This one’s been eating at me since September 17 at 10:09 AM.   That was when a speaker from Tier 1 Research concluded a presentation at the 4th Annual Hosting Transportation Summit (HTS) at the Mirage Hotel in Las Vegas.

HTS is a great event for anyone involved in the hosting industry.  It was attended this year by about 400 people representing everything that’s anything in the U.S. hosting industry.  Attendees, for the most part, have profit and loss responsibilities and were there to find new weapons for their arsenals to increase revenues.   I love these focused conferences.  Having them in Las Vegas is really smart.  That makes it easy to gauge attendees’ interest by seeing how much of the audiences at the various sessions are lost to the casino.  The sessions at HTS were well attended!

By contrast, that week was VM World, right across the street (which in Vegas means only a 15 minute stroll) at The Venetian.  VM World was impressive – close to 15,000 attendees, I am told.  My sense walking around there, though, was that the majority of the attendees were more technology oriented – looking for cool new technology – but were not the people in their organizations responsible for P&L, who make spending decisions, and, most importantly, who make strategic business decisions.

So, what happened at 10:09 AM Las Vegas time on 9/17?  I just finished watching and listening to a very well researched and prepared presentation by a Senior Analyst at Tier 1, who organizes the event.  He very thoroughly described how the Cloud people, the compute on demand people – people like Amazon and Google, were kicking the hosting providers’ butts as they remain a commodity whose ability to compete with these Cloud giants is starting to wane.

What he didn’t do, though (and this is no criticism of him – he did his job), was talk about what the hosting providers can and should do to combat this.

So, why now?  If it’s been eating at me 7 weeks, why am I writing about it now?

Well, for the last couple of months, enterprise interest in Cloud Computing seems to have emerged in spades (pardon the Las Vegas pun).  VMware, Citrix, Microsoft and others have all made announcements readying themselves for enterprise Cloud Computing.  Our own marketing efforts have been focused around the enterprise as, though we are largely used by hosting providers and our customers are largely hosted, we have a full Cloud Computing platform that can run behind a corporate firewall, and our number customers who do that, particularly enterprise customers, are definitely growing.

So, let’s not forget our hosting providers.  They are not only the salt of the Cloud, but they will be an integral part of Cloud Computing’s future.  In fact, as Clouds begin to interoperate globally, it will be the hosting providers who jump on that bandwagon who will fuel it with much of its resources.

Note to Hosting Providers:

If you are worried about how you are going to cope with this new competition, there is something you can do about it.  This advice might sound like an “if you can’t beat ‘em, join ‘em” mentality, but it is far from it.  The mentality is more of the nature that you should join a movement that they, too, will eventually have to join.

Whatever people think, there will not be a single dominant Cloud from any of these guys.  Cloud Computing, like any other utility, will evolve into a series of Clouds that can interoperate among themselves and are connected globally.  These interoperating Clouds will be run by hosting providers, will be proprietary Clouds like EC2, AppEngine, etc. and will be corporate data centers.

So, how does a hosting provider get on board?

Hosting providers need to implement Cloud Computing platforms in their data centers (of course, I think that platform needs to be 3tera’s AppLogic – plug, plug – surprise, surprise).  They need to build product offerings on these Cloud platforms.  Once there is a critical mass of applications hosted in all of these Clouds, the leaders will start interoperating with one another as people will want to share and reuse technology components, and, more importantly, companies will want to effect business to business transactions with companies in running in other Clouds.

It will be inevitable that businesses running applications in proprietary Clouds will want to have the same capabilities, and in order to do so, their Clouds are going to have to start interoperating in the same ecosystem that yours do.

And guess what.  Many of the new enterprise customers we are attracting are and are wanting to run their web applications in external Clouds - HOSTED BY YOU.  So, there’s a whole new customer base here ripe for the picking.

So, hosting providers unite.  Get on board the Cloud train and in time, and not a real long time, the Amazons, Googles, Microsofts, Akamis, Salesforces, etc, of the world will have to join you or be beaten by you!

We’ve been so busy lately that time has become just a blur. When I went to post today, I found it’d been a month since the last blog entry. Ouch! Today, however, a recent article got me typing.

Recently, Larry Ellison, CEO and founder of Oracle, got a lot of press when he ranted that cloud computing is nothing more than a “fashion trend.” I can certainly understand the frustration he’s expressing. First the blogoshpere and later vendors started stretching the definition so they could label everything as cloud, draping themselves in the latest haute couture.

Having been in the infrastructure business for a couple decades, though, I’ve always found IT folks aren’t fashion conscious. They’re a pragmatic lot, and used to cutting through marketing noise. Anyone in IT for more than a couple years has lived through the hype cycle getting, and learned to dig through to what’s real. Perhaps it’s not surprising then that cio.com’s recent IT survey shows IT leaders find cloud computing promising and are putting it on their roadmaps in greater numbers. The survey suffers a bit from the broad definition of cloud computing, but there’s substance in there as well that makes it worth a read.

