I’ve been closely following cloud computing for a number of years, having posted my first cloud blog in March of 2008. A few months later I gave a presentation at a cloud-based conference. The overall sense at that conference was that something big and profound was emerging in the IT industry. Cloud computing could well be The Next Big Thing - one of those massive changes that the IT industry goes through from time to time that really shake things up, - like the advent of personal computers in the 1980s and the Internet in the 1990s.
Cloud has fulfilled those early expectations, having made much progress in a relatively short time. As I look back at its evolution over the past few years, I think of cloud as having gone through three main, overlapping phases.
Early adopters viewed cloud as computing-on-demand. Next, cloud introduced a much more disciplined approach to the architecture and management of large IT infrastructures. And by now, cloud has become accepted as a major transformational force in IT, in business, and in the economy in general.
Let me discuss each of these phases.
Cloud as Utility Computing
In its early years, cloud was primarily viewed as improving the economics, flexibility and agility of IT. Instead of having to buy and operate their own hardware and software products, users could now obtain the computing resources they needed over the Internet on demand.
The prevailing metaphor used to describe this new form of utility computing was the evolution of power plants in the 19th century. In the early days of electricity, companies usually generated their own power with steam engines and dynamos. But with the rise of highly sophisticated, professionally run electric utilities, companies stopped generating their own power and plugged into the newly built electric grids.
Cloud service providers offered computing-as-a-service, with near unlimited scalability at very attractive prices. Instead of having to buy computing resources up front, users now had the flexibility of only paying for whatever cloud resources they actually used.
In addition, cloud offered business users the agility they increasingly demanded to keep up with the pace of technological and market changes. Turning to an external cloud service provider was often a faster and less costly way to implement a new application than relying on the internal IT organization. We saw a proliferation of so-called shadow IT, where departmental and business users acquired what they needed directly from a cloud service provider, bypassing the central IT organization.
Cloud as the Industrialization of IT
Many data centers had evolved over the years with little architectural discipline or company-wide governance. A number had grown through mergers and acquisitions, with the different companies involved bringing their own separate equipment, architectures and processes. Different departments insisted on getting their own servers for their own business applications, rather than using the global, shared facilities. Such legacy data centers often spent the bulk of their energies on the maintenance and integration of their varied applications.
Not surprisingly, these older companies were challenged to keep up with born digital Internet companies, especially when it came to customer-facing applications. These applications generally required a more agile development approach to respond to fast changing market conditions, as well as the ability to efficiently support the fast growing volumes of mobile users and devices.
The massive scalability, flexibility and agility required to support these new workloads was now driving a much needed industrialization of IT. IT had to become much more disciplined in every aspect of its operations, as had been the case with manufacturing about 30-40 years ago.
Before that time, most manufacturing plants were fairly inefficient by almost any measure, and were turning out products of varying quality. Then, following the success of Toyota and other companies around the world, business started to apply engineering discipline as well as a holistic, systems-wide approach to manufacturing processes. Company after company embraced the Toyota Way, Six Sigma, Lean Production and similar methods in their manufacturing and logistics operations - leading to major improvements in their productivity and quality.
Data centers have now become the production plants of cloud-based services, a transformation that’s been pioneered by born-to-the-cloud companies like Amazon, Google, and Salesforce. Cloud computing requires very well-engineered IT infrastructures, applications and mass customized services. The architectural standards and management disciplines of public cloud providers are being embraced by older companies, as they develop private clouds so they too can efficiently deliver high quality services to their own customers, business partners and employees.
Cloud as the Transformation to Digital Business
Beyond utility computing and the industrialization of IT, cloud is now a major force that’s systematically transforming the economy and helping every company on its digital business journey. The job of the CIO is now more exciting, - and much more challenging. In a few short years they have moved from architecting the enterprise to leading the digital enterprise forward.
