Real-World Financial Services Cloud

Cloud computing has been made very real today.

As I subtly alluded-to in March, The New York Stock Exchange (NYSE Euronext) today launched their Capital Markets Community Platform (CMCP) along with partners EMC and VMware. It's essentially a high-performance, low-latency, special-purpose cloud IaaS, replete with customers and roadmap. Register Coverage  FIN Alternatives Coverage

This is a very notable event for a few reasons:

• Cloud is not a commodity: Unlike general-purpose public clouds, NYSE has constructed a high-performance, low-latency infrastructure to meet the specific needs of trading firms. From these perspectives alone, use of a public cloud (AMZN, RAX, etc.) would never meet the stringent performance requirements. My belief is that we'll see even more of these industry-specific clouds arise. Differentiators will likely vary based on needs for performance, privacy, security, scale, etc.
• Cloud is highly reliable:  A lingering question has been whether the cloud - and associated automation controls - was reliable enough for mission-critical applications. NYSE is no stranger to Financial-Markets levels of reliability, and has clearly taken great pains to ensure that their experience carries-over to the CMCP.
• Cloud is highly secure: Ditto to above. the CMCP is accessible to customers only via a highly-secure network and only to pre-validated users.
• Cloud enables new forms of business: For me, this is the most exciting aspect. NYSE's cloud now allows small firms (picture 3 hedge fund managers and their dog in a garage) to take advantage of enterprise-grade hardware and data... say to test and run new trading algorithms. Access to resources such as this would have been far outside of the reaches of the small firm.
• The Cloud + Big Data story is real: What's also nifty about NYSE's implementation plan is that it allows users to create DB's on demand, and will allow users to access massive data in the form of market play-backs.  This DBaaS will obviate the need for tenants to replicate TB or even PB of data as they test algorithms against historic market data.

NYSE's partnered with EMC and VMware to construct the cloud, and VMW has also posted an excellent Blog on the topic. A few excerpts:

"So, why is this better, and why is NYSE Technologies the right organization to deliver? For hedge funds and other buy-side firms, their value isn't in integrating compute, storage, networks and security -- it's in analytics, trading strategies, algorithms, application strategies and other proprietary expertise. The NYSE service means those IT organizations no longer have to struggle with integrating data dumps and feeds into their infrastructure and operations. Trade execution speed can be critical, so physical location and proximity to the market matters. NYSE's experience in operating large scale, mission-critical VMware-based infrastructure -- the NYSE and Euronext exchanges -- is unquestionable....

"...NYSE represents an alternative cloud future: one that contains a vibrant ecosystem of clouds, both internal IT departments and external cloud service providers, with unique understanding and focus on customer needs, married with the ability to deliver through scalable, on-demand and trustworthy IT services. What internal IT organizations and cloud providers like NYSE share is a rejection of the concept of an inflexible cloud monoculture. Instead, they choose to build high performance, secure and scalable infrastructure because it meets critical business needs. They obsessively focus on value delivered to the customer and never confuse that with cost of service.

And that's it. Cloud is now about Value, even more than it has ever been about cost reduction.

Hosting/Cloud Index: Update

Back in December, 2009, I proposed an index of hosting and cloud providers, and posited that these sample portfolios would be an excellent gauge of the market's perception of the state of the business. I also made an update in December of 2010.

I thought I'd make an update again, and review the state of the business.  Also, it would seem that others are adopting the same idea, as I was recently reminded by Software Advice.  Good to see that these types of metrics are being adopted...hopefully they cut through some of the vendor hype.

Now, on with the statistics.

First, I created an index of a superset of publicly-traded hosting providers, some of whom also provide cloud computing resources. My only litmus test was that these were *not* SaaS providers, and that they provided hosting/IaaS services as their primary business. The performance was compared against the NASDAQ composite, and has been quite positive. The large increase in index price was primarily due to Verizon's acquisition of Terremark for a hefty premium.

Next, I took a subset of the providers who solely claimed to provide cloud-computing services.

As I had suspected, this index has vastly out-performed the NASDAQ - my supposition being that the market is placing a higher premium on any business conducting "cloud"-related business. 

The market would appear to still be going strong, and I'll continue to update progress every few months.

