Don’t Look to Cloud Computing for Cost Savings?

In May there was an AFCEA conference that addressed computing strategies in the cloud environment. Following comments were attributed to DoD senior speakers: *

"If we're doing cloud purely to save money, we're going to fail."
"You've got to look at it as a large investment in resources, and that will be the challenge."
"IT leaders can easily fall into the trap of over promising and under delivering when it comes to cloud computing."

The above comments are misplaced. That fact is that five-year total cost of ownership savings from cloud computing show that capital costs can be reduced by 91% and operating cost savings by 72%.  The break-even paybacks are less than two years.

SUMMARY
Though the migration of cloud computing offers many additional advantages, including improved security, the potential of realizing enormous cost reductions cannot be dismissed. In the Department of Defense it is the budget, not the technology that drives IT investment decisions. Without an immediate concentration on realizable cash savings it is unlikely that any new information technology program can receive attention.

Proposing migration to cloud computing as requiring large up front investments is unrealistic. Migration to cloud computing cannot be funded under current budgetary constraints. It will require decisive actions to move thousands of DoD applications to a limited number of platforms (PaaS) to generate gains. The technologies for such rapid migration are available now and have been tested in commercial cases.

The DoD deterrent to rapid migration to money-saving clouds is not strategy or technology, but policy and organization. What DoD needs now is consolidation to a few PaaS platforms to replace hundreds of separate systems “silos”.  With 57% of DoD spending consumed by a multiplicity of infrastructures, a few interoperable PaaS platforms can deliver not only very large savings but also greatly improve the ability of DoD to innovate and adapt to the rapidly rising needs of cyber operations.



* http://www.fiercegovernmentit.com/story/dod-official-dont-look-cloud-computing-cost-savings/2011-05-24
** http://pstrassmann.blogspot.com/2011/03/benchmarking-virtual-cloud-services.html

Migration of Legacy Systems Through Encapsulation

As IT infrastructures become more complex close to 70% of a typical IT operating budget will be spent on maintenance. This will leave only limited money available for new development and for capital purchases.

What is needed is a method how to extract systems from existing inefficiencies. A way must be found how to place all systems into a cloud environment where computing resources can be delivered without money spent on keeping up with a proliferation of options.

 Enabling IT as a cloud service will give to a business what it needs while retaining control and improving security. Applications and virtual machines can be provisioned automatically while resources are pooled pooled and then delivered on-demand according to business policies. This makes it possible for a firm to build a self-managing virtual infrastructure while cutting costs.

Encapsulation makes it possible for virtual machines to be portable into Infrastructure-as-a-Service (Iaas) or Platform-as-a-Service (PaaS) cloud environments. A complete copy a legacy system, regardless how organized, can be then relocated from a dedicated computer into cloud pooled computing. A virtual machine is a software container that bundles or “encapsulates” into a complete set of virtual hardware resources. It includes the operating system plus all applications and utilities inside a software package without making any changes in the programs.

   

The term “legacy application” is a misnomer. Legacy applications are simply software that still works but runs inefficiently because it does not share the ability to participate in the sharing of resources, including security appliances. The purpose of inserting encapsulated legacy into a cloud is to achieve combinations of assets for maximum efficiency.  Legacy applications, such as written in COBOL, that are still working can continue participating in a wide range of services that are available on a cloud that is offered by a particular vendor. Companies will not have to rewrite program code or to created new programming interfaces just to get to an application to operate in a private or a public cloud.  Encapsulation of applications allows the re-use of legacy systems with only minor changes.  The cloud platform will continue supporting identical interfaces so that applications can move instantly and seamlessly into a chosen cloud environtment without interoperability problems.

SUMMARY

The Department of Defense can realize currently mandated rapid cost reductions only by materially cutting back the number of data centers. This makes it necessary to depend on virtualization of computing assets to improve capacity utilization.

However, such consolidations will not deliver the expected savings unless applications are also migrating from poorly utilized servers to virtual cloud operations that can show much higher levels of efficiency.

The encapsulation of as-is legacy applications and then relocating them into an IaaS cloud environment is the best way of reducing operating costs in the immediate future. Large savings will accrue not only from greater efficiencies in capacity utilization but also from a reduction in the operating manpower. A small number of people will be needed to manage operations that are simpler and smaller.

After the legacy applications have been herded into consolidated data centers the work of systems designers to work on further integration can then begin.

