Commodity Clouds for Enterprise: Inside the Economics

Tuesday, April 05, 2011

Ben Kepes

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Recently at the Cloud Connect event in San Jose, Randy Bias, co-founder of cloud builder Cloudscaling gave a fascinating talk which sought to dispel many of the myths around enterprise cloud computing.

Bias’ talk is an excellent way to spend ten minutes – I’d recommend watching it HERE. Cloudscaling is an organization that has been building some of the worlds biggest clouds and it was great to have someone peel back some of the covers around the economics involved with that.

I caught up with Bias recently and took a very deep dive into some (unfortunately private) information that he uses to differentiate between “traditional enterprise clouds” and the commodity clouds that Cloudscaling has been building customers.

Part of Bias’ argument lies in what he says as a dual battle that is going on. On the one hand public cloud providers (Amazon, Rackspace etc) are fighting over the greenfield opportunities within enterprises.

This is the traditional cloud adoption discussion, that new apps will go cloud, while traditional will remain on the infrastructure they already sit on. Bias also contends that there is another (albeit slower) shift of existing apps moving to enterprise public clouds.

The battles that Bias sees going on are between Amazon and the other big public cloud providers for greenfield apps, and between enterprise cloud providers and builders of commodity cloud products. Bias asked the audience when the enterprise cloud product would come that proved the enterprise cloud model in the same way that AWS proved the public cloud model.

Bias tried to answer his own question by pointing out some anecdotal evidence that suggests that building an enterprise cloud is 5-10 times more expensive than building a commodity cloud. Before we delve into those statistics, we need to clearly identify what Bias meant by commodity cloud.

In a follow up post, he articulated six distinct attributes that indicate an infrastructure cloud is built using enterprise approaches rather than commodity approaches;

  • It has more than 2 ‘brand name’ enterprise vendor’s products
  • Allows for complex networks and routing topologies
  • Focuses on allowing migration of unchanged (‘legacy’) applications from existing enterprise data centers (e.g. features like hypervisor compatibility, live migration, complex networks, VPN access, etc.)
  • Has an expensive price tag
  • Doesn’t take credit cards, instead requiring contracts and monthly invoices
  • Provides you an arbitrary ‘pool’ of ‘resources’ (i.e. clock cycles, RAM, storage) to carve up any way you want

As a side note, Bias told me about a customer he’s done some work with who had a serious business falling out with a large traditional hardware vendor. That vendor went back to the customer on bended knees offering rock bottom pricing just to get back into the game.

Even at special build and rock bottom pricing, the hardware delivered 25% of the performance at three times the cost of tuned commodity hardware matched with OpenSource software. Surely that’s validation for the approach that Bias is encouraging.

Not surprisingly there was a degree of skepticism on Twitter about the distinction. This skepticism was best summed up by Krish who said;

Let us not wage wars on terms like Enterprise Cloud and Private cloud. As far as I care, it’s all semantics for some infra optimization.

So too said Sam Johnstone, contending that;

#cloud is confusing enough for most already — we don’t need new terms to help hw vendors peddle their wares.

I entirely understand Krish’s and Sam’s perspective – while those of us within an inner circle argue semantics, an entire industry stands by somewhat dazed and confused by the oftentimes conceptual discussions going on.

Unfortunately however in the light of what can only be called FUD on the part of more traditional vendors, it is natural that those building clouds in the most efficient (read cheapest) of ways, fight back against some of that spin.

The most telling statistic of all, and one that perhaps justifies Bias’ crusade, regardless of any collateral confusion it may cause, is the following one. This diagram depicts the relative costs of building a private cloud.

The blue figure uses commodity hardware and OpenSource software, the red figure, some 7x more than the preceding one, utilizes “trusted” providers of hardware along with proprietary software.

I know which I’d be choosing if I was an enterprise CIO...

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Cross-posted from Diversity

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