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The Value and Utility of Cloud Computing

Cloud computing's ultimate value depends on open PaaS models to avoid applications and data lock-in

As enterprises examine the use of cloud computing for core IT functions, how can they protect themselves against service provider lock-in, ensure openness and portability of applications and data, and foster a true marketplace among cloud providers?

Indeed, this burning question about the value and utility of cloud computing centers on whether applications and data can move with relative ease from cloud to cloud -- that is, across so-called public- and private-cloud divides, and among and between various public cloud providers.

For enterprises to determine the true value of cloud models -- and to ascertain if their cost and productivity improvements will be sufficient to overcome the disruptive shift to cloud computing -- they really must know the actual degree of what I call "application fungibility."

Fungible means being able to move in and out of like systems or processes. But what of modern IT applications? Fungible applications could avoid the prospect of swapping on-premises platform lock-in for some sort of cloud-based service provider lock-in and, perhaps over time, prevent being held hostage to arbitrary and rising cloud prices.

Application fungibility would, I believe, create a real marketplace for cloud services, something very much in the best interest of enterprises, small and medium businesses (SMBs), independent software vendors (ISVs), and developers.

In this latest BriefingsDirect podcast discussion, we examine how enterprises and developers should be considering the concept of application fungibility, both in terms of technical enablers and standards for cloud computing, and also consider how to craft the proper service-level agreements (SLAs) to promote fungibility of their applications.

Here to explore how application fungibility can bring efficiency and ensure freedom of successful cloud computing, we're joined by Paul Fremantle, Chief Technology Officer and Co-Founder at WSO2, and Miko Matsumura, author of SOA Adoption for Dummies and an influential blogger and thought leader on cloud computing subjects. The discussion is moderated by Dana Gardner, Principal Analyst at Interarbor Solutions.

Here are some excerpts:

Matsumura: Fungibility is very, very critical, and one thing I want to emphasize is that the fungibility level of current solutions is very low.

... The economics of upscaling and downscaling as a utility is very attractive. Obviously, there are a lot of reasons why people would start moving into the cloud, but the thing that we're talking about today with this fungibility factor is not so much why would you start using cloud, but really what is the endgame for successful applications.

The area where we are specifically concerned is when the application is more successful than in your wildest dreams. Now, in some ways what it creates is almost an unprecedented leverage point for the supplier. If you're locked in to a very high-transactional, high-value application, at that point, if you have no flexibility or fungibility, you're pretty much stuck. The history of the pricing power of the vendor could be replicated in cloud and potentially could be even more significant.

... The things to look at in the cloud world are who are the emergent dominant players and will Amazon and Google or one of these players start to behave as an economic bully? Right now, since we're in the early days of cloud, I don't think that people are feeling the potential for domination.

But people who are thinking ahead to the endgame are pretty clear that that power will emerge because any rational, publicly traded company will maximize its shareholder value by applying any available leverage. If you have leverage against the customer, that produces very benevolent looking quarterly returns.

Fremantle: People are building apps in a month, a week, or even a day, and they need to be hosted. The enterprise infrastructure team, unfortunately, hasn’t been able to keep up with those productivity gains.

Now, people are saying, "I just want to host it." So, they go to Amazon, Rackspace, ElasticHosts, Joyent, whoever their provider is, and they just jump on that and say,"Here is my credit card, and there is a host to deploy my app on."

The problem comes when, exactly as Miko said, that app is now going to grow. And in some cases, they're going to end up with very large bills to that provider and no obvious way out of that.

You could say that the answer to that is that we need cloud standards, and there have been a number of initiatives to come up with standard cloud management application programming interfaces (APIs) that would, in theory, solve this. Unfortunately, there are some challenges to that, one of which is that not every cloud has the same underlying infrastructure.

Take Amazon, for example. It has its own interesting storage models. It has a whole set of APIs that are particularly specific to Amazon. Now, there are a few people who are providing those same APIs -- people like Eucalyptus and Ubuntu -- but it doesn’t mean you can just take your app off of Amazon and put it onto Rackspace, unfortunately, without a significant amount of work.

No way out

As we go up the scale into what's now being termed as platform as a service (PaaS), where people are starting to build higher level abstractions on top of those virtual machines (VMs) and infrastructure, you can get even more locked in.

When people come up with a PaaS, it provides extra functionality, but now it means that instead of just relying on a virtualized hardware, you're now relying on a virtualized middleware, and it becomes absolutely vital that you consider lock-in and don’t just end up trapped on a particular platform.

One of the things that naturally evolved, as a result of the emergence of a common foe, is this principle of unification, openness, and alliance.



Matsumura: From my perspective, to some extent, there already is a cloud marketplace -- but the marketplace radically lacks transparency and efficiency. It's a highly inefficient market.

The thing that's great is, if you look at rational optimization of strategic competitive advantage, [moving to the cloud makes perfect sense.] "My company that makes parts for airplanes is not an expert in keeping PC servers cool and having a raised floor, security, biometric identification, and all kinds of hosting things." So, maybe they outsource that, because that's not any advantage to them.

That's perfectly logical behavior. I want to take this now to a slightly different level, which is, organizations have emergent behavior that's completely irrational. It's comical and in some ways very unfortunate to observe.

In the history of large-scale enterprise computing, there has long been this tension between the business units and the IT department, which is more centralized. The business department is actually the frustrated party, because they have developed the applications in a very short time. The lagging party is actually the IT department.

There is this unfortunate emergent property that the enterprise goes after something that, in the long run turns out to be very disappointing. But, by the time the disappointment sets in, the business executives that approved this entry point into the cloud are long gone. They've gotten promotions, because, their projects worked and they got their business results faster than they would have if they had actually done it the right way and actually gone through IT.

Hard for IT to compete in short-term

So, it puts central IT into a very uncomfortable position, where they have to provide services that are equal to or better than professionals like Amazon. At the same time, they also have to make sure that, in the long-term interest of the company, these services have the fungibility, protection, reliability, and cost control demanded by procurement.

The question becomes how do you keep your organization from being totally taken advantage of in this kind of situation.

Fremantle: What we are trying to do at WSO2 is exactly to solve that problem through a technical approach, and there are also business approaches that apply to it as well.

The technical approach is that we have a PaaS, and what’s unique about it is that it's offering standard enterprise development models that are truly independent of the underlying cloud infrastructure.

What I mean is that there is this layer, which we call WSO2 Stratos, that can take web applications, web application archive (WAR) files, enterprise service bus (ESB) flows, business process automation (BPA) processes, and things like governance and identity management and do all of those in standard ways. It runs those in multi-tenant elastic cloud-like ways on top of infrastructures like Amazon, as well as private cloud installments like Ubuntu, Eucalyptus, and coming very soon, VMware.
What we're trying to do is to say that there is a set of open standards, both de facto and de jure standards, for building enterprise applications, and those can be built in such a way that they can be run on this platform -- in public cloud, private cloud, virtual private cloud, hybrid, and so forth.

What we're trying to do there is exactly what we've been talking about. There is a set of ways of building code that don’t tie you into a particular stack very tightly. They don’t tie you into a particular cloud deployment model very tightly, with the result that you really can take this environment, take your code, and deploy it in multiple different cloud situations and really start to build this fungibility. That’s the technical aspect.

One of the things that’s very important in cloud is how you license software like this. As an open source company, we naturally think that open source has a huge benefit here, because it's not just about saying you can run it any way. You need to then be able to take that and not be locked into it.

Our Stratos platform is completely open source under the Apache license, which means that you are free to deploy it on any platform, of any size, and you can choose whether or not to come to WSO2 for support.

We think we're the best people to support you, but we try and prove that every day by winning your business, not by tying you in through the lawyers and through legal and licensing approaches.



Matsumura: As a consumer of cloud, you need to be clear that the will of the partner is always essentially this concept of, "I am going to maximize my future revenue." It applies to all companies.

... Thing that’s fascinating about it is that, when a vendor says "Believe me," you look to the fine print. The fine print in the WSO2 case is the Apache license, which has incredible transparency.

It becomes believable, as a function, being able to look all the way through the code, to be able to look all the way through the license, and to realize, all of a sudden, that you're free. If someone is not being satisfactory in how they're behaving in the relationship, you're free to go.

If you look at APIs, where there is something that isn’t that opaque or isn’t really given to you, then you realize that you are making a long-term commitment, akin to a marriage. That’s when you start to wonder if the other person is able to do you harm and whether that’s their intention in the long run.

Fremantle: What Miko has been trying to politely say is that every vendor, whether it’s WSO2 or not, wants to lock in their customers and get that continued revenue stream.

Our lock-in is that we believe that it's such an enticing, attractive idea, that it's going to keep our customers there for many years to come.

Now, what’s WSO2's lock-in?

Our lock-in is that we have no lock-in. Our lock-in is that we believe that it's such an enticing, attractive idea, that it's going to keep our customers there for many years to come. We think that’s what entices customers to stay with us, and that’s a really exciting idea.

