Archive for July, 2009

Financial Risk in the Cloud

July 27th, 2009 Comments off

After seeing our entire financial industry fall apart at the seams, and the demise of the auto industry, one has to wonder what industry is going to be hit when the next major downturn comes.

Cloud computing seems to be a redistribution of risk. Companies that had to pony up for a fixed infrastructure investment can now scale up and down, thereby pushing the risk out to their service providers.

These service providers in turn are pushing their infrastructure capital costs onto cloud computing providers who are assuming all the aggregated capital risk. The likes of Amazon, Google, Microsoft and Rackspace are all vying for large market share.

This works well if these providers have diversified risk. At present, cloud infrastructure is a minor part of their product portfolio. But what happens when we get a few large providers with all the capital investment, and this becomes their main revenue stream? What happens when there is a “run at the bank” – a big downturn and everyone’s needs shrink, or a security scare that sends those who can running, and the company can’t sustain itself?

Will these providers be “too big to fail”? What happens to all their customers who don’t have the ability to switch quickly to another provider? Sure, this may be a worst case scenario. When capacity requirements go down you can just shut off the power and reduce a lot of your costs. We’ll have clear operability standards and you will be able to just switch seamlessly to another provider (OK, maybe not). But it does make you think…

There’s a lot of hype around Cloud Computing, but it is going to lead to some major business model changes, we’re just trying to peer into our crystal balls and work out what they are, and what the long term consequences will be.

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Azure Providers

July 16th, 2009 Comments off

I thought Microsoft’s statement that Azure would only be available in it’s own data-centers would be a problem. It seemed like there would be a need for it to be hosted by other providers with different security/service levels for enterprises. On Tuesday, CSC announced it would be providing Azure services to its enterprise customers (ComputerWorld July 13, Eric Lai) (DataCenterKnowledge), and it looks like Rackspace might go that route too. I’m sure this list of providers will expand once Azure has got through it’s teething stage.

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Infrastructure as a Service

July 13th, 2009 Comments off

Infrastructure hosting is critically important to any SaaS provider. Hosting infrastructure is a major fixed cost. This is especially true for small and mid-size companies providing services to large multi-nationals. We provide solutions for a number of Fortune 500 companies, who have very stringent availability and security requirements. On the internet scale, the volumes are fairly low – most corporate applications are serving less than 100,000 users, but the standards imposed by the companies being served are very high. This results in a high cost of entry, and a lot of unused capacity. So the ability to seamlessly scale up and down with a pay-per-use model that matches incoming revenue is very attractive to a SaaS provider.

This type of capability is starting to become available. Amazon is well underway with its services providing infrastructure for those in the Java/Sun camp. Microsoft is playing catchup with it’s Azure services platform, putting it’s Windows Server OS into the cloud. Our platform is .NET based, so I’ll be closely watching the evolution of Azure, with a view to whether and when our company might consider moving to an Azure platform. Microsoft is due to announce it’s pricing model this week – then we’ll see how attractive this solution is from a cost standpoint.

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Welcome to “Hosting in the Cloud”

July 11th, 2009 Comments off

Welcome to my blog on Hosting in the Cloud. I wanted to share some of the challenges, opportunities and technology associated with running a business developing and hosting applications. I hope this will prompt some discussion, and provide an opportunity for contact between individuals sharing the same challenges that I do on a day-to-day basis.

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