The Three Great Lies of Cloud Computing

It’s elastic! It’s on-demand! It scales dynamically to meet your needs! It streamlines your operations, gives you persistent access to data, and it’s always, always cheaper. It’s cloud computing, and it’s here to save your enterprise.

And yet, for all the promise of cloud, there are still segments of IT, such as HPC and many categories of big data analytics, that have been resistant to wholesale outsourcing to public cloud resources. At present cloud computing makes up only 2.4 percent of the HPC market by revenue, and although Intersect360 Research is forecast its growth at a robust 10.9 per year, that still keeps it well under 5 percent throughout the five-year forecast period.[1]

If cloud computing is so indisputably awesome, why are some markets stuck under mostly sunny skies? Typically, answers to this question float to the so-called barriers—security and data movement are the most common scapegoats—but in reality, cloud computing adoption goes beyond finding the keys to unlock the gates of heaven.

The cold, hard truth is, not everyone pictures cloud computing as Cloud Nine. Some people see the world differently. This shouldn’t be a surprise; markets have segments. No matter how much you and your friends like them, not everyone else likes Starbucks, Costco, or “Orange is the New Black.” But even for those with cloud-colored glasses—perhaps especially for those proselytizers, the cloud-noscenti—it’s worth pointing out that not all of the great truisms of cloud are strictly true.

Lie #1: It’s in “the” cloud.

We talk about the cloud as if it were a singular, magically connected ether-verse, the same way we talk about the web, the internet, or perhaps heaven. It’s in the cloud, like that’s one place, where your corporate accounting is hanging out with my Instagram pictures when no one’s looking.

This is so obviously untrue that is almost doesn’t bear mentioning, except that it leads to sloppy behavior when users fail to consider where “in the cloud” is. Who is in charge of the data’s accessibility and stewardship? Who ensures availability of applications? If I want something back from the cloud, how do I get it, and will it be in the same condition as when I gave it up?

Even among major cloud service providers, services are not always the same, and when “the cloud” is wrapped together with other trends, such as Internet of Things, our awareness of the cloud is at yet another remove. That instantiation of “the cloud” where your smart lawn sprinkler data is kept might be a rented partition with Google, or it might be an independent server closet in Alpharetta, Georgia.

Rectifying this lie is mostly a matter of language, along with consumer awareness, and at an enterprise level, it is easily enough managed with service level agreements. Yet any time we refer to “the” cloud, it belies a certain laziness in specification that sets off alarm bells. Ask yourself if you are prepared to be asked, “What do you mean we can’t access it? I thought it was in the cloud!”

Lie #2: You only pay for what you use.

The elasticity of the cloud is often touted as its greatest benefit, saving you money through the magic of only paying for what you use. When you need more, they give you more; it’s a pay-as-you-eat buffet of enterprise infrastructure where they simply weigh your plate at the end of the line.

But what about the food that goes uneaten? Who pays for that? Why, the restaurant does, of course, just as the cloud service provider pays for all of the unused computing cycles and storage that gets thrown out at the end of the shift.

It still sounds like paying for only what you use, until you consider: The cloud service provider is still making a profit. After paying the power bill, hiring the administrators, and advertising its services, selling clouds is a profitable business, even if it doesn’t sell all of its capacity. Who pays for the unused cycles? The buyer still does, built into the price of the cycles that do get bought.

And by the way, there are excess cycles, just like there’s always leftover food on the buffet at the end of the night. Clouds are provisioned for elasticity, and the cloud provider doesn’t like to get caught without desired capacity.

Lie #3: Cloud computing is definitively cheaper than on-premise.

The notion that cloud computing is categorically cheaper than on-premise draws on two philosophies. One, that there are substantial savings implicit in only paying for IT on a utility basis—but as we just saw, when IT needs are relatively stable, this is a fallacy. Two, that economies of scale allow the cloud service provider to acquire and manage IT resources far cheaper than the smaller individual enterprise could.

To be sure, hyperscale companies like Google, Amazon, Microsoft, and Baidu wield considerable buying power, and they even bypass traditional OEMs to employ ODMs or to purchase components directly from suppliers. But to espouse the volume of their purchases as the driver of savings is to draw the wrong comparison. Any system vendor buys components in large volumes. The only thing that has changed is the delivery mechanism, to a short-term rental economy. Depending on your commuting patterns, it may cost you less money to take a bus periodically than to buy a car, but the economies of scale for the municipal fleet isn’t the fundamental reason.

