LinkedIn Twitter
Director, OpenShift Strategy at Red Hat. Founder of Rishidot Research, a research community focused on services world. His focus is on Platform Services, Infrastructure and the role of Open Source in the services era. Krish has been writing @ CloudAve from its inception and had also been part of GigaOm Pro Analyst Group. The opinions expressed here are his own and are neither representative of his employer, Red Hat, nor CloudAve, nor its sponsors.

12 responses to “Why Public Clouds Will Eventually Win The Game”

  1. Frederik Van Hecke

    I agree that cloud economics will be a driving factor towards a more important role for the public cloud in future IT. Certainly when taking into account the possibility to scale back to a no-cost footprint and the assumption that public cloud prices will decrease when the adoption increases and more providers enter the market. (assuming here that public clouds will be mature enough enough in the next few years)

    However, there still a lot of room for improvement when it comes to private cloud deployment.. Mainly on aspects such as automation and scaling the OpEx along with the workload. Given the right improvements, I believe that the private cloud still has a chance..

    A similar dilemma existed in the past, namely the choice between buying and collocating a server or renting a dedicated one. For a 3 year server lifetime, the former was and still is a lot cheaper. And when running lots of them, not only do the savings become more significant, the cost of maintaining them decreases. Off course this results in a higher CapEx, but if you have the cash and in the end the cost is equal or less, why would you bother?

    For the private/public cloud, the situation is slightly different. Ideally you’d have a software stack that is able to manage your private cloud fully automated, leaving your sysadmins with the same responsibilities/work as they’d have in a public cloud. And while you can never scale back in a private cloud as you could in a public one, given the right technological improvements, this cost may be smaller than the surplus you pay to your public cloud provider.

    You do not hear me saying that public clouds will dominate the cloud landscape, certainly not, however I do not believe in the opposite either.. Certainly not when considering internal IT hosting business application with limited peak-behavior, constant uptime and maybe even limitations on the location those apps have to run (i.e. business-critical applications).

    To conclude, I strongly believe in a hybrid ecosystem, where public and private clouds co-exist and more importantly work together. Not all workloads are suited to run on a public cloud, but a lot are. Those could run on public clouds when the private cloud has high load and could come back home when the load decreases. If the size of the private cloud is well chosen based on the knowledge of the workloads, this could be a very elegant approach. However, there’s still a lot of ground to cover until this will be possible and more importantly straight-forward to use..

  2. Adrian Cockcroft

    The problem with private cloud is that you are investing in “undifferentiated heavy lifting”. To be successful, you either need to hire very good and scarce people who know how to build clouds from low cost components, or pay enterprise computing prices from IBM, Oracle, HP, VMware, or Microsoft. You also need to invest in enough unused capacity (headroom) to cover your future peak needs, or build an even more complex hybrid cloud system that combines private and public capacity. The problem with hybrid is the data, you can move compute around easily, but it takes time to move the data, and you have to solve hard problems in consistency and coherence. The way Netflix runs now is hybrid, we refer to it as “roman riding”, you have two horses, stand on the saddle of the datacenter horse, then put one foot on the cloud horse, and gallop along hoping you can keep them in sync. We are moving as fast as we can to take our foot off the datacenter horse.

    The best way to figure out your total burdened cost is to take your entire ITops budget, from the CIO down, and divide it by the total number of datacenter instances you are running, then convert that to an hourly rate. Even based on internal chargeback, numbers that Randy and I have heard are an order of magnitude higher than published public cloud costs. However, the primary driver for Netflix is business agility, (i.e. opportunity cost), not infrastructure cost.

    Many ITops organizations will spend the next year or two turning themselves into a private cloud, while their internal customers go public, especially with new apps, and leave them running a shrinking legacy.

