Like Walmart and Windows laptops, cheaper does not in any way mean better.
My new Walmart belt has frayed after 5 wearings and I had to use a black market because the black coating came up and I had a surprise funeral to go to.
I won't talk about the company associated with... Macrobloat anymore.
But there are security and economy concerns with the Cloud; if a company one relies on goes out of business, for example... data breaches. Reliability. Identity theft. Data loss. I could go on.
Google: The cloud is cheaper
Summary
Following a recently published report from McKinsey which cast a shadow on cloud computing, Google says to consider the whole picture, not just hardware costs.
Topics
When considering the costs of going to the cloud, consider the whole picture, not just hardware costs, said a Google executive.
Following a recently published report from McKinsey (below), which cast a shadow on cloud computing, the cloud platform vendor is perturbed.
The search giant spoke to ZDNet Asia Thursday in response to the report, which recommended large companies be better off managing their IT resources in-house. It compared the costs of running a typical enterprise data center against a cloud alternative, and found the latter to be a more costly option for large enterprises.
Matthew Glotzbach, product management director, enterprise, at Google said the report was flawed in that it only focused on hardware cost.
"It is only one cost aspect out of a dozen." Companies also need to consider other costs of the application stack such as licensing and development, said Glotzbach.
Furthermore, he said the report also assumes virtualization will be able to raise hardware utilization to 100 percent. Glotzbach said, in reality most companies are only able to achieve 20 to 30 percent.
"Enterprises haven't been sophisticated enough to plan for that high utilization level." Virtualization, to achieve high utilization "is good in theory, but in reality it isn't even close to how enterprises are run", he said.
Google has been on the path to win large clients over with its cloud-based application offering, Google Apps.
Glotzbach said the majority of its 3,000 new customer wins each day have been small and midsize businesses (SMB), but pointed to the "few dozen large enterprises adopting [cloud services] every quarter" as an indication of cloud services maturing.
He added that the cloud's value lies beyond cost reduction--as a platform, it can help serve functions that companies could not otherwise achieve in-house.
Within the Google Apps offering, he said, companies can post videos for streaming. "There's no way companies could have set that function up themselves," said Glotzbach.
On the cloud, companies can adopt the latest technology without the investment or development cycle involved with building apps in-house, he added.
Companies should think about moving commodity aspects of the business such as e-mail and calendaring to the cloud, he said. Core applications central to the business should be kept in-house; companies need to decide if they want to rewrite these applications to the cloud.
Glotzbach noted that industry momentum around cloud platform providers making it easier for developers to port existing apps to the cloud will help bridge this divide in future.
What McKinsey said
McKinsey released a report in April 2009, which said cloud computing is suited for smaller organizations, not larger corporations.
In a study, the consulting group found that for small to midsize businesses (SMB), the cost of running a data center is higher than the cost of transiting to a cloud computing environment.Large enterprises, on the other hand, should run on their own data centers, McKinsey recommended, saying it is much cheaper to manage in-house compute capacity.
Using Amazon's EC2 cloud platform, as an example, the report revealed an increase of 144 percent in costs is needed to move to the platform.
Furthermore, non-labor costs increased from US$43 per month for typical data centers to US$270 per month for Amazon's cloud.The report also said companies can match server utilization rates in the cloud by applying virtualization technology in-house.It said companies can achieve server utilization rates of about 35 percent with "aggressive virtualization" and a "generally achievable" rate of 25 percent. Going to a "best-in-class" option, using Google as an example, would yield about 38 percent.
Large companies should instead rely on server virtualization to share compute resources in a more cost-effective way, according to the report.
Konrad Foo contributed to this story. Based in Singapore, he is an intern with ZDNet Asia.
This article was orignally posted on ZDNet Asia.
Talkback Most Recent of 15 Talkback(s)
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HypnoToad727th May 2009 -
For SMBs that can not afford the necessary security people 24x7, the cloud
will increase security and make data breaches less likely.
For large enterprises, they can save money right now on commodity applications at the same or better security levels and uptimes.
