Cloud Computing: Fact versus Fog December 2010 Table of Contents Executive Summary Foundations of Cloud Computing Obstacles and Considerations Future of Cloud December 2010 | Copyright © 2010 Grail Research, LLC 2 Executive Summary Purpose “Cloud” Buzz This presentation addresses the current state of cloud computing, obstacles to business adoption, and expectations for the future. This is the first in a series of papers written by Grail Research on the topic of cloud computing and the investigation of how businesses are adapting to and taking advantage of Internet-based, on-demand computingNews of Cloud is everywhere, and its predominance in IT is a foregone conclusion.In fact, the push to adopt Cloud has been so strong that risks inherent in this model have largely been ignored The recent economic turmoil and the promise of Cloud leading a renaissance of the tech sector are shaping the perspective and appetite for Cloud rather than the readiness of the technology itself. Cloud is a powerful tool for mobilizing data; however, there are no regulations, standards, or assurances of data protection from a technical perspective Major breaches at Google, Salesforce.om, and Amazon, have exposed the fragility of the Cloud delivery model, and the fundamental issues of data security, privacy, and standards that have yet to be addressed. Though price points gained in Cloud can be significant, businesses should weigh advantages against the hidden costs of compromised data Analyst sentiment seems to be the sole voice of reason. Principal analysts from Forrester, Gartner, and Yankee cite major security concerns with Cloud.In the more immediate future, look toward applications focused on innovative data protection methods, enabling organizations to utilize Public Cloud in a private manner Adoption Haste Security Risks Expert Views Opportunity Key Takeaways December 2010 | Copyright © 2010 Grail Research, LLC 3 Foundations of Cloud Computing Foundations of Cloud Computing Obstacles and Considerations Foundations of Cloud Computing Obstacles and Considerations Future of Cloud Future of Cloud Cloud is an evolution, merging virtualization, grid, utility, and web standards “ Cloud is an evolution.It coalesces grid, utility, virtualization and web standards into a delivery paradigm. The difference is each of these components are building blocks that solve the specific point problems of abstracted, on-demand, distributed processing – Tony Bishop (Founder and CEO, Adaptivity) I don’t think it’s a revolution as much as it’s an evolution. If you want to really say what kicked this thing off, virtualization was a big precursor to Cloud…I think “Cloud” is a little bit overused right now. I look at it as the evolution of the data center, to do more scalable processing and computing – Ping Li (Partner, Accel Partners)Source: SysCon Website; Ars Technica Website; CIO Website December 2010 | Copyright © 2010 Grail Research, LLC 4 “ Cloud services have shifted from a year ago. We did a focus group around 12 months ago and they pretty much took the mickey out of Cloud. It was seen as unrealistic and CIOs weren’t considering it. What’s even more of a surprise is that in a short period of 12 months, we’ve seen Cloud go from a bit of a joke to a number two priority on the plate of CIOs today, and a very serious consideration that they are taking on board – Paul Harapin (Director, ComputersOff. rg and Ex-MD, Vmware) Defining Cloud Computing Definition Foundations of Cloud Computing Obstacles and Considerations Future of Cloud “Cloud computing is a model for enabling 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. ” – Peter Mell and Tim Grance (NIST) Essential CharacteristicsOn-demand Self-Service Broad Network Access Resource Pooling Rapid Elasticity Service Delivery Models Cloud Software as a Service Cloud Development as a Service Cloud Platform as a Service Cloud Infrastructure as a Service Deployment Models Private Cloud Public Cloud Hybrid Cloud Community Cloud How Do Experts Define Cloud Computing? “ Cloud computing is an evolutionary technology because it doesn’t change the computing stack at all. It simply distributes the stacks between the service providers and the users.It is an IT architecture with vertical services – Steve Jin (Creator of Vmware vSphere Java API) Applications/functionality delivered via Cloud: Accessible via standard Internet protocols, always available and scaled to demand, programmable interface, pay as you use, full self-service features – Chenxi Wang (Ph. D. , Principal Analyst, Forrester) Source: Sysomos Software Tool; SysCon Website; Forrester Research Website; NIST Website December 2010 | Copyright © 2010 Grail Research, LLC 5 “ The ‘Cloud’ model initially has focused on making the hardware layer consumable as on-demand computer and storage capacity.This is an important first step, but for companies to harness the power of Cloud, complete application infrastructure needs to be easily configured, deployed, dynamically-scaled and managed in these virtualized-hardware environments – K. Sheynkman (Co-Founder, Elastra Corporation) Emerging Primary Models for Cloud Deployment Major Types of Clouds Public/ Community Cloud Internet Foundations of Cloud Computing Obstacles and Considerations Future of Cloud Definition and Expert Views Private Cloud Dedicated to one customer/company Key Takeaways Private Cloud is more suited for organizations that need high-level security.Though most experts believe that ‘private cloud’ is an oxymoron, others argue that the model offers better resource management to current IT managers Private Cloud Intranet/VPN1 Hybrid Cloud Intranet/VPN1 + Internet Public Cloud Made available to the general public for specific