Nihar Mehta Aug 18, 2008

Doug,
It seems that the predominant opinion around Cloud Computing is that its basically Data Center outsourcing 2.0.

For the of the reasons you discussed above, I agree that most corporations may be hesitant to outsource strategically important applications. 

However, Cloud Computing architectures provide many benefits beyond just outsourcing to a third party provider.  A fundamental benefit of Cloud Computing is its use of new Data Center designs that leverage network, storage, and compute virtualization. The benefits of this has been discussed before and are well accepted.

However, the benefits are not reserved for just Cloud Computing service providers.  They can be leveraged by enterprises that can take advantage of the provisioning, flexibility, scalability, and utilization improvements that come from a Cloud Compute model.

Designing applications to run “in the cloud” may provide the best of both worlds. For less critical applications, you may choose to follow the outsourcing model. However for the important ones with special requirements, utilize Cloud Computing architectures internally to provide better services for strategically critical applications.

James Urquhart Sep 1, 2008

Doug,

I can’t find the reference right now, but a few months ago Jeff Barr at Amazon noted that their biggest revenue and/or fastest growing market was, in fact, financial services. Combine this with the fact that so-called Federal cloud offerings are not only springing up quickly, but gaining traction with federal agencies, and you have to ask whether intuitive logic applies in this space.

If a business can save money by running workloads on someone else’s infrastructure, and security is at a survivable level, then why the heck not?

To your point about latency, if you move the entire compute load and data to the cloud before executing the job, then compute latency is limited to setting the environment up in the first place.  If you keep running baselines of your images, and only upgrade incrementally (or cache data drawn realtime from the network to strengthen performance) then latency is not the core issue.

I think the bigger problem applications are the “real time” systems of a corporation: the ERP/CRM/Accounts/etc. systems that are integrated across an enterprise and must be able to quickly assemble data from multiple sources.  Unless you outsource the entire application (aka SaaS), spreading these systems across the cloud may actually increase cost by decreasing performance.  This is why I am studying the possibilities for Cloud Oriented Architectures that take these issues into account at my blog, The Wisdom of Clouds (linked from my name on this comment).

I look forward to your input.