Then, you have the distraction. The managers end up having to spend time managing all of the internal infrastruction, they end up having to hire and fire managers, participate in infrastructure decisions, applications decisions, etc.
Finally, if your traffic doubles you are screwed blued, and tattooed, and left scrambling to figure out how to finance and buy equipment, get more bandwidth, and more physical space. With the cloud, you just pay for extra CPU cycles, storage, and bandwidth.
DonnieBoy7th May 2009 -
The Sales Pitch Sounds Nice But...
What about the cost of the team of lawyers needed to protect IP rights? The new management team that has to be hired to manage vendor relationships.
The cost of equipment and staff used to patch all of the legal, social, and technical holes in cloud adoption.
There aren't any cloud standards so in effect if one cloud vendor goes out of business, your business get affected. Of course your business plans for this but this reduces the cost/benefit of the cloud.
Virgina's online medical records were recently held hostage for 10 million dollars. It doesn't sound like cloud security is a match for private networks with out internet access.
So far no cloud company has really gone out of it's way to guarantee the data originators are the data owners. If Google needs to raise revenue in these tough economic times, are they going to sell my data to the highest bidder? Since they are a for profit company the answer is probably yes. Will my company have to sue Google? Sure but again this reduces the cost/benefit of cloud adoption.
The technology is interesting but it is not mature enough.
Cloud adoption has been compared to out sources of other services. However, what doesn't get mentioned is that USA companies don't outsource to ever other country on the planet. They avoid high risk countries. You don't see a lot of African outsourcing because it is risky. Your company builds a 1 billion dollar system and some local warlord over runs it and takes it from you. Your employees get killed and you lose a tremendously valuable asset. So companies only outsource to places that have a risk/benefit that favors them. Same with cloud computing. When the risks/costs/benefits all align in favor of a company, cloud adoption will proceed.
mr19727th May 2009 -
Do you keep your money underneath your mattress too? We have these
institutions called BANKS. Do you design and build you own fleet of cars, or do you outsource that to Ford?
The teams of lawyers you need will be to defend yourself for the data loses because you did not have the employees to secure the data center and all of your customers information are floating around on a botnet.DonnieBoy7th May 2009 -
Not at all
You throw the gloom and doom scenerios around quite easilly, but carefull planing at the beging ensures that your situation never arises.
The infrastructure is already in place for other tasks, so the workload easilly handled, and the fact that Google claims something can not be done in house does not indicate they are correct, just looking for business, nothing more.
This is typical of Google: Enterprises haven't been sophisticated enough to plan for that high utilization level
Translation: "You are too stupid to do this, only we at Google are capable of pulling this off"
Then, you have the distraction. The managers end up having to spend time managing all of the internal infrastruction, they end up having to hire and fire managers, participate in infrastructure decisions, applications decisions, etc.
They do that already. Adding more capabilities in house does not change that fact in any way shape or form.
So of course the interview with Glotzbach must be taken for what it really is:
Google wants you to pay them to manage your infrastructure, and not have you take revenue away from them by doing it yourself.
GuidingLight7th May 2009 -
You can not plan when a new service or product will take off, you can not
always plan ahead. You can not run promotions that will suddenly quadruple you computing needs for just a few days. It is not doom and gloom, just situations that businesses need to be able to handle to increase competiveness. That simple. With cloud computing, you can now handle those situations without breaking a sweat.
And, this is not a matter of stupidity, just limited resources. People that can not handle this kind of thing are just working with limited resource and infrastructure, and can not afford to hire experts to keep everything working and secure 24x7. Their expertise it not in computing.DonnieBoy7th May 2009 -
Actually, I believe I see the problem here
It is that you are overstaing the complexity of the tasks.
As is Google.
Google talks the talk in an effort to scare people into their arms, never giving them the opportunity to learn it was able to be done in house all the time, at a smaller cost then Google claimed it would have cost them.GuidingLight7th May 2009 -
Well, securing servers is NOT simple, and Google is NOT the only cloud
provider. And, beyond the complexity, it is just a matter of being able to instantly quadruple your capacity for a promotion, or a suddenly popular service. You might need that capacity for only a few days even, making things worse. This is all about being able to handle these scenarios and be more competitive. No scare tactics involved.
