Navigating Among the Clouds. Evaluating Public, Private and Hybrid Cloud Computing Approaches

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1 Navigating Among the Clouds Evaluating Public, Private and Hybrid Cloud Computing Approaches June 2012

2 Much like the winds of change that continue to alter the cloud landscape in the skies above, a powerful gust has shifted the landscape in the cloud computing marketplace. The hardware and software that was previously cost prohibitive to own and manage has become better, cheaper, and faster. Meanwhile, business users have become more comfortable with the stability and security of cloud computing options, resulting in exponential growth. In broad terms, cloud computing is a model for enabling ubiquitous, convenient, on-demand network access to a shared pool of configurable computing resources (e.g., networks, servers, storage, applications and services) that can be rapidly provisioned and released with minimal management effort or service provider interaction, according to the United States National Institute of Standards and Technology (NIST). More narrowly defined, cloud computing is an updated version of utility computing, where virtual servers are made available over the internet. Regardless of the precise definition, cloud computing has established a strong foothold in the marketplace. In 2011 alone, it s estimated that 1.8 zettabytes (a zettabyte is the equivalent of 1 billion terabytes) of information was created and replicated in the cloud. 1 A recent CDW survey indicates that 84 percent of information technology (IT) managers are employing cloud strategies in their work 2 to take advantage of increased scalability, flexibility, cost savings, and data redundancy. While cloud computing was gaining in popularity, a transformation was taking place behind the scenes. Hardware and software prices rapidly decreased. In addition, the cloud management software that used to be proprietary to large cloud service providers (e.g., Amazon Web Services, etc.) began entering the market for purchase. Some of the cloud management software even became available as open-source solutions, including the Xen Cloud Platform. The experience that IT professionals gained using the public cloud infrastructure has now enabled them to essentially bring the cloud back in house. The result is the evolution of public cloud infrastructures into private and hybrid cloud infrastructures that are not only cost effective, but also offer performance enhancements. Now, companies developing cloud strategies have more options, but they also have more decisions to make when they evaluate whether to deploy public, private or hybrid approaches. This white paper examines the factors to consider when developing cloud strategies, and offers a real-life example of how one company evolved its public cloud strategy into a hybrid approach. Cloud Types Different cloud types exist to take advantage of specific characteristics within each model, ranging from shared resources and security approaches, to varying provisioning and virtualization strategies for high-demand systems. Deciding which cloud type to use should be based on where a company is in the lifecycle of its IT structure. In some cases, companies may choose to use more than one cloud type simultaneously to address their needs. The following are the four main cloud types: Public Cloud Where a service provider makes resources, such as applications, storage and processing power, available to businesses and consumers over the Internet. Fee models vary greatly, with some public cloud services offered free to specific users and on a pay-per-usage model for businesses. 1

3 Private Cloud The infrastructure of a private cloud is owned by one company, which also manages the infrastructure or outsources that function to a third party. It can be hosted internally or externally. Community Cloud A hybrid of the public and private clouds is the community cloud, where multiple organizations own and develop a cloud infrastructure for their exclusive use and share the costs among each of the entities. Hybrid Cloud A hybrid cloud combines two or more clouds. For example, applications may reside on a private cloud, but data may be stored on a public cloud. Multiple variations of hybrid cloud deployment exist. When Using a Public Cloud Makes Sense The low initial capital investment requirements of a public cloud make it an ideal solution for start-up companies that are looking to costeffectively gain access to infrastructure that can support business growth. Public clouds are an excellent choice for start-up and established companies that are looking to quickly develop and deploy new products and services without expanding in-house infrastructure. In addition, using a public cloud is a cost-effective choice for companies that have an immediate need for specific IT functionality, such as: Disaster recovery IT expansion to accommodate growth Developer tools and environments Web services The flexibility of a public cloud to rapidly scale up or down, depending upon business needs, allows companies to focus more on their product and service offerings, instead of managing infrastructure and projecting future capacity requirements. Overall benefits of a public cloud include: Minimal IT personnel resources are necessary (typically a single tech can manage the cloud operations) Less infrastructure to maintain Lower total cost of ownership (TCO) when compared to traditional datacenters without virtualization Financial considerations Cloud service subscriptions are completely tax deductible, whereas computer hardware and software is a capital expense that must be depreciated Flexibility to make quick changes to products and services at a lower cost than traditional software approaches Despite the benefits of a public infrastructure, the tradeoff is that public clouds typically provide lower levels of performance in most instances. Cloud services can have applications and data spread across multiple virtual computers, which increases the latency when accessing data or services. For many cloud computing applications, this increased latency is a fair trade off for the other benefits that organizations can realize. Another tradeoff is the reliability of public cloud infrastructures, which is a legitimate concern. This was demonstrated in the April 2011 crash of the Amazon Elastic Computing Cloud (EC2), which forced numerous cloud-based businesses offline for days and a permanent loss of data in some instances. Although such a crash is unusual, companies offering cloud computing services need to build redundancy and data recovery strategies into their offerings to compensate for these unforeseen events. When to Consider a Private Cloud The lower cost of hardware (including leasing options) and the availability of robust cloud management software have created a market place where a private cloud is not only affordable, but practical. 2