Government Regulation and Platform as a Service

The consolidation of data centers into service clouds will reduce the capital and operating costs in data centers. However, cloud solutions do not cut all of the total life cycle costs of IT. They do not improve interoperability across different clouds. They do not increase the rate of innovation of applications.  They do not strengthen security and assure a high level of availability. They do not offer a solution to the proliferation of chaotic IT applications.
Data center hardware depreciation accounts for not more than 10% of total annual cost of information technologies. A rationalization of information processing by means of virtualization does not attack most of the operating costs. These are the costs of customer-operated devices, applications development, application maintenance, administrative management, costs of user support and communications expenses.

Implementing information-as-an-Infrastructure (IaaS) will take care only of hardware costs, expenses for electricity and the payroll of support personnel. Although IaaS is the first step how to migrate into cloud computing it delivers only a portion of potential savings.

By far the largest IaaS firm in the world is Amazon EC. It has estimated 2011 revenue of about $500 million. Other IaaS firms in the world do not exceed Amazon revenues.  With total global IT revenues of $3.4 trillion, a policy that concentrates exclusively on the savings from IaaS clouds cannot catch up with the market.

There is very little that the government can do to regulate IaaS. Every customer will port their existing application stack into proprietary hosting offered by an IaaS firm. IaaS solutions are set up as custom solutions. Standards are dictated by each vendor who will do their best to keep a customer captive.

Software-as-a-Service (Saas) offerings are attractive. If they could be scaled up to include a wide range of applications SaaS could solve many of the prevailing IT problems. However the SaaS approach to cloud computing requires an unusually high level of uniformity in meeting customer needs. Applications are dictated completely by the supplier of the SaaS services.  A total reliance on only pre-fabricated applications is not feasible. The enormous customer diversity will always limit what can be ever delivered through standard offerings. The largest SaaS firm, SalesForce has revenues of only $300 million. Although it is growing rapidly, it cannot catch up with the size of the market.

There is very little that the government can do to regulate SaaS. Every customer will use whatever proprietary services are offered by their SaaS supplier. Standards are dictated by each vendor who will do their best to keep a customer captive.

The future of IT calls for the adoption of different methods how to cut the costs of the IT infrastructure and to simplify IT operations.  The solution is Platform-as-a-Service (PaaS).

A PaaS the customer’s unique data and applications are placed on top of a standard (prefabricated) computing “stack”. The “stack” takes care of all of the infrastructure services such as communications and security. The customer needs to worry only about applications and data. The rest is taken care of without further intervention from a customer.

PaaS requires the placement of a standard software overlay on top of the existing IT coding “stack” acting as an intermediary between what belongs to the customer’s and what belongs to the cloud. The intermediation layer allows for the diversity of IT solutions to function while residing on a standard “stack” that supports a wide range of applications.
The PaaS arrangement makes it also necessary for applications and data to be constructed using a cloud specified development “framework”. Such standardization is necessary to enable applications to relocate easily from one PaaS cloud to another PaaS cloud, whether these clouds are private or public.  With such standardization applications and data can relocate to take advantage of competitive offerings from various PaaS suppliers.

To prevent PaaS firms to offer cloud solutions that capture customers by means of proprietary runtime and middleware solutions it will be necessary to institute to define the interoperability across several PaaS services. That can be done by government regulation or through the adoption of open source interfaces that can be tested for compatibility. 

Achieving PaaS interoperability through government regulations is not likely to happen. The PaaS technologies are global whereas the reach of governments is national.  The ability of customers to migrate from one PaaS vendor to another PaaS vendor is required to preserve competitive services, to prevent cartel-like hold on services and to enable smaller firms to participate in offering various forms of cloud offerings.

SUMMARY

It will take government support of dominant software firms to prevent a monopolistic lock-in by major telecommunication firms. In various places it is the national communication carriers that are losing their voice business to the Internet. These firms are now seeking new opportunities by shifting to PaaS services that could offer much large profit margins.  It should be the policy of the government to insert itself into the business of cloud firms to assure that competition can prevail.

Can DISA Operate the DoD Cloud?

2011 global IT spending is expected to reach $3.4 trillion.  DoD has a $36.3 billion IT budget, plus an estimated spending for 150,000 military and civilian personnel of $15 billion. Consequently, the DoD has by far the single largest IT budget in the world. It consumes 1.5% of total global costs.

The 2010 DoD Operations & Maintenance IT expense was $25.1 billion. Over a half of that was spent in data centers.

The potential size of all DoD cloud operations would be approximately $12.5 billion.  Such a huge computer operation does not exist anywhere. How such as complex could be managed is not known. The two largest public commercial cloud firms, Amazon EC and Rackspace, have revenues of only about $1 billion. To take over cloud computing for DoD the DISA operation would have to grow at an unprecedented scale.  Its organization would have to be restructured.