And, do not forget that SMBs can NOT afford the personnel required to keep servers secure and running 24x7. Add to that, your internet connection fails, and your site is down, which just might be the lifeblood of your company. Sure, you can still read your email, but that is of little consolation as you see your business go to zero, while customers look for other vendors to fill their needs. SMBs can not afford the redundancy that Amazon can.DonnieBoy7th May 2009 -
Another big thing is lowering the barrier to entry for smaller companies.
To set up an e-commerce site, for example, is a snap on the cloud. To get your own company email / document storage, you only pay the domain, Google Apps my domain is free for less then 50.DonnieBoy7th May 2009 -
You can not plan when a new service or product will take off, you can not
always plan ahead. You can not run promotions that will suddenly quadruple you computing needs for just a few days. It is not doom and gloom, just situations that businesses need to be able to handle. That simple. With cloud computing, you can now handle those situations without breaking a sweat.
And, this is not a matter of stupidity, just limited resources. People that can not handle this kind of thing are just working with limited resource and infrastructure, and can not afford to hire experts to keep everything working and secure 24x7. Their expertise it not in computing.DonnieBoy7th May 2009 -
Google and service.
Just a possible case:
I have all my business software on the Google Cloud and it has worked fairly well for a couple of months.
One day i found that my system stopped working, then i decided to called Google... big surprise, you can't phone call Google!, then i decided to send a urgent email and a couple of days later i received a automatic response from Google saying nothing reality worthy to mention. At this point, my system has been down for many days and i don't have a ETA to when it will be fixed.
magallanes11th May 2009 -
Paid or not?
They offer phone based support to paying clients. Are you a paying client or are you using Google Apps for free?
KieranMullen
http;//360oregon.com
kieranmullen11th May 2009 -
RE: Google: The cloud is cheaper
Folks let's face it - to say one is doing 'cloud computing' plays well on the resume and in the boardroom. Execs like to blackbox things so they don't have to make decisions, even if they cost more. This way they also have a scapegoat and whipping boy. They sure don't want to be the last to say they are doing what everyone else is 'doing'. When will we get leadership in place that will point the way and then lets those who follow chart the course. Cloud computing is maybe the course or maybe not - but it is not the final destination. Fire your C/level execs.
MachTurtleToo11th May 2009 -
Bad title, lots of assumptions...
I honestly don't see where cloud computing is viable except with brand new development. Forget about the costs associated with hardware and maintenance.
All of our applications are designed to work with relational databases through SQL. That means that we have to do all the CRUD stuff, but also complex joins and data analysis. All of the interactions from the data layer to the database, is through SQL.
Google cloud computing uses the "Big Table" storage approach, where data storage is treated as a large hash table, and you have to know the primary keys of the data you wish to access. Not only is this completely unpractical from our standpoint... its a gigantic architecture change! We would spend MILLIONS of dollars worth of time and money to rewrite apps just to get (in my opinion) negligable performance / maintenance / reliability gains.
I know that Microsoft is at least looking at exposing SQL Services as a form of hosted SQL Server (which seems more applicable to most apps now), but how much of that differs from going to an existing hosting provider?
I just don't see the benefit yet. This feels a lot like SOA... lots of hype. When you get down to it, SOA is just an architecture change that some vendors have tried to exploit to sell "glue" products. This feels similar to SOA.
dominigan15th May 2009 -
There are already many clouds
And each of them has their own specifications and optimizations. An IBM cloud (public), for instance, can offer a different level of reliability and support (because it is designed and priced that way) than a Google cloud. One pays one's money and makes one's choice (probably in the reverse order). Clouds are a good answer for many companies (including large enterprises) for some things, not everything. Reviewing your applications and identifying and prioritizing cloud-appropriate applications will be a new skill. we will probably not rewrite old applications to run on the cloud (but we could componentize them into services), but hopefully we will write new applications only as services.
amywohl16th May 2009
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