Google Cloud: For CIOs it Means More Tough Choices

There’s a major dissonance going on today in the business technology industry.  In particular, there’s an IT labor problem in that most of the spending on technology initiatives (more than 50% in many shops) goes to labor costs. It’s ironic that an industry with a purpose to automate manual tasks has essentially failed to solve this problem.

C-level and line of business executives are intimately familiar with the ease and simplicity of consumerized IT (Google, Facebook, Amazon) and are demanding less complicated more agile technology deployments from their own organizations. With Google expected to announce new cloud services today at Google I/O to compete with Amazon AWS and Microsoft Azure, IT organizations will come under continued pressure to drive cloud adoption.  As conceptualized in the figure below, the innovation gap between cloud service providers and traditional IT shops is widening.

 

This puts CIOs in a very uncomfortable position. While on the one hand they’re being asked to do more with less, the risks associated with security and privacy breaches have never been greater. Outsourcing to cloud service providers is an alluring prospect to reduce labor costs, shift CAPEX to OPEX and simplify IT deployment. However the reality is that protecting customer privacy, complying with legal, audit and compliance edicts and “securing the data castle” of the corporation becomes significantly more complicated with many service providers; in particular Amazon.

 Are Public Clouds Really Cheaper?

What’s more, empirical and anecdotal data suggest that public clouds are often a more expensive alternative to traditional IT. As shown in the figure below, based on a study done within the Wikibon community in 2010:

Anecdotally, many large-scale Web companies are pulling away from Amazon and building private and increasingly hybrid clouds. Certainly the large Web companies like Facebook, Google and Microsoft are building their own private data centers. And as this case study about Zynga shows, at a certain scale, Amazon is not an attractive economic option.

Facebook’s Open Compute Project is a further attempt to commoditize infrastructure and drive down costs. Can the open source community facilitate standardization at the hardware and infrastructure management layer to further improve data center costs? Probably. The question remains is this model deployable by traditional IT organizations or is it an initiative that only Facebook can leverage in the near term? The answer is most likely both, but it will take years for traditional IT organizations to create the levels of standardization seen inside of the likes of Amazon, Facebook and Google.

So where does that leave traditional IT?

2012: The Year of the Hybrid Cloud

The conundrum for CIOs continues. Many of the business model aspects of the cloud remain attractive (e.g. pay-as-you-go, shared risk, CAPEX reduction) but the economic model is not always ideal and the security, privacy, auditability, legal and compliance hassles are onerous.

For these reasons, organizations are turning to the hybrid cloud. The IT industry has observed that the benefit that Amazon and Google have, for example, is homogeneity. Specifically, their infrastructure, infrastructure management and application development processes are highly standardized.  Traditional IT organizations are, on the other hand, highly fragmented and non-standardized. Leading organizations are abstracting complexity through virtualization and standardizing on an IT stack that supports a hybrid cloud model.

As the following Wikibon survey data from June 2011 and June 2012 shows, in the short span on 12 months, organizations have gone from unenthusiastic about hybrid cloud, to making it the preferred cloud strategy—even over private clouds:

Discussions with IT executives in the Wikibon community indicate that practitioners are actively pursuing cloud strategies and are trying to build infrastructure with the following attributes.

  1. Guaranteed quality of service (QoS) in writing
  2. 24x7x365 support with dedicated engineers that are available by phone if necessary
  3. The ability to conduct on-premise security audits and data center inspections
  4. Flexible security incident reporting to match corporate edicts
  5. Support for hybrid or federated clouds
  6. Geographic control of where data is stored
  7. An ecosystem that provides bench strength to the cloud service provider
  8. A solid backup and disaster recovery story
  9. True cloud attributes including self-service, elastic capacity, pay-as-you-go, no upfront fees, etc
  10. Affordability

The question for IT executives is can consumer giants like Google and Amazon deliver these capabilities in the near term? The answer is likely not soon for many demanding enterprises. At the same time, IT execs are wondering, can my enterprise cloud service providers deliver the simplicity, scale and speed of Google and Amazon for my enterprise—at costs that are attractive? The key to this question is the degree to which traditional IT vendors – e.g. IBM, HP, EMC, VMware, etc. – can partner with the cloud service provider ecosystem to deliver hybrid cloud services that meet the above requirements.

For CIOs considering public cloud options, it’s best to think about the following:

  • Read the SLA fine print – it’s not likely that Google will meet your need for many enterprise apps;
  • As such, can the Google cloud really be a part of your hybrid cloud strategy?
  • What about stealth IT – how prevalent is it in your organization and can you stem the tide of business units end running IT?
  • On the flip side, can your hybrid cloud service providers deliver cost effective services at scale?

And the biggest question of all. Because Google, Amazon and Microsoft don’t think about the split between enterprise and consumer…will the wave of consumerization wash over your secure, robust, compliant enterprise hybrid cloud with a “good enough” cloud solution that economically scales to meet most of your demands?

If not – at least in the near term –  it really won’t matter to Google.

If so – it will matter a lot to you.

Related Research

http://wikibon.org/wiki/v/Private_Cloud_is_more_Cost_Effective_than_Public_Cloud_for_Organizations_over_$1B

http://servicesangle.com/blog/2012/05/22/wikibon-survey-shows-2012-really-is-the-year-of-cloud/

http://wikibon.org/blog/private-cloud-computing/ (infographic)

http://wikibon.org/blog/stealth-it-the-consumerization-of-it/ (infographic)

 

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