Long term readers of this blog know my views on public vs private cloud debate. I believe that private clouds may dominate over public clouds among the enterprises in the short run but, in the long run, most of the workloads will move to the public clouds. The cloud economics will be a major driving factor for this shift. Even though I believe in a future where public clouds will dominate, I don’t want to dismiss the current concerns of enterprise customers outright, much like many public cloud advocates. Security is still a concern (Look out for my next post, either later today or tomorrow, highlighting this fact vis a vis Wikileaks episode) for many in the enterprises but, ultimately, the public cloud economics will seal the deal. Of course, only after further maturity in the security and other related aspects of the public clouds. There are some smart companies who are seeing this trend and already making dramatic shifts into the public clouds.
Netflix is one such company. Even though they are in the consumer space, the size and scale of their operation makes them an useful case study for this topic. Recently, they moved their 24/7 movie streaming infrastructure to AWS from their own datacenters. Netflix story is not just a big win for AWS but also has the potential to replace “The New York Times story” which is slowly becoming boring and saturated.
Randy Bias, CEO of Cloudscaling and former CTO of public cloud provider GoGrid, published a blog post where he talks to Adrian Cockcroft, Cloud Architect at Netflix, on the business drivers behind Netflix’s move. It is a great interview for anyone interested in cloud computing and the associated trends. Don’t forget to read the interview in full. In this post, I am going to pick a few points from Adrian’s interview and argue how public clouds are going to eventually win the game.
Almost all the public cloud stories starts with how public clouds eliminates the CapEx part of the economics and then goes about highlighting features like high scalability, business agility, etc.. However, the private cloud spin machines counter these arguments by focussing on the security aspects and then argue that private clouds can also offer similar scalability (of course, with a good amount of spin) and business agility. But, I am going to point out to an argument in favor of public clouds which they cannot counter with any amount of spin and, in my opinion, it will eventually make the enterprises appreciate the value of public clouds.
In August of this year, Forrester Analyst James Staten wrote a blog post about how a good reverse capacity planning can help organizations leverage the cloud economics to the fullest. In the post, he even highlighted the case of how the US Federal government site, USA.gov, took advantage of this factor and saved 90% on their hosting costs. In fact, he even extrapolated this idea to argue that AWS Free Tier is a great opportunity for Amazon to drive revenues in the long run.
A few weeks back I posted a story about how one of our clients has been turning cloud economics to their advantage by flipping the concept of capacity planning on its head. Their strategy was to concentrate not on how much capacity they would need when their application got hot, but on how they could reduce its capacity footprint when it wasn’t. As small as they could get it, they couldn’t shrink it to the point where they incurred no cost at all; they were left with at least a storage and a caching bill. Now with the free tier, they can achieve a no-cost footprint.
Clearly, one cannot enjoy this advantage with private clouds and this is going to be the biggest attraction for enterprises as they ponder their cloudy future (pun intended). This same fact was highlighted by Adrian Cockcroft in the interview with Cloudscaling when he talks about not having to pay for the unused resources after scaling back. Also, he highlights how the future lowering of public cloud pricing will help the bottom line when organizations rely on public clouds instead of their own infrastructure.
The third point is that the costs are elastic, you start paying for a resource just before it goes live, and if you stop using a resource you stop paying for it. If you own a resource it sits around a long time waiting to be delivered and installed, and if you no longer want to use that type of resource you are still paying for it for three years. When Amazon cuts prices, your installed capacity gets cheaper. When they install new instance types you can be running on them in hours, technology refresh in real time.
In my opinion, the way scaling back helps in the cloud economics is going to be an important factor which enterprise planners should take into account when they look at their cloud options. Yes, most of the enterprises don’t have their peaks like the consumer facing sites such as Netflix or Amazon retail. But, this factor will nevertheless be significant in the long run. Irrespective of our political ideology, we want to cut the wasteful expenditure in the government. It is only natural that we would want to use the same approach (Business 101) in the private enterprise as well. Unlike in some other aspects of the government vis a vis private enterprises, US government is leading the pack here. I think the enterprise managers should also be smart when it comes to planning for their future IT needs.
Having said that, I once again want to revisit what I mentioned in the first paragraph. Public clouds are still not mature and we need to go a long way before we can consider public clouds for most of the enterprise workloads. This shift is not going to happen in the next 2-4 years but, eventually, the above mentioned advantage of public clouds will change the game for good. What do you think? Fire away your thoughts.
Update: Looks like some folks are upset with the use of the term game, win, etc.. Relax, it is just my style of writing. I see the markets, politics and, even, our lives as a game in a bigger stage called universe. If I have to get away from my style of writing and do a post, the title would be “Why public clouds will get more traction than private clouds in the future”. I hope it helps. I find such nit picking amusing as it is just my style of writing. Rather, I would welcome you to criticize me on the substance part.
- Netflix Advice on Moving to Amazon Web Services (readwriteweb.com)
- Interview: Netflix Moves to AWS Cloud (insidehpc.com)
- The Cloud Economics : Emerging Signals (enterpriseirregulars.com)
- Private cloud discredited, part 1 (enterpriseirregulars.com)