4 Of course, creating a private cloud assumes that an organization has the IT resources (either inhouse or outsourced) to manage the solution whether the organization is a software developer or an end user that wishes to host and deploy a solution throughout its enterprise. The benefits of a private cloud, however, often outweigh the additional cost of IT resources. Benefits include: Increased Performance Data latency is reduced because the virtual machines running the applications are often in closer proximity to the databases, rather than distributed across multiple machines and great geographical distances. Additionally, companies using private clouds know their customer base and can better predict demand fluctuations in the short and long term, which directly impacts performance. In contrast, public clouds are struggling with balancing growth with demands. Lower TCO Price drops are enabling organizations to create their own private clouds and operate them at a lower cost than the ongoing public cloud subscription fees. Furthermore, private clouds do not incur per-use fees for data storage or processor usage as they do in many public clouds. This helps organizations better balance demand and costs. When determining TCO for a private cloud installation, the costs of creating, maintaining and staffing a data center need to be evaluated, as do offsite data storage needs for redundancy and disaster recovery. Unplanned downtime can challenge even the most technically savvy organizations (as it did with Amazon), so thorough plans for recovery and server restarts are essential to maintain business continuity. The following types of software developers and end-user organizations are ideally suited to pursue a private cloud approach: Software Developers The flexibility of a public cloud service enables developers to more easily accommodate fast company growth, frequently changing demands and rapid solution development. Cloud computing resources can quickly scale to meet demands, such as adding storage or increasing central processing unit memory. Self-service tools offered by many cloud service providers allow developers to not only request additional virtual machines, but also manage their own development environments. Additionally, developers can use the cloud s snapshotting capabilities to save configurations that can be restored at a later date if newer versions of a configuration encounter errors or unexpectedly fail. End Users Now there is an affordable option for end users to host and deploy applications via their own private cloud, or contract with a vendor offering solutions via a private cloud. As with any cloudbased offering, end users need to determine if security, redundancy and disaster recovery capabilities meet their needs. When subscribing to software services from a cloud-based vendor, it s important to determine if they are using a public or private cloud, as it may impact fees over time. In-house private clouds are becoming less expensive to operate than public clouds, so fee increases over time may be minimized with vendors that employ a private cloud approach. Hybrid Cloud The Best of Both Worlds Hybrid cloud approaches are designed to emphasize the benefits of public and private clouds, while minimizing their drawbacks. The variability of hybrid clouds enable organizations 3

5 to more fully customize cloud environments to fit their needs. Companies with a private cloud can still leverage public cloud services when business needs dictate. Situations may include: Expanding Data Storage To minimize hardware investments, some companies use public clouds to archive data, while storing live or production data on the in-house private cloud. Many public clouds, such as Amazon, have separate fees for storage and processor usage. As a result, archiving data is cost effective since little processing time is needed. Redundancy and Disaster Recovery The low cost of data storage on public clouds makes it ideal for offsite data redundancy storage and real-time replication. Also, the hosted applications used on an organization s private cloud can be hosted on the public cloud as a backup. In the event of unplanned downtime on the private cloud, the application on the public cloud can be started up within minutes as a backup. Product Development Rather than consuming the processing capabilities of the in-house private cloud, software developers can do their work on a public cloud. When the product is ready for deployment, it can be loaded onto the private cloud servers. Accelerating Time to Market The timing of new business opportunities doesn t always coincide with cash flow. Organizations with a private cloud that need to ramp up quickly for new product development and deployment can forego or delay data center expansions by utilizing public cloud infrastructure. Satisfying Partner Demands Business partner requirements for data storage and processing availability can change quickly. Leveraging public cloud infrastructure to maintain service level agreements can salvage a relationship and position a company for revenue growth when opportunities arise. A primary benefit of using a hybrid cloud strategy is that it enables organizations to avoid the over-provisioning that can take place with public cloud service providers. It s unusual for public cloud service providers to reveal how they are provisioning their machines, so cloud service subscribers are unable to know the processing demands that are being placed on the servers. Since companies using a public cloud are essentially sharing computing resources with other companies, substantial spikes in computing resources may impact the other companies who are using the same servers. A hybrid strategy enables companies to have more control over performance by placing high-demand solutions on their private cloud, while placing low-demand solutions or data on a public cloud. Proof of Concept A Real-Life Example of a Public-to-Hybrid Cloud Transition In 2009, Plano, Texas-based RemitDATA had an idea for a new solution. RemitDATA had limited financial and IT staffing resources to develop and launch its new solution, TITAN, before the marketplace developed a competing solution. RemitDATA is the leading independent source of comparative analytics for reimbursement, utilization and productivity data for the healthcare provider market. Its data-intensive solutions and processing-heavy analytics required a robust infrastructure to meet end-user demands. TITAN was conceived to provide healthcare organizations with real-time analytics on not only their own financial performance, but also 4

