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“We believe in the cloud. Sometimes people need to do certain things outside of the cloud (e.g. direct access to the physical drive for optimization). But you should go up as high in the stack as you can.”

“Sometimes you need your own house which you can decorate exactly how you like it”

“You have to decide if you’re going to build or use service providers. Running power & cooling are not core to any company.”

“We’re getting a lot of interest because the opportunity to save money is extreme. In a bad economy this accelerates even faster.”

“Amazon and Google but they have very different businesses. They have nothing in common. Part of the reason there is so much hype is because this is a paradigm shift in computing. We also have our approach to bring to the play – to be high service-oriented company, as well as a standards based approach. Google and Microsoft have an agenda – we’re focussed on just being a computing company.”

“BigTable is very exciting to use, but you have just one place to use it. And that’s Google. We’d love to see some standards around these next generation datastores.”

“MySpace still runs on relational databases, they just shard it to death. There’s going to be a better way.”

“We allow people to get out of contracts to get to the right service for them, to get to the right technology for them”

“If you think people in your company are not going to build little wikis, blogs, team sites and so on, you’re wrong. Cloud computing lets you get them what they need quickly rather than in a month”

“To run things at this scale, there are no tools to do it. 100’s of thousands of customers, you can’t do it well with other tools such as VMware. We’ve found we have to build our own. Also the tools are really expensive, it really changes the economics. What people want is Linux and Microsoft servers fast.”

“I think that cloud offers mature, more and more is going to get abstracted. Most APIs are going to be fairly similar. Bigger issues is around platforms as a service – Azure, App Engine. There is a lot of prescription, but in return you don’t have to do much.”

“We want to drive next generation standards”

“I think people will try and find solutions that help them cut corners and go faster. Companies need to do due diligence on where there is lock-in and where there isn’t”

“Every IT department has to get involved in cloud computing, because every department just wants to get their job done and they will go out there and use these things. If you’re not careful you’ll lose control very fast.”

The speakers were:

• Thorsten von Eicken, CTO and Founder, Rightscale
• Richard Dym, Chief Marketing Officer, OpSource
• Grace Kim, Sr. Manager, Marketing, WebEx
• Jesse Robbins, Co-Founder and CEO, Opscode

Allan opened with the example of MCI, who owed a lot of its success to the introduction of a “Friends & Family” scheme. No new technology, nothing new, just a new billing model. This is why clouds are exciting, they offer an opportunity to revolutionise the domain with new pricing models.

How do cloud computing models affect budgeting?

Richard: We’re going to give departments the ability to manage their usage, but they are in more direct control of it.

Thorsten: It’s all about visibility and control. Provided you have both, you can make the decisions and budget more or less as normal. You actually have more control with cloud computing. For example Skytap can alert you when your usage goes over a threshold.

Grace: It’s important to think about who your audience is. They don’t worry about the pricing model. They’re thinking about the task. So it’s important that the pricing model works for the end user as well as IT. Lack of understanding about a pricing model may deter users from using the application completely.

Jesse: The kinds of metrics that exist in the cloud are ones that should already exist at the CIO level in a large enterprise.

Allan: CPU hours are a different kind of unit which are not well understood by decision makers.

Jesse: The educated finance organisations understand waste. One of the key driver for cloud service adoption is virtualisation. Ask your IT department what percentage of our aggregate utilization are we actually using. 2%? Cloud spurs us to look at our usage more intelligently.

Richard: It’s easy to spin up, but people forget about spinning down.

Grace: Flexibility is the key thing. You may not be sure, but that’s ok when flexibility is built in and you can adjust. It’s very important too to choose a model where you’re not penalizing end users doing their jobs.

What sort of bill, what sort of contract should we expect?

Grace: We give our customers options – the shorter the contract the more you pay. We also have add on bundles and services.

Thorsten: We found it important to align the contract duration to the payment. If you don’t you’re creating a problem for your organisation. We do metering ourselves but we outsource the billing itself.

Jesse: One of the most important parts of this transition is that sysadmins want to try stuff prior to having to sign contracts and make heavy commitments. Easy free onboarding is key. As you grow, you then look at those more formal aspects. A transition from free to pay is how the early adoption is going to come.