This phase of cloud was nicely summarized in a recently released Verizon report - State of the Market: Enterprise Cloud 2016. The report points out that in the past few years, “we’ve seen cloud go from a newcomer to part of the established order. But despite the maturity of cloud, the market is still developing and most organizations are still finding new and exciting ways to take advantage of it…”
“In many organizations the IT function is now much more closely aligned with the lines of business (LOBs) and is adept at managing a portfolio of cloud providers… Companies are combining public, private and on-premises infrastructure to create highly sophisticated, customized environments. These environments can provide the ideal mix of performance and flexibility. This can enable even the most established organization to do things in new ways, and disrupt even the most entrenched industry…”
“As cloud increasingly becomes the norm, the edge it gives a company is falling. It still has a major role to play in delivering competitive advantage, but using cloud is now just table stakes. It’s not enough to think cloud first. To derive significant competitive advantage from cloud you need to think how you can leverage it to enable digital transformation, change how you do business, and disrupt your market.”
Verizon’s surveys identified three major organizational attitudes toward cloud. Skeptics are still not convinced that cloud can provide the necessary security, reliability, privacy and governance. By now, this is a relatively small segment of the market, - “Only 6% of respondents in our survey said they think their company will have less than 25% of workloads in the cloud by 2018.”
At the other end of the spectrum are the cloud natives, comprised of companies that believe in cloud-first or cloud-only. Most startups are in this category, but many other companies “are choosing to buy services rather than servers.”
The majority of companies are pragmatists, falling someplace between the skeptics and the natives. These organizations are implementing a hybrid IT model, using public clouds for non-sensitive workloads, private clouds for more sensitive ones, and on-premise traditional applications for difficult-to-move and highly sensitive workloads. Most such companies have multiple public and private cloud providers. Their key challenge is tying it all together into a well-functioning, integrated IT architecture.
The Verizon study highlights the rise of private clouds. With the falling costs of technology, companies feel less compelled to turn to the shared infrastructures of public clouds to realize the economic benefits, other than for not-so-sensitive, highly scalable workloads with widely varying peaks and valleys. They welcome the added reassurance provided by the dedicated infrastructures of private clouds.
In reality, public versus private does not adequately describe the wide variety of cloud options now available. Choosing among them, - workload by workload, - comes down to a few basic points: the risks profile of the workload; the proportion of the workload and associated data residing on the company’s premise versus the provider’s; and whether the company has the skills to manage its cloud environment.
The report concludes with a few recommendations.
Keep projects short: Six months is a good upper limit to help maintain momentum and keep up with technology changes.
Don’t try to do it alone: Cloud is complicated, broad, relatively new and rapidly moving. It’s hard to keep abreast of all the changes in cloud technologies and capabilities and many companies don’t have the required skills and experience to manage cloud projects on their own.
Improve IT-business cooperation: Cloud is redefining the role of the CIO organization. As IT now permeates every nook and cranny of the business, close cooperation between the lines of business and the IT function is more important than ever. Managing a hybrid enterprise infrastructure, - comprised of on-premise applications and a portfolio of public and private cloud providers, - is a highly specialized discipline.
Continually reassess security: While managing risk continues to be a major topic when discussing cloud, “fewer than 5% of companies had experienced a significant data breach that was directly attributable to a cloud-based service… As cloud became more pervasive within organizations, IT had to step in and make sure that it was properly managed from a policy, control and compliance standpoint. The result has been a decline in shadow IT projects, clearer definitions of expectations and greater service-provider transparency. So now when we ask about cloud, most companies say that their cloud environment is as secure, if not more secure, than their traditional infrastructure.”
Don’t forget the network: Connectivity is critical to the success of cloud projects, especially for mission-critical workloads. Dedicated cloud connections should be used as needed to improve performance and reliability.
“Cloud’s now firmly established as a reliable enterprise workhorse, and what’s most interesting is how it’s driving transformation. Organizations are using cloud to create new customer experiences, re-engineer their business processes and find new opportunities to grow.” Being an early believer in cloud computing, it’s gratifying to see how much progress has been made in just a few years. And, I’m convinced, much more is to come.