Cloud Services are a Bright Option for the Enterprise

The Cloud Opportunity
With Cisco Partner Summit happening in New Orleans this week there has been a lot of important news with the announcement of the Cloud Partner Program that enables and encourages Cisco Partners to develop and deliver cloud services being at the top of the list. You can follow the action on the Cisco Channels Facebook page. This announcement might have you wondering what the size of the market for cloud services is and what Enterprise organizations are thinking as they consider the move to services from the cloud.

At Cisco we had these same questions as we were making investment decisions in the systems and solutions that enable organizations to build a cloud service delivery architecture. As a result the Cisco® Internet Business Solutions Group (IBSG) conducted research that included interviews with enterprise IT decisions makers and key subject matter experts. The study showed that enterprises across many sectors are seriously considering cloud computing. Based on direct feedback from enterprise decision makers, Cisco IBSG estimates that close to 12 percent of enterprise workloads will run in the cloud by the end of 2013 and that this will yield a market for public-cloud services of approximately US$43 billion. Organizations have a few things to consider as they make this migration to the cloud.

To Cloud or Not To Cloud
The primary reason for the enterprise to adopt cloud services is to reduce costs and increase agility. The decision to migrate to the cloud hinges the how access to critical applications will be impacted and what the benefits are for running applications in the cloud when weighted against the constraints. Many factors come into account such as workload variability, the need for agility, and application functionality when run in the cloud. The applications that are most suitable for delivery from the cloud are workloads with variable or unpredictable resource requirements. For example workloads that are seasonal, such as tax season, or public-facing applications such as online sales. Since these applications must be provisioned for peak loads there is a major cost advantage to utilizing on-demand infrastructure to run them. Applications that require quick setup, such as sales-and-marketing campaigns, and application development are prime candidates to move to the cloud as well.

Considering the Possibilities
There are a number of consideration with the adoption of cloud services, among these are security, legacy architectures, and sunk costs. These might be short lived though as cloud computing matures. In fact given the limited resources of many organizations security can often be delivered better by cloud providers who have dedicated staff to address the issues and who are subject to scrutiny by oversight agencies. Legacy architectures can impede public-cloud migration as many enterprise workloads are running on RISC or mainframe architectures; however the availability of Infrastructure as a Service (IaaS) can accelerate the migration of these workloads to x86 architectures by providing a lower cost way to develop and test applications during migration. In making this migration organizations will be taking sunk costs such as software licenses and customization into account and might be planning migrations around amortization schedules to maximize return on investment, as well as looking for favorable pricing models that let them ramp up as needed.

The Role of the Network
The network plays a major role in the delivery of applications from the cloud and factors into the consideration to migrate. For example accessing applications from the cloud requires high bandwidth and low latency. Cloud service providers must be able to ensure application availability as well. This means that cloud service providers need a way to deliver service level agreements for cloud service assurance both in the data center and over the network. Customers are increasingly expecting these agreements to address the coupling of application with business processes. That means that they not only expect reliable performance from the network, including monitoring of application performance, but that they also expect the performance of their important business processes, such as order entry or payroll, to be assured. This topic was covered in a previous blog: Addressing the Need for Cloud Service Assurance.

Staying Private or Going Public
Enterprises must make a decision about whether to build a private cloud or to go with a public cloud service. They have the option to do both and there are a number of factors that go in to the decision. When looking at a private cloud organizations need to consider if they currently have overcapacity in the DC that they can utilize. If they don’t they are probably better off going with a public cloud provider instead of building new capacity. In deciding between the two options they need to consider if they have efficiencies that will enable them to deliver services at a comparable cost. Having access to skilled IT personal is another key consideration and given that cloud providers specialize in this area they might be able to retain the more experienced talent. The need for special security considerations can be another deciding factor. Large financial institutions have different security requirements from manufacturing organization for example, and the former might lean towards private cloud while the later is more likely to adopt public cloud.

To Learn More
To learn more about trends in cloud service adoption see this research study by Cisco IBSG, Network Service Providers as Cloud Service Providers.

Backstory: While I was on the Cloud and Managed Services team Cisco IBSG provided us research that we used in our marketing. I created this blog to promote the Cloud Services opportunity that I was marketing. It is posted on the Cisco Data Center blog site.