It's All Just Data to Me

Now that I’ve been with EMC for a few months, my relationship to storage, computing, and networking has once again shifted. And, in the context of the cloud computing operations model, my relationship to the physical location of data - and processing of that data - has shifted too.

My new perspective starts with Computer Science 101: Where, at its heart, computing is simply data and instructions (stored on similar media) which are combined on a device (CPU) and produce an output.

Since computing began, this model was consistent – but as the data and instructions grew in size and abstraction, the media changed to the point where instructions (code) and data, were each stored in physically separate locations.

Until recently the data and instructions would be transported (over the network) to individual physical CPUs (with their own sets of OS) where they would be combined and executed. And then, the resulting data generally was transported back to its place of residence.

Servers are Just Bits

Now, enter the Virtual Machine.  At the heart of it, it's simply another file (e.g. VMDK) – in other words, just more data.

So in the modern virtualized data center, what we have – at the extreme – is a model where not only the data and instructions are bits… but the servers are bits too. All they require are physical CPUs to execute.

In the ‘traditional’ model, the data and instructions were brought to where the physical servers and O/S were.  But today, with pervasive farms of generic physical servers, we have the situation where *either* the data bits can be brought to the server, or the server bits can be brought to the data.

Some of the implications you’ve probably already thought of – such as vMotion of a VM from one physical server to another, or using a DRS-style control to re-locate VMs from failed physical compute resources elsewhere.

But consider another situation that’s happening with increasing frequency: The need to work with “Big Data” – such as running analytics on unstructured bits that could be on the Terabyte to Petabyte scale.  Here is a case where it makes sense to send Mohamed to the mountain than the other way around… To literally re-locate the servers (which are, after all just data themselves) closer to, or co-incident with, the data.

Or, consider a “follow-the-moon” strategy for data center energy efficiency: where the most energy-efficient (and least expensive) physical servers are chosen to handle workloads. Once again, the data (which includes the virtual server, data and instructions) is simply transported to the optimal set of physical processing resources.

Cloud Infrastructure and Data Management

From where I sit, the importance of data storage, data management and data portability suddenly becomes paramount. It can reasonably be argued that physical servers are now merely execution platforms for the VM data bits, and that the network is simply becoming flatter and fatter.

So the future data center and cloud model might be thought about as a data management problem. Where and how to locate bits, back-up bits, scale bits, operate on bits.   True, this is a data-centric view of the world. But it's also a healthy perspective from which to view the renewed importance of data and its dynamics, versus the other more static components of the data center.

Cloud's Transformation: The Softer Side

After having spoken to numerous customers and vendors, it's clear to me that cloud computing's operational transformation necessarily triggers structural changes in the IT organization - as well as in the rest of the enterprise.

Overheard at a conference late last year, an analyst I was briefing illustrated it this way: A Converged infrastructure requires a converged organization to operate it.

I'm convinced we'll see significant internal transformation in the future - not of technology, but of people, roles, skill-sets, and organizations. As evidence, just take a look at the organizational transformation EMC's IT department has gone through in the past 3 years (HT to Chuck's Blog)

Consider this:

• The Role of the CIO: Today the CIO is orchestrator of technologies, if not a technologist him/herself. Governance of the technologies/vendors is perhaps secondary because "keeping the lights on" is such a dominating task. In the future, the role will shift from technologist to where the CIO (and IT overall) will become a service portfolio and governance manager... Regardless of whether the services are generated internally or externally.  Implication: CIO's will need new skills, policies, processes.
• IT Organizations: Referring again to Chuck's blog (and excellent illustrations therein) the IT organization will shift from siloed / distinct organizations to a set of unified service organizations leveraging a common services infrastructure. Implication: change management, goal changes, departmental funding changes.
• Individual Skill-sets: Today's IT skills (esp. in larger organizations) are specialized around applications, servers, networking, backup, etc. each which aligns with the organizational structures, above.  However, in the future many of these functions will either become more automated and/or combine with (be embedded within) other service management functions. Implication: new skills training, certifications, processes.
• Supporting Services:  As IT transforms, so will adjacent organizations and services - like finance, lines-of-business, legal/compliance, vendor/partner management.  How IT is measured and accounted-for, related-to as a business partner, and how it dovetails with external partners/providers will necessarily shift.  Implication: need for change management and new organizational design.

