The Definitive Guide To

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Cloud Computing

Dan Sullivan

The Definitive Guide to Cloud Computing

Dan Sullivan

Chapter3:EnablingBusinessInnovationbyUsingCloudComputing...........................................41 LaunchingaNewBusinessService...........................................................................................................42 NewServicesUnderaTraditionalITServiceModel....................................................................44 Scenario1:TutorialVideosfortheDIYCustomer...................................................................44 Scenario2:AdvancedAnalyticsforAutoInsurancePremiumCalculations.................46 NewServicesUndertheCloudComputingModel........................................................................49 . Scenario1:TutorialVideosintheCloud......................................................................................49 Scenario2:AdvancedAnalyticsintheCloud.............................................................................49 . AdvantagesofDoingBusinesswithCloudComputing....................................................................50 TimetoDeployServices...........................................................................................................................51 CostControlandAbilitytoScaletoDemand...................................................................................52 AdaptabilityofResources........................................................................................................................53 SourceofROIintheCloud............................................................................................................................53 LoweringCapitalCostswithCloudComputing..............................................................................53 LoweringOperationalCostswithCloudComputing....................................................................54 OnDemandProvisioning....................................................................................................................55 ReducingMarginalCostsofSystemsAdministration.............................................................56 StandardizationandAutomation.....................................................................................................58 ServiceManagementReporting.......................................................................................................59 AssessingtheBusinessValueofCloudServices.................................................................................59 Summary..............................................................................................................................................................60

The Definitive Guide to Cloud Computing

Dan Sullivan

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The Definitive Guide to Cloud Computing

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Chapter3:EnablingBusinessInnovationby UsingCloudComputing
Manydiscussionsofcloudcomputingfocusonitstechnologicaladvantagesandthereare manybuttherearebusinessadvantagesaswell.Thischaptershiftsfocusfromquestions ofarchitectureandoperationstoissuesofservicedeliveryandreturnoninvestment(ROI). Afterall,cloudcomputingisnotanendinitself(unlessyouareacomputerscientistor systemsarchitect)butameansofdeliveringexistingservicesmoreefficientlyandenabling thedeliveryofnewservicesthatmaynotbepracticalunderothermodels. Thechapterisdividedintothreemainsections: LaunchinganewbusinessserviceThefirstsectioncomparesservicedelivery undertraditionalITservicemodelsandundercloudcomputing.Examplescenarios willillustratesomeofthekeydifferences. AdvantagesofdoingbusinesswithcloudcomputingTheadvantagesofdoing businesswithcloudcomputingincludethereducedtimerequiredtodelivernew services,newmeanstocontrolcosts,theabilitytoscaletodemand,andthe adaptabilityofcloudcomputing. SourcesofROIinthecloudROIincloudcomputingcomesfrombothreduced capitalcostsandloweroperationalcosts.Aswithothertechnologies,theROIinthe cloudishighlydependentonmorethanjustthetechnology;howyouimplement andmanagecloudservicescontributestohowmuchofthepotentialROIisactually realized.AsafirststeptounderstandingthesourceofROIincloudcomputing,lets consideracoupleofhypotheticalexamplesofhowservicedeliveryinthecloud differsfromtraditionalITservicedelivery.

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LaunchingaNewBusinessService
Thereisnothinglikelaunchingabusinessservicetocombinetheexhilarationofcreating somethingnewwiththeapprehensionassociatedwithchoreographingalltheelements requiredforasmoothlaunch.Andthereisnoshortageofpiecesthatmustbeinplace: Thecomputing,storage,andnetworkservicesrequiredtosupporttheservice Softwarethatcapturesthefunctionalrequirementsofthenewservicewhile providingausableinterface Awelldevelopedplanfordeployingelementsintheproperordersothat dependenciesareinplaceasnewcomponentsareputinplace Policiesandprocedurestogovernhowtheserviceinfrastructureismanagedand maintained Arecoverystrategyandcorrespondingsystemstomitigatetheriskofdatalossor servicedeliveryfailure

Itiseasytoseehowessentialeachofthesetechnicalandbusinesselementsistothe ultimatesuccessoftheproject. Takeawaysufficientcomputing,storage,ornetworking,andtheservicecandegradetothe pointoffailure.Skimponusabilityengineeringorotherwiseshortchangetheuser interface,andyoulosecustomersattheproverbialfrontdoor.Thoseofuswhohave workedonprojectswithinadequateplanningknowthefrustrationandfutilitythatcome withadhoc,reactivemanagement.Theworstpartisthatthedelays,rework,andmissed stepscouldhavebeenavoided.Asweconsidertheadvantagesofcloudcomputingfor servicedelivery,youwillseehowsomeofthesepotentialproblemscanbereduced. Needlesstosay,cloudcomputingisnopanaceaandnoamountoftechnologycan compensateforpoormanagementpractices.Cloudcomputingcan,however,reducesome oftheburdensandchallengesthattypicallycomewithplanningandimplementingnew projects. Onceaserviceisdeployed,itistimetomoveintoanoperationmaintenancemode. Planningisjustasimportanthereasitwasduringdesignanddeployment.Thedifference isthatnowyoushiftfromaprojectplanningframeworkofdeliverables,milestones,and resourcebalancingtooperationsguidedbypoliciesandproceduresthatdefinewhatisto bedoneandhowtodoit.Policiesgoverningeverythingfromservicelevelagreement(SLA) monitoringtobackupstosecurityshouldbeinplaceatlaunch.Procedures,whichturn thosepolicesintoexecutabletasks,mustalsobeinplacetoensureproperoperations.Of course,evenwiththebestplanningandpoliciesinplace,hardwarefails,softwareerrors manifestthemselves,andnaturaldisastersstrike.Arecoverymanagementstrategy, commensuratewiththevalueofthenewservices,canhelpyourespondeffectivelyand efficientlywhenadverseeventsoccur.

