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Summary:

Anyone who knows me will tell you that I am not a great dancer. Yet I have recently become a proponent of a technology strategy that I have coined the “cloud two-step.” The cloud two-step is the way enterprise IT departments are going to dance their […]

Anyone who knows me will tell you that I am not a great dancer. Yet I have recently become a proponent of a technology strategy that I have coined the “cloud two-step.” The cloud two-step is the way enterprise IT departments are going to dance their way to better infrastructure economics for their organizations during the current downturn.

Before we talk about specific two-step moves, it’s important to realize that the economic crisis has forced enterprise IT departments to stop or severely limit their spending. While this may help the enterprise stay afloat, it also requires that those departments find imaginative and cost-effective ways to serve technology needs. Put another way, they need to find the cheapest way to provide two commodity resources: storage and processor power. And providing flexible, cost-effective and outsourced storage and processor power is the value proposition of cloud computing that makes the CIOs of Fortune 1000 companies stand up and take notice.

Enterprises are looking to leverage the buying power and infrastructure management expertise of cloud vendors such as Amazon, Microsoft, Google, GoGrid, Mosso, Joyent and others. These clouds allow the enterprise to lease rather than own processors and storage. The lure of leasing these resources allows for the flexibility to turn up and down resources as needed instead of owning and provisioning for a high watermark of requirements. Perhaps one of my favorite illustration of the power and economics of cloud computing is the Washington Post example available on Amazon.com.

So why are enterprise IT departments not running toward cloud computing to help scale resources and control costs? One oft-cited reason is that this technology is still in its infancy, but I think the real reason is that they are struggling to transform their traditional practices to ones that extend into the cloud. For example, if an IT department decides to outsource some of its processing power to Amazon like the Washington Post did, then how are those resources provisioned, monitored for faults and performance issues, secured against break-ins and accessed by both internal resources and third-party partners? There are some cloud solutions for these issues, but enterprise IT has spent decades building integrated internal systems and needs a way to bridge the gap from what they are using today to the cloud.

That’s where the cloud two-step comes in. The cloud two-step is a technology strategy that bridges the gap between traditional IT practices, ones that occur within the four walls of the enterprise, and the desire for IT practices that work under a new economic environment. It is a way to step into the cloud in two easy steps: the first to deploy technology within the enterprise that IT can fully control, the second to then use this technology to leverage clouds. Some examples include:

  • a technology solution that configures enterprise network management systems (step one) to monitor faults and performance of cloud vendors (step two)
  • software that configures virtual machines in an enterprise data center (step one) with an overflow option to offload processing to a cloud (step two)
  • a new enterprise backup system (step one) that automatically provisions cloud storage when disk capacity reaches a certain threshold (step two)

It seems likely that there will be many dancers auditioning to perform the cloud two-step for enterprise IT in the upcoming year, and I look forward to seeing these solutions help further establish clouds as the next generation for IT. So while enterprises will always need their IT departments, those that find solutions that allow them to dance the cloud two-step gracefully will live to dance another day. Those that don’t may find that their next dance is their last one.

Allan Leinwand is a venture partner with Panorama Capital and founder of Vyatta. He was also the CTO of Digital Island.

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  1. Unlike the rapid web world where we can sneeze and deploy new services overnight, enterprise IT is not exactly constantly pushing technology to its limits. According to Goldman Sachs in their July 2008 IT Sales Opportunity survey of 100 CIOs, less than 2% of them said cloud computing was a priority. In fact, it was ranked last in a series of initiatives.

    They have one primary edict: Keep the Lights On and No One Dies.

    To expect them to embrace and deploy new technology comes along is going to make VCs very angry with their portfolio companies.

    The transition to the cloud is going to take time and, as you indicated, a testing of waters: one or two fringe applications to start, maybe a storage unit here and there.

    But no doubt that the economics will drive more adoption at this point (as illustrated in our PaaS-onomics whitepaper: http://www.longjump.com/paas-offers/paas-whitepaper.htm)

  2. We are active in the enterprise-grade cloud space (both in public and private clouds), and I tend to agree with the general premise of this post that enterprises gain their confidence in stages.

    It seems fairly clear that economic challenges can motivate strapped organizations to consider new options. In fact, I’m elaborating on that a bit in a two-part post, of which the first post is here (and the second will follow very soon).

    For a number of customers a strong need to scale has been the driver that caused them to look at private clouds (that was true at both FedEx and GeoEye – a provider of satellite imagery to Google and the US intelligence community, among others).

    So in terms of this post, that was what drove them to “Step 1″. Whether they take the second step or not almost doesn’t matter – they’ve already realized substantial cost, scale, flexibility, and reliability benefits from adopting private cloud technologies and operational philosophies.

    One More Thing
    This brings me to what may be the most important point. This post, like so many of the conversations in the industry, miss what is probably the single most important factor in an enterprise actually adopting cloud computing – the applications.

    Indeed, what about the applications?

    Well it turns out that while so much of the conversation has been around extending virtualization models, creating operational and billing models that can enable the flexibility whose promise is so attractive – all good things – what most enterprises eventually come around to (or in fact start from!) are the applications themselves.

    In other words, how do I cloud enable the applications that I really want to run?

    This is true, of course, whether the applications is going to be deployed in my own private cloud or perhaps one of the increasingly capable public cloud choices.

    So that’s why we focus on cloud-enabling applications, which as you may guess has become quite enjoyable!

  3. So enjoyable, in fact, that sometimes I forget to correctly enter html in blog comments – sorry about that!

  4. Developing an application to run in a cloud is alluring, because you feel that you are automatically creating a scalable product. I have several concerns, however.

    1. I don’t trust the marketing angle. I suspect that “cloud” is an attractive euphemism for “no longer a problem on planet earth”. That, of course, is not possible. Technology development always presents difficult problems.

    2. I hear that “the cloud does not like databases”. The cloud does a good job providing vast amounts of cpu and storage, but it does a poor job with the kind of bottlenecks often found in database access. If true, this would put the lie to the whole concept (in my opinion).

  5. David, Business Technology Roundtable Sunday, October 19, 2008

    Allan, perhaps it’s not the CIOs that stand up and take notice, it’s more likely the CEOs who get the idea from their peer group, and then give their CIO some “words of encouragement.”

    Also, rather than apply an outsource model, it’s more likely to be selective out-tasking. Meaning, these targeted solutions can coexist with in-house solutions — there’s no need to confront the enterprise IT leadership with the notion of dramatic changes.

    That said, the real bonus for a weary CIO isn’t the economics, although the cost-reduction is welcome. It’s the freeing up of their time — that’s gained by out-tasking basic infrastructure, and thereby removing the drudgery of operations and maintenance headaches.

    Moreover, some CIOs are eager to demonstrate to their Line of Business heads that they can deliver a project with meaningful new strategic competitive impact. That takes leadership talent, an investment of time and flawless execution.

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  10. Bob Sullebarger Saturday, February 7, 2009

    The idea of 2-step make complete sense to me. No doubt enterprises need a migration strategy to the cloud that manages risk. But isn’t the cloud is going to catch fire first with mid size companies who can do this more readily with less risk? No surprise that the Goldman Sachs survey found cloud computing to be a low priority, because that’s probably not the sweet spot.

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