It's even more exciting in the cloud era. It was interesting in open source, and it was interesting with Java, but what we are seeing with cloud is the potential for lock-in has actually grown. The potential to get locked-in to your provider has gotten significantly higher, because you may be building applications and putting everything in the hands of a single provider; both software and hardware.

There are three layers of lock-in. You can get locked into the hardware. You can get locked into the virtualization. And, you can get locked into the platform. Our value proposition has become twice as valuable, because the lock-in potential has become twice as big.

... You're bound to see in the cloud market a consolidation, because it is all going to become price sensitive, and in price sensitive markets you typically see consolidation.

Two forms of consolidation

What I hope to see is two forms of consolidation. One is people buying up each other, which is the sort of old form. It would be really nice instead to see consolidation in the form of cloud providers banding together to share the same models, the same platforms, the same interfaces, so that there really is fungibility across multiple providers, and that being the alternative to acquisition.

That would be very exciting, because we could see people banding together to provide a portable run-time.

Matsumura: Smart organizations need to understand that it's not any individual's decision to just run off and do the cloud thing, but that it really has to combine enterprise architecture and ... cautionary procurement, in order to harness cloud and to keep the business units from running away in a way that is bad.

The thing that really critical though is when this is going to happen. There is a very tired saying that those who do not understand history are doomed to repeat it. We could spend almost decades in the IT industry just repeating the things of the past by reestablishing these kind of dominant-vendor, lock-in models.

A lot of it depends on what I call the emergent intelligence of the consumer. The reason I call it emergent intelligence is that it isn’t individual behavior, but organizational behavior. People have this natural tendency to view a company as a human being, and they expect rational behavior from individuals.

Aggregate behavior

But, in the endgame, you start to look at the aggregate behaviors of these very large organizations, and the aggregate behaviors can be extremely foolish. Programs like this help educate the market and optimize the market in such ways that people can think about the future and can look out for their own organizations.

The thing that’s really funny is that people have historically been very bad at understanding exponential growth, exponential curves, exponential costs, and the kind of leverage that they provides to suppliers.

People need to get smart on this fungibility topic. If we're smart, we're going to move to an open and transparent model. That’s going to create a big positive impact for the whole cloud ecosystem, including the suppliers.

Fremantle: It's up to the consumers of cloud to really understand the scenarios and the long-term future of this marketplace, and that’s what's going to drive people to make the right decisions. Those right decisions are going to lead to a fungible commodity marketplace that’s really valuable and enhances our world.

The challenge here is to make sure that people are making the right, educated decisions. I'd really like people to make informed decisions, when they choose a cloud solution or build their cloud strategy, that they specifically approach and attack the lock-in factor as one of their key decision points. To me, that is one of the key challenges. If people do that, then we're going to get a fair chance.

I don’t care if they find someone else or if they go with us. What I care most about is whether people are making the right decision on the right criteria. Putting lock-in into your criteria is a key measure of how quickly we're going to get into the right world, versus a situation where people end up where vendors and providers have too much leverage over customers.

More Stories By Dana Gardner

At Interarbor Solutions, we create the analysis and in-depth podcasts on enterprise software and cloud trends that help fuel the social media revolution. As a veteran IT analyst, Dana Gardner moderates discussions and interviews get to the meat of the hottest technology topics. We define and forecast the business productivity effects of enterprise infrastructure, SOA and cloud advances. Our social media vehicles become conversational platforms, powerfully distributed via the BriefingsDirect Network of online media partners like ZDNet and IT-Director.com. As founder and principal analyst at Interarbor Solutions, Dana Gardner created BriefingsDirect to give online readers and listeners in-depth and direct access to the brightest thought leaders on IT. Our twice-monthly BriefingsDirect Analyst Insights Edition podcasts examine the latest IT news with a panel of analysts and guests. Our sponsored discussions provide a unique, deep-dive focus on specific industry problems and the latest solutions. This podcast equivalent of an analyst briefing session -- made available as a podcast/transcript/blog to any interested viewer and search engine seeker -- breaks the mold on closed knowledge. These informational podcasts jump-start conversational evangelism, drive traffic to lead generation campaigns, and produce strong SEO returns. Interarbor Solutions provides fresh and creative thinking on IT, SOA, cloud and social media strategies based on the power of thoughtful content, made freely and easily available to proactive seekers of insights and information. As a result, marketers and branding professionals can communicate inexpensively with self-qualifiying readers/listeners in discreet market segments. BriefingsDirect podcasts hosted by Dana Gardner: Full turnkey planning, moderatiing, producing, hosting, and distribution via blogs and IT media partners of essential IT knowledge and understanding.

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