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AsFigure3.1depicts,successfulservicedeliveryisdependentontheseandothertechnical andbusinessfactors.Oneofthequestionsfacingbusinessstrategistandsystemsarchitects is,Whatisthebestservicedeliverymodelforrealizingprojectobjectives?

Figure3.1:Servicedeliveryisbuiltonafoundationoftechnologyandbusiness servicesandpractices.Remove,disrupt,orundermineanyofthese,andservices deliveryisadverselyaffected. Tobetterunderstandhowservicemodelsinfluenceservicedelivery,letsassessdelivering acoupleofdifferenttypesofservicesunderdifferentmodels.Inthefirstexample,wewill considerahomeimprovementretailerwithaplantooffertutorialvideosonhome improvementprojectsforthedoityourself(DIY)customer.Inoursecondexample,we willseehowbusinessanalystsdealwiththeproblemofbigdataandtheneedfor advancedbusinessintelligenceandanalyticsservices.Theseexamplesarechoseforseveral reasons: TheyaresignificantlydifferenttypesofservicesoneisacustomerfacingWeb applicationandtheotherisamorebatchorientedbackofficeservice Theyrequireadifferentcombinationofcomputingresources Theyhavedifferentusagepatternsovertime Cloudcomputingcanreducethecostofdeliveryofbothservicesregardlessofthe differencesinthetypeofapplicationandemandprofile

First,letsexplorethestepsinvolvedindeployingthesetwoservicesunderatraditionalIT servicemodel.Next,welllookathowthesameservicecouldbedeployedinthecloud. 43

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NewServicesUnderaTraditionalITServiceModel
Projectmanagement,softwaredevelopment,testing,anddeploymentpracticesarewell developedundertraditionalITservicemodels.Theyallcomeintoplayinourtwo hypotheticalscenarios. Scenario1:TutorialVideosfortheDIYCustomer Notallofusaregiftedcarpentersorskilledplumbers,butsomeofusthinkwecoulddoa fairlydecentjobaroundthehouseifwejusthadtherighttoolsandafewtipstogetus started.Ahomeimprovementretailerthathastraditionallydonewellservingthesmall contractorsegmentofthemarkethasdecidedtotargetthepotentialDIYcustomerinan efforttoimprovesalesandexpandtheirshareofthatmarketsegment.Thefollowinglist highlightskeyfeaturesandnonfunctionalrequirements: Theservicewillprovideshorttutorialvideosonarangeofhomeimprovement topics.Videoswillrangefrom1to10minutesindurationwithanaverageof5 minutes. VideoswillbestreamedovertheWebanddeliveredthroughthecompanysWeb site. TheservicewillbelaunchedinbetatocustomersintheNortheastUnitedStatesfor 4weeksfollowedbyanextended4weekbetatotheNortheast,MidAtlantic,and SoutheastUnitedStates.Afterthat,itwillbemadeavailablethroughoutthe companysNorthAmericanmarket. Theinitiallaunchwillsupportupto500videos;attheendofthebetatestingphase, 1000videoswillbeavailable.Contentwillgrowatanaveragerateof200videosper monthafterthat. Metadatawillbeassignedtoeachvideotoimprovesearchandbrowsing.Tagswill includestructureddata,suchasrepairtype,toolsrequired,andtimetocompletethe task.Unstructureddatadescribingthevideocontentisalsoincluded. VideoswillbeaccessiblethroughacentralizedHowtoVideoLibraryintheWeb siteaswellasthroughproductpagesthatlinktorelevantvideos. Customerswillbeencouragedtoreviewandratevideos.Theresultswillbe analyzedtoimprovetheoverallqualityofinstruction,expandthescopeoftopics, andeliminatetheleastusefulcontent.

UsingcurrentWebsitestatistics,businessplannersanticipatepeakdemandsWednesday andThursdayeveningsbetween6:00pmand10:00pmandSaturdaymorningsbetween 7:00amand11:00am.TheanticipateddemandpatternisdepictedinFigure3.2.