Richard: We believe you have to have a compliant cloud (PCI etc). We are doing hourly billing with no commitment.

Jesse: … which is almost the same as free.

Grace: It’s easy to offer free trials. We find that pay per use rarely grows as new people come in and old ones sign up for contracts etc.

Would you ever offer flat pricing, like cellphones or internet DSL? Should it evolve to that?

Richard: We played with that. It may be possible down the road but it’s not right now.

Jesse: SMS is my favourite example. You’re paying for a free to provide uplift. Everyone would want to charge like that.

Grace: We found end users like the unlimited usage best, they don’t have to think.

Are there any products or tools for billing?

Thorsten: We use Aria which is a SaaS billing service, which keeps things simple.

Jesse: There is also Zoura and Evapt. Google and Amazon and Paypal are in the field too.

Richard: We used to use Aria. Licayla (sp?) too. But you can use us (OpSource)

The Speakers were:

• Jon Beck, SVP Sales and Client Services, OpSource, Inc.
• Chad Swartz, Senior Manager, IT Operations, Preferred Hotel Group
• Geir Magnusson, Consulting Architect, Platform, Gilt
• Scott Clark, Director of Engineering Infrastructure, Broadcom
• Josh Litwin, President and CEO, Memento Press

Definitions of Elasticity

Mathematics: Elasticity is the ratio of the incremental change of the logarithm of a function with respect to an incremental change of the logarithm of the argument

Physics: Elasticity is the physical property of a material when it deforms under stress (e.g. external forces), but returns to its original shape when the stress is removed.

Economics: Elasticity is the responsiveness of a function to changes in parameters in a relative way

Ian’s definition of Elastic Computing: An essential property of cloud computing providing us the ability to “automagically” provision computing resources on demand and release them when no longer needed.

• Automation – policy driven and programmatic
• Near “Instantaneous”
• Pay per use?
• Infinite scalability?
• To be determined….wikipedia article is up for grabs!

Quotes & Highlights

Scott: If we have to train our own people, make our own mistakes, this limits our speed and responsiveness. It makes a lot of sense to take advantage of the cloud providers who already have that expertise.

Chad: It makes it much easier to manage my costs when I’m paying more like a cellphone plan – a fixed, predictable cost but that I can “go a little over” if I need to.

Jon: We’ve come full circle in SaaS space, but we’re looking for three things from cloud providers: portability, transparency and affordability. The good news is that there is a lot of room for growth in the market. Today we’re mainly using it for QA, dev, test and demo.

Chad: One of big lessions learned was that systems run more efficiently if you build them from scratch in the cloud than if you migrate existing machines across. You have to think differently about things like I/O.

Geir: Our biggest fear is Oprah – a huge number of people sign up all at once. Cloud computing is the only thing that lets us do that. Databases scale terribly in the cloud. You have to rethink your whole data layer.

Scott: One of the things we can gain is learning from someone much bigger than us. It reduces our cost burden by letting us participate in a bigger ecosystem.

Josh: For a small company some software prices become harder for us to afford. But cloud services are more affordable. The biggest issues we are facing at the moment are around speed and responsiveness.

Scott: Big cloud engineering companies can get the best talent to build the cloud infrastructure. As a small company that’s a great reason for us to use their services rather than to roll our own.

Geir: Architectures are changing and service models are changing. It’s important to look past the hype and pay attention to the detail of this stuff.

Chad: It’s not for everyone now, but it will be very soon. This is the start of a new era of the way we approach computers. Cloud computing offers us huge advantages in agile deployment.

Jon: You add an aas to anything and it’s in vogue now. But it’s a different business & delivery model and it’s good for the evolution of the market. Generation Saas is upon us.

The speakers were:

• Joe Weinman, Strategic Solution Sales, AT&T Signature Client Group
• Neil Cohen, Director of Product Marketing, Akamai
• Paul Mockapetris, Chairman and Chief Scientist, Nominium, Inc.
• James Urquhart, Product Marketing Manager, Cloud Computing and Virtualized Data Centers at Cisco

What is the return on investment in the cloud?

Joe: I think it sums up to a strategy of “Own the base. Rent the spike.”