What should we make of this contradiction? Is cloud computing just a fashion trend? IMHO, vendors with real product can easily get caught up in the hype cycle. Trying to keep up with a barage of announcements as major companies rebrand old products and VC’s throw money at slide decks can easily distract you from the real issues. IT pros aren’t responding to the cio.com survey because it’s a fashion statement, they’re reacting because they have real needs that aren’t being met. They see cloud computing as a potential solution to those needs based on what they can discern from available products and services. At 3tera, as we work to deliver cloud computing, it’s useful to see that IT pros continue to seek technilogical leverage to solve real issues. It’s that fact we have to keep in mind going forward - rather than worry about the latest fashion trends.

Ken Fogarty, writing for CIO, comments on a panel on virtualization at MIT last week that included Amazon CTO Werner Vogels and VMware founder Mendel Rosenblum.

“The good news is that virtualization will become a critical part of an even larger part of most IT infrastructures as time goes on.

“The bad news is that it will do so as part of a larger movement toward cloud computing and will, in large part, disappear as a separate discipline.”

This trend started a year ago and IMHO is new happening faster than most folks expected. Perhaps this explains why so many vendors seem to need to claim they are in the cloud computing space.

This week, something quite miraculous happened.  Those of us whose vision of the future is in the Clouds have seen our crystal balls start working.

Months ago, 3tera unveiled our Cloudware architecture.  But rather than try to convince the world that there is only a single architecture that works and ours is it, we emphasized that Cloud architectures need to be open.  Not only need they interoperate with all sorts of hardware and software as virtual appliances, they need to interoperate with other Clouds and Cloud components as well.

So, what happened this week?

The two undisputed leaders in virtualization, VMWare and Citrix/Xen announced suites of products in support of Cloud Computing, vCloud and Citrix Cloud Center (C3), respectively.  Undoubtedly, Microsoft and Red Hat and more will follow.

The anticipation that drove our Cloudware architecture is proving spot on.  There will be multiple global Clouds, they will not all be the same, and the ones that will get the brass rings will be the ones that interoperate rather than stand alone.  Cloudware is designed so that it will, in the not too distant future, have the ability to incorporate elements from any Cloud.

You will note that both VMWare and Citrix, in their Cloud announcements, emphasize the need for API-based interoperability among Clouds.  3tera agrees.  The development of this interoperability will make the vision easy to accomplish.

3tera intends to take this direction to the nth degree by not only enabling applications in one Cloud to interoperate with applications in others, but to enable elements from multiple Clouds to coexist in the same application.

There’s been a lot of music to our ears this week.  The huge install bases of VMWare and Citrix are becoming part of the eco-system that we have been participating in the definition of, designed for, been building for and support - the eco-system we’ve been predicting was coming.

So, if this is music to 3tera’s ears, it’s a multi-media extravaganza that should tickle all the senses of information technology users of any size   Combining a continued direction of open Cloud Computing where anything can operate in the Cloud with this new direction of interoperability among Clouds will leave all IT users at their own mercy.  Vendors will have less ability to manipulate and dictate what hardware you run your applications on, what operating systems you use, what software you deploy, what type of infrastructure components you rely on, what databases you use and where your applications run - and in how many places.  This will ALL be up to you and you’ll be able to change it all at YOUR will with just your little old browser.

A lot of people ask me - How are you going to get big enterprises to accept Cloud Computing?  How are you going to get over the concerns around security and privacy?

Well, as I said in an earlier post, many enterprises will be running Clouds behind their firewalls, in their own data centers.  But what about external Clouds?

Hmmmm.  Is Cloud Computing really just a trendy term?  Or are we onto something here?

When something is in a cloud, it is shrouded in secrecy.  You can’t see it.  You can only imagine what it is, if it is there at all.

At 3tera, we believe the optimal Cloud exists in multipal data centers, geographically dispersed.  This adds to the question, “What is in the Cloud?” another question sort of - “What Cloud is it in?”.

Lets imagine that all the clouds in the sky are somehow connected (at the molecular level, they most probably are).  Each of these Clouds are made up of millions upon millions of water droplets.  Now imagine if you had to find a single particular water droplet in the sky and you had no idea what cloud it was in.  Now, add to that, the ability of that water droplet to move from one cloud to another.  Do you think you could find it?

So, I maintain that concerns about Cloud Computing privacy and security become very overstated when dealing with Clouds in multiple locations.  In fact, I’ll go as far as to say that running stuff in those kind of Clouds is far more private and secure than running the same stuff in traditional data center environments.

Imagine a sophisiticated hacker who wants to attack the First National Bank.  Imagine that First National runs all of its applications in two data centers.  All the hacker needs to do is penetrate one or both of those data centers.  Once inside, he can monitor First National’s transactions indefinitely and methodically plot what type of transactions to spuriously submit and when to submit them.

Now imagine if First National’s applications run in multiple data centers worldwide, and each application did not necessarily always run in the same data center.  What would the hacker do?  I suppose he might accept that challenge, but if he was really out to get a bank, he’d move on to Second National.

You know, statistically, homes with burglar alarms get robbed much less often than homes without them.  Of course this is due to the fact they they are more secure.  But it is also due to the fact that a burglar will look for an easier target and not even try.