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Figure3.2:Servicedemandwillvarywidelybydayofweekandtimeofday.(Times arerelativetothetimezoneofthedatacenterhostingtheservice). Asthesystemsarchitectsandapplicationdesignersplantheinfrastructureforthisservice, theyhavetotakeintoaccountanumberofconsiderations.Theservicewillrequireservers tomeetpeakdemand,althoughthoseperiodsarerelativelyfewandfairlyshort.Theirony ofrunningahowtofixtutorialserviceonapoorlyfunctioningplatformcouldundermine thebrandimageandisnotworthrisking. Onthebusinessside,thisprojectwillrequireacapitalexpenditureandClevelapproval. TheITprofessionalsontheteamknowthattheywillhaveonechancetogettheresources theyneedwithinthenext12months.Theydonothavesufficientdatatoconfidently predictdemandfortheservice,sotheyresorttothenextbestthing:makingabestguess estimateandthenaddanother20%forcontingency.Thecombinedconcernfornot performingtocustomerexpectationwiththeinabilitytogetasecondroundofresources rapidlyenoughpushtheapplicationsdesignersandsystemsarchitectstochooseamore costlysolutionthanmayultimatelyberequired. Themajorcomponentstheydecideoninclude: Severalserverstostreamthevideotutorials Aloadbalancertodistributeusersessionsacrossseveralservers Astoragearraywithsufficientredundancy(forexample,RAID6) Applicationlicensestosupporttheservice

Figure3.3showstheconfiguration.

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Figure3.3:Thevideotutorialservicerequireshardwaretomeetpeakdemandeven thoughtheaveragedemandissignificantlyless. Itisclearfromthisexamplethatbuildingoutthisservicefollowingatraditionalstrategy requiresthatyoubuildforpeakdemandbeforeyouevenhavesufficientinformationto determinetheactuallevelofneed.Notonlycanyounotadjusttochangingneeds,youhave tomakeafairlylongtermcommitmenttothearchitectureearlyintheprocess. Scenario2:AdvancedAnalyticsforAutoInsurancePremiumCalculations Theautoinsuranceindustryisacompetitivebusiness.Aswithanytypeofinsurance, premiumshavetocorrelatewithrisks.Forautoinsurers,therearemanyfactorsto consider,includingtheageandsexofthedriver,pastaccidents,numberofmoving violations,primarygaraginglocationofthevehicle,andsoon.Fromacompetitive perspective,usingjustthesefactorsisinsufficienttogainanycompetitiveadvantage;after all,competitorsusethesamedata.Usingthesamedatacanleadinsurerstoclusterdrivers intosimilargroupsmakingitdifficulttocompeteonpricewithinthosegroups.

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Inthisscenario,severalautoinsuranceanalystsproposeexpandingthebaseofdatausedto categorizecustomersandthenapplyingdataminingtechniquestocreatefinergrained clustersofcustomers.Premiumscanbeadjustedtothesefinergroupsofcustomerssothat customersposinggreaterriskscanbechargedhigherpremiumsallowingforlower premiumsforsaferdrivers.Ultimately,thiscouldreshapetheriskpoolbyattractingbetter driverswithlowerratesthancompetitorsofferwhilegivingincentivetohigherriskdrivers tolookelsewhereforinsurance.

Figure3.4:Finergrainedclusteringofcustomerscancreateacompetitiveadvantage byallowingmorepreciseandaccuratepremiumpricing. Thefollowinglisthighlightskeyfeaturesandnonfunctionalrequirements: Existingdatasetsonageandsexofthedriver,pastaccidents,numberofmoving violations,primarygaraginglocationofthevehicle,andsoonmustbeavailablefor datamining Additionaldataonhouseholdincome,includingincomebyage,disposableincome, householdnetworth,disposableincome,andsoon;consumerspendingdataby category,suchasfinancialservices,automotive,medical,recreation,andsoon; businessactivitydatabylocation;andpublicallyavailabledata,includingcensus dataandcrimestatistics Onamonthlybasis,internalandexternaldatawillbecollectedandanalyzedto buildapredictivemodelthatcategorizeseachcustomerbyfinegrainedrisk estimate

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Newextraction,transformation,andload(ETL)procedureswillbedevelopedto collectdatafrommultiplesourcesandcopyittoprojectstorage;datawillnotbe storedoncethemodelisconstructed Toimprovethequalityofpredictions,multiplepredictionmodelswillbe constructedandresultswillbecombinedtomakefinalclassifications.

Thisapplicationiscomputeintensiveduringthetimeswhenthedataminingsystemsare runningandpredictivemodelsarebeingcreated.Afterthemodelshavebeencreated,the modelswillbeexecutedontocategorizenewcustomersandreassessthepremiumson existingcustomersduringpolicyrenewal.Runningmodelsaresignificantlylesscompute intensivethangeneratingthem.

Figure3.5:Analyticoperationshavefairlypredictabledemandpatternsthatinclude significantperiodsofpeakdemandfollowedbyanalysisoperations. Onceagain,thisservicerequiresthatyoubuildaninfrastructureforpeakcapacity.A clusterofhighendserverseachwithmultiplemulticoreCPUsandsignificantamountsof memoryarerequiredtobuildtheindividualpredictivemodelscombinedintoanensemble predictionservice.Althoughdatawillonlyneedtobestoredduringthetimethemodels arebuilt,architectswillhavetopurchasestoragesufficienttosupportcopiesofallthe variousdatarequired. BothofthesescenariosmanifestcommondifficultieswiththetraditionalITmodelof servicedelivery.Dedicatedresourcesarenotusedefficiently.Capitalspendingdecisions mayhavetobemadewithinsufficientusagedata.Itisdifficultifnotimpossibletoscalethe infrastructureupordownaccordingtodemand.Thecloudcomputingmodeloffersan alternativemethodfordeployingservices.