Neil: Example: Television voting. Big spike, gone in a few hours. Completely impractical to build a whole infrastructure just for that. $7m in business benefits. Only $1.5 of that is infrastructure benefits – the majority is business and agility benefits etc

Paul: Scarce resource is the geeks and the clue. It’s why you buy the cloud because you’re renting a scarce resource. Do you want to learn how to filter out spam and porn or do you want to hire someone to do that.

James: Pure cost of the resources (per hour) is less and less important. Agility savings become a much bigger factor. You can generate new value you couldn’t generate before so you open up new ROI opportunities. I wouldn’t move a bunch of fixed low utilisation servers out to the cloud; but those with short run cycles, where elasticity is needed, those are the apps you should look at first.

Joe introduced complexmodels.com – a calculator to investigate the cost of the clouds. Joe: If your peak to average ratio is better than the premium for moving to the cloud, it’s cost effective to move everything you do to the cloud right now.

Neil disagreed with this, saying it sounds like a Wall Street approach and the devil is the detail, it’s not that simple. Paul also disagreed.

How does the ROI change when you add security into the cloud?

James: He recommends following Chris Hoff. These days we just put a firewall in front of everything. Security in the cloud is more complex. There are VPN products that let you span multiple clouds and your data center. There are products that let you encrypt your data on someone else’s architecture. The number one issue is trust.

Some other points made in the quick questions at the end

James: The packaged software community is going to have to totally rethink their licencing model.

Neil: How much are you saving by getting that app running quickly and in front of a customer sooner. Har to measure

Joe added: It’s better to be 50% over budget than 50% late. So anything that lets you get apps to market quicker, especially cross platform gives a great ROI boost.

Well, we just saw a Microsoft slide about Azure at Cloudcamp Las Vegas, and I just gotta say…

Mike Repass, Product Manager of Google App Engine took part in a fireside chat with Alistair as the final session of Enterprise Cloud Summit today. A wide variety of topics were covered.

How can people trust their hardware needs to Google?

“The App Engine is a customer of raw Google services the same way Gmail or anything else is. We offer the same security as those raw Google services which are built to scale – e.g. BigTable”

Why did Google take a platform as a service approach?

This approach plays to Google’s strengths. Google’s success has been to build hardware to serve vast amounts of data to millions and millions of people. The value proposition is more about abstracting away the concerns with machines. No instances, no reservation – pay as you go based on usage.

Are you going to make people better developers?

Hopefully! The billing by usage definitely influences the way developers code. There were radical rewrites of code when we moved to the pay as you go model.

Is there a class of application you wouldn’t recommend to put on Google App Engine?

Data mining. It’s based around simple databases at the model. It’s more for flexible consumer apps rather than data-intensive applications.

Is Google creating a locked in Ecosystem where you use Google Marketplace to allow people to buy & sell Google Apps?

No. Marketplace is something we’re interested in. We want to build common functionality to arbitrarily create multiple instance of apps. But we would want a marketplace to go beyond Google App Engine as a platform. We want to focus our efforts on raw power under the hood rather than pushing people towards specific Google products such as Google App Engine or Google Maps. We want to focus on technology leadership; spurring growth, driving innovation. Move the web forward.

Will Google offset Adwords income against App Engine costs?

We’ve not looked yet at this but we would if there was compelling demand. It’s worth remembering that up to 5 million page views per month are free.

What would you advise CIOs who are considering trying Google App Engine?

I would ask them to consider what is a common business process that could be automated. Google App Engine is well suited to a user-centric approach, you can set a couple of developers on this and come up with something to automate or enhance your business processes quickly and easily.  You can hook into your existing database views and the like by running Secure Data Connector, a feature which allows the App Engine to connect through an enterprise’s firewall to an enterprise’s other applications and datastores.

On Google App Engine & Android

We do have some customers who are using Google App Engine as back end for Android. We want a healthy app ecosystem on Android that builds on any back end – and we want Google App Engine to host services for any mobile client. But I do hope that HTML for mobile catches up with things like Geolocation and location-aware services.