This isn’t to say that cloud doesn’t make economic sense for buyers. It often does, particularly when demand is highly variable. When an organization needs a relatively large increase in capability for a relatively short period of time, the pay-as-you-go model still offers a benefit, despite the implied overhead. Additionally, for many organizations, managing IT isn’t considered to be strategic or otherwise core to operations. In fact, in some cases, it may be worth a premium to pay someone else to manage it for you.

The Truth of Cloud Computing

There are myriad cloud service providers out there, all competing for your business. Combined with smaller providers, application specialists, and scientific collaboration sites, there are hundreds of public clouds available. They offer you the ability to outsource any portion of your IT infrastructure or workload, scaled to the size required, and adjustable over time.

Sure, you have to pay a premium to cover management and overhead. And if you can use the majority of the capacity you buy, it isn’t necessarily any cheaper to outsource, relative to managing infrastructure internally. But for many users, cloud computing is worth it.

And it has a major role in the market.

Even within HPC, a market that has been resistant to it, we see major growth potential for cloud. In addition to bursting for short-term additions to peak capability, cloud provides an on-ramp for organizations that are moving into HPC for the first time. There have always been application consultants to help manage workloads, and now the infrastructure can be outsourced along with the expertise.

If the promise of cloud computing is overblown, it because of the amplification it gets from its loyal converts, enterprises who have found liberation and agility in outsourcing IT. There will still be segments of the market where cloud computing doesn’t make economic or operational sense, and even some workloads and data sets for which enterprises reintegrate workloads, bringing them back on-premise out of the cloud.

The truth is, cloud computing is here to stay, and it is growing, specifically because it represents a new paradigm that introduces more capabilities to more people. But it is not a panacea that will overwhelm the IT landscape. Cloud will not fully displace on-premise, but it will remain an extended part of the infrastructure—the hybrid cloud, if you will—in most forward-looking enterprises. And it will enable fabulous new applications, things that we have dreamt of, and even things we have not.

The true leaders in adopting cloud computing are not the organizations that heuristically push everything off-premise based on the faith that life is better in The Cloud. Rather, the true leaders are the ones who see past the platitudes to determine which clouds to adopt, when and where, and for what.

With a well thought out strategy, cloud computing can help transform an enterprise, introducing more capabilities, streamlining operations, or delivering more return for an optimal investment. There are a lot of clouds to choose from, ready to scale to any level of need, with utility pricing plans that make financial sense for a lot of workloads. And that’s no lie.

Editors Note: Keep an eye open for the free download edition of The State of HPC Cloud: 2016 Edition from Next Platform Press. Available via Amazon and other booksellers December 20th with a special free download week beginning October 24, sponsored by Nimbix. 

[1] Intersect360 Research, “2015 Worldwide HPC Total Market Model and 2016-2020 Forecast,” September 2016.

nottomcruisebutkinda2About Addison Snell, Contributing Author, The Next Platform

Addison Snell is the CEO of Intersect360 Research and a veteran of the High Performance Computing industry. Addison was previously an HPC industry analyst for IDC, where he was well-known among industry stakeholders.

Prior to IDC, he gained recognition as a marketing leader and spokesperson for SGI’s supercomputing products and strategy. Addison holds a master’s degree from the Kellogg School of Management at Northwestern University and a bachelor’s degree from the University of Pennsylvania.

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7 Comments

  1. Well written article thank you the only critique I have is that besides briefly mentioning it doesn’t touch remotely the data security and privacy issue with public clouds which is huge and often unfortunately seem to be completely neglected in these discussions.

    Personally I find the concentration of compute and data storage in few global players a very concerning trend.

    Also often enterprise IT decision are made by short term bean counters who do not really understand and foresee middle to long term implications of their decisions.

  2. The hybrid approach will be the winner. As far as I know IBM is leading in that segment. Moving everything to ‘the cloud’ does not make sense in many situations, and some companies already noticed the risk of having all your data in other’s hand. Use the flexibility of the cloud when you need it, and on-prem for core/private stuff.

  3. Nice article, Another area to also be aware of is backups and data retention. What do these cloud services offer when you need to recover something that has either been changed or delete well in the past due to a legal requirement e.g Court orders, TAX requirements.

    Are you going to rely on the cloud provider, host your own backups, or you just may not be able to backup anything. Pulling large volumes of data across WAN links isn’t going to be nice. How does the provide handle the backups once they have been taken?