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NewServicesUndertheCloudComputingModel
Thecloudcomputingmodelprovidesaflexibleinfrastructurethatallowsserviceproviders toacquirethecomputeandstorageresourcestheyneed,whentheyneedthem,foraslong astheyneedthem,andtopayforonlywhatisused.Bothoftheexamplescenarioswould benefitfromdeploymentonthecloud. Scenario1:TutorialVideosintheCloud Thetutorialvideoserviceisanewcustomerfacingservicethatcouldhavewideranging demandpatterns.Initially,thesystemsarchitectsdecidetoallocatetwovirtualserversfor thebetatestperiod;however,ifdemandwarrantsadditionalorfewerservers,systems administratorswilladjustasneeded.Planningforlongtermstorageisnotasignificant issuebecauseadditionalstoragewillbeallocatedasneeded.Thereisnoneedtopurchase peakloadstorage.Astheprojectmovesfromthebetatestingstagetofullproduction,the systemsadministratorswilladdvirtualserversasneeded.Ratherthanfocusonpredicting whatthepeakdemandwillbeoverthenext12months,systemsadministratorscanfocus onimmediatedemandandserverallocationtoefficientlyandcosteffectivelymeetthat demands. Scenario2:AdvancedAnalyticsintheCloud Thecloudisamuchmorecosteffectivemethodfordeliveringthekindofadvanced analyticsdescribedearlier.Inthiscase,thereisarecurringdemandforasignificant amountofstorageandcomputingresources.Thedemandisforonlyafewdaysevery month,sopurchasingdedicatedhardwareisnotcosteffective.Deployingtothecloudis relativelystraightforwardandincludes: Creatingvirtualimageswiththerequiredsoftware,suchasETLsystems,andpre processingscriptsandstatisticalanddataminingpackages Instantiatingserverstorunpartsoftheworkflowasneeded;forexample,basedon thetypeofsourcedataanditsconfiguration,itmightmakesensetoinstantiate10 virtualserversforETLoperationsthatruninparallelastheETLoperations execute,theywritedatatocloudstorage,whichistakenasinputtopreprocessing scriptsthatoutputdataintotheproperformatforthedataminingapplication Allocatestoragetostoretherawandprocesseddata;oncethedatahasgone throughthepreprocessingstage,therawdataisdeleted;oncethepredictive modelsarebuilt,theoutputofthepreprocessingstageisdeletedaswell

Thismethodimprovesupontraditionalimplementationmodelsinatleasttwoways.First, youcanruntheworkflowasasequenceofstepsallocatingserversforeachstepasneeded andthenshuttingthemdownandstartingserverswithsoftwareforthenextstep.With virtualizationandservicecatalogs,thisisasimplematter.Intheory,youcoulddothiswith asetofdedicatedphysicalserversbyrunningdifferentvirtualmachinesateachstepofthe workflow;however,thevirtualmachineimagemanagementwouldbemoredifficult withoutaservicecataloganditwouldstillnotaddresstheproblemofhavingtopurchase hardwareforpeakdemand.

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Figure3.6:Inthecloud,serverscanbeallocatedtodotaskaslongasneededand releasedatwhichpointotherserversareinstantiatedforthenextstepinthe workflows.Serviceprovidersonlypayforwhentheyareusingcomputeandstorage resources. Thetraditionalmodelofserviceallocationhasworkedwellforus.Themanycritical businessservicesarerunningtodayondedicatedinfrastructure.Cloudcomputingmodels improveonthetraditionaldeploymentmodelbyallowingyoutoeasilysharecomputeand storageresourcesandallocateonlywhatisneededwhenitisneeded.Thisapproach reducestheneedforadhocsolutionstomitigatingrisk,likeaddinganarbitrarypercentage toaprojectbudgetincaseadditionalhardwareisneeded.Asthesetwoscenariosshow, evenwithdiversetypesofprojectstargetedtodifferentuserswithdifferentcomputeand storagerequirements,cloudcomputingcanoffersignificantadvantages.Next,wewill identifytheadvantagesalludedtointhescenariosjustdescribed.

AdvantagesofDoingBusinesswithCloudComputing
Theadvantagesofdeployingserviceswithcloudcomputinginfrastructurefallintofour categories: Timetodeploynewservices Costcontrol Abilitytoscaletodemand Adaptabilityofresources

Eachoftheseadvantagesiscloselytiedtothearchitectureofcloudcomputingcombined withmanagementpracticesforallocatingthecostsofcomputeandstorageservices.