Looking forward, if these transformations occur even at a modest level, I would expect too see other broader-scale industry-wide changes in these and related areas.

1. CIO roles will shift to governance & vendor management (perhaps even modeling supply-chain management)
2. Organizational & change-management resources (firms facilitating change specific to IT transformation) will be in higher demand
3. IT skills development will re-invent itself; new training and certifications (e.g. cloud architect) will become the norm. Fewer special-purpose technologists will be needed, in favor of a new breed of "converged" technologists
4. Entirely new categories for job recruitment will emerge to find and place this new talent
5. IT financial management skills development, training etc. will be in further demand as IT shifts from being a high-dollar capital expense to becoming an on-demand business resource/enabler.

 In the future I'll continue to reflect and blog about what I'm hearing in the market. But we should all be keenly aware of the non-technical impacts of the IT technology shift.

And, if you know of examples today, do share!

Marketing the Cloud

Of all the marketing, marketing "The Cloud" has all the makings of a real challenge: The concept is new, the technology is disruptive, buyers are skeptical, hype abounds, and the terminology (just what is "cloud"?) is murky. So, when recently asked how do I "market the cloud" this Blog idea arose.

For me, marketing is far more than making "buzz" in the market. It's about matching seller and buyer: First, ensuring that the seller's product specifically targets one or more needs in the market (and adjusting as-needed), and second, ensuring that the buyers understand the product and its fit-for-their-purpose (and adjusting the buyer segments as-needed).

So, where a nascent concept, confused buyers, and evolving definitions are concerned, I turn to basics of new product introduction: (a) understanding customer problems/opportunities, (b) clearly defining the product/solution, (c) addressing objections, (d) helping customers through the adoption cycle.

Focus on specific issues the cloud addresses, not the Cloud itself: Before I recommend "cloud" as a solution, I ask myself what problems will customers really try to solve? They've heard “cloud” and it likely interested them, but for what reason? Getting to the need point is critical: It is cost? agility? keeping-up-with-the-Jones’? New business enablement?  You have to first ask the business need question, not try to force-feed a solution. Usually the cloud model is compelling on nearly all levels - but the customer first needs to understand - and want to pursue - the opportunity. Good marketers ensure customers self-select into the solution, even if it's an extremely broad one. Also, an exercise I sometimes pursue is to avoid using the term "cloud" altogether during this phase. Instead, I focus on the attributes of cloud computing, and wait to hear whether they resonate with the customer's needs. Sometimes they might not.

Get clear on definitions - and use lots of adjectives: The next question to ask is: What cloud?  Too often marketers of the cloud model don't modify the noun Cloud with an adjective like Private/Internal, Public, Hybrid, etc. causing even more confusion. It's alphabet soup. Many buyers usually start by thinking the only cloud is the public cloud. Once buyers are clear about the operational cloud model you're both talking about, you can have a more meaningful marketing action.

Know your buyer's technology maturity, and technology appetite: Different markets, segments and customers will have different technology appetites and be at different technology maturity states. So, as much as vendors want buyers to take a big step and buy all-new stuff, there has to be a spectrum of offerings to fit buyers at different stages of the maturity curve. (See "It's A Journey", below...)

Be pragmatic - identify resistance areas and objections: I say pragmatic, because everyone has their own list of objections and concerns. They might be trust/security/governance issues; economic models to justify the investment; the risk of moving to new operational models; dealing with change management (a change in IT will necessarily impact changes in related orgs); the list goes on.  Make sure you've listened carefully to all objections, and thought-through responses.  I've unfortunately seen wonderful products fail - not because they don't work, but because when it comes to implementation, all of the pot holes and speed bumps haven't been identified and addressed.

Be pragmatic - it's a Journey: Few buyer segments adopt all-new models - especially cloud - in their entirety on day-1. So marketers need to be prescriptive about where to start, what to do when, and how to help buyers with a roadmap that accelerates them down the path. Most cloud buyers (with the exceptions of folks like service providers) make incremental changes to infrastructure – so marketers have to help recommend the incremental changes (and products/services) they’ll need in the coming years.