The most detailed information about DISA computing operations come from a presentation made in February 2009.  DISA operated thirteen Enterprise computing (DECC) data centers, averaging 34,000 square feet of raised floor. That is comparable to the US data center I built in 1972 for Xerox but which is now economically not viable because it is too small. From the standpoint of economies of scale, newly built data centers to house cloud operations is in the 300,000 to 500,000 square foot range, which makes DISA data centers too small. There are now hundreds of such data centers.

The current DECCs are the result of the consolidation of marginal data centers authorized by DMRD 918, which was approved in 1992. This was based on work that started in 1990 when I was the Director of Defense Information. The DECCs were supposed to be completed by 1996 so that a next phase of consolidation of data centers that would consolidate Components’ operations could take place. That never happened. While the DISA data center count held steady at thirteen, the total number of DoD data centers grew to a total of 772.

New commercial cloud data centers are currently being constructed to house over 100,000 servers. At present, DISA has in all data centers only a total of 6,100 servers plus 34 mainframes, which are used mostly for legacy applications and would not be suitable for cloud operations. Again, the scale of DISA data centers is too small.

In 2009 the total number of files in all DISA data centers was 3.8 petabytes. The only benchmark comparison we have is the 29 petabytes that can be housed in 320 square feet. DISA storage capacity does not have anywhere such density.

SUMMARY

The current claim that DISA could become the processing cloud for DoD is not as yet credible. How DoD could migrate into cloud computing is a question that still needs more work.

A Global Perspective on Internet in 2015

CISCO has just published a global view of the Internet, 2010-2015. These forecasts are of sufficient interest to warrant a summary review.

Consumer Internet traffic (70,000 petabytes/month) will overwhelm business traffic (10,000 petabytes/month). Consequently firms that concentrate exclusively on the consumer segment, such as Apple, will have a marketing advantage.

The overwhelming amount of traffic, as defined in terms of petabytes transmitted per month, will be still conducted over wired Internet connections (59,000 petabytes/month, growing at a 32% a compound annual rate). Mobile data will have the highest average growth rate (92%), but in terms of capacity will be capable of handling only 6,000 petabytes/month.

 

From a geographic standpoint the highest growth rates in Internet traffic will be in Latin America (48%, 7,000 petabytes/month) and in Middle East and Africa (52%, 2,000 petabytes/month).  Internet traffic will shift to the Asia Pacific region (24,000 petabytes, 35% growth rate), followed closely by North America (22,000 petabytes/month, 26% annual growth rate).

The largest Internet segment, consumer traffic, will be dedicated to managing video communications (35,000 petabytes/month, growth rate of 48%). Traditional traffic, such as files sharing, web connectivity, e-mail and data mail will process only 22,000 petabytes/month, at a growth rate of 25%.

Perhaps the most dramatic change will take place with the adoption of Internet as the medium for transmitting video, which includes TV entertainment.  By 2015 1,500 billion customers will receive television video over the Internet, with largest growth taking place in China (502 million customers) and in the Middle East and Africa (193 million customers). This will be achieved through introduction of gigabit transmission channels directly to consumers.

SUMMARY

There is no question that the Internet will continue to grow into the dominant global communication channel, not to be supplanted by other technologies. 

Mobile communication will grow extremely fast, but will not have the capacity to handle large volumes of traffic. The continued concentration on the wired Internet will favor the construction of cloud data centers that will act as the hubs for managing applications and storing files.

The consumer segment of the Internet will continue moving traffic to the video medium, which will shift from voice over IP to increased amounts of video calling. Such traffic will be transmitted over mobile channels as Latin America and Asia Pacific skips over investments into coaxial cables and move directly into wireless connectivity. The increased dependency on the delivery of TV over the Internet will accelerate this development.

The huge increase in the volume Internet processed data, measured in thousands of exabytes, will require a reexamination how data will be stored. Application-specific servers have only a limited capacity to manage the traffic to support video files as well as public cloud services.  As business and consumers increased their dependency on the Internet, uptime reliability can be safeguarded only through a redundancy of information processing sites.  Only through the installation of cloud computing data centers, that enjoy economies of scale, can that be accomplished.

