The Case for Cloud Infrastructure: On-Demand Economics

Day 2 of the Enterprise Cloud Summit kicked off with a panel session moderated by John Willis of Zabovo.

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.