Educate: Finally, I believe a rising tide lifts all boats. The more the market is educated about cloud computing models - and how to get there - the faster the market will mature. It's our job to help provide education tools, models and success stories. And to draw distinctions between here-and-now vs. futures vs. vision.

The opportunity we have with cloud is also a danger: There is an inordinate amount of hype in the space. So, as we move down the hype cycle, we need to get pragmatic about the value the cloud model offers, the journey customer take to implement, and the opportunities it creates. 

A Community Cloud: Real-World Example

When I first heard the term "Community Cloud" I shuddered. I thought: Just what we need... another cloud definition.

But I had a peek at one yesterday speaking with an established services customer (who must remain anonymous for the moment). They got their start building a co-location facility for companies in their specialized and highly-regulated industry.  But it became obvious that they could add more value as a service provider than just supplying a cement slab, cooling and electrical outlets.

So they've set out to create a raw cloud IaaS infrastructure, but with some attributes that are specific to the community/ecosystem that they serve:

• Security: Access to the cloud is granted only after a trusted validation of identity (required by regulating bodies) - and certain out-of-band management functions can only be made over hardware VPNs.
• Availability: Cloud resources are available at roughly a five-9's level (or better) including complete fail-over and DR sites - this is uber-Enterprise-Grade availability.
• Performance: Because of the specialized industry, the processing and networking performance of the cloud is optimized for high transaction rates and extremely low-latency.

Most other cloud properties, such as elasticity and metering are as you would expect.

Because of the special attributes, the company aims to become a special-purpose Cloud Service Provider to its industry - something that a generic AWS, Google or Rackspace could never be. And many other firms in the industry -- large and small -- will likely find both economic and performance advantages to host in its infrastructure.

Then, things really got interesting...

In addition to the raw IaaS they'll provide, they also plan to provide a special-purpose PaaS to tenants. For example, most clients will tend to use a common set of "Big Data" - ranging in size from Terabytes to Petabytes. If each tenant maintained their own instance of this data, it would be massively costly, inefficient and complex. So instead, the company will host a single, on-site shared instance of the data, charging for its access and use by users of the cloud. And they expect to offer a wide range of such PaaS services in the future.

What does this example say to me?  That (as many predict) the market may in fact only support a very few number of generic IaaS providers who compete almost solely on cost and economies-of-scale. But, assuming this example is even partially successful, there will be room in the market for countless "community clouds" serving the special needs of enterprises and ecosystems globally.

I'd be interested to know if you're aware of opportunities (or instances) of other real-life specialized community clouds in your area of business. The era of cloud has only just begun.

Cloud Attributes Apply Across the Stack

My “aha” moment here at EMC came during my first week when I was asked to describe the generic attributes of cloud infrastructure. Here I was, in an organization that’s made billions on storage, and I was about to talk about cloud attributes solely from a compute perspective.Was I missing something?

I then realized that I’d always related to storage as a “big, fat, dumb disk in the sky”, and assumed that it was merely subservient to the compute stack.

Well, not exactly.

My re-think was that attributes of Compute, Storage, and yes, Network, all had to be reconsidered in the context of a holistic cloud-based infrastructure.

Cloud Attributes:

Most will agree that the following attributes describe the operational profile of a generic cloud: (HT to IDC)

• Shared, standard service. Built for a market (public), not a single customer
• Solution packaged. A “turnkey” offering, integrates required resources
• Self-service. Admin, provisioning; may require some “onboarding” support
• Elastic scaling. Dynamic and fine grained
• Usage-based pricing. Supported by service metering
• Accessible via the Internet. Ubiquitous (authorized) network access
• Standard UI technologies. Browsers, RIA clients, and underlying technologies
• Published service interface/API. Web services and other common Internet APIs

 I’ll add a few functional attributes as well:

• Consolidation: ability to make optimal use of lower-level resources
• Automation: ability to self-configure to provide the required service
• Self-healing/failover: ability to correct for failure with little or no service interruption
• Multi-tenancy, Multi-tiered-SLA: ability of resources to securely house individual services & service-levels across a shared infrastructure
• Global availability: ability to provide a shared service across multiple availability zones

Attributes in a Storage Context

The first assumption most make is that these traits apply exclusively to the compute layer (physical servers, VMs and the like). But pause and consider the storage (and network) facilities need to embody most, too.