Security will emerge as the key issue in shaping the Internet infrastructure. Global connectivity will enable the chance of a rapid spread of security corruptions of Internet-connected computing assets.  This would require the implementation of new measures for the regulation of Internet security on a global scale.  However, based on experience so far, it is unlikely this can happen. Government institutions are neither global nor responsive to tackling rapid technological change. It will take a consortium of globally dominant IT firms to forge agreements how to impose on the Internet and on the cloud operations new methods for dealing with security issues.

Significance of Apple’s Addition of Cloud Computing

This blog was also featured on http://www.theinfoboom.com/


Last week Steve Jobs, the Apple CEO, announced the addition of cloud services to the Apple list of product offerings. The new cloud will make it possible to move from a primary reliance on Apple devices (Mac computers, iPhone and iPads) to also receiving computing support from Apple data centers.

Access to the Apple Cloud heralds the extension control to centralized and proprietary management by Apple. Apple customers will receive the benefits of lower capital costs as well as reduced operating expenses. Customers will have the incentive to shift from merely purchasing Apple devices and software to also renting computing services and software. New applications will be available directly from data centers so that a faster rate of innovation can take place.

Cloud computing represents major change how Apple can be expected to operate in the future. To understand the context of a different concept of operations the following describes what directions Apple is likely to be taking in the next decade:

1. Apple will continue with its dedication to offer devices and services to consumers and not to enterprises. Apple will not compete for market share in enterprise systems with firms like IBM, HP and Dell. However, cloud computing will allow an expansion in the scope of what Apple will be able to offer.
2. With 250 million active users Apple should be able to expand to a population that could eventually number billions of customers.  The availability of cloud computing services will make the current rapid growth in the number of customers sustainable. Apple will not compete with Google who at present offer free services to consumers.
3. Apple will continue enjoying top ranked global brand name recognition. Its products will continue to receive premium pricing. Added services through the cloud will continue to maintain exceptional profit margins.
4. Apple is now the largest integrated IT firm in the world. The projected 2011 revenue exceeds $100 billion. Current revenue growth rate exceeds 50%/year.  Its market capitalization of over $300 billion. This exceeds HP and Microsoft, who have comparable revenues of $127 but lower growth rates and lower profits than Apple.  Cloud computing products will contribute to Apple’s increase in market share.
5. Apple is the only IT organization with presence in every part of the consumer computing market with the exception of not participating in network services.  HP dominates hardware while Microsoft dominates software. However, these firms do not deliver an integrated solution as done by Apple. The addition of cloud computing as an easy extension of existing services will only widen the gap between Apple and all other computing vendors.
6. Apple is unique in that it can claim to be the provider of integrated products and services by delivering both the hardware as well as the software that only fits on Mac computers or Apple devices. With the addition of proprietary cloud services, Apple has broadened its ability to serve dedicated customers at a much lower total cost of ownership than competitors. So far Apple has been able to obtain a modification of Microsoft’s dominant Office suite to run in the Mac environment. Apple can be expected to pursue such approach by integrating seamlessly Software-as-a-Service offerings, such as SalesForce, into its cloud.
7. The global consumer information technology sector is growing faster rate than enterprise computing, in which Apple does not as yet participate to a significant extent.  According to a 2011 forecast (Cisco Visual Networking Index) the projected 2015 internet traffic for consumers will be 70 thousand petabytes/month whereas the the internet traffic of the business segment will be only l0 thousand petabytes/month. Apple’s consumer sector is driven by rising population and by more demanding customer preferences. Apple is serving this sector by improving the ease of use through improvements in customer-to-computer interactions.  The total cost of ownership of an Apple is lower than comparable costs of Microsoft centered devices. With easy access through cloud computing Apple will now start adding the penetration of a large small business sector to its scope of services.
8. The enterprise sector of computing is consolidating by reaping improvements from more efficient technologies. In the short run the enterprise computer business will slow down while corporations concentrate on reducing the labor overhead costs that currently surround enterprise IT operations. Meanwhile, the consumer sector will grow explosively with a shift of consumer preferences to wireless connectivity. The Apple advantage in wireless connectivity, especially in high growth regions such as Latin America, will extend its cloud-based services to small-scale enterprises as well.
9. Apple has a limited but highly innovative product line. It is subject to rapid upgrading by means of proprietary software developed by over 100,000 registered developers who are not the Apple payroll. Apple will continue to extend the role of developers in less developed countries, especially through local applications hosted on the Apple cloud. In this way Apple will be able to gain global market share at a low marketing expense.
10. Apple product innovations, especially in customer interfaces, have surpassed IT competitors. Apple consistently excels in the design of devices and in the production of graphic displays. Cloud computing will continue to extend this capability through solutions than will depend on local developers who will be able to serve linguistically unique requirements.
11. Apple controls its products with only two Operating Systems, OSX and IOS, which share the same codebase. Competitive offerings from Microsoft and Linux are more diverse and create interoperability problems. Apple operating systems are updated frequently and have been able to maintain backward compatibility whereas competitors require additional investments to make diverse software components compatible. With cloud computing available for downloading of applications there is no reason to change the current policy of maintaining only two operating systems.
12. No competitor has been able to match Apple’s complete hold over every part of its systems software offering. Apple exercises control over software development methodologies and programming tools, which includes application programming interfaces. It couples software and hardware under unified supervision. This speeds up that rate at which innovation can take place. Cloud computing will make it possible to maintain control over developers and prevent unauthorized corruption of software development methods.
13. Apple offers to customers an open source browser, which is closely coupled with the Apple operating systems as well as with web applications whether developed by Apple or accessed from other sources. The management of all software offers to Apple a competitive advantage that is unlikely to be matched by IBM, Microsoft, HP or Dell who are encumbered by too many legacy offerings. That advantage is now getting extended with the introduction of cloud computing as an integrated part of the entire spectrum of product offerings. It may take a new “clean sheet” offering of hardware-software solutions to match what Apple is placing into the marketplace.
14. Any product or software release from Apple has the advantage that it can be tested together for bug free operations across the entire Apple product line. A tightly controlled approach to software management makes this possible. Consequently Apple can deliver new products at a faster rate than competitors. Cloud computing will make it feasible to continue keeping such a close hold over product testing.
15. Apple has pioneered the introduction of products not dependent on the “mouse” devices that is associated with Microsoft. With portable computing devices (iPhone, iPad) this becomes a competitive advantage. The absence of a keyboard will continue to be an advantage in global market. Cloud computing will also permit the application-specific customization of input formats that can be swapped to deal with local needs, such as in health care or in the military.
16. Apple has pioneered innovative user access methods with reliance on high quality graphics. Apple now leads the industry in offering a preferred consumer experience with computing devices, which are standard across the entire product line, but can be instantly modified from the cloud.
17. Apple’s App Store contains 425,000 applications that range in price from 99 cents to $29.99. App Store management conducts reviews of programming methods used prior to publishing to guarantee that all applications can be integrated with the unified Apple approach to software management.  This differs from the largely unrestricted acceptance of developer applications in the Google Chrome Web Store and the Android Application Store. Cloud computing will now allow an almost infinite expansion of items available in customized application catalogues.
18. Apple reaps profits from the marketing of downloadable music (15 billion iTunes sold), downloadable movies (for rent or purchase), downloadable TV shows and as well as lectures, on-line training, academic course and podcasts. It has recently opened an iBookstore (130 million books sold). The App Store is pioneering new approaches to marketing of on-line information products. So far customers have opened 225 million accounts. The App Store sales so far are $4.3 billion. Cloud-based App Stores will make downloadable products also available to devices other than Apple such as Android phones or MS Windows devices. All App Store products will be downloaded, thus discontinuing the present practice of distributing products on a disk.
19. Consumers typically buy software for a designated machine so that vendors, such as Microsoft or Oracle, can collect license revenues by point of use. Purchases from the Mac App Store are attached to the identity of an individual. This is a departure from how consumer software is licensed. It allows Apple users to reuse App Store products regardless of device or location. There is an incentive for customers to keep purchasing more hardware, software, music, books and teaching materials without a concern about paying for changes in devices.
20. The extension of the processing capacity of the Apple cloud will allow adding to the App Store the ability to sell information services such as offered by payroll processing bureaus, tax services and video conferencing offers. The economics of on-line selling favors purchasing of products where the embedded security for collecting funds makes that a convenient choice.  Cloud-based information services from App Stores are potentially a major contributor to Apple future profits while providing the producers with a low cost distribution channel. In this regard the major competitor of Apple would be Amazon.
21. Apple offers to its developers development tools, ten thousands of Application Program Interfaces (API) and marketing aids.  In this way App Store becomes a closed system that assures integration while minimizing security risks. The estimated number of Apple developers is presently greater than 100,000 but cloud computing will permit a large enlargement of this number. There are large populations of highly trained but unemployed students world-wide who are already finding software development for Apple as a rewarding opportunity to start a software business.
22. 70% of the proceeds from App Store sales are passed to developers. So far Apple has paid out $2.5 billions of fees.  The highly motivated Apple developers should be seen as a virtual extension of Apple’s own development organization and a source of technological power.
23. The newly announced Apple Cloud has been staged for incremental evolution.  The cloud now becomes the link that connects all Apple devices.
24. The Apple Cloud should be seen as an Apple owned private and proprietary Platform-as-a-Service (PaaS) arrangement. It offers not the supporting global Internet infrastructure (Infrastructure-as-a-Service) for Apple applications but also standard middleware that will accept only applications that have been programmed according to Apple specifications.
25. The Apple Cloud also provides 5 GBs of data storage for Apple customers at no added costs. Large collections of music and pictures may find cloud storage helpful, especially for archival storage.
26. The Apple Cloud will also hosts every application purchased from the App store. It will offer fail-over backup to another site in addition to the local “time machine” backups that are located in Macintosh computers. Several large Apple applications, that have frequent use, are already available from four data centers.  The Apple's 500,000-square-foot computer operations, costing over $500 millions, has the capacity of 120,000 servers.
27. All documents, music or pictures uploaded from any Apple laptop, iPhone, iPad Touch to the Apple cloud can be synchronized with every other Apple device. This will allow a customer to carry the contents of all applications regardless of locations or whether the device is portable or at a fixed location.

