You’ll be happy to know that a veteran VC believes that cloud computing is here to stay. Given that I’ve blogged about issues emerging in cloud computing, you might think I’d be rebutting this view. Not so; I’ve never suggested that cloud computing would go away, but I have said that “everything will move to the cloud” is also nonsense. I’ve been trying to get enterprise insights on why they use the cloud, and the results may not be as definitive as I’d like, but they’re interesting.
Let’s start with some basic comments on cloud economics. Enterprises tell me that if they compare the cost of a single VM in their own data center to a VM instance in the cloud, each in the context of actual usage, the latter will cost between 7% and 13% more. Where enterprises have virtualization in their data centers, they can achieve nearly the same economies of scale as a cloud provider, and of course the cloud providers have to earn a profit, so they mark up their services. A total transformation to the cloud would increase costs, even not considering the cost of making legacy applications run there.
OK, then, what we’re seeing is a “partial” transformation. What were, and are, the specific shifts in computing that have led to cloud adoption? Where are those trends taking enterprises?
One early trend driving cloud adoption was server consolidation. Back in the year 2000, enterprises said that about 19% of their servers weren’t in the data center, they were scattered around in departments, branch offices, and so forth. I couldn’t get universal data on utilization, but those companies who offered insight into just what usage levels these departmental resources experienced indicated that the total utilization was less than 30%. In addition, the cost of maintaining these decentralized servers was roughly double what was spent supporting servers in the data center. No wonder enterprises saw the cloud as an opportunity to save some money. However, by 2012, enterprises indicated that server consolidation was no longer a meaningful driver of their cloud growth.
The next driver has proved to be more durable. Workload variability has been contending for the number one driver of cloud computing growth since 2012 (we’ll get to the other contenders later). The problem here is familiar to CIOs; when there’s a radical difference in workload over time, peaks and valleys in application usage, it’s essential to size resources for the peaks to avoid congestion and QoE issues at the very times you don’t want anything to go wrong. How do you do that with capital equipment in your data center? In the cloud, capacity elasticity is a given.
A closely related contender for the cloud-driver crown is high availability, so close in fact that I group them into one category. Both workload variability and availability management demand resource spares, which means that a data center would have to be overprovisioned. Failover to the cloud and cloudbursting are faces of the same situation, which is that static server populations have to be overprovisioned in the real world, unless you can draw on the cloud to backstop their operation.
The real alternative contender is technology inertia, and this is the driver that seems to be emerging as the most significant. To understand why, we need to understand what’s happening that promotes agile technology responses, which obviously makes a lack of them a problem. The new development is a shifting in the retail sales model.
The Internet, or more specifically the worldwide web, offered companies a conduit directly to their customers. Unlike advertising, which might stir interest in something but couldn’t interact with a prospect to solidify that interest, the web could be used to present material in the order and with the detail needed. Starting in the ‘90s, web marketing became a major force in retail, something increasingly essential to sellers. Because the interconnected-federation structure of the Internet could create highly variable QoE, content delivery networks emerged and “wholesale” ISPs who served only content providers grew up.
The success of the web created its own problems, though. People wanted better web experiences, more interactivity, great graphics, and inevitably a tighter coupling between the “active marketing” mission and an emerging pre-sale and direct retail mission. They wanted apps on their phones that could be retail portals, offer them customer support and answer questions on their accounts. What was happening was that customers and prospects wanted their phones, and their browsers, to be effectively virtual representatives of the companies they dealt with. That demanded much tighter integration between the experience and the core business applications.
These tighter interactions were also highly variable in duration and trajectory, and so the “front end” of an application became separated both in terms of the technology associated with development and the resources needed for execution. At the technology level, highly interactive front-end elements are more like OTT services than traditional websites, and so development shifted to the microservice/function model that is not particularly useful in transactional applications of the kind found in data centers. At the resource level, not only resource elasticity but geographic elasticity became important.
The need to support hosting across a wide geography is the final contender for the primary diver of the cloud. Enterprises regularly support sales across a much wider area than they cover with their own physical facilities, which means the cloud provides them with a (virtual) local presence where no real option for a data center exists. While companies may have distributed shipping and even sales or support facilities in far-flung locations, these rarely have technical support staff on site, which means central administration of cloud resources could be far cheaper and more effective.
All of this means two things. First, the cloud is not going away. While early drivers have declined, some like server consolidation to the point of being irrelevant, the current drivers are rooted in global economics and geography and they’re not going anywhere. In fact, we can expect to see online shopping, both in researching purchases before going to a store and in actually making purchases, increase. But second, all our current drivers of cloud adoption focus on the user experience and not business records. The split between a cloud front-end and a transaction processing framework in a controlled data center facility is continuing. The data center isn’t going away either.