6 to compare them against peers throughout the nation. To quickly scale up its infrastructure to meet the development and partner requirements with the TITAN product launch, RemitDATA turned to a public cloud solution with Amazon Web Services. The solution development environment was on the cloud, and eventually the solution itself was hosted and deployed on the Amazon cloud. As sales of TITAN grew, RemitDATA revenue increased and the company expanded. Although TITAN users were satisfied with the solution s analytic capabilities, the latency of the public cloud and Amazon s unscheduled downtime started to impact performance for all users. Screens that should load with data in seconds took much longer. Additionally, increased use of public cloud infrastructure seemed to further exacerbate the latency issues due to the higher volume of data input and output (I/O) commands. RemitDATA needed a new approach to delivering TITAN s functionality. RemitDATA s new in-house data center uses a high-density blade platform for the pool of virtual machines that it maintains. The choice to make the transition to a private cloud came down to price and performance. RemitDATA operates its in-house private cloud for about a third of the costs that were being incurred with the Amazon Web Service. Data latency issues have been improved as well. The savings are enabling RemitDATA to expand product offerings and maintain low subscription fees for its software as a service (SaaS) solutions. The hybrid aspect to RemitDATA s transition is the way that the company uses the Amazon public cloud for data storage, development environment, offsite data redundancy, and disaster recovery. Data more than 90 days old is archived on the Amazon cloud. Data backups and real-time replication are also stored on the cloud. In the event of extended unplanned downtime, backups of TITAN and other RemitDATA solutions are hosted on the Amazon cloud and can be activated within Deployment Time: A Comparison of a Cloud versus Traditional Approach This is the secret of Cloud Computing. Every other virtue stems from here. The chart on the left shows the labor resources that are necessary to deploy and maintain a traditional (non-cloud) farm of computers when deploying a solution. The chart on the right shows how labor resource requirements drastically decline in week three of deployment when using a cloud-based approach. The substantially reduced labor resources decrease costs. 5

7 45 seconds. Amazon s data storage costs are low, and processing fees are based on usage, so once the data is stored, it does not incur additional processing fees. Beyond reducing public cloud processing and storage fees, another cost-saving measure involved reducing the number of Amazon cloud environments that RemitDATA used. When TITAN was hosted on the Amazon public cloud, the solution required 52 servers across 13 environments. Now, RemitDATA uses 12 servers across four environments. This reduction in servers cut RemitDATA s Amazon cloud costs in half. Additional cost reductions were achieved by the creation of an internally developed product that automatically starts up and shuts down the pre-production environment on a daily basis. The automated shut down takes place on nights and weekends, and then starts up the environment in the morning before RemitDATA s Yearly Storage Growth developers arrive at the workplace. Developers still have the ability start up the environment on demand whenever the need occurs. This reduced use of Amazon cloud services cut costs by another 33 percent. To facilitate rapid data transfers between the private and public cloud, RemitDATA installed a 1 gigabit per second (Gbps) Internet connection. Besides providing the bandwidth for rapid data transfers, the connection is also a vital component to RemitDATA s disaster recovery strategy, enabling the sharing of files necessary so that either environment can remain running in case an unplanned event occurs. Using the hybrid model also increases RemitDATA s business agility, as the company can rely on its own cloud or the public cloud to quickly meet any business demands from new product development, to customer base expansions, and more. The move to a hybrid cloud RemitDATA s flexible hybrid solution enables it to store massive amounts of data cost effectively by balancing whether data is stored on its public or private cloud. Currently, RemitDATA has 135 terabytes of data stored on its public and private clouds. 6

8 approach has positioned RemitDATA as one of the industry s technological leaders that is poised for continued growth and new product offerings. Final Considerations The move to a cloud computing environment is not without its challenges. Traditional softwarebased applications cannot simply be cut and pasted into the cloud and work as designed. Companies need to design their applications for the cloud to account for distributed data environments, load balancing, I/O latency and even unforeseen events that cause downtime. However, the economics of private and hybrid cloud approaches are making it possible for companies to conserve capital expenditures and employ budgets for more strategic endeavors. Hybrid cloud strategies provide unprecedented flexibility for companies to rapidly expand or contract their computing infrastructure based on marketplace changes. This flexibility enables companies to quickly respond to customer demands, incorporate new technologies, and more effectively compete as industries evolve. Pursuing a hybrid cloud strategy is a logical choice for companies that wish to increase their business agility and reduce costs. Authors: Matthew Hargus, CTO Shawn Henderson, Director of IT RemitDATA Inc. All Rights Reserved. 1 Extracting Value from Chaos. An IDC Digital Universe study. 2 CDW 2011 Cloud Computing Tracking Poll. 7

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