Understanding Cloud and How to Buy It

The value of cloud

The advent of cloud brings to enterprises new agility, speed and flexibility. Cloud enables them to contain capital expenditures, reduce operating costs, and scale up and down with ease to meet fluctuating market demands.

For the past few years, everyone’s been talking about cloud computing, and for good reason. This delivery model has changed how companies work and the speed at which they can respond to changing market demands. The fast provisioning, dynamic scalability and pay-as-you-go cost model deliver big advantages to businesses and more fluidity to users.

The cloud model: delivery types

The cloud model is a measured service that promotes availability and delivers key benefits, such as on-demand self-service, broad network access, resource pooling and rapid elasticity. There are three basic cloud delivery models, and enterprises can employ one model or a combination of different models:

Private or internal cloud: Cloud services are provided solely for an organization and are managed by the organization or a third party — or a combination of both. These services may exist on the customer’s choice of premises. This is similar to a traditional data center environment, but the services are provided within the cloud capabilities, not as complete IT service delivery.

Public cloud: Cloud services are available to the public and owned by an organization selling cloud services, such as Amazon, Google, Rackspace or other cloud businesses. Typically, a public cloud solution leverages a shared infrastructure service for all customers and may or may not enable the end customer to specify or even identify where data resides or applications are executed.

Hybrid cloud: An integrated cloud services arrangement that includes a cloud model and something else. For example, data stored in a private cloud or a customer’s database in a traditional infrastructure is manipulated by a program running in the public cloud.

Cloud benefits over outsourcing

Cloud computing provides a threefold advantage over the traditional IT outsourcing (ITO) model: agility, predictability in costs (including moving expenses from CAPEX to OPEX), as well as potential cost savings, particularly when compared to a nonleveraged model. The three basic types of cloud service offerings are Software as a Service (SaaS), Platform as a Service (PaaS) and Infrastructure as a Service (IaaS).

The cloud brings cost benefits in that enterprises can quickly leverage new technology to be more efficient when compared to introducing new technology by traditional means. On the infrastructure-management side, the benefits result from using a shared, multitenant infrastructure or by consolidating a company’s infrastructure through virtualization. On the application run-and-maintain side, cloud allows for a more leveraged shared-services model for applications with which the supplier has competence and capacity.

On the application side, cloud benefits result from an environment that can be quickly established for application development, testing, QA and staging for production. Being able to replicate in a low-cost environment to reconfigure, change, test or stage before moving to production is a definite advantage. This saves time, accelerates application development to meet critical business or mission requirements, and provides a higher level of quality across an organization.

How to buy cloud services

Cloud agreements require a living document of business requirements, containing only those technical requirements that are absolutely necessary. When soliciting cloud services, enterprises should be stating their specific business challenges and any explicit requirements they may have for that system — such as interconnectivity, middleware or data exchange.

Because every provider defines a virtual CPU (vCPU) differently, companies need to ask some specific questions to adequately compare services in the cloud. When assessing a cloud solution, consider the following:

vCPU: It’s important to understand how the provider is measuring CPU capacity: in gigahertz, number of cores or some combination. Smart customers should request that providers compare their measurement to a standard set by the customer, using the Intel Xeon X processor as a baseline, and assess how many vCPUs it takes to equal that capacity.

RAM and Storage: Some vendors do not include RAM as a measured service because, as a commodity, it is a very small fraction of the total cost. Regarding storage, in the majority of cases, customers should base their cost structure on persistent storage only.

Network: It is important to accurately estimate the volume of data traffic the network solution may require, so either dedicated connections or an expansion of current capacity can be planned prior to implementation.

Capacity Planning and Usage: Customers can opt for Capacity on Demand, which typically refers to a specific set of circumstances in the private cloud that lets a customer reserve a minimum capacity but lets the usage “burst,” with the customer paying for the additional capacity only when using it. Or, customers can opt for Guaranteed Capacity, in which a “block” of computing resources is purchased, but not all of it used due to any number of reasons; however, the capacity has a finite limit.

Support: The single most important point to consider is the delineation of support between the provider and the customer. In most instances, management and support ends either at the virtual hardware level or at the OS level, with all additional application support provided by the customer.

Cloud contracts are less complex than traditional ITO contracts but also less negotiable, because customers are buying a bundled service. A typical cloud contract will have little flexibility in negotiating terms and penalties. The only real option in a true cloud implementation will be a credit for downtime, with no enhancements for loss of business-critical functionality.