovative solutions on top of it without having to worry about hardware infrastructure.

    We utilize:
    Salesforce.com, Force.com (Salesforce's platform), Workday, Eloqua, Google apps, apttus, ADP and Tangier. Each has its own benifits and all have had a solid delivery in regards to uptime. Most deliver features and functions every 2-3 months.

    Douglas Menefee
    CIO
    Schumacher Group
  • Just about anything that gets over-hyped draws instinctive skepticism from the grizzled-vet crowd, and I agree with some of the comments that this may be natural and good and part of any potentially-disruptive, exciting new technology or model entering the market.

    Sure - people are confused, skeptical, have imaginary as well as legitimate concerns. But wasn't that true in the early days of client-server? or the internet? open source? web 2.0? SaaS apps? I'd wager that it might even go back to disruptive technologies like PC word-processing although I wasn't an IT person back then. As the skeptics raise questions, the proponents will attempt to address them (either through debate or through refinement of the technology/model) and it will succeed..... or fail. We'll see.

    And there may be more of an assumption of "black and white" opinions amongst cloud proponents and skeptics. I'm personally incredibly optimistic about the value and impact of cloud computing, but also completely agree that no giant enterprise is going to flip a switch and go all-cloud any time soon for many of the reasons you mention.

    Thx for a good post.

    -Lance
  • The conversation has been great but a few things should be noted. I think that the presumption that folks lining up against what has been a marketing "mess" -- you know, those looking for the steak in all the sizzle -- are grizzled veterans in their own right. In terms of operations, standards, etc. We know how to run data centers and found out a long time ago that people that specialize in doing so can do it better, faster, cheaper. I was an early ASP adopter and also negotiated and presided over global outsourcing agreements with contract values in the hundreds of millions. As for job security, what IT person in their right mind feels job secure? Most became mercenary years ago driven by big demand spikes (i.e. year 2000) that put them at odds with a differential between the market and what employers were willing to pay. If anything, many would welcome a shift to create a new market for hard to find skills.

    Having said all of that, the value proposition has not been clearly stated and resonated. Right now, it's a reduce cost play and a buy as a service instead of having an asset on your books. Security is HUGE for companies that deal with personal data, health care, military (i.e. ITAR), etc.

    So, if someone wants to offer me an outsourcing deal and lower my costs by connecting data centers from varying suppliers together, running grids, enabling me to ARC and RRC storage and processing (virtual servers) on the fly and call it a "cloud" so be it. But, at the end of the day they slapped a label on everything they already had in the first place.

    And as the customer, I get to have that resold to me. In some cases, I may have already paid for it once before.
  • Hey George.

    As I responded to you in Twitter, I have a little different perspective. I don't see how the Cloud can be considered to be turning when it's barely even started to come in. ;)

    What do I mean?

    I think I summarized it fairly well in my blog post here titled "Most CIO’s Not Sold On Cloud? Good, They Shouldn’t Be…": http://www.rationalsurvivability.com/blog/?p=982 <-- I do not think that means what you think that means ;)

    Good food for thought.

    /Hoff
  • Jeff Beardsley
    I'm much in agreement with Peter's perspective. I really wonder why people get so religiously wrapped around the axel, either pro or con, when it comes to cloud. It's a tool folks - use it where it's appropriate, and don't use it where it's not.]

    I believe the fundamental difference of cloud computing isn't the technology per se, but that cloud is a completely different economic/cost model, and that difference drives (when properly/efficiently used) an *evolutionary* architectural/operational model. Of course there are some additional differences to more traditional models as Peter points out (security, data ownership, location, SLAs, etc). However I frequently wonder when I hear all the complaining about the additional time/risks/costs to ensure compliance, data integrity & security issues are taken care of in the cloud - how many were also performing those same steps on their internal systems, and at what cost? I think for too many, cloud computing would *force* them to take steps in those areas they've ignored in their own shops, and that's when the additional costs come in - costs that should have been there all along in reality. Having been on both sides, I can say SaaS and cloud vendors get asked those questions every single day, and they can't just pay lip service to the answers.
  • Drew
    As noted above, the BIG concern about cloud computing is SECURITY most importantly job security for traditional IT shops. Suddenly they aren't necessarily the gatekeepers for the corporation. For new tasks especially they have to compete with outsiders who don't have legacy costs or mindsets. Cloud computing isn't going to sweep away the old ways in a year or two. After all GM still makes Buicks right? Don't they?
  • Steve Friedberg
    Points well taken all around, folks. I'd refer you to the McKinsey report (yes, I know), which insists on differentiating between the cloud and cloud services. Let's clarify and know exactly what we're talking about.

    In addition, the *hype* has been significant, and George's post is one more sign that we may be progressing toward the "Trough of Disillusionment." This is not a bad thing; someone needs to be crying loud and long that too many emperors in this space ain't wearing no clothes.

