Wednesday, April 16, 2008

About a Loser's Model

Today I read a posting on Joe McKendrick's blog called Is Cloud computing too good to be true for enterprises. His blog entry was inspired by postings of some of his colleague bloggers on ZDNet. It is a nice article discussing the pros and (a bit more) cons of cloud computing for the enterprise from the perspective of SaaS, PaaS, Google and Amazon. So be it.

Reading the article two things came to my mind.


The following quote attracted my attention:

In many cases, even 20-year-old mainframe programs contain custom processes and logic that provide market advantages.

I wouldn't put my cards on a company that relies for its market advantage on 20 years old IT-systems... It is a loser's model nowadays! Modern IT evolvements are currently inclining the world explosively. Not the least reason because of the introduction of ultimate connectivity; every home nowadays has multiple IP-addresses (I even carry one with me every day in my pocket), to mention just one of todays IT-characteristics that didn't exist 10 years ago. Knowledge of the occurrence of even the smallest event spreads around the world within a few seconds (by everyone, from every home, at no cost, and with audio and moving pictures!) to mention just another of today's characteristics. Relying on software (and supported processes), build in an age when these characteristics were laughed away as irrational fantasies, needs not be a big issue. But if your business depends on it for its current market advantage... o boy!


Of course cloud computing is the way to go!

I do cloud computing myself every day by handling my financials via a web browser connected over the Internet to an external service provider - my bank - whose systems (and data centers) I don't know, whose personnel I've never met, whose office I've never visited, and whom I yet allow to safeguard my money. This is an extreme example of outsourcing sensitive processes to an external service provider. This external service provider deals with my most risk sensitive assets like my salary - and pays my bills from my own money partly even without any of my interference. And I control the process via the cloud. What the heck security issues and no future for cloud computing... It is just going to happen and you'd better be prepared if you want to stay in business.


Paul Wallis said...


No sitting on the fence by you!

During 2003, the late Jim Gray made an analysis (pdf)of Distributed Computing Economics:

“'On Demand' computing is only economical for very cpu-intensive (100,000 instructions per byte or a cpu-day-per gigabyte of network traffic) applications. Pre-provisioned computing is likely to be more economical for most applications - especially data-intensive ones.”


“If telecom prices drop faster than Moore’s law, the analysis fails. If telecom prices drop slower than Moore's law, the analysis becomes stronger.”

Since then, telecom prices have fallen and bandwidth has increased, but more slowly than processing power, leaving the economics worse than in 2003.

By 2012, the proposed Blue Gene/Q will operate at about 10,000 TFLOPS outstripping Moore's law by a factor of about 10.

I’ve tried to put The Cloud in historical context and discussed some of its forerunners here. My take is that:

“I'm sure that advances will appear over the coming years to bring us closer, but at the moment there are too many issues and costs with network traffic and data movements to allow it to happen for all but select processor intensive applications, such as image rendering and finite modelling.”

I don't know when enterprises will switch to 'The Cloud' but given current technological circumstances, and recent events like The Gulf cables being cut and Amazon S3 failing, today the business is being asked to take a leap of faith to put mission critical applications in The Cloud.

Reading your recent posts 'Levels in IT-architecture - nice picture' and 'IT Services Stack: collaboration experiment', I can tell you like simple pictures of the business and IT relationship. But the 'big picture' of business and IT has been elusive for some time.

You might be interested in the Business and IT diagrams here and in my blog post Understanding Enterprise Architecture complexity.



Jack van Hoof said...

Hi Paul,

Thanks for your comment. Probably you are right. Maybe I am right. Maybe we both are right... or wrong.

I know like nobody else how elusive reality is. That is why I strive to create simplified pictures. Not only to be able to communicate with others, but even more to sharpen my own mind.

I believe in the unbelievable. As I showed, irrational fantasies of 20 years ago are common practice now. I didn't mention a time-line in my posting, because I don't know when it will be reality, but I am sure we are moving into that direction and we will be there earlier then many can believe now, IMHO.

Our "digital citizens" (the younger generation) will start global businesses at nearly null IT-investments. And enterprises will follow... I think.


eelco said...

Would you dare to put your money on a bank that uses cloud services like Amazon EC2 and SQS?

Or wouldn't you trust a bank that doesn't?

Looking at the organisation where i work (a bank), i cannot imagine it to be moving to the cloud any time soon. The information a bank is keeping is just too sensitive to drop in some cloud.
(Well, at least it is for now, ten years ago hardly anyone trusted the internet enough to use for their banking.)

What the rise of the cloud does tell us though, is that the enterprise needs their own cloud services. But then again, enterprises already do have these: mainframes, storage services, ESB's.
The biggest difference i see is the complexity of the process. If you need 1GB of storage at Amazon, it's just a matter of a few clicks. Getting 1GB in an enterprise might take a lot of your energy and weeks of your time.

Jack van Hoof said...

@ Eelco,

I don't know if my bank consumes cloud services. It is invisible to me and yet I do business with them. Most likely they do not... at this moment in time. But perhaps they do. In a few years they certainly do.

It already started by outsourcing the lower layers of the IT-stack. And by outsourcing development departments. It is just a matter of time...

But from a producer perspective they do offer cloud services. I daily use them. An irrational fantasy an odd 10 or 15 years ago, as you mentioned yourself.

I agree that enterprises need and use their own clouds to day. I am working on that every day in the company I work for. It's the beginning.

You are right in saying:

"If you need 1GB of storage at Amazon, it's just a matter of a few clicks. Getting 1GB in an enterprise might take a lot of your energy and weeks of your time."

So the business case is there already!

You know, my boss allows me to use a maximum 200MB mailbox, demanding an error prone, time consuming and frustrating action every month to sort out my mails. I use a free "archive" mailbox of 5GB from the cloud (Google) to relieve me. I even have a few of them. See what I mean?