On Cloud Computing in general

To me the cloud computing is just one threshold of computing getting further and further from the physical machine. There is a trend towards finding social objects and creating services around them

On Google strategy

Our number one mission is to combat lock-in. That’s why we provide Java support as well as Python. An amazing thing with App Engine is that all queries take the same time to return if schema is laid out correctly. 1 million or 10 million users – the query to login to a customised page takes roughly the same amount of time. Inverts traditional database performance characteristics and Google wants to share that advantage.

We want to build Google App Engine into an entirely abstracted development platform. That’s why we can’t currently offer local file storage; we need to rebuild a virtualised version of file storage so we can be free to enhance and innovate the platform.

What’s the biggest limitation of Google App Engine?

When you get to the platform at a service level, a lot of the raw technology entry points e.g. sockets and things that require administrative access locally are not available. This does mean that its harder to integrate with legacy applications with Google App Engine.

What would be the greatest third party tool for Google App Engine you can imagine?

A third party tool that would help encourage Google App Engine adoption. Classic challenge is our datastore. A tool to help customers migrate existing data assets to/from App Engine. That’s the holy grail. A data conduit. Also a schema analysis tool to advise on compatibility issues and migration options. That would have applicability even beyond App Engine.

• Drew Bartkiewicz, Vice President of Cyber Risk and New Media Markets, The Hartford
• Robert Parisi, SVP & National Technology, Network Risk & Telecommunications Practice Leader, FINPRO, Marsh USA

Quotes

Drew: “The profession of a cloudster is yet to be written.”

Bob: “Are you giving someone a threat that they are unable to handle? It’s like giving your 16 year old the keys to the Camaro”

Drew: “Developers are doing things that CEOs don’t know about. The costs are low. But just because you can, doesn’t mean you should. You need to set guidelines for your developers.”

Slides: “The original assumptions for business risk and liability are no longer valid. However, it appears that the upside outweighs the downside.”

Drew: “Where does contextual marketing stop and surveillance begin?”

Drew: Two words that came up a lot today – Uncertainty (12 times) and Aggregation (I lost count)

Drew: “There are eight examples of companies that were sued not for their lack of professional standards but for the lack of professional standards of their users. Companies need to be aware of this risk.”

Bob: “You’re now taking on all the risks of your cloud provider’s own business, and of the interdependency between you and them, as well as their own.”

Drew: “The wealth-generating companies of the future are those that grow, leverage and process their information assets”.

Drew: “On average we shared 12 personal attributes of ourself even back in the year 2000. The amount we share is growing exponentially. Most of these companies are not in the cloud, companies are taking ownership of this data. You might even know some of this data exists.”

Bob: “The fact we’re saying CIO instead of CTO is a recognition that companies are waking up to this. We are not just working with the IT people any more. Companies are starting to realise that they need to take a wider look at how they handle data, what they collect, where they store it, and how long they keep it.”

Slides: “A new ecosystem calls for new ways to manage points of risk.. and aggregation”

Bob: Gartner came up with 7 questions companies should ask their cloud computing provider. Cloud computing providers should ask themselves these questions as well. If you fall short on these pieces, that piece will be leveraged against you.

Drew: “There is a business conduct gap in Cloud Computing. The professional laws and standards of care do not exist or are not broadly applied to cloud governance.”

In summary:

• Think Open, Think Smart
• Manage points of risk in the cloud
• Insure for uncertainty.. or make sure your cloud partners are insured
• “Cloud Insurance” does exist.

The speakers are:

• Peter Coffee, Director, Platform Research, salesforce.com
• Randy Rowland, General Manager, Managed Hosting & Cloud Computing Services, Terremark Worldwide, Inc.
• Geva Perry, Founder, Thinking Out Cloud
• Bill McGee, Vice President, Products and Technology, Third Brigade

What types of cloud architectures are there and are they all alike?

Peter Coffee: “It would be a mistake to think that cloud computing is a whole new thing” It’s more useful to look at what they have in common with enterprise deployment.

Geva: Although there are some services such as Hadoop are uniquely tailored to take advantage of cloud architecture. ”

Peter (a bit later on): There are new skill sets, there is experimentation to be done and things to learn. It’s like replacing a horse pulling a horse drawn carriage with a big motor – you need to tailor to the environment you will be running in.

Are all cloud vendors offering the same thing?

A resounding No all round.