But consider this: In a virtualized world, servers are files, and files are just data.

So, when we talk about cloud-related scaling, service migration, server fail-over etc., we must also implicitly speak of managing data dynamics, data replication and data mobility. When we talk about automation, self-service provisioning and service elasticity, we’re implicitly talking about dynamic data/storage provisioning and expansion. When speaking of multi-tenancy and tiered SLAs, we’re also speaking of shared storage facilities performing identical functions in lock-step with the compute facilities.

From a broader perspective , begin to consider implications of global availability and hyper-scale. The terabytes of data that embody virtual servers and their data might need to be migrated to (or duplicated in) multiple hemispheres- not a trivial task from an integrity and latency perspective. We can know (or hope) that the physical servers will be there… but it’s the bits that still have to travel.

The next idea these observations triggered was the need to keep compute, network and storage stacks in lock-step when rolling-out cloud services. The answer (not surprisingly) is converged infrastructure... An approach where the desired cloud attributes are assigned to the 3 stacks simultaneously. More about that in a future Blog.

But I'm now encouraging everyone to view storage of bits in a completely different light – one where the functional and operational attributes of storage must be architected to embrace the core attributes of cloud computing. For without the bits, there can be no servers, no data, and no services. More about that in a future post as well :)

Why Utility Computing Failed (But Cloud Computing Didn't)

Since about 2006 I’ve been involved with data center IT automation. Back then I started with Cassatt, one of the first companies trying to automate infrastructure components in the data center.  Rob Gingell, the CTO, had a design principle of “service-level automation”, where the variable monitored and maintained was the service, not the server. That was a revolutionary thought.

The technology behind this was a combination of orchestrating physical and virtual devices, which automatically composed appropriate infrastructure stacks to keep the service SLA within pre-defined bounds. And it absolutely worked!  The best market description we had for this technology was “Utility Computing,” and drew from the analogy of electrical utilities: No matter what the draw (load), the supply would always be generated/retired (elasticity) to keep up with it.
 
But selling the Utility Computing model, and service-level automation technology, was hard, if not impossible. We’d frequently have successful POC’s, and demonstrate the product, but the sales inevitably stalled.  The reasons were many and varied, frequently tied to the ‘psychographic’ of the buyers.  But overall, we could point to a few frequent problems:

• Automation was scary: The word “Automation” frequently scared-off  IT administrators.  They were accustomed to complete control of their hand-crafted infrastructure, and visibility into every layer.  If they couldn’t make and see the change, they didn’t trust that the system actually worked.
• Lack of  market reference points:  Peers in the market hadn’t tried this stuff either – and there was no broad acceptance that utility computing was being adopted
• Inflexible Process: The use of ITIL and ITSM procedures were designed to govern manual IT control, and had no way to incorporate automatic approaches to (for example) configuration management.
• Organizational fear: There was usually the un-stated fear that the utility computing automation systems would obviate the need for certain jobs, if not entire IT organizations. Plus, the systems spanned multiple IT organizations, and it was never clear which existing organization should be put in charge of the new automation.
• Multiple Buyers: Because Utility Computing touched so many IT organizations, the approval process necessarily included many of them. Getting the thumbs-up from a half-dozen scared organizations was hopeless. Even if the CxO mandated utility computing, implementation was inevitably hog-tied.

Enter Virtualization

Somewhere around 2007, OS virtualization began to go mainstream. And its value proposition was simple and uncomplicated: Consolidate applications, reduce hardware sprawl. It was a no-brainer.

But just below the surface, virtualization had an interesting effect on IT managers: It began to make them more comfortable to break the binding of physical control and physical management of servers, transitioning instead to being more at ease with logical control of servers.

As consolidation initiatives penetrated data centers, additional virtualization management tools followed. And with them, more automated functions. And with each new function came IT’s incremental comfort with automating logical data center configurations.

And Then, Commercial Examples

At just about the same time, Amazon Web Services had begun to commercially offer these virtual machines in their EC2 – Elastic Compute Cloud. This could be had for the use of a credit card, and charged-for on an hourly basis. IT end-users now had simple – if sometimes only experimental – access to a truly automated, logical infrastructure. And one where all “hands-on” aspects of configuration were literally masked inside a black box.

