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Cloud vs Data Center

August 14, 2008 - 3 Comments

Was reading this really interesting article on Data Center Knowledge about Wall Street Grids. This is one of those applications that I am not sure will move to a cloud architecture. My reasons are as follows:1) Latency is of paramount importance in this space. The faster a transaction models, and transmits, ehte faster the trade may execute, and trading is a race. First come, first served. So these architectures tend to be hyper-optimized on transaction latency reductions.2) Corporations tend to not outsource areas of strategic advantage. I was meeting with the CTO of a large investment bank who commented- “IT contributed $7B to the bottom-line of our firm this year, talk to me about how we can grow that next year.” In Financial Services IT can provide tremendous strategic and sustainable competitive advantage. If a resoure is that critical to your business you usually don’t delegate or entrust it to anyone else.3) Growth rates in this area are larger and faster than many people realize. I know of an almost arms race between some firms where the number of servers is north of 10,000 for Monte Carlo simulations to build risk analysis infrastructure. What do you all think? Is this a space that lends itself to a cloud architecture, and if so- what properties and capabilities does the cloud need to offer in order to offer a credible service, and if the environment is that competitive how could the cloud provider sustain more than one customer?dg

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  1. 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 eal 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."

  2. 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."

  3. Doug:I think the one factor to consider is the economic sustainability of the current trend. There was a interesting paper recently published that predicted that by 2009, the 3-year cost of electricity of a server will surpass the street price of that server. This analysis was done at $0.07/kWh, so I am guessing these Wall Street firms are much closer if not already past that point.At some point, firms will be able to draw on greater computing power at a lower price point from the cloud then from owned-infrastructure, and I think the first firms to take advantage of this will gain an advantage.Omar SultanCisco Systems