Why the Hybrid Cloud Makes Sense

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1 CITO Research Advancing the craft of technology leadership Why the Hybrid Cloud Makes Sense Sponsored by

2 Contents The Hybrid Cloud: A CIO s New Focus 1 Business Challenges Driving Enterprises into the Cloud 2 Cloud Design Challenges 3 Speed Is Critical to Success 4 Proximity Is Precious 4 The Public Cloud Has Limits 5 The Benefits of the Hybrid Cloud 6 Meeting the Needs of Mobile Employees 6 Right-sizing the Network 6 Reducing Costs 7 Accelerating Development 7 Going Global 7 Conclusion 8

3 The Hybrid Cloud: A CIO s New Focus Enterprises are increasingly choosing this cloud architecture in order to maximize the performance of mission-critical applications. In a previous era, it was possible for a CIO to confine almost all of the technology operations of his company within the walls of a data center that was directly managed, and likely owned, by that company. But today, the data center is just one component of the hybrid cloud, an architecture that combines elements of private clouds, public clouds, and on-premise data centers. Enterprises are increasingly choosing this cloud architecture in order to maximize the performance of mission-critical applications, which benefit from the security and reliability of the private cloud and on-premise data centers, as well as the scalability and flexibility of the public cloud. The hybrid cloud helps companies manage the processing of applications from big data to payroll, service mobile and fixed users, and speed content to its consumers. Determining what goes where in a hybrid cloud and how everything fits together is a prime new focus for CIOs. CIOs will have to develop new skills to employ the hybrid cloud and its new technologies, but the results will be well worth the effort as the hybrid cloud provides new levels of business agility and an ability to say yes more often. This CITO Research white paper examines hybrid cloud design challenges and provides advice about how to build and optimize for such clouds. 1

4 Business Challenges Driving Enterprises into the Cloud It is important to understand the challenges that are driving companies to the cloud. Each type of computing has its own personality. Some services and applications are cloud-friendly by design; others are not. To understand the right place for each type of computing in your landscape, it is important to understand the challenges that are driving companies to the cloud. Challenge Type Global application delivery Mobile application delivery Economics of content delivery Response time Data locality Expense of innovation Economics of private cloud at scale Challenge Description As businesses spread across the globe, they realize that they can t service a global business out of one data center. Applications need to be delivered at a consistent and predictable level of quality across multiple markets on multiple device types. In many markets, mobile is the primary platform consumers use to access apps. If an application underperforms on mobile devices, a significant customer base may not be addressed. The need to distribute content at scale and the inadequacy and expense of doing it from a single data center led many companies to hire CDNs to cover the last mile in global markets. Providers charge a premium for local caching services; companies are looking for alternatives. More enterprise apps are delivered as services from the cloud every day. Business users increasingly rely on SaaS , CRM, and HR apps, so response time is critical to customer satisfaction. Sometimes data needs to stay in one place, due to regulatory compliance, such as Europe preventing access to records by external governments. The flexibility of the public cloud is an irresistible draw for new product innovation since it is so efficient for procuring resources when compared to standing up hardware. Businesses use of the cloud has grown so extensively that the economic advantages have diminished. When companies are spending tens of thousands of dollars per month on the public cloud, it s like renting a car for three years at some point it s cheaper to buy. 2

5 Cloud Design Challenges The business challenges outlined above are best mastered by using the hybrid cloud as a designing and organizing principle. We are in the early days of designing hybrid clouds. The technology and the capabilities of cloud computing are not commonly understood, nor are the tradeoffs involved (see the sidebar for our discussion of public, private, and hybrid clouds and our impression of their strengths and weaknesses). Public, Private, and Hybrid Clouds The public cloud is what people think of when they hear the word cloud. It s ideal for application development, scientific data processing, and web-scale applications. On the downside, SLAs can be weak and security can be limited. Exclusive use of the public cloud becomes less economically feasible as usage scales. Once applications hit a certain usage/cost threshold, or have strict requirements, such as security or data protection, that cannot be met by the public cloud, organizations often consider a private cloud. IT favors the private cloud for core enterprise security; applications run on infrastructure that is solely assigned to your company and that facilitates auditing and compliance. The reality is that most organizations will need a blend of these options for different purposes. This is referred to as a hybrid cloud. It allows organizations to use the public cloud where it makes sense, to create private clouds to support certain application types, and to use advanced techniques such as cloud hubbing situating critical hardware in network data centers in close proximity to telecom providers, content distribution networks, and application component providers to place their applications optimally to ensure rapid response time. 3