Now the industry had its proof-point: There were times when full-up IT automation, without visibility into hardware implementation, worked and was useful.

Use of EC2 (initially) lay outside the control bounds of IT management and IT’s organizational boundaries. Developers and 1-off projects could leverage it without fear of pushback from IT – usually because IT never even knew about its use.

Once IT management acquiesced that EC2 (and similar services) was being used, they finally had reason to look more closely. And the revelations were telling: How was it that the annualized cost basis for a medium-sized server was lower than an in-house implementation could possibly hope to achieve? How come configuration and tear-down was so simple? Finally IT had to look in the mirror at the fact that this thing called cloud computing might be here to stay?

Looking Back

While it’s clear that the concept of cloud computing isn’t new, some important industry changes – more psychological and organizational than technological – had to take place before widespread adoption would happen.  And even then, it took some simple commercial implementations to prove the point. Too bad these weren't around a few years earlier during the "utility computing" era.

Watching this unfold, lessons *I* learned – or at least some explanations of this effect I’ve examined have been

• Psychology/Attitude shifted:  the more broadly OS virtualization was adopted, the more IT’s attitudes became accepting of automation and of logical control.
• Technology change was replaced by operational change: The new approach is more a change to the operational approach than a technology upheaval. The way users interacted with the cloud was appealing and nearly viral.
• Value was Immediate: The “new” cloud economic evidence was/is usually so compelling that it has forced IT to take a second look. This started with simple consolidation economics, but has expanded well beyond that.
• Broad availability accelerated adoption: Even only a few commercially available cloud providers helped provide immediate proof-points that the new model was here to stay. And purchasing this technology was as simple as entering a credit card number

Going forward, I would expect these 4 (perhaps more) “pressure points” will continue to help accelerate the use and adoption of internal clouds, public clouds, etc.   In future Blogs I’ll begin to look at how to further mainstream Cloud (and automation) adoption, as it serves to accelerate improvements to business’ bottom line.

Hosting & Cloud Computing market index: Update

This month's updates to my original index indicate that the hosting market - and particularly those companies that are in the cloud hosting market - are doing quite well at holding their own against the falling NASDAQ index. Although the NASDAQ component was down ~ $7, my broad hosting component was down less than $1, while my cloud computing component was actually up ~ $7.

One other point of note: Apparently Merriman Curhan Ford also believed that coverage of this space was now warranted:

"We believe Cloud Computing represents a fundamental shift with regards to how IT organizations manage and source data center computing resources.  Companies such as Terremark, Rackspace, SAVVIS and NaviSite are at the forefront of this development," said Alex Kurtz, senior vice president and technology equity research analyst of Merriman Curhan Ford.  "Our core differentiator in covering this space is leveraging our expertise within our existing coverage of IT systems vendors, who are competing for the same IT budget dollar and impacted by the same macro trends as a Terremark or a Rackspace."

Hosting & Cloud Computing: Numbers Don't Lie

There's lots of chatter in the market today regarding the value of using outside data centers, hosting services and cloud computing.  But listening to pundits/analysts trying to objectively predict true value left me hollow.

While I'm not an investment professional, I do know that the stock market doesn't lie.... so instead, I thought I'd look at a bundle of stocks from publicly-traded data center companies in the data center space, and compare against a market benchmark.

I chose companies on publicly-traded markets in both the US as well as in Europe. My criteria were somewhat subjective, but basically the companies had to have a primary business operating data centers. I also excluded Telcos because it is difficult to separate their carrier revenues relative to hosting revenues. So, my initial "virtual fund" consists of 12 companies: Digital Realty Trust; DuPont Fabros; Equinix; Internap; Iomart; Macquarie Telecom; Navisite; Rackspace; Savvis; Switch & Data; Telecity; Terremark.

I also took a 5-company subset of these public companies that had significant offerings in the cloud computing space (Equinix; Navisite; Rackspace; Savvis; Terremark). I labeled this "virtual fund" a cloud-only index.