  3. Omar Sultan

    Krishnan:

    So, perhaps I am mis-intepretting your post, but there seems to be an inherent “either/or” aspect to your argument, which undermines your assertions. If you assume that in “X” number of years the typical data center will be a blend of private cloud, public cloud and legacy infrastructure, then your argument that public clouds will “win” stops making sense. The right conversation to be having is finding the right blend public, private and legacy to optimize cost while still meet business requirements.

    There is always going to be stuff in the data center that is a no-brainer for public cloud. There is also going to be a class of workloads that might or might not be a good fit for public cloud–the lower the cost of public cloud, the more willing folks will be to take the risk and move those workloads to public cloud. Then there is the category or workloads where cost is not the primary consideration, but rather it is things like reg compliance, availability, security, transaction performance, etc. If these workloads ever move to the public cloud, its not because public cloud is cheaper, its because the cloud provider can deliver other functional or operational characteristics (which probably adds to the cost, but that’s another conversation). These workloads are usually a company’s crown jewels and I think they are going to be the last ones to go–let’s face it, if a company can’t close out the qtr because of a hiccup, someone is getting fired. Are there hiccups today in Enterprise DCs? Sure, but folks have greater control over their infrastructure which gives them a better handle on the risk.

    I find we always end up with the same adage: cheap, fast, or good–pick two of the three. Most folks will pick the post office for their holiday cards but pick FedEx for their escrow paperwork. I don’t see any indication that cloud providers will not evolve along similar lines.

    I think you should also assume the enterprise IT will continue to evolve and continue to learn how to drive down TCO–ironically taking advantage of public cloud might be a key strategy, but at the end of the day, for critical workloads, I don’t think the cost differentials will be as wide as you think.

    Regards,

    Omar Sultan
    Cisco

  4. Enterprise Cloud Computing And Wikileaks Saga

    [...] Cloud Computing And Wikileaks SagaBy Krishnan Subramanian on November 29, 2010 TweetIn my previous post, I had argued about how public clouds will eventually dominate the enterprise IT scene though [...]

  5. Randy Bias

    Great post, Krish. To Omar’s point, I think what Krish largely means here by ‘win’ is that public clouds will dominate the majority of IT spend. I don’t see any conceivable outcome where that is NOT the result. The simple reality is that, to Adrian’s point, most enterprises are engaged in undifferentiated heavy lifting for 100% of their IT. And perhaps 10-20% of that IT is core to the business. This is typical inside of most large enterprise businesses. I can think of dozens of medical companies that spend billions on IT that isn’t a core competency such as running desktops, email, archival storage, and related. It seems inevitable that to remain competitive all of these business will move that 80-90% of undifferentiated IT to an external provider *over time*.

    Now, granted, that time scale might be 5-20 years, but it will happen. The net result is that the procurement of IT will undergo a drastic change. This is what legacy enterprise vendors, such as Cisco, are largely unprepared for. It’s also a fundamental part of what the disruption is about. Can they adapt? I don’t know, but it’s going to be a fun ride.

  6. Focus on your cloud management, not your cloud provider. | Rooflabs

    [...] of the catalysts for this post was a recent post by Krishnan Subramanian titled Why Public Clouds Will Eventually Win The Game.  In the article, Krishnan wrote about how security and economics Even though I believe in a [...]

  7. Wes Smith

    Always find it interesting how the debate generally excludes human resources. At the end of the day the non-human resources are about 15% to 20% of the TCO, so it seems like more of the debate should be about the value of the delivered solution which is clearly based on people, not the commodity components.

  8. Looking Back 2010: Netflix’s NY Times Moment

    [...] at a grander scale. But it goes far beyond what NY Times story told us. As I pointed out in my post Why Public Clouds Will Eventually Win The Game, this teaches something very important to the enterprises. It is about cutting down the wasteful [...]

  9. Interview: VMware Cloud System CTO Explains Cloud Foundry Architecture and Strategy | ITPark

    [...] InfoQ: The debate continues to rage on between public vs. private clouds. What do you think that Cloud Foundry will do to this debate? Move it forward? Make it less relevant? [...]