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TimetoDeployServices
Whenhardwareisdedicatedtospecificfunctions,itcanbedifficulttofindcomputeand storageresourcesforanewinitiative.Intheearlystagesfordevelopment,wouldbe serviceprovidersmaybeabletosqueezeinsomeapplicationsonunderutilizedservers. Thelikelysuccessofthisapproachdependsontheavailabilityofserverorstoragecapacity andtheabilitytofindthatexcesscapacity.Ifonehastocrossorganizationalboundariesto findtheseresources,thechancesofsecuringthemcandropsignificantly.Ifsuccessful, thesestopgapmeasureswilleventuallyhavetobereplacedwithamorepermanent solution. Procuringhardwarecanbetimeconsuming.Capitalexpendituresformultipleservers, storagearrays,andotherequipmentcanrequiremultiplelevelsofapproval.Plansmay havetobereviewedandapprovedfrombothabudgetandtechnicalperspective.Delivery ofhardwarecantakeweeks,andinsomecases,months.Oncethehardwarearrives,the nextstageofdeploymentbegins. Installinghardwareisamultifacetedprocess.Itneedstobeconfiguredaccordingto organizationalstandardsandincorporatedintosupportsystems,likebackupschedules andpatchmanagementsystems.Someofthemostfrustratingdelayscomewhenasingle pieceofhardware,suchasastoragecontroller,hastobeorderedseparatelyandinstalled whentheserverarrives.Intermsoffrustration,orderglitchesaresecondonlytohavingto waitforasimpletask,likerunningafibretothenewserver,togettothefrontofthe servicequeue.Manyoftheseconfigurationtasksareunavoidable.Theintegrityof infrastructuredependsonkeepinghardwareandsoftwareinaccordancewithpolicies. Fortunately,cloudcomputingprovidesaframeworkthatpreservestheintegrityof infrastructurewithoutmanyofthetimedelays(andfrustrations)encounteredin traditionalITdeploymentmodels. Inthecloudmodel,provisioningbecomesamatterofinstantiatingavirtualmachine instance.Therearenohardwareorders,deliverydelays,orwaitingforITsupporttoget aroundtoinstallingyourhardware.Withtheabilitytorapidlyadjustthenumberof instances,thereislessneedtoanalyzeprojecteddemand.Inefficientandtimeconsuming effortstofindexistingserverswithsparecyclesarealsoeliminated.Hardwareresources arecentrallymanagedandallocatedondemand.Thenewbottleneckstodeploymentare establishingachargeaccountforthecostofcloudservices,selectingavirtualimagetorun, anddecidinghowmanyinstancestostart.

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CostControlandAbilitytoScaletoDemand
Anotheradvantageofusingcloudasadeliveryplatformisgreatercostcontrol,andthatis tightlylinkedtotheabilitytoscaletodemand.Thiscomesfromtheabilitytomakefairly finegraineddecisionsaboutresources.Whereasyoumighthavetodecidebetween purchasinga$10,000and$15,000serverunderamoretraditionaldeploymentscheme,in thecloudrealm,youhavetodecidewhetheryouwanttorunthe$0.50/hrserverorthe $0.90/hrserver.Youarenotcommittedtousingtheseserversfor2to3yearseither;inthe cloud,youcouldbechargedbythehour.Ifyoumakeamistakeandunderestimateyour need,youaddmoreservers.Whenutilizationreportsshowthatthevirtualserversyou haveallocatedareunderutilized,youscalebackthenumberofserversyouarerunning.

Figure3.7:Dedicatedserversincurhighinitialcostinlinewithanticipatedpeak demand.Cloudserversincurcostsforactualuseovertime. Systemsadministratorsandservicemanagershavegreatercontrolovertheallocationof resourcesinthecloudandthereforecanprovisionasneededforcurrentdemand.With cloudcomputing,theyhaveeffectivelyescapedthechallengeofneedingtoconstantly dedicateresourceforpeakdemands. Thereisalsoapotentialforcostsavingswithsoftwarelicensing.Traditionally,softwareis oftenlicensedtonamedusersorforaspecificnumberofconcurrentusers.Thecloud openstheopportunityfornewsoftwarepricingmodels,suchaschargingbythehour. Ultimately,anycostsavingsonsoftwarelicensingwilldependonvendorsadaptingtheir pricingmodelstothecloud.

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AdaptabilityofResources
ThroughthecourseofITshistory,therehasbeenatrendtowardmakingcomputing resourcesmoreadaptable.Forexample,inthe1960sand1970s,ifyoupurchaseda mainframeorminicomputerfromIBM,DigitalEquipment,oroneofthefewother hardwarevendorsoftheday,youwouldgettheoperatingsystem(OS)forthatmachine, suchasOS/360forthemainframeorRSTSfortheminicomputer.Eachmachinewasused fordifferentpurposes,suchasbatchprocessingbusinessapplicationsorinteractive scientificprograms.Bythe1980s,hardwareandoperatingvendorsstartedtoseparate, withMicrosoftprovidingthedominantOSfortheIBMPCwhileAppleintroduceditsOSto runonMotorolahardware.Inthe1990s,itwasnotuncommontorundifferentOSsonthe sametypeofhardware.Cloudcomputinghasmovedthistrendtothenextstagewiththe abilitytorapidlyswitchvirtualmachineimagesrunningonahardwareplatform. Inthecloud,hardwareresourcesarenottightlycoupledtoanysingleplatform.Thesame resourcethatrunsaninstanceofWindowsServer2008anhouragomayberunning UbuntuLinuxnow.Asetofserversthatweretaskedwithgeneratingreportsforadata warehousemightbeusedtogeneratecustomerinvoicesafterthat.Removingrestrictions onthetypeofsoftwareandradicallyreducingthetimeandexpertiserequiredtochangeOS platformssignificantlyimprovestheadaptabilityofhardware. Theadvantagesofcloudcomputingstemfromtheabilitytodeploynewservicesfaster thanpossibleundermoretraditionalmodels;theabilitytocontrolcostsatamuchfine grainedlevelofdetailthanpossiblebefore,includingtheabilitytorapidlyscaletoneeds andtheadaptabilityofresourcestodifferenttasks.Themovementawayfromdedicated serversforsingletaskstousingcloudresourcesbringswithitseveralsourcesofROI.

SourceofROIintheCloud
TheROIofcloudcomputingisrealizedintwoforms:reducedcapitalexpendituresand improvedoperationalcosts.

LoweringCapitalCostswithCloudComputing
Withcloudcomputing,businessservicescanbelaunchedwithoutthesametypeofcapital outlaysrequiredintraditionalITdeploymentmodels.Theshiftsincapitalexpenditures occurforthreereasons: Reducedneedforinitialcapitaloutlay Reducedneedforbuildingforpeakcapacity Moreefficientutilizationthroughvirtualization

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Aswesawinearlier,justgettinganewbusinessservicestartedrequiresaccessto hardwareandsoftware.Traditionally,thismeansprocuringdedicatedserversrightfrom thestartevenifthefullcapacityoftheserverisnotneededforsometime.Tyingup workingcapitalinhardwarebringswithitopportunitycosts.Thecapitalthatwentinto purchasingaservercouldhavebeeninvestedinaresourcethatbeginsproducinganROI rightfromthestartinsteadofhavingtowaitmonthsbeforetheservicerequirestheextra initialcapacity. Anotheradvantagefromacapitalcostperspectiveisthatyoudonothavetoinvestforpeak capacity.Withthecloudmodel,yourcostsovertimearemorecloselyalignedwiththe averagecostofdeliveringaservice,notthepeakcapacitycosts.Thesavingscanbe significant,especiallywhenpeakdemandishighlyskewedrelativetootherdemand periods.Forexample,inthecaseoftheadvancedanalyticsapplication,therewasrelatively modestaveragedemandforcomputingresourcesbutsubstantialpeakdemand,providing forsubstantialsavingsincapitalcosts. AnothersourceofROIisduetovirtualization.Theutilizationofaphysicalserverisno longertiedtoasingleapplicationsusagepattern.Aserverdedicatedtotheadvanced analyticsapplicationwouldsitidlemostofthemonth;however,thesameserverinacloud configurationcouldhavemultiplevirtualmachinesrunningonthephysicalserver constantlyifthereissufficientdemand.Ofcourse,oneoftheobjectivesofmanagingacloud serviceistohaveenoughphysicalserverstomeetdemandbutnotsomanythatoverall utilizationratesdrop. PartoftheROIrealizedwithcloudcomputingcanbetracedtothereducedcostofcapital expenditures,butevenmoresubstantialbenefitcanbeaccruedbyloweringoperational costs.

LoweringOperationalCostswithCloudComputing
ThemostimportantdriversinROIrelativetooperationalcostscanbegroupedintofour areas: Ondemandprovisioning Reducedmarginalcostofsystemsadministration Standardizationandautomation Servicemanagementreporting

TheROIinoperationalcostsaresubjecttotheeconomiesofscale.Thesesavingsare particularlyimportantinlargercloudinstallations.

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OnDemandProvisioning ITsupportservicesarenecessaryinanydeploymentmodel,traditionalorcloud.The amountofsupportthatisneededforprovisioningserverscanvarysignificantly,though. ConsiderthestepsinvolvedinprovisioningavirtualserverinatraditionalITenvironment (thetodolistisevenlongerwhendealingwithphysicalservers),whichincludes: Submittingaservicedeskticketrequestingavirtualmachineinstance Identifyingwhichphysicalserverwillhostthevirtualmachine Determiningtheconfigurationparametersforthenewinstance Specifyingrequiredsupportservices,suchasbackups Coordinatingwithotherusersonthesharedhoststoavoidcommonpeakdemand periodsforexample,runningafullbackupononevirtualmachineinstancewhile anI/Ointensivejobisrunningonanotherinstance.

Theprocesscanbetimeconsumingbecausethereisadivisionoflaborthatseparatesthose whoknowwhathastobeimplementedfromthosewhoknowhowtoimplementwhatis needed.ThisisatypicalscenarioinIT.ThecomplexityofITsystemsdemandsapoolof specializedITknowledge.Servicedevelopersandbusinessusersrequiretheirtalentsto deploynewservicesandthatcreatesapotentialbottleneck.Cloudcomputingavoidsthis problemwithsupportforselfprovisioning.

Figure3.8:Selfprovisioningallowscloudconsumerstoallocateandmanagetheir ownresources.

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Withaselfprovisioningsystem,cloudconsumershaveaccesstomanagementsystemsthat allowthemtospecifythetypeandnumberofvirtualinstancestocreate.Allthehardware inthecloudismanagedcentrallyandvirtualmachineimagesaremaintainedinaservice catalog,socloudconsumersdonothavetodealwithlowleveldetails.Forinstance,details aboutwhatdevicedrivershavetobeinstalledorwhichlibrariesareneededtorunan applicationhavealreadybeenaddressedwhenthevirtualimageswerecreated.Also,cloud infrastructureabstractsimplementationdetailssuchasallocatingmemoryorCPUsto particularvirtualmachineinstances. ReducingMarginalCostsofSystemsAdministration TounderstandhowacloudinfrastructurecanresultinsignificantROI,youonlyneedto lookathowsystemsadministrationchangeswiththecloud.Atypicallistofsystems administrationtasksinclude: Installingnewapplicationsandpackagesonservers PatchingOSsandapplicationsoneachserver Backinguplocalstorageoneachserver Allocatingspacetofilesystemsasneeded Reviewingandpurginglogfiles Performingsecuritychecks,suchasrunningvulnerabilityscannersandreviewing resultsforeachserver

Inconventionalenvironments,systemsmanagershavetorepeatthesetasksforeach server.Fortunately,servicemanagementtoolssupporttheseefforts,buttheycanstillbe timeconsuming.Consistencyacrossserversisimportanttoreducetheamountoftime requiredtomaintainsystems;however,asthenumberofserversgrows,sodoesthe chanceofhumanerrorduringsystemsmanagementoperations.

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The Definitive Guide to Cloud Computing

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Figure3.9:Cloudsystemsadministrationentailsmaintainingimagesintheservice catalog,unliketraditionalsystemsadministration,whichislinkedtoeachphysical server. Inthecloud,maintainingindividualserversisswappedformaintainingvirtualmachine imagesintheservicecatalog.Theservicecatalogisthesetofimagesavailableforrunning inthecloud.Forexample,theremaybeseveralWindowsserverandLinuximagesthat havebeenconfiguredforgeneraluse.Theremayalsobemorespecializedimagesfor relationaldatabasesorcontentmanagementsystems.Stillotherimagesmaybedesigned fordeveloperswhoneedtoroutinelyinstantiateapplicationserversfordevelopmentand testingaswellasforproductionuse.Havingacentralizedrepositoryofvirtualmachine imagescansignificantlyreducethetimerequiredtoperformroutinetasks.Considera simpleexample.

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The Definitive Guide to Cloud Computing

Dan Sullivan

Amidsizebusinesscouldeasilyrun200serverswithamixofOSsandapplications.Ifa criticalsecuritypatchisreleasedandhastobeappliedto50servers,thepatchhastobe applied50times.Evenwithpatchmanagementapplicationstohelp,systems administratorswillhavetoverifythesuccessofthepatchineachcase.Incaseswhere automatedtoolsarenotavailable,systemsadministratorswillhavetoapplyeachpatch manually.Nowcomparethatwithpatchingaservicecatalog.Theexistingimageisremoved fromthecatalog;anewpatchedversionisgeneratedanduploadedintothecatalog.What couldhavetaken50distincttasksisdoneinonestep. Thisexampledoesraiseanotherdifferencefromasystemsmanagementperspective.The servicecatalogimageispatched,buttheremaybeinstancesoftheunpatchedimage runninginthecloud.Wherearethoseimages?Howlongwilltheycontinuetorun?Atwhat pointshouldtheinstancesbeshutdownandrestartedusingthepatchedversion?Thefirst twoquestionscanbeaddressedusingcloudmanagementsoftware.Thelastissueisa questionofpolicyanalogoustodecidingwhentoscheduleacriticalpatchforaserver. Systemsadministrationinthecloudmaybelesslaborintensivebutsometimesdifficult decisionsaboutbalancingsecurityorstabilitywithbusinessexpectationsremain. StandardizationandAutomation AnotherreasonforoperationsrelatedROIisthatbystandardizingonasetofgeneral purposevirtualmachineimages,youreducetheoverheadinmaintainingthem.Imagesare deployedandvirtualmachineinstancesarestartedusingamanagementconsole,soacloud userwhoknowshowtodeployaWindowsserverknowshowtodeployaLinuxserverora relationaldatabaseaswell.Standardizationalsoenablesbehindthescenesautomation thatfurtherreducesthedemandforsystemsadministratorexpertise. Forexample,whenyouinstallLinuxonaserver,youhavetodecidewhattypeoffile systemtouseandhowtopartitionthedisk.Thesearenotparticularlydifficulttasks,but youdoneedtoknowsomethingabouthowpartitionsareused,howmuchspacetoallocate toeach,andthetradeoffsbetweenthedifferentkindsoffilesystems.Whenyouinstantiate serversinthecloud,youdonothavetoworryaboutstorageservices,theyareprovidedfor you.Theimagesintheservicecatalogareconfiguredtoworkwithcloudstorageservices. Muchofthetediumofsettingupmonitoringprocessestocollectperformanceandusage dataisalsoautomatedwithservicemanagementsystems.

