What lies ahead for the cloud?

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As enterprise adoption of cloud solutions soars, IT leaders must recognize where vulnerabilities still exist, what improvements to push for, and how to reap the most value from available technologies.

In survey results released last year, IBM reported that the strategic importance of cloud to C-level decision makers, such as CEOs, CMOs, finance, HR, and procurement executives, is likely to double from 34% to 72% — compared to 58% of CIOs. The same survey revealed that one out of five organizations is ahead of the curve on cloud adoption and achieving competitive advantage with cloud that goes beyond cutting costs and driving efficiency. The results also indicated that organizations that are driving cloud adoption aggressively are 170% more likely to use analytics extensively via cloud to derive insights for better business decisions.

Cloud computing is clearly no longer in experimental stages, although soft spots remain in areas such as governance, resilience, and service. From an infrastructure standpoint, corporate IT is also still wrestling with the enactment of hybrid cloud architectures that are capable of end-to-end resource management and accountability that incorporate both public and private cloud technologies.

Gartner research affirmed this in its 2014 predictions by recommending that enterprises should architect their private cloud services with a "hybrid future in mind" so they can position their users to take advantage of on-premise and internal private cloud deployments while they use public cloud solutions that offer additional scalability and flexibility in areas where it makes sound business and technology sense.

The cloud success story

Since the advent of cloud computing, a full understanding has developed in both enterprises and small /midsize businesses (SMBs) of what cloud is and how it can deliver business value.

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The IBM survey reported that organizations ahead in the cloud adoption curve were 136% more likely to use cloud to reinvent customer relationships, and 117% more likely to use cloud to enable data-driven decisions. In addition, 66% of these companies already use cloud to strengthen the relationship between IT and lines of business, and a majority use cloud to integrate and apply mobile, social, analytics, and big data technologies.

Public cloud usage is also on the rise. The IBM study concluded, "By 2017, the public cloud services market is predicted to exceed $244 billion. Companies are looking to capitalize on this fast growing opportunity around the cloud for business transformation."

In most midsize and large enterprises operating their own private clouds, there is now a greater comfort level with cloud since these companies all have first-hand knowledge of how cloud computing works, and what it does.

With the enterprise private cloud model, more data center chargebacks to end business units are done on a pay-for-use basis. With the provisioning and de-provisioning of IT services from the cloud, IT has reorganized itself so that cross disciplines within it work together on technology teams that support applications and services for particular business areas of the company. This support is not only technical. It also comes in the form of service level agreements (SLAs) that IT negotiates with its own internal users. As a consequence, end users feel that they are getting more for their dollars for internal IT services than in former days — when IT costs were meted out based upon an apportionment of fixed facility and depreciation costs across the entire business user base that didn't always tie back into IT resource usage from individual business units.

For companies using public cloud solutions, some of the greatest successes have been in filling niches and solving problems that have eluded enterprises for decades.

Many of these obstinate issues involve external business processes that internal enterprise systems were never intended to solve. Public cloud solutions now exist that put together networks of global suppliers and trading partners that would take months to assemble with an internal enterprise system — or that can ramp up additional processing and storage for a two-week holiday sales campaign that enables an enterprise customer to avoid over-investing in data center resources that are consumed in peak times but remain dormant the rest of the year.

In other cases, enterprises and SMBs have solved business issues related to big data cultivation and the running of algorithms and analytics for competitive advantage that would not be possible with internal resources, running a predictive analysis on areas of the world that will be most vulnerable for supply chain breakage, or profiling patient populations to determine who is most at risk for certain diseases and disorders so preventive healthcare measures can be taken.

Cloud work in progress

Despite the fact that cloud has firmly established itself as an internal IT technology and as an external pay-for-use subscription service, there are still areas that remain vulnerable and that enterprises expect to see improvement in.

Cloud service failures and lack of resiliency are major concerns for paying clients that must operate 365/24/7 businesses.