6 Here are some of the key challenges that enterprises will face in the design, construction, and evolution of hybrid clouds. Hybrid Cloud Why the Hybrid Cloud? Massive Scale On Demand Pay-as-you-go Public Cloud + Control Security Cost Efficiency at Scale Private Cloud = Public Cloud Private Cloud Manage and control Tailor application portfolio Meet required SLAs Speed Is Critical to Success While technology changes rapidly, the laws of physics and its constraints on networks remain the same. We can t send communications faster than the speed of light. A lightning-fast response time becomes an ever-more critical evaluation criterion for the performance of an application (and by extension, the business that runs it). Consumer demand for data, delivered in high volume at high speed, has grown exponentially. Consumer demand for data, delivered in high volume at high speed particularly on mobile apps has grown exponentially. The media we deliver is richer than ever before. Advertisers expect that crisp videos and ads will appear seamlessly on 3G and LTE devices. The number of broadband customers in rural areas is increasing. All of this means that high speed and low latency will be paramount objectives for any application. Proximity Is Precious As much as the Internet is celebrated for collapsing distances between collaborators, volume and latency requirements make the physical location of content servers and transaction hubs critical. To deliver a good experience, enterprises need to be as close to customers as possible, and they need to understand how customers consume applications, as well as what components (payments, ads, videos) are required from outside sources. The requirements for servicing geographically distributed customers and content, and decisions about how to aggregate and distribute content, will be increasingly specific to individual applications and the location of their user bases. Likewise, the need to place telecom carriers, content providers, and other application components in close proximity will become increasingly intense. 4

7 Why the Hybrid Cloud Makes Sense The Public Cloud Has Limits Often the design process for a hybrid cloud begins when a CIO realizes that the public cloud is being so heavily utilized that it would be more efficient to do some or all of the computing elsewhere. Businesses can pay tens of thousands of dollars a month to use public cloud services, and as more applications move into the cloud, renting computing infrastructure can become prohibitively expensive. At large scale, leveraging private cloud resources becomes an attractive option. Moving applications out of the public cloud is typically spurred by the following factors: The enterprise experienced an outage in the public cloud and did not get support during the recovery process Instead of running expensive leased lines from one data center to another, enterprises gain value by placing applications in the center of a cloud ecosystem. The CIO discovered application sprawl in the cloud and realized it s time to consolidate The enterprise needs more control over transactional data than the cloud offers Enterprises want to distribute content and are finding CDNs (Content Delivery Networks) exceedingly expensive Instead of running expensive leased lines from one data center to another and attempting to manage the interaction of networks and applications internally, enterprises gain value by placing applications in the center of a cloud ecosystem, such as those developing inside Equinix data centers. A cloud hub offers direct access to many of the providers the enterprise needs to reach to assemble and enrich applications, access the public cloud, or deliver new applications from outside providers. Direct Connection to Public Cloud Elements of the Cloud Hub Ecosystem Platform-asa-Service Content Delivery Networks Cloud Hub Ecosystem Software-asa-Service Network Carriers Peer-to-Peer Industry Connections 5

8 The Benefits of the Hybrid Cloud Because a geographically distributed network is required, connectivity becomes critical. As CIOs wrestle with the design challenges of a hybrid cloud, they find that their understanding of networking increases as the network that connects data centers and clouds becomes much more important and is in fact the enabling platform for the hybrid cloud. And because a geographically distributed network is required, connectivity becomes critical. Benefits of the hybrid cloud include the ability to meet the needs of mobile employees, right-size the network, reduce costs, accelerate development, and go global. Meeting the Needs of Mobile Employees Ever-increasing portions of the global workforce are becoming mobile-enabled. Some 39.4% of the global workforce more than 1.9 billion people will be using mobile technology by This is driving an exponential increase in data consumption and the number of devices attempting to access enterprise networks. To support these users, enterprises need to be able to call on data, computing power, and content delivery seamlessly and across multiple device types, carriers, and geographies. To date, a community of specialized CDNs for mobility that run optimized local caches has supported mobile app delivery in global markets. But, many businesses are finding it more economical to build their own CDNs, hosted by a private cloud operator. The hybrid cloud can offer the right mix of customer and company data protection, app performance, and traffic management. The hybrid cloud can offer the right mix of customer and company data protection, app performance, and traffic management. Right-sizing the Network Setting up a private computing network across multiple facilities is a major investment in infrastructure. With the hybrid cloud, enterprises can be more selective about how much as well as where and when to spend, and they can choose to use an internal or external network as appropriate. They can build a base in the private cloud and leverage the public cloud for peaks. Ultimately, it s about right-sizing the network to leverage distributed resources based on the enterprise s specific use cases and needs. 1 Worldwide Mobile Worker Population Forecast (IDC, 2009) 6