    But let's not lose sight of cloud computing's proven benefits for any number of companies. The ability to design, implement and operate a system in a fraction of the time and cost is an ability that must not be overlooked, hype notwithstanding.

    The message, I guess, is that companies should take all this stuff with a grain of salt, but not rule it out. Depending on their needs, ranging from Infrastructure as a Service (IaaS) in a production environment to Data Warehousing as a Service (DaaS), they should do their due diligence and see if it makes financial and operational sense. If it does, cloud computing should be heartily embraced. If not, move on. Just like any other technology.
  • I'm seeing a huge and disturbing backlash here, more disturbing (to me) than the excessive hype surrounding cloud computing. As people have long pointed out on Slashdot, one oh-so-typical reaction to a new technology or approach is for industry veterans to loftily claim that they've been doing it for years (this happened, for example, with object-oriented programming, in spades).

    But cloud computing is NOT just another name for ASP or timesharing or network computing, and it's not by any means limited to SaaS. When BusinessWeek publishes a major article on the phenomenon (last week) and gets it COMPLETELY wrong, that tells me that the trend hasn't come close to any kind of peak, much less having turned the tide.

    Cloud computing's compelling case (sorry for the alliteration) is one of COST reduction and elasticity and flexibility, not one of sudden new functionality per se. BusinessWeek got this entirely wrong. It honestly isn't about "taking out your credit card and ringing up Amazon to stand up some servers real quick", either. eHarmony recently did a project where they took a monthly expense of $5K down to $1.5K with cloud computing. (http://bit.ly/z7uQy). Here's another study of a startup using cloud approaches and reaping a lot of benefits: http://bit.ly/4vQX9D

    None of that is to say that there aren't legitimate concerns and issues to be worked through: security, avoiding vendor lock-in, establishing process, etc. These are real and large. But I honestly don't understand when people claim that cloud computing is just the same old stuff with a different name.
  • BobMarche
    Thanks for the useful info. It's so interesting
  • I agree we are seeing excessive hype. That's hard to argue. The missing link for any cloud deployment is applications that can take advantage of elasticity. Without elasticity, cloud computing is just another way to lease servers or manage virtual machines.

    But elasticity is real work. You legacy applications were not built to scale across a variable number of servers. Most likely they run on a single machine. If they scale at all, it is across a fixed set of carefully configured servers.

    For most business applications, the value of hour-by-hour scale up and scale down are low. The applications you have are valuable enough to run in a fixed deployment, or you wouldn't have them. The potential savings aren't going to be enought to drive the required investment to make legacy apps eslastic.

    That sounds like bad news, but it will work out in the long term. Slowly but surely, customers are going to demand that new applications and platforms be elastic from the start. Even if they don't deploy them in a private cloud, it is going to start out as a checkbox in the evaluation project and eventually grow into a real deployment requirement.

    So cloud computing will work in the long run. But there is not going to be a tornado of adoption in the short term. The economics won't justify it.
  • Another way I view this cloud computing model, it evolved from the outsourcing madness as no one wants to build out and maintain data centers and the IT personnel to run them. Instead, they pay as they go using the facilities of a far and distant data center since it is cheap and one gets what they pay for.

    Security is a HUGE issue and here are some of the issues I see when computing, data, authentication/authorization to access the data and ownership:

    1. Privileged user access. Sensitive data processed outside the enterprise brings with it an inherent level of risk, because outsourced services bypass the physical, logical and personnel controls big time. IT shops exert over in-house programs and imagine the legalities if a serious breach occurred and your "cloud" is in India or China, who knows where!

    2. Data location. When you use the cloud, nobody knows exactly where the data is hosted. In fact, you might not even know what country it will be stored in.

    2. Regulatory compliance. Customers are ultimately responsible for the security and integrity of their own data, even when it is held by a service provider. Traditional service providers are subjected to external audits and security certifications. See #1 above who owns your data and where is it located physically?

    Tons more of security issues involved and everyone seems hell bent to gravitate and adopt this model which is gravely wrong. Executives never see the ramifications of serious security breaches, loss of control over computing and the data that pins the foundation of their company.

    George Moraetes, CISM, CGEIT
    Information Security Executive
    http://www.moraetes.com
    Twitter, AIM, MSN & Yahoo IM: TriumphCISO
  • I wholeheartedly agree call it ASP, call it OnDeman computing, call it virtual computing or a big puffy Cloud but whatever you call it, stop trying to shove it down my throat! Look SOME people will give up their destops but you will never get the numbers these "visionaries" are claiming. It isnt going to happen. It didnt work when they tried to call it ASP 14 years ago and it isnt going to now.
    I consider myself to be a leader in embracing technologies. The cloud can only serve a small niche market and that market is already saturated by app vendors who have got it right and have already been doing it a long time . (SAP, ADP, etc.) The only ones who are making money with cloud are the marketing guys coming up with the names for this stuff.
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