Cloud

Should you follow Netflix and run your business from the public cloud?

As video-streaming giant Netflix prepares to move wholesale onto Amazon Web Services experts weigh in on whether other firms should follow suit.

Online video streaming service Netflix will complete its long journey to the public cloud this summer when it shuts down its final in-house datacenter.

When the datacenter closes, the hugely popular video on demand portal will rely entirely on Amazon Web Services (AWS) infrastructure.

But just how feasible is it for other businesses to follow suit and move wholesale to the public cloud, and does such a step make sense for most firms?

The legacy problem

Any company thinking of following Netflix should consider that the company is something of an anomaly.

"Netflix is not like any other company. They are what I would call typically a single application company, so they have one application which needs to scale enormously," said Gregor Petri, research VP and cloud computing specialist at analyst house Gartner.

"It's an application that at some points of the day has hardly any users and at others has many, many millions of users."

Helping Netflix to cope with that demand are applications that have been designed to run in the public cloud, meaning they are tailored to scale with demand and be resilient to failure.

In contrast, said Petri, your average corporate IT environment is a more diverse mesh of overlapping systems, many of which are unable to efficiently spread workloads across virtual machines in the cloud.

"Most companies have thousands of applications and those applications were not built or designed in a way that you can scale them up and scale them down, so that you can go from one CPU at midnight to thousands of CPUs during the day.

"Most traditional applications are built in a way that they require a certain size of machine that gives them the performance and if you want more performance you have to go to bigger machines."

Without software that can easily exploit the public cloud's scalability, hosting systems on AWS or Microsoft Azure infrastructure becomes less attractive and it's unlikely that businesses will go to the expense of rewriting the many applications they rely on, he said.

The breadth of compute, storage and networking services offered on a platform like AWS, as well as the myriad SaaS offerings it supports, also adds complexity when it comes to getting value for money from the public cloud.

Matching applications to the right cloud infrastructure is not a simple task, said Laurent Lachal, senior analyst for infrastructure solutions at Ovum.

"For example, if you are using cloud which is cheap from a storage point of view but expensive from a data transfer standpoint, you want an application that can swallow a lot of data but doesn't make a lot of calls between all the components," he said.

Such is the complexity of finding public cloud services that meet performance, security and reliability needs at the right cost, Lachal said, that many third-party companies have sprung up to advise companies.

Better to buy than to rent

For many businesses, cost will continue to be a barrier to using public cloud infrastructure for some time to come, said Petri.

Public cloud infrastructure like AWS, Azure or Google Cloud Platform are especially likely to be more pricey than in-house where a company has relatively fixed compute needs and doesn't need to run datacenters with large amounts of reserve capacity.

"In those cases we do see that cloud, as of yet, and probably also for quite some time to come, is not cheaper yet than doing it yourself," he said.

Petri draws an analogy between buying a home and running in-house infrastructure and renting and relying on public cloud. If you know you're going to be living in an area for many years then buying will probably work out cheaper than renting. However, if you're going to be moving every year or so then it might make sense to rent and benefit from the flexibility and only paying for what you need at that moment in time.

"For certain workloads it makes lots and lots of sense, it's almost a no-brainer, if you want to use thousands of CPUs for three hours then nobody can beat the cloud.

"For other workloads if you move into the cloud and pay by the hour it can actually be substantially more expensive."

But will the cost relationship change over time? Today, spending on cloud software and infrastructure makes up a fraction of the global market for IT. However uptake of cloud services is growing rapidly, driven by constantly falling prices and the expanded ecosystem of services offered by the likes of Amazon. Eventually, some predict the cost of public cloud infrastructure will fall to the point where it will becomes impossible for in-house offerings to compete.

Petri said the differences in how cloud providers run their datacenters - the levels of automation, standardisation, custom hardware and other efficiencies - are not yet at a level where they have opened up a vast difference in the cost of providing IT infrastructure.

"We do see that the cloud providers probably are going to get more economic over time but we also see that the price decreases, which were very, very aggressive in the beginning, do seem to be slowing down a bit.

"It's not like that eventually the cost goes to zero for a cloud provider and a customer with a fairly large footprint can also achieve economies of scale."

Do all roads eventually lead to public cloud?

There's long been an argument that private cloud is a stepping stone on the way to public cloud, and that public cloud services will eventually become too efficient and flexible for private cloud to compete. One CIO even recently argued that in-house services already struggle to compete with those provided by the public cloud, claiming firms buying their own IT infrastructure are saddling the business with "instant legacy".

Gartner's Petri doesn't believe that public cloud is an inevitability. He believes there will always be a reason for some services to be kept back.

"There is a trend towards more cloud but just to extrapolate that and say 'By year so-and-so everything will be in the cloud', I think that this is a simplification," he said.

In his view businesses will prefer running systems they class as core to their success in-house, while continuing the existing trend of using software-as-a-service to provide more general services, such as email and reporting.

"What's then left are the systems that do the core processes, so if you're an energy providers it's those that support the billing and the portals, it's those systems that are so important for the customer experience that you want to have a lot of control over them."

On the flip-side, focusing on core competencies doesn't preclude the use of the public cloud infrastructure. Concentrating the company's efforts was the reason given by the CEO of Zynga for the online gaming company's decision to move back to AWS and away from running a multi-million dollar in-house datacenter.

In some respects it's becoming more viable to run core systems on the public cloud, as visibility and control over this infrastructure is improving, said Lachal. IaaS (Infrastructure as a Service) offerings from AWS and its competitors aren't opaque, stressed Lachal, thanks to APIs that expose data on the likes of usage, costs, security, performance.

"I'm sure that Netflix has been one of the core drivers for AWS to provide much more granular information about the resources being used. It's a good example of a not just adoption of public cloud but optimization of public cloud resources."

He gives the example of cloud-storage service Dropbox, which offers APIs that detail who stores what where and with whom - offering a level of granularity he says the average filesystem in an in-house datacenter "wasn't designed to provide".

One-size doesn't fit all

The problem with only considering cost or control when considering the public cloud is that it ignores the myriad factors - security, performance, flexibility - that influence a company's IT decisions, said Lachal.

"As usual, it all depends on the clear understanding of what you do and what you can do. On paper it may be true that private cloud is better but your ability to actually make the best of that private cloud is not necessarily something that will be delivered."

Crucially, comparisons of in-house and public cloud provision can ignore the ability of a public cloud service provider to optimize performance and security, said Lachal. Such assessments can also ignore hidden costs of running in-house services, said Petri.

But Lachal shares Petri's view, that the demands of business are multi-faceted and as such will need to be served by a mix of computing models.

"Why wouldn't a company eventually move everything into the public cloud? For all sorts of reasons. Intellectual property, control, differentiation - in a world where everybody is in the public cloud having your own private cloud is a differentiator. There's also the industry you are in, Zynga was an example of a company that because of the industry it was in had to move back to the public cloud - but for a company in another industry it could be the other way around.

"I don't believe in the world moving to public cloud lock, stock and barrel. Some companies will, and Netflix is a good example of that, but Netflix is not an example that everybody should or will necessarily follow."

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About Nick Heath

Nick Heath is chief reporter for TechRepublic. He writes about the technology that IT decision makers need to know about, and the latest happenings in the European tech scene.

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