  4. Addison,
    This is a balanced and thoughtful read and is excellent background for any working group about to formulate a cloud strategy. I have a lot to gain if everyone flips wholesale to run Big Compute workloads on cloud, and I am the first person to tell customers what a bad plan that will turn out to be. The tools are all there to enable organizations to do fantastic things, but the market is still figuring out the best methodology to identify the right fit for the right customer at the right time. But we will get there if people take the same reasoned view you have.

  5. Very well articulated piece if a bit misleading. Let me explain. The first “lie” is, according to you, “It is in “the cloud””. Well, this is really not a lie as much as it is a fact. A lazy fact perhaps and one that you point to as well. But really, my cavil, and I suspect yours too, is that there is an deep seated apathy expressed by most who talk of the cloud as this giant blob of storage that can be easily pointed to when, in fact, it is far more complicated than that. So, yes, intellectual lethargy? Absolutely. Lie? Hardly.

    Second, “You only pay for what you use” is a lie, according to you, in that typically the units sold are never (ever) personalized to each user in the way they would use the cloud. This is a bit like expecting to pay the restaurant only for those grains of rice consumed and having the owner make the excruciating calculation of how many grains have been consumed and billing you only for those. Talk about a thankless job. Not likely to happen. So, yes, technically speaking if you do not consume certain units you still end up paying for those. But, when you buy a certain capacity the explicit agreement is that you would use that capacity for whatever you choose to do with it and the payment is made upfront for it. How is that then a lie? Or is this not the way business ANYWHERE is done when you buy a product or a service regardless of whether it is on the cloud, off it, or somewhere close to nirvana whether you use it fully or not? Or is the argument, which is what I suspect you are getting at, that it is a lie because cloud service providers can sell you a certain capacity knowing quite well that they can resell parts of your unused capacity to someone else in a show of stunning double dealing? Even that is a bit of a stretch as again, with a little bit of planning and some practice, there is a no need to buy more than you can chew and instead minimize wastage. To take a banking analogy here, while fully understanding the derision that such a comparison could engender, banks are expected to ensure availability of all your funds at all times. This does not mean that they cannot lend your money to others for a certain interest. Similarly, in the case of the cloud service providers, a certain capacity and concomitant service levels are guaranteed and whatever else happens behind the scenes is not really of concern to anyone else.

    Finally, the third lie occurs when the cloud is touted as the cheaper alternative to on premise. True. That is indeed a lie but not for reasons that you have specified; at least not for the second one. It is highly debatable that rational people (while fully conceding that in these fraught electoral times, this concept of rationality is a bit of a stretch, but work with me on that) make the economic calculus of the cloud being cheaper based on the purchase economies of scale of the cloud service provider, as you allege. I laughed at your smart analogy of taking the train for reasons that the municipal fleet is large. Humor aside, this is a silly reason as you rightly point out though it must also be said that this is largely an argument that only the IT extremists make, which, may have a greater presence in my corporate backyards than I am aware of. So, yes it is a lie but not a convincing enough one that I have seen people tell with a straight face and therefore one that ought not to be legitimized as you have here.
    But beyond all the lies, I fully agree that a sensible cloud strategy can happen only when enterprises start by doing a few things: (a) articulate to themselves and their internal stakeholders what the “cloud” even means and the various forms that it could take, (b) understand what workloads realistically could be migrated to the cloud and for what reasons, (c) have a way to meter the costs beyond the normal charges that accrue to a service provider but one that truly accounts for things like slack capacities, internal resource redeployment and others, (d) and finally understand under what circumstances to “retrench” current cloud services and bring them back in house. I am sure there are more things to consider but these would be a start.

  6. Lets be honest folks. The majority of those not adopting the cloud process are those stuck in the old ways. The control of their own sandbox types. The thought of turning even the most microscopic amount of power to another signals their doom. Budget/Revenue, headcount/staffing, and other factors drive the fear of adoption of cloud technologies. Of course the easiest to fall back on and by far hardest to prove out is Security. Who has my info? Who can see it? Are they good stewards? And so on.

  7. the cloud is just a way for you to put your ideas your patents your business models and your sensitive materials on a server that is controlled and owned by someone only now they are not responsible for your blackmail,your monetary loss,your death or your arrest because ITS THE CLOUD no responsibility no warrants no borders needed. Before they had to file a mountain of paperwork, construct a legal brief,show judge that suspicion exists or break n or hack your home or corporate computers to do these things to you. Now the NWO or EU or China or Big Tech can EFF up your plans with a simple request an anonymous “donation” and never leave the house…..or senate or mansion or Langley Virginia

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