SUMMARY
Apple is the world’s most successful information technology corporation and therefore warrants careful study about the patterns of the future directions how computerized information will be generated and marketed. With a highly focused strategy Apple can be expected to continue sustaining its leadership in the consumer segment of the IT industry in the foreseeable future.  The keys to success will be now cloud computing, an augmentation of App Stores, interoperable consumer devices and a development virtual staff. Such strategies suggest that the current patterns of success will continue.

Yet, Apple with its $100 billion revenue occupies only 6% of the global $1,690 billion IT industry.  The remaining 94% is fractured into thousands of suppliers, diverse software development practices and uncoordinated operating methods. How this vast market can be covered with the aid from cloud computing will be discussed in another blog. It is clear, however, that in the absence of integration across the entire application “stack”, other methods will have to emerge as a unifying force. There is a technological and marketing opportunity how to achieve an improved economy how information technologies can be organized.

Why Cloud Computing Will Take a Long Time

The best way to understand cloud computing is to view it from the standpoint of a “workload stack” that describes the structure of all systems. Various vendors have organized computing differently, but all can be represented by means of a six-layer structure. The ultimate scope of cloud computing, when all information technologies would become potentially available as a service, would be $1,690 billion (in 2010 IT costs):

 How far is cloud computing in 2011 from where it would have a major share of total IT spending? Before we can answer that question, it would be useful to examine a history of how various generations of computing organized their workload stacks. 

In the period from 1955 to 1975 vendors, lead principally by IBM, wedged the layers of the entire stack into a tightly coupled set. Each stack layer would be dictated by IBMs decision what hardware and software to use. Any attempts to introduce an element of choice into operations, such as introducing other vendor’s disk drives or printers, was allowed only after regulatory intervention.

From 1975 there has been a gradual loosening of IBMs control over the entire stack. Microsoft managed to tear the layers apart by creating a separate server stack to support personal computers. The Microsoft stack was different from the server stack that was running in the data center or at a “server farm”. This resulted in what is known as the client/server architecture, which is dominant to this day.

  The problem with the separate client/server arrangements is a growing inefficiency. Millions of separate server computing stacks was created that each had individual computing, storage and networking layers. The server stacks were almost always incompatible and could not share hardware layers across several stacks such as computing power, disk drives or communications switches. As result the millions of server stacks were poorly utilized. There was no way how separate computing assets could share the capacity of different computing devices.

The client/server arrangement also suffered from a diversity of operating systems. There was a proliferation of “middleware” how various developers installed software that was placed between the operating systems and the applications.

When the hardware layer plus the hardware/software interface plus the middleware layers were installed for diverse applications, the number of combined choices became very large.  A customer was forced to break up the enterprise into separate computing enclaves (also called “silos”), which were neither interoperable nor capable of sharing processing capacity. For instance, in the Department of Defense there are well over 10,000 separate computing enclaves that collectively have an excessive amount of unshared capacity. Each enclave was built to accommodate expected peak workloads.  The combined capacity far exceeded what was needed. The total capital costs were excessive.  The total operations expense for maintaining individual enclaves were a large multiple of what would be otherwise sufficient.

 On account of the existing inefficiencies cloud computing should be seen first and foremost as a way of combining individual application stacks into assets where capacity can be shared.  The second objective of cloud computing is to aggregate capacity so that storage resources, compute resources, applications and the interface can be managed separately and independently. This means that every shared layer in the enterprise stack have the capacity to be engineered for its own optimization:

Storage resources would be shared across all applications. Compute resources would be shared across all applications. Application logic would be shared across all software programs. User interfaces would be common across all applications.

Best practices for the management for storage, compute resources, application logic and user interface would be able to change vendors and operating practices without the need to tightly couple each stack layer with its proximate layers.  Systems would be modular, which means that changes in technologies could be made incrementally rather than having to restructure an entire stack, which is the prevailing practice.

There are vendors that accomplish the separation through  “public cloud” services or as “private cloud” services. There are hundreds of firms now offering various combinations of cloud services. Different firms may pursue diverse approaches of how to organize for delivery of cloud computing stacks.

ASSESSMENT OF CURRENT STATUS

The ultimate objective of cloud computing is SaaS. This gives a vendor complete control over every layer of the stack. The most aggressive SaaS firm is SalesForce. It summarizes its offering by stating that it has “no hardware, no software, no headaches” by concentrating exclusively on the delivery of a full suite of Customer Relationship Management (CRM) methods. A wide range of out-of the-box applications is available. These are custom-tailored for the needs of specific vertical markets or business processes. SalesForce 2011 revenue is $1 billion, which represents less than 0.1% of the global total IT spending of $1.69 trillion.

There are hundreds of cloud companies that offer services that imitate the SalesForce model. In each case these are relatively small niche firms that provide access to specialized software where a customer does not wish to manage their own computer organization. Nevertheless, the pure SaaS business typified by SalesForce has taken only an insignificant share of the IT business.

A more ambitious effort is the recent commitment by Apple to restructure itself to operate as somewhat of a SaaS set up. Apple can do that because it has been always successful by managing its entire computing stack. It makes its proprietary hardware, offers a proprietary operating system as well as a proprietary browser. It originates its own applications while those provided from other vendors have to conform to its tight protocols. With the projected 2011 revenues of $100 billion and a very high growth rate Apple is the most successful IT firm in the world. However, its focus is limited by concentrating primarily on consumer computing.

The Apple cloud strategy is evolutionary. It shows a high executive level commitment to cloud computing. It will migrate from its proprietary strength in customer-owned hardware and software to relocate shared storage resources to the cloud.  Even then, the Apple share of SaaS computing will represent only a small share of its revenues that will be derived primarily from the sale of hardware devices and not from cloud fees.

Microsoft has already declared its plans to move into cloud computing by offering a mix of IaaS and PaaS services.  With 2011 revenues of $64 billion it has so far shown only a limited executive commitment to its Azure cloud offering. It is not as yet apparent whether Microsoft can aspire to become a significant cloud services provider. Microsoft depends on revenues from a limited set of application suites and from selling operating systems that are increasingly getting squeezed out by open source offerings. The prospect of Microsoft cloud computing taking a significant share of total IT spending is uncertain.

What will be the cloud strategy for Google is yet to emerge. This is a firm with $35 billion revenues and is highly profitable. Its Gmail offering has over 200 million customers on the Google cloud. Its Android operating system controls the major share over smart-phone devices in the world. However, Gmail nor Android are offered by Google at no cost and therefore cannot be counted as a profitable venture.  Its ChromeBook offering is potentially a pure SaaS device. However, a comprehensive strategy is yet to emerge from Google that would reveal a business case of how to migrate into a cloud environment.

By far the largest IaaS provider is Amazon.com. The best revenue number available for its EC2 cloud service is $500 million for 2010. These services can be best seen as a form of outsourcing of servers from companies that do not wish to own computing assets to Amazon on a pay-for-use basis. Though there many other IaaS small firms, their aggregate revenues do not add up to a significant share of total IT spending.

Base on reviewing the major cloud firms, such as Apple, Microsoft, Google and Amazon, the prospects of large gains from cloud computing are not significant as yet. Despite enormous media attention, public cloud computing so far takes only a minute share of total information spending.

However, the story may be different in the case of private clouds, where individual firms are proceeding at a rapid pace to virtualize their data centers. Almost every CIO in the world is proceeding with a cloud project. What progress firms are making in moving into private clouds or what share of their workload is shifted to public clouds has not been reported.

We conclude that the adoption of cloud computing still remains only a distant goal. It may take decades before cloud computing will manage a large share of the world’s IT spending.

Is Gmail Secure?