general purposes The Public Cloud model emerged as a great value proposition for SMB4 companies and startups USERS Global Share of Online Clouds 1% 12% 52% 2 Discussions4 on Types of Hybrid Cloud Integration of two or more types of Clouds (Private, Community, or Public) Public Cloud 35% Hybrid Cloud Community Cloud N= 49,7813 Community CloudDedicated to a user/industry group that has shared concerns (mission, security requirements, policy, and compliance considerations) The Community Cloud model is expected to address the requirements of governments and their agencies Note: 1Virtual Private Network; 2Discussions during the period 25-Aug-2009 to 25-Aug-2010; 3N may include some articles/posts more than once, if repeated on different websites; 4Small and Medium Businesses Source: Sysomos Software Tool; CIO Website; SysCon Website; IBM X-Force: Mid-Year Trend and Risk Report December 2010 | Copyright © 2010 Grail Research, LLC 6 “ Private Cloud “The hybrid cloud is an attractive way to take advantage of cloud computing, and It also means choice for the customers, and they can determine the adoption speed they want to go at – Tim Crawford (CIO, All Covered) “ “ Concerns for those deploying in the public cloud are factors such as the financial stability of the hosting organization and the hosting organization’s deployment policies – IBM X-Force “ “ CIOs know that what is sometimes dubbed “private cloud” does not meet their goal as it does not give them the benefits of cloud: true elasticity and capex elimination – Werner Vogels (VP and CTO, Amazon)Some experts believe that companies are testing the waters by taking limited services on Cloud before adopting a particular cloud computing model The Hybrid Cloud model provides more flexibility than the Public Cloud model, and is less capital intensive than the Private Cloud model Cloud Computing Market Size and Growth Prospects Foundations of Cloud Computing Obstacles and Considerations Future of Cloud Insights The cloud computing market is expected to grow at a double-digit rate in the next 5 years.According to experts, the SaaS delivery model of cloud computing will lead the growth story. They believe that emerging countries such as India have the greatest potential for market growth, including opportunities to support outsourcing of Cloud services Cloud Market Growth USD 37. 8 Bn 2010 (26% CAGR) USD 121. 1 Bn 2015 Expert Views Key Takeaways Experts believe that SaaS will be adopted by most companies in the next few years at some level or the other, especially in content management, collaboration, document management, and customer management applications The global cloud computing market is expected to grow from $37. 8 billion in 2010 to $121. 1 billion in 2015 at a CAGR of 26. 2% from 2010 to 2015. SaaS is the largest contributor in the Cloud computing services market, accounting for 73% of the market’s revenues in 2010 – MarketsAndMarkets Report India will not only see a surge in cloud computing services but companies all over the world will look to India to support their transition to cloud computing – Steve Ballmer (CEO, Microsoft)Note: Comment and Views include key snippets Source: IDC reports: “Worldwide Enterprise Server Cloud Computing 2010-2014 Forecast”; “Worldwide Software as a Service 2010–2014 Forecast: Software Will Never Be the Same”; MarketsAndMarkets report: “Global Cloud Computing Market 2010 – 2015” ; EconomicTimes Website December 2010 | Copyright © 2010 Grail Research, LLC “ By 2012, nearly 85% of net-new software firms coming to market will be built around SaaS service composition and delivery; by 2014, about 65% of new products from established ISVs will be delivered as SaaS services.SaaS-derived revenue will account for nearly 26% of net new growth in the software market in 2014…– IDC Report The explosive growth in the cloud computing market will mirror greater IT globalization trends, with India leading the market in outsourced support for Cloud services It is estimated that SaaS is growing at a rate five times faster than the software market as a whole 7 “ “ We are seeing an acceleration of adoption of cloud computing and cloud services among enterprises and an explosion of supply-side activity as technology providers maneuver to exploit the growing commercial opportunity Ben Pring (VP, Gartner) Traditional IT Delivery Translated to Cloud Business Value Traditional Delivery Foundations of Cloud Computing Obstacles and Considerations Future of Cloud Cloud-based Delivery Consumption Applications Software as a Service (SaaS) Creation Development Tools Development as a Service (DaaS) Orchestration Middleware Platform as a Service (PaaS) Infrastructure Infrastructure and Hardware Infrastructure as a Service (IaaS)Source: R Wang and Insider Associates; A Software Insider’s Point of View–Understanding The Many Flavors of Cloud Computing and SaaS ( R “Ray” Wang, Phil Wainewright, Michael Cote, and James Governor); Forrester Report; Grail Research Analysis December 2010 | Copyright © 2010 Grail Research, LLC 8 Four Service Delivery Models Business Value Definition Expert Views Foundations of Cloud Computing Obstacles and Considerations Future of Cloud Service Provider Application licensed to customers “SaaS is perfect for small businesses, they get the benefits of world-class infrastructure, enterprise-class features, and no capital investment.Frankly, I’d be surprised if the SMB market doesn’t shift to a SaaS-dominated sector” – Bernard Golden (CEO, HyperStratus) “The cost of comformity is the lack of flexibility. What will you do 5 years into a True SaaS scenario when you are locked in and the vendor won’t add the feature or functionality you need? ” – R ‘Ray’ Wang (Partner, Altimeter Group) “Just as platform as a service provides enterprise IT with a new model for platforms to run applications in the cloud, development as a service provides a new model for development tools, giving developers the power to create applications for the cloud” – Marc Benioff (CEO, Salesforce. om) “I think there are going to be thousands of new platform companies — you the end user can program it” – Marc Andreesen (General Partner, Andreessen Horowitz and Cofounder & Chairman at Ning Inc. ) “The advantages of PaaS are – Complete abstraction; considerable cost savings and faster time to market ; Better security. PaaS makes developers succeed even if they are completely ‘operations blind” – K. Subramanian (CTO and Advisor, CloudsDirect) “There are shortcomings in the platform as a service model as well.The biggest problem with PaaS may be difficulty migrating existing applications from the internal data centre to the cloud” – Tim O’Brien (Director, Platform Strategy Group, Microsoft) “Although it is not the first choice, IaaS has an obviously huge market in the enterprise because there are countless servers sitting in data centers that are prime candidates to move out to IaaS clouds, and countless more that will be needed in the coming years” – Scott Sanchez (Security and Privacy Officer, ScaleUp Cloud) “In short, IaaS and other associated services has enabled startups and other businesses to focus on their core competencies without worrying much about provisioning and management of infrastructure” – K. Subramanian (CTO and Advisor, CloudsDirect) SaaS Access through “thin client interface”, such as a web browser Set of tools and APIs provided for creating customized applications DaaS Tools provided include code editors, source control systems, and batch scripts Hosting for clientdeveloped applications PaaS Applications can be created using programming languages such as Java and .Net Fundamental computing resources (processing, storage, network, etc. ) — to run full virtual servers Customer has control over operating system, storage, and deployed applications IaaS Note: Comments and Views include key snippets Source: NIST Working Definition of Cloud Computing; SysCon Website; The Role of Internal Audit, October 2009 (Ernst & Young); TechWorld Website; SoftwareInsider Website(R “Ray” Wang); Company Websites December 2010 | Copyright © 2010 Grail Research, LLC 9 Cloud Computing Continues to Evolve Expert Views Foundations of Cloud Computing Obstacles and Considerations Future of Cloud Key Takeaways Requires Awareness and Clarity “ A There is still a strong need for awareness on the part of folks in the cybersecurity area about cloud computing. About 21% of those folks involved in cybersecurity, their agencies are unaware about cloud computing, and 34% of the respondents in total weren’t familiar with the cloud. That is the real key-take away that awareness around the cloud as it relates to trust and security needs to continue to be increased” – Melvin Greer (Chief Strategist, Cloud Computing, Lockheed Martin) “…the biggest security threat for cloud computing is lack of awareness about cloud security among the IT Pro’s” – Scott C. Sanchez, CISSP (Security and Privacy Officer, ScaleUpCloud) “Public cloud services are generally not providing as much customization as customers want, but the cloud model is gaining popularity both among users who want to sidestep their companies’ IT departments, and from small businesses that want to get out of the IT business” – Tim O’Brien (Director, Platform Strategy Group, Microsoft) “Cloud solutions won’t come in a box, nor are traditional internal IT technologies and skills apt to seamlessly spin up mission-ready cloud services. Neither are cloud providers so far able to provide custom or ‘shrinkwrapped’ offerings that conform to a specific enterprise’s situation and needs” – Dana Gardner (President and Principal Analyst, Interarbor Solutions) “People are going to want to move data around, they’re going to want to ask clouds to do things for them . We don’t have any inter-cloud standards.There’s a whole raft of research work still to be done and protocols to be designed and standards to be adopted that will allow people to manage assets” – Vint Cerf (Co-designer of the TCP/IP, VP and Chief Internet Evangelist, Google) “When customers are looking to adopt cloud services, they want services that follow highest standards, even though such services may follow better standards than their existing infrastructure” – Bernard Golden (CEO, HyperStratus) Awareness and understanding of cloud computing is limited to a small set of IT professionals B Requires Customized Solutions Requires Cloud Computing Standards There is a gap between customer requirements and existing cloud computing solutions in the market Note: Comment and Views include key snippets Source: Sysomos Software Tool; CIO Website; SysCon Website; Ulitzer Website; CloudNod Website December 2010 | Copyright © 2010 Grail Research, LLC 10 “ C Cloud computing is still evolving in terms of welldefined adoption/integration standardsInterest in Cloud Computing Across Geographies Share of Discussions1 on Cloud Computing 46% Foundations of Cloud Computing Obstacles and Considerations Future of Cloud Key Takeaways Certain geographies are better suited to offer Cloud services (e. g. , those with favorable climate conditions to sustain the cooling needs of data centers) 17% 11% 9% 7% 6% 4% Rest of World Cloud technologies are dependent on uninterrupted connection to the Internet, which is not possible in all parts of the world where electricity and Internet connectivity can be sporadic The Patriot Act in the US allows the government to subpoena all data stored within the country.