The same is true for Cloud Computing, if the Cloud is done right.  At 3tera, we like to say that Cloud Computing is not a substitute for good architecture.  But if the Cloud is architected like the sky - multiple sub-clouds interconnected, that IS good architecture.  “Sky Computing” is private and secure!!!

Finally, there’s a practical side to all this.

External Clouds will be operated by companies whose business is data center operations, not companies whose business is financial services, pharma, health care, manufacturing, etc.  These companies, to remain competitive, will constantly update their data centers with the latest technologies.  These technologies assuredly include those that keep data private and secure.

So, to all of you early adopters of Cloud Computing, I say, “Bravo!”.  By being brave you are achieving world class security and privacy for your precious information technology assets, without incurring huge data center capital expense.

Your applications and data can be naked sitting ducks, or moving targets in flak jackets.  The choice is yours.

There have been multiple white papers and articles written by analysts - Is Cloud Computing Ready for the Enterprise?  The question is asked so many times now - Is Cloud Computing ready for the enterprise?  So, I have to ask - Is the enterprise ready for Cloud Computing?

I’ll start this discourse with a few PC and sincere comments (the two are not mutually exclusive unless one is running for political office).

First, I love Corporate CIOs and IT managers (not in a romantic way, of course, but with great admiration).

Second, they have the most difficult jobs in the corporate universe.  They are the brains and the central nervous systems of large enterprises.  They are also the most taken for granted of all executives.  They represent cost centers who get no credit for their corporations’ profits, while keeping the corporation alive.  If they achieve 99.99% availability of their services, an iota of kudos is given for that 99.99%, but a mountain of wrath is doled out for the other 0.01%.

Finally, I spent 27 of my 37 year career in information technology as an enterprise IT manager and Fortune 500 CIO.  You guys and gals are my comrades.

So, why do I feel the need to put my comrades on a pedestal?  Well, it started with some comments I made at a Wall Street conference and variations of it that I made to members of the technical press and analyst community.  I used the following analogy.

If you woke up in the morning and read in the Wall Street Journal that an eCommerce company like Overstock.com had stopped using the USPS, UPS, FedEx, DHL, etc. to deliver their goods and, instead, leased airport hubs all over the world, bought a fleet of jets and bought thousands of trucks and started delivering the stuff themselves, you’d think they were out of their minds.  So, why is is not equally insane for financial services companies, health care institutions, manufacturing companies, bio-tech companies, pharmaceutical giants, etc. to be spending a billion dollars or much  more each year on information technology infrastructure?

Well, that analogy has prompted several to accuse me of thinking that corporations are insane and corporate IT managers and CIOs are stupid.  I assure you that it not the case.

Then what do I do?  I really put my foot in my mouth.  I title this treatise “Are Enterprises Ready for Cloud Computing?”, as if to arrogantly proclaim that we are ready but enterprises are not.

But there is expiation for that as well (and I am not running for office, so this is a thought embellishment rather than flip flop).

Intellectually, of course you are ready.  Of course you have the experience and skill to adopt Cloud Computing.  And most of you have the resources.  Most significantly, you have always risen to the occasion when disruptive technologies have been thrust upon you.

But, practically speaking, whether you, I or anyone thinks that the future holds a world where all enterprises will get computing on demand and only pay for what they consume, we know that this will not happen over night.  I do see a world, though, in six or seven years, where this will be very much the norm and corporations owning data centers will be the exception to the rule.

So, here’s where the Darwinian Theory of the Corporate Data center comes to play.

I have said many times that Cloud Computing is the most disruptive technology that has come along in a very long time.  Respected technology analysts say it will be bigger than e-Business and it’s potentially a quarter of a trillion dollar market (that’s almost enough to fund a fraction of a war!).  So, people ask me - Do you think Cloud Computing is a revolution or an evolution?

My answer is a resounding “Both”.

I believe that all evolutionary change starts with revolutionary change.  In Darwin’s Origin of the Species evolutionary changes start with a mutation.  Those mutations are the revolutions that result in evolution.  In most cases the mutation comes about as a mechanism to heighten the chance of survival - you know, to make the species more fit.  Subsequent to those revolutions, the evolutionary process gradually occurs as the most fit survive and the mutation becomes the norm - the standard.

Cloud computing is the mutation - the revolution.  Enterprise IT and Corporate CIOs/IT Managers will jump on the opportunity to evolve as they always have when revolutionary technology mutations have occurred.

So, here’s an example of a scenario of how the evolution will happen.

During the next couple of years two things will occur.

First, enterprises know that the hardest things to plan for with regard to capacity, performance, etc., are on line applications offered on the web.  They really have no control over who may log on, how many may log on, when they may log on, what they may do once they log on, etc.  So, the natural evolutionary step to mitigate this is to run those applications on massively scalable infrastructure that scales up and down dynamically as needed, using resources on demand, always there when needed and only paying for what is consumed.  These infrastructures are what we are now calling Clouds.

At the same time, the mission critical data and systems of records that are the enterprise life blood residing in their data centers need to be isolated from these on line applicatons exposed to every internet user.  This will be accomplished through the use of secure virtual gateways in the Cloud, connecting, in a loosely coupled manner, rather than a fