Is the Cloud Right for You? Ask Yourself These 5 Questions - GigaOM

Is the Cloud Right for You? Ask Yourself These 5 Questions - GigaOM

Is cloud computing right for you? For the fledgling startup, the appeal of the cloud is obvious. Given how easily an entrepreneur’s vision can be stymied by a lack of technical and operations expertise, leveraging an Amazon EC2 or Google App Engine could provide the only viable option.

But what about large enterprises that not only have an in-house technical staff to do their bidding, but existing data centers and deep pockets? Stacey has already identified issues with some cloud providers, such as security, reliability and portability. However, assuming they are all resolved, are there compelling reasons for large enterprises to even be interested in cloud services? And if so, under what conditions?

In order to decide, the enterprise needs to ask these five simple questions:

1. Is demand constant? If demand is constant, dedicated resources in an enterprise data center are fine. Smooth, constant workloads mean that a fixed pool of servers can chug away 24/7, meeting utilization targets.

Unfortunately, very few enterprise applications have this kind of profile. Consider a retailer that does 80 percent of its annual business in the month following Thanksgiving Day. Fixed capacity engineered to peak would only be fully utilized during those four weeks, compared to utilization of slightly more than 2 percent during each of the other 11 months. In other words, its investment would go virtually untouched for more than 90 percent of the year. Try selling that to the finance committee. A cloud, on the other hand, can provide dramatic cost savings by offering access to scalable resources on a pay-per-use basis.

2. Is growth predictable? Even if demand isn’t constant, if growth is predictable, it can be managed in an enterprise data center. By building in lead times, one can place orders for additional capacity and rest easy that it will arrive in time, even by snail-mailing paper purchase orders for servers that get delivered by slow ships.

But when growth is unpredictable, the pay-per-use model of the cloud makes “cloud-bursting” — that is, leveraging cloud services to handle spikes — a more cost-effective option. Plus, with fixed capacity, it’s easy to make one of two fatal errors: Being overwhelmed by surprise demand can easily lead to poor performance or no service, resulting in the loss of both revenue and reputation. On the other hand, investing in capacity that remains idle can bankrupt a small company.

3. Can demand be shaped? Users today expect instant gratification, even from free services. While some demand can be shaped and smoothed – either by avoiding it, deferring it, or incenting it, via sales, promotions, queuing, congestion pricing, or variable pricing for yield management — some can’t.

If spiky demand can’t be shaped, on-demand scalability is indispensable. After all, how popular would Google be if a search request returned, “We’re kinda busy right now. How does next Tuesday around 2 pm work for you?”

4. Where are the users? If users are concentrated in a particular locale, they can be serviced by a single nearby data center (or two, for business continuity), but not if they’re scattered around the globe.

The only way to engineer today’s rich Internet application for a global community is to leverage a network of dispersed web, content and application servers. While building lots of data centers all over the world might have seemed like a good idea for enterprises a few years ago, a better option today is to consolidate enterprise data centers while simultaneously leveraging a cloud service provider with a global footprint.

5. Is the application interactive? There are still many applications out there that aren’t highly interactive, such as seismic analysis, circuit simulation and equity portfolio optimization. For them, geographic dispersion could be a negative, due to an inability to effectively partition the compute tasks into loosely coupled components.

However, for the tidal wave of emerging Web 2.0, AJAX, Rich Internet Applications, proximity to a service through geographically dispersed cloud resources is key as the client portion of the app has to make frequent round-trips to the server — in some cases on every keystroke. And for applications such as multipoint video collaboration, reducing hops and propagation delays between end points and cloud-based bridges is essential to creating a natural experience.

So for enterprises with smooth and predictable demand created by accommodating users who are willing to walk back across the street another day to process their batch jobs, clouds may be unnecessary.

But for enterprises pursuing emerging, shifting and uncertain global markets, with global supply chains or virtual enterprise partners and variable and unpredictable workloads coming from demanding users who want engaging, interactive interfaces, the cloud could be the right — perhaps even the best — option.

Key Question	Enterprise Data Center Better	Cloud Services Better	Key Cloud Benefit
1) Demand	Constant	Variable	Scalable and On-Demand
2) Growth	Predictable	Unpredictable
3) Fungibility of Demand	Deferrable or Promotable	Not Shapeable
4) Users	Concentrated	Dispersed	Globally Dispersed to Reduce Latency
5) Applications	Batch	Highly Interactive