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The Definitive Guide to Cloud Computing

Dan Sullivan

ServiceManagementReporting ROIisnotjustabouttechnologybutabouthowyoumanageit.Withservicemanagement reporting,serviceproviderscanbetterunderstandtheresourcestheyuseandadjusttheir allocationsaccordingly.Someofthemeasurementsserviceprovidersmightuseinclude: Numberofserverhoursallocated Overallaverageserverutilization Averageserverutilizationbyhour Averageserverutilizationbyinstancetype Totalstoragespaceused AmountofnetworkI/O

Dataonthesemeasurementscanhelpdeterminehowmanyserverstoallocateandhow longtorunthem.DataonstorageuseandtheamountofnetworkI/Ocanhelpguide optimizationofapplicationperformance,especiallyiftherearechargesbasedonnetwork traffic. ManyaspectsofcloudcomputingcontributetotheROIinthetechnology.Capital expendituresaresignificantlylower,ifnoteliminated,fornewservicedeploymentwhen usingthecloud.Thebigsavings,however,comesfromreducedoperationallaborcosts enabledbyselfservicemanagement,automation,andstandardization.

AssessingtheBusinessValueofCloudServices
TheROIincloudtechnologieswillvaryfromonebusinesstoanother.Muchwilldependon factorsoutofyourcontrol,suchaseconomiesofscalethatwillbenefitlargerbusinesses thansmallerones,aswellasfactorsyoucanmanage,suchasserverutilizationrates.To assessthevalueofcloudservicestoabusiness,considerseveralcloudmetricsaswellas thesourceofROIforyourparticularbusiness. Thereasontotrackparticularmetricsincloudcomputingisnodifferentthanthatofany otherbusinessoperation:toquantifythecostsandbenefitsoftheservice.Thisisespecially importantwhenusingaprivateorhybridcloudmodel.Keymetricsforthesecloudsare: Utilizationofallcloudresources.Ifresourcesareunderutilized,serverscanbe powereddowntosaveonenergycosts.ITmayalsowanttopromotetheuseofthe cloudandpublicizeavailabilityofresources. Systemsmanagementhours.LaborcanaccountforsignificantportionsofIT operatingbudgetsbutshouldbesignificantlylessforcloudservices.

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The Definitive Guide to Cloud Computing

Dan Sullivan

Virtualmachineimageuse.Allimagesinaservicecataloghavetobemaintained. Ifsomeimagesarenotused,orusedinfrequently,theymaybeincurringmorecosts thantheyrecoupthroughusagecharges.Infrequentuseorusebyonlyoneusercan alsoindicatespecializedoroneoffimages.Thesearesometimesnecessarytomeet businessrequirements,butifthenumberofspecializedimagesgrows,thecostof maintainingthemwillincrease.Chargesmayneedtobeadjustedtorecoupthefull costsofmaintainingspecializedimages. Timetoprovision.Thismetriccanindicateinsufficientresourcesinthecloud.Ifa sufficientnumberofserversarenotavailable,userswillhavetowaitforotherjobs tofinishinthecloudbeforetherevirtualmachineinstanceswillbeprovisioned.

Inadditiontothesemoreglobalmetrics,lookingatROIbasedonspecificelementsofcloud infrastructureisusefulaswell.TheseincludetheROIrealizedfrom: Improvedhardwareutilization,especiallywhenfewerserversarerequiredtomeet aworkloadleadingtoreducedcapitalcosts,lowermaintenancecosts,andreduced energycosts Lowersoftwarecostsbecausesoftwarelicensedperservercanhaveimproved utilizationthatparallelshardwareutilization Selfservicemanagement,whichreducessystemsadministration Increasedproductivityduetoreducedwaittimetodeployserversandapplications

Cloudcomputingisanevolutionininformationtechnologyandsoitisnotsurprisingthat manyofthesamemetricsandROIfactorswehaveusedinITforyearshaveanalogsin cloudcomputingaswell.

Summary
Cloudcomputingoffersnewwaystodeliverbusinessservices.Asthetwoexample scenarioshighlighted,differenttypesofbusinessapplicationscanbenefitfromdeployingin thecloud.Theabilitytoscalecomputeandstorageresourcesasneededreducestheneed tobuildforpeakdemand.This,inturn,reducesthecostofdeliveringserviceswhile avoidingcostlyriskmitigationstrategies,suchasaddingcontingencyfundstoaproject budgettopurchaseadditionalhardwaretomeetunexpecteddemand. Furtherbenefitsofcloudcomputingaccruewithregardstoreducingthetimetodeploy newservices,morewaystocontrolcosts,andtheadaptabilityofresources.Serversinthe cloudcanberepurposedrapidlyandwithminimaltechnicalexpertise,reducingtheneed fordedicatedserversandtheirtypicallowutilizationrates.

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The Definitive Guide to Cloud Computing

Dan Sullivan

PerhapstheprimarydriverfortheadoptionofcloudcomputingistheROI.Capitalcostsare reducedlargelyduetohigherutilizationratesofservers.Evenmoresubstantialsavings canrealizedwithselfservicemanagementandsavingsinsystemsmanagement.With standardizedimages,automation,andservicemanagementreporting,clouduserscannot onlydeployservicesinthecloudbutalsomanagethemeffectively. Thefirstthreechaptershaveintroducedcloudcomputing,examinedsomeofthetechnical aspects,anddescribedingeneralhowcloudcomputingcanimproveservicedelivery.Inthe nextchapter,wewillturnourattentiontothequestionofhowtobeginplanningforcloud servicesinyourbusiness.

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