The chart at right is my best attempt to (a) tabulate historic end-of-month closing price of each stock; (b) calculate month-to-month percentage gains for each; (c) create "virtual funds" where $100 would be invested equally across each vehicle (initially $8.33 in each of the 12 hosting stocks, and initially $20 in each of the 5 cloud-related stocks). The benchmark I used is the Nasdaq index, also assuming an initial $100 investment.

Not surprisingly (for me, anyway) both "indexes" are outperforming the Nasdaq -- perhaps proving the thesis that datacenter operation and application outsourcing is indeed a growth market (or at least a speculative growth market?) as compared to the general technology market. What would be equally useful (but not an analysis I've done) is to chart gross revenues for the Index companies. This would be a telling barometer of actual business.

I'll continue to update this index at the end of each month. Comments, additions and suggestions welcome!

A real-world cloud user shares his findings

I subscribe to a number of mailing lists from my alma mater. A few weeks ago, an alum "John" posted a request for recommendations for a cloud computing vendor for his small investment firm. What follows is his email to the group following responses he received.

This is an incredibly illustrative peek inside of the "real world" of cloud computing, and what prospective SMB users are looking for and concerned about. As well as what's "Good Enough". I've not edited anything....


I had many requests to share our findings so I figured I would share with the group. I appreciate all of the input I received. It has been really helpful.

~ John


Having looked into cloud computing solutions for our small investment firm over the past few months, we have learned a lot about the growing movement towards remote data storage and accessibility. Our goal has been to find a cost-effective solution for our IT needs that would make it convenient for employees of our company to access our shared network (documents and emails) all over the globe without much hassle, difficulty, or expense. While the cloud computing landscape is still relatively new, what is already available is exciting. Both Google, Microsoft, and other companies have products available such as Google Apps and Microsoft Office Live, but neither has fully come to the point of being able to handle our business needs. We are currently in the process of setting up a Google Apps trial period, through a consultant, to try out business e-mail and calendar via Google’s Gmail and Google Calendar. We will do this test while retaining our current Microsoft Exchange server.

There have been many issues to consider as we have been speaking with various consultants and researching all of the available alternatives. First, since we are an SEC-registered investment adviser with lots of confidential and sensitive information on our hands, issues regarding the security of our electronic files – both in terms of disaster recovery as well the integrity of the company with whom we are entrusting to house our data – are paramount. This also ties in with the issue of record retention, which is equally important to us. In terms of data storage and backup – our current system is not ideal. We need to retain copies of all e-mails and files for at least seven years, if not more, and this information needs to be secure and easily accessible. There seem to be some progress in this area (Google Postini and Amazon S3, for example), but as of yet, there is not yet one system that can do all of these things in the way we’d require.

Second, since we currently are not pleased with our current remote network access - we would like an easy and inexpensive way to access email and our network drive from any computer with Internet access. We have discovered that while web-based, unlimited e-mail and calendar storage are currently available from multiple providers, a solution for mass file storage that would essentially replicate our shared network drive and allow large files for multiple software applications to be stored/backed up in the cloud does not yet exist at an attractive price. In particular, a system where we could modify docs in the cloud without having to download and upload/re-save the file each time it needs to be edited.

One interesting product we discovered during our search is called Dropbox. You download Dropbox to one computer, save any type of file you would like to a “Drop Box drive”, and it syncs up automatically with the Web. Then, when you are at home or traveling, you can access those docs through a web browser... or you can download Drop Box onto another computer anywhere and you can edit the docs directly in Drop Box. The only glitch is that Dropbox does not yet have file storage capacity for a company with over 200GB of data to store and seems to be geared more for individual users. Word on the street is that Google will be coming out with a new product soon that has similar features to Dropbox, but on a much larger scale that would be useful for businesses.

In terms of cost and ease, Google Apps seems to be the best solution for us right now (it comes out around $50/user/year), at least for the e-mail and archiving component. Microsoft’s upcoming 2010 Web Apps platform seems appealing as well, particularly because we might be able to edit complex Excel documents directly in the cloud from anywhere.

Bottom line, what we have learned is that this rapidly-developing option for IT is not yet 100% ready to cover all the bases our business needs, but it will probably get there sometime in the next year or two. For the time being, we are going to see how the e-mail works and go from there.