What is a Private Cloud ???

I recognize that the media has moved the term “cloud computing” into an over-hyped state.  But, as a CIO, I also know that there is real value in utilizing the cloud.  The “Public” Cloud.  What has me concerned is that the media is now calling everything “the cloud”, breaking it into public cloud services and private cloud services and I think I am missing the point with “Private Clouds”.

The categories of “cloud services” are, in simple terms:

1. Infrastructure as a service(IAAS) – this is the “storage as a service” or “compute as a service” type offerings.

2. Platform as a service(PAAS) – this is the Amazon EC2 or Microsoft Azure type offerings.

3. Software as a service(SAAS) – this is the Salesforce.com type offerings.

One of the most appealing aspects of the cloud is that the cloud concept is based on a “pay by the drink” model.  You only pay for what you use.  When you’re not using it, you don’t pay – like a utility.

But this is where the benefit of the private cloud seems to break down.  It breaks down on two levels: First, as a CIO do I have or want to invest in having the capability to provide my enterprise with a pay-by-the drink model and the associated billing functionality and; Two, even if I had the capability, do I really want to have that as the model for my enterprise IT service?

The above presumes that when one talks about a private cloud they are not just talking about virtualization.  Virtualization is a great opportunity to more effectively and efficiently manage the data center.  Westcon’s data center is 100% virtualized.  We are a big proponent and find great value in virtualization.  And, the underlying principle that accelerates cloud offerings really is virtualization.  But, by definition a private cloud is more than just a virtualized data center.  The CIO delivering a private cloud has to provide the abovementioned cloud services while doing so with a pay-by-the-drink billing capability, competitively priced.

There has to be more.  For example, even if tomorrow the CIO made IAAS/PAAS/SAAS offerings available to his or her business units with a pay-by-the-drink usage tracking and billing capability, are the internal business units prepared to take on the responsibilities associated with consuming such services.  I know it’s been very fashionable to question the value of IT, but the truth of the matter is that every well-managed firm utilizes IT to compete more effectively.  Can the CIO compete with the public cloud offering on price, and still provide the competitive value inherent within a business-process savvy internal IT organization. Few CIO’s can compete with Google or Microsoft on price.  Therefore the CIO is then left with monetizing the infrastructure sitting in the enterprise’s data center.  And, the CIO must either monetize the business process services inherent within IT or dismantle those services.  This will not create value for the enterprise.  And I doubt the CFO wants to hear about all the capital infrastructure write-offs the CIO would need to incur to become price competitive.

There is no doubt that the public cloud can create value for the CIO and the enterprise.  But it requires proper planning, and its value in the short term is incremental.  But the concept of the private cloud is different.  It requires a substantial upheaval within the IT organization as well as within any business unit that relies on the IT organization.  It is unclear to me where the cost/benefit is within that internal upheaval.

Then again, if the private cloud is really just virtualization, then let’s just call it virtualization, and reinforce the value of virtualization’s benefits.

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5 responses to “What is a Private Cloud ???

  1. Excellent Article, Bill.

    I like the sentence “if the private cloud is really just virtualization, then let’s just call it virtualization, and reinforce the value of virtualization’s benefits”.

    Very true and we have private cloud for a long time in our enterprises through Shared Infrastructure and Virutalization .

    Keep writing. Have a good week.

  2. Bill – isn’t the virtue of a “private cloud” the ability to leverage that pay-by-the drink model as a way to rationalize the IT budget and spending?

    I think you’ve have hit on the crux of the promise or farce of private cloud computing. Behavioral change – which includes changing fundamentally how IT organizations budget and provision resources, and how the internal IT user consumes and pays for these resources, is right at the heart of the discussion.

    Without resolving this core issue cloud is really just as you said, simply highly virtual efficient infrastructure. An evolution but not necessarily a revolution

    Which is a great end result in and of itself.

  3. Russell Blackburn

    Bill I agree with your statement when purely focused on, lets call it, “cost savings” especially if all that has been done is virtualise the servers, however “the cloud” is about having a fully automated infrastructure which significantly improves the time to use. The “pay by the drink” model is the best way to charge for the use, access to the infrastructure is what makes the difference in terms of business advantage and number of people involved in provisioning and deploying. As an example I recently went to a very large multinational bank who had an issue with departments wanting to set up their own (mostly internal) websites – to put into perspective the last year they had seen a thousand of them spring up – the issue was not that they were doing this, it was the time and resource taken to do this. Some of these databases and websites had taken nearly six months to become live – the Automation of this process reduced this to less than a week. Of course this did rely on them having a virtualised environment, which they did. This business is a long way from using the Public Cloud due to the nature of their business, however a fully automated Private Cloud makes a lot of sense.

    In my view virtualisation is just part of building a cloud, a big part granted, however it’s the Automation element that makes it commercially viable and provides business advantage.

  4. Hi Bill,
    Amazon EC2 isn’t a Platform as a Service it’s currently still an Iaas. However, they are releasing a new beta service called BeanStalk which has a fairly weak offering compared to Azure.

    PaaS and Iaas are often confused with each other. Iaas is basically taking your current ‘stuff’ on a server and putting it in either a public cloud offering or in-house virtual private cloud. You could then bridge the two using VPN. This is smart for a CIO who wants to expand capacity into the cloud instead of investing in their internal private cloud/infrastructure. However, IaaS is like a drug and you will end up spinning up instances for anything which looks like code.

    Paas takes a different approach and solves what I like to call the Oprah Winfrey syndrome. If you were a cookie seller and you went on Oprah’s show more than likely the next day your website will be down, due to a million hits because everyone wants your cookies. If you took the IaaS approach to this problem you would end up over over-spending on your IT budget and spinning hundreds of instances waiting for this one unknown event. Instead PaaS can handle this by automatically scaling when required. This is useful for these one of events or a seasonal type business. However, the PaaS approach requires writing software in a ‘cloud’ way in the first place. In the new world of eCommerce understanding the difference between PaaS and IaaS could mean your job. Imagine BestBuy.com going down for 5 hours on Black Friday, those 5 hours is literally millions of dollars lost in sales.

    Essentially… each cloud decision needs to be taken with education. I’m impressed that your one of the few CIO’s who get it!

    John Shaw
    NimboTech

  5. Great post, you would be surprised about how many people don’t know what a private cloud is. I run a data center management software business that is cloud-based, and it’s something that I constantly need to explain to our clients.

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