9 Case in Point: Bechtel Bechtel, the international construction contractor, used a leased line to connect its main data centers with smaller data centers in far-flung localities. Bandwidth was nearly $50 per MB, yet news reports revealed that Google, one of the world s largest sources of data traffic, paid closer to $6. In the time the company took to study its cost base and examine alternatives, its own rate had gone up to $55 while Google s had gone down to $4. Bechtel decided to take a page from Google s strategy: position data centers at the most critical interconnection points around the globe. Bechtel virtualized a large portion of its equipment to save space on hardware and situated its hardware in Equinix s data centers. This allowed the contractor to directly access the trunk lines of the carriers it had once paid to string dedicated lines all over the planet. This move saved Bechtel almost 40% of its communications costs, reduced latency, and placed it in close, low-latency proximity to an ecosystem of SaaS service providers such as Workday and SalesForce.com. Reducing Costs The hybrid cloud can greatly reduce the cost of cloud operations by optimizing the best mix of owned hardware, public cloud service, and private cloud security and management capabilities. For example, companies paying around $20,000 a month for public cloud IaaS can achieve ROI in about four months by purchasing their own equipment and moving to private clouds enabled by Redapt, Open- Stack, CloudStack, or RightScale. Accelerating Development With secure, easily managed, low-cost cloud resources, companies can finally break the 6-to-18-month application development cycle. Many businesses take advantage of the initial low cost and speed of provisioning servers in the cloud to test new applications, then move production apps to a private or hybrid cloud for better performance and cost savings. With secure, easily managed, low-cost cloud resources, companies can finally break the 6-to-18-month application development cycle. Going Global Simply put, a company can t go global if its end users can t reach its applications and services. To support global delivery, companies are paying increasing attention to the network performance from their end users back to the applications being consumed. Placing application servers close to the customer and directly connecting with relevant networks helps to ensure an optimal end-user experience. 7

10 Case in Point: Salesforce.com Salesforce.com was able to cut its latency in the Japanese market from 800 milliseconds to 120 milliseconds by directly connecting to Japanese carrier NTT in a West Coast US Equinix data center. As a result, the end-user experience for Salesforce.com customers went up, as they were now able to update and retrieve opportunity records faster and make better use of social-media and chat facilities in the platform. Using a hybrid cloud, enterprises can set up multiple availability zones under their control, connect with cloud service providers in regional markets, and use techniques like those used by Salesforce.com to forge a direct connection to public cloud resources. Conclusion With the rise of cloud infrastructure, software as a service, the global data footprint, and mobile apps, CIOs and business leaders need to think much more broadly about how their technology fits into a global network of services. Applications must be designed to be split across multiple locations and delivered on a multitude of platforms across the globe. Connecting to an ecosystem of partners becomes an increasingly important part of the job as these partners will be vital to building new applications and enriching and replacing old ones. To reach customers, extending a cats cradle of leased network lines or paying for a content delivery network will be increasingly expensive for enterprises with heavy data traffic. Instead, enterprises will consider options for building their own networks using hubs and private clouds. The hybrid cloud provides opportunities for enterprises to save money, accelerate development, maintain security, and connect to as many partners and customers as possible, and in the most optimal way. However, there are important management considerations for the hybrid cloud. Some of which have been obscured. That s why the focus of the next paper in this series is Advice for Hybrid Cloud Architects. 8

11 About Equinix Equinix, Inc. One Lagoon Drive 4th Floor Redwood City, CA Main: Fax: This paper was created by CITO Research and sponsored by Equinix. CITO Research CITO Research is a source of news, analysis, research, and knowledge for CIOs, CTOs, and other IT and business professionals. CITO Research engages in a dialogue with its audience to capture technology trends that are harvested, analyzed, and communicated in a sophisticated way to help practitioners solve difficult business problems. Visit us at 9

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