The spate of outages at major public cloud providers is worrisome. They involve major public cloud players like Google, Microsoft, Amazon, and Dropbox, which all experienced major outages in 2013. Coupled with these outages is the lack of communication from public cloud providers when things go wrong. In one case, a major cloud services provider was "out" for more than 24 hours but did nothing more than communicate status to frustrated users through an occasion tweet on Twitter. For business users and especially for corporate IT, which ultimately gets tasked with handling cloud vendor relations, dealing with an outage from a service provider is infinitely more tolerable when there's information from the source on how the outage happened and what's being done to fix it. When quality communications aren't forthcoming, insecurities build.

Cloud providers do not consistently meet enterprise governance standards.

Last September, VMware surveyed 195 IT professionals and found that 87% favored in-house private cloud solutions instead of offerings from third-party providers. There's a reason for this: Most public cloud provider don't do governance well.

A 2012 report funded by Microsoft in the UK concluded, "Cloud governance needs are poorly defined and ill served both by governance tools and by [cloud] providers, many of whom serve a volume market where few customers see governance as an issue." Areas of governance that the report deemed crucial for cloud providers were service management, change management, service mobility, security, data protection and sovereignty, legal and financial stability, and risk management.

These areas of governance are vital to enterprise IT as well. Many of these governance areas are also works in progress in enterprises. However, enterprises are certainly further down the road to mature governance than their public cloud counterparts. "We actually put teeth into our SLAs and financially penalize ourselves with credits to future billings with our clients if we fail to meet them," said one SaaS manager. "But I see few of our cloud competitors offering the same guarantees."

Cloud service levels remain evolutionary.

While persisting outages without much explanation is a major concern, public cloud providers must also work to improve their service options for clients in both self-service portals to the cloud and in live support when issues escalate.

A great cloud portal takes into account how clients work and anticipates client workflows and the services clients will most likely be looking for when they enter the portal. In cases where multiple users with different business objectives are likely to visit the portal, cloud providers that are forward-thinking in their portal development allow for customization of portals and desktops so individual users can quickly get to what they need most often. The end goal is to make the portal (and its users) self-sufficient.

If portals are designed without human factors engineering that focuses on a user-friendly experience, this objective usually goes unmet. Public cloud providers should also avail timely live support to users when a portal, FAQ, or other self-service option isn't enough. When a question needs to be escalated to a real human being, users should be able to get to an expert without difficulty. The same guidelines apply to private clouds in enterprises.

Down the road...

In the months to come, business and IT executives will continue to build out hybrid cloud architectures that position them to run their own private clouds and to provision services from public clouds when appropriate business cases present themselves.

A major technology hurdle will be finding an overarching system and resource management software capable of providing end-to-end visibility and management of applications that cross borders between public and private clouds — and that continue to use internal data center resources that are not cloud-based. Management software vendors are working to solve this problem and will commit major effort to it in the future — but the task is far from done. Meanwhile, enterprises will progress in their hybrid cloud work by escalating their demands to public cloud providers to match their own enterprise standards on governance, if for no other reason than auditors and regulators will ask for it.

The service architecture behind cloud will also continue to evolve.

For enterprises with private clouds, this evolution will most likely focus around end-to-end application performance management (APM) that combines the efforts of IT "silo" groups, such as database, networks, systems, and applications. All these disciplines will be asked to collaborate in the support of a specific application for a specific business area, guaranteeing service levels in the same way that a commercial vendor is expected to. This is a major cultural change for IT that is not always easy to achieve. It will be up to the CIO and other IT management leads to facilitate the process.

Public cloud providers will determine their positions on governance and whether they want to meet enterprise standards.

Some enterprises will demand strong governance as a condition of doing business. In other cases, public cloud services may be viewed as more of a commodity that enterprises can live without when service is unavailable. It will be up to each public cloud provider to decide what type of provider it wants to be.

Other resources

The art of the hybrid cloud (ZDNet special feature)

The executive's guide to the hybrid cloud (free ebook)


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