There are over 200 million Gmail users and it is completely free.  You get 7.4 Gigabytes of disk space to store 1.5 million pages of text.  Gmail has greater than 99.999% availability and has a response time of less than 0.2 seconds. It offers every conceivable e-mail feature. All you need is any browser to receive messages, with spam already filtered out and searches made without leaving a trace. One can sign up for Gmail in two minutes, with emphasis on rating the strength of the proposed password.

When US government employees need to communicate they would have an incentive to use Gmail instead of the demonstrably inferior e-mail services usually provided by their agency. It is therefore a matter of interest to examine the widespread publicity that has been recently generated when the access to the Gmail accounts of a few government employees was obtained by “hackers” with origins presumed to be in China.

The attacks used emails that appeared to be tailored to their targets to better fool their victims, a technique known as spear phishing. Recipients were asked to click on a link to a phony Gmail login page that gave the hackers access to their personal accounts.

 SUMMARY

The attacks come as the U.S. government considers expanding its use of Web-based software for email, along with word processing, spreadsheets and other kinds of documents. Google is one of the many companies vying for the business with its Apps product, as is Microsoft. Web based email would be vulnerable to hackers who steal login information through phishing attacks, which then allows them to apply malware to worm into the disk drive of a person’s computer and from there spread out to others. Web-based systems are not easier to hack than traditional email, even if a government agency would rely on own servers to manage e-mail.

The issue here has nothing to do with the presumed vulnerability of Gmail. The security weakness is located in a human failure when someone opens an infected attachment to an e-mail.  Whether the government e-mail runs in Google data centers or at a government-managed server farm makes no difference. Human errors will occur regardless where the e-mail is hosted.

The approach to diminish “hacking” attacks is the compartmentalization of records. Personal messages, engagements with social computing and classified e-mail should be contained within individual logical “sand boxes” that prevent traffic from separate folders to access any other folder. That requires the redesign how desktops, laptops or smart-phones are organized.  For instance, a device such as the Chromebook, illustrates how folders are managed and stored. A compromised folder can be examined and then purged.

 The "sand box" partitioning of cloud-based e-mail, such as Gmail, has a greater chance of being more secure than the existing client-server based solutions.
Of course, giving to U.S. government customers a superior e-mail system will go a long way to keeping all e-mails within already secured transmission channels. 

2010-2015 Networking Forecast

Cisco has published a network traffic forecast that warrants attention because it projects an enormous increase in network traffic. http://www.cisco.com/en/US/netsol/ns827/networking_solutions_sub_solution.html

Organizations have to start planning for increased capacity for handling transactions to exceed volumes that have been experienced so far.

1.                Global IP traffic will be growing at an annual rate (CAGR) of 32% with the greatest growth in the Asia Pacific and Latin American countries.

2.                There will be two network IP devices per person by 2015 as compared with only one network IP device per person in 2015.

3.                By 2015 fifteen percent of all network traffic will originate from devices other than personal computers. Machine-to-machine communications will have a growth rate of 258% CAGR, mostly coming from Radio Frequency Identification sources.

4.                Traffic from wireless sources (Wi-Fi plus mobile devices) will exceed traffic from wired devices by 2015. Business mobile traffic will grow at 84% CAGR as compared with only 19% FAGR for traffic on wired devices.

5.                Traffic will be unevenly distributed. There will be at least 20 million locations that will be consuming over six terabytes of traffic per year by 2015.

6.                Peak load traffic will increase faster than average traffic. By 2015 there will be 500 million people that can be expected to use global networks simultaneously.

SUMMARY

The unprecedented rise in computer-based communications will require an enormous expansion in the capacity of circuits. It will also call for a decisive shift to the IPv6 protocol to accommodate a large number of sites in the Asia/Pacific geography.

“Last mile” wired communication links will be unable to keep up with rapidly rising demands for circuits and therefore there will be a shift from landlines to wireless connectivity. Latin America and the Asia/Pacific countries will leap-frog directly from wired to wireless methods while simultaneously also adopting the most advanced form of cloud computing.

The key bottleneck will be in the availability of application software. Countries with a rapid expansion in the number of computer users will migrate directly to software-as-a-service solutions.

Most people will own both a wired as well as a wireless device.

The explosive growth of machine-to-machine communications will see the beginning of a trend from viewing Internet as a people-to-people medium to things-to-people connectivity.

Peak load concentration of traffic will dictate the creation of global transaction processing centers so that the workload can be distributed across several time zones. The distribution of the workload will be also dictated by the requirement for redundancy in transaction processing in order to assure high availability of services.

The emerging trends in growth and in the structure of information processing will require a redesign of computing facilities. There is no question that the adoption of cloud computing will be leading future developments, at a rapid pace.