Peter: If you want cheap, there is cheap cloud. If you want high quality Anything is being offered at a price of zero, Anything is also being offered at an enterprise class.

Greg: And there are some cloud services that are vaporware.

Geva: I call it “vision lock-in”

What are the critical cloud dependencies.. where could things go wrong?

Geva: Something we’re seeing (ref Hubs Spokes and Islands in the cloud). Some of the cloud offerings are becoming hubs with a rich set of offerings around them – like Amazon for infrastructure or salesforce.com in the CRM space. If I were choosing a cloud provider now, I’d think very careful about who’s becoming a hub – like Windows for operating systems or the iPhone App Store.

Bill: I don’t look forward to opening my Blackberry bill each month. Similarly, variable cost of cloud computing is a big concern, to avoid costs getting out of control. we also need vendors to put in more to protect/prevent access to sensitive data.

Greg: What about multi-tenancy, sharing with 3rd party products with potential vulnerabilities.

Bill: I think the cloud vendors are going to have to strike the right balance between offering a base level security but also offering some flexibility. In terms of multi-tenancy – malicious VMs – this comes down to a problem for the cloud infrastructure vendors to solve and patch quickly. I think that best practices are being used – cloud vendors are being held to a higher standard than standard enterprise providers.

Peter: The brightest light for a CIO is when they realise they can develop separate components in Amazon, Google App Engine, Salesforce.com, they can use each vendor for the part they do best, and tie those together into a web-based solution for customers. It offers real customer advantage.

Also In a VM environment each new VM is a new security risk as it could be unpatched or have exposures – but in a service oriented architecture you move the whole platform to the security level required by the most demanding customer – and all 55,000 other customers get that benefit.

Randy: One of the biggest mistakes people make is assuming that because it’s in the cloud, someone’s looking after my data, someone’s backing it up. You need to be more vigilant about what is and isn’t being offered. Another thing to think about is that unless you’re building a brand new internal app, a big concern is connectivity to the cloud – how do you pass information to and from the cloud.

Peter: Don’t say, the cloud is not secure, you ask “let’s assume this has to be done in the cloud, what steps need to be done to make it secure enough”. This is the interesting part of the conversation. It turns out remedying your perceived defects of the cloud is a very small cost.

Peter: If you’re looking at a major capital commitment, you need to look at doing it in the cloud. Look at the numbers and you may find it’s compellling. $47m a year in the cloud vs $50m a year in house.

Geva: Different vendors provide different levels of lock-in. General platforms have flexibility but you have to do a lot of the plumbing. More specialised services will reduce flexibility but have the advantage that you don’t have to worry about a lot of the backend stuff you normally would. It’s important to keep this in mind. When it comes to security, we are seeing different solutions emerging to address the things that the big cloud providers are not. For example Entrada, user management layer on top of Amazon AWS.

What are the most stark differences between standard IT services and cloud services?

Randy: The slower it takes IT to adopt internal/external cloud computing, business can circumvent the IT department. IT departments need to accept, embrace and integrate

Peter: There are two ways to screw up: You can embrace the cloud without strategy and have a haphazard costly approach, or you faithfully reproduce the old set up at the other end of a wire without thinking differently.

Bill: These cloud environments are all about automation. Not all the APIs for automatic migration out of the enterprise exist yet. This is an important consideration.

Geva: Automation enables self-service. This is a key element that empowers business and developers to get what they need when they need it.

An example of an enterprise use case for cloud computing

Werner related the case of the NASDAQ which had a lack of capital, which was restricting innovation and making it difficult for them to solve the technical problems around handling complex historical stock queries.

They solved this by having every ticker symbol for 10 minutes written to a text file in Amazon S3. An Adobe Air application was created which allowed you to specify a symbol and a date range. The app would download the text files for that time period – meaning you can do joins, queries etc. The computation is done by the customer’s desktop which means there is no resource investment. They were able to use cloud technology to keep things “nice and simple”

Cost savings can include people

Werner talked about the idea that when assessing the cost of cloud computing versus in-house infrastructure, you have to think about the total cost of ownership not just hardware. Werner talked about the example of the Indy 500. He said they have a very nice website which offers a flash environment with multiple video streams including views from the cockpits of drivers’ cars with audio feeds and telemetry. This is a high load application but it only runs three times a year. They found that they had to move a lot of engineers into data centers to keep their servers up. When they moved to cloud infrastructure they made 75% cost savings, the majority of which was on the people side; now they can manage everything from their armchair at home.

On Amazon direction and strategy

Amazon created these cloud services because they needed them for themselves. When you go to amazon there are 200-300 services being accessed to create that page. They did a deep dive into looking how the engineering organisation was working and found that 70% of the time that people in those teams where focussing on infrastructure level. Amazon made a conscious decision to virtualize the infrastructure platform – which is what brought about Amazon EC2. Werner said “When we did EC2 it was as important to scale down as well as up – and to do it in a matter of minutes. Scaling down hadn’t been done much before. things were left running “just in case”. This means significant savings can be made by reducing this “hoarding”.

Werner noted that another reason they’ve rolled everything themselves, is because control is important – performance, cost, reliability. 3rd party services become a black box. They were not built for 80,000 transactions per seconds against S3.

On infrastructure as a service versus platform as a service

Amazon has an internal principle of avoiding lock in. “We do not force an engineer to use any particular technology”. They can use whatever works best. He noted that to be able to do that you can’t offer an API forced to one programming language externally. “It’s important to provide an environment where anything is possible, even shooting yourself in the foot. We don’t believe in lock-in.”

Werner cited the example of Stax, which is a J2EE as a platform service – you can move your J2EE standard app into the cloud without any re-coding. He noted that Amazon didn’t build it but it happened because there was an ecosystem. If Amazon had started higher up the stack this wouldn’t have happened. Amazon makes strategic investments in the cloud ecosystem.

Alistair asked how do you decide what to invest in, using the analogy of the roofrack and the speedometer. Some things are better “built-in” and others are better done by third parties? Werner said that the fact it is a growing ecosystem means people will choose what’s best. Choice and competitions is good.

On the future

It doesn’t matter whether you view providers as engineers or systems integrators. There’s nothing bad about helping customers being successful. Werner observed that consumer power is rising. This means there is much less certainty about whether something is going to be a success. He is sure that tremendous value will be delivered. But it has to come from somewhere. We just have to do it. Innovation is key and people should focus on building value add applications.

He gave an example of this: College IT. Many large universities, pretty much every university in the US, manages their own email system. It’s historical. It used to be that students’ first email address was from their University. Now students already have 5 email addresses when they come into uni – they hate having another service (although they do need a University domain for their address). CEOs from Universities want to hand the email provision out into the cloud. They can use the specialists – and re-divert those internal resources. This is a classic example of focussing on what’s important to your customers, deliver more value.

Constraints breed innovation. Cloud research/OS research is not over. Looking at the precursors for cloud computing, there were a number of things that needed to happen: Virtualization needed to mature (CPU, storage, network, security). SaaS needed to mature. Needed to get experience with delivering very large software systems over the internet. Service oriented architectures had to develop – ie. the standardised set of protocols to access a service. Distributed computing needed to make a lot of progress so we could deliver these storage services at this scale – we couldn’t have done this five years ago.

Exciting things are happening, such as voice recognition as a service, location based services.

Another example: Delivery companies lose money because 8-10% of deliveries reach a closed door. They didn’t want to create call centres, but could still save money by automating a call to check if customers were in before attempting to deliver.

Now we are getting a lot of aggregation of different services – offered by people who historically wouldn’t have offered these things because it’s not their area – like mashups but real services that offer real value.

Business-driven technology is good. Business comes to you with real problems to solve. Not because it’s cool technology  and we want to see what we can do with it (as happened in the 90s when we bought software and didn’t use it). We are focussing on delivering value to our customers.

IT will be a driver for the adoption of cloud tech. Customers are choosing it because they get a higher level of integrated security than they would be able to achieve themselves. For example, Wall Street. No data center space left in New York. These firms have capacity in 15 different data centers. This is not optimised for security. When a security breach happens its too late. This gives them a solution.

Werner concluded “This is Day One of cloud infrastructure. We will continue to listen to our customers and evolve our services to meet the needs of real customers, and solve real problems today. Day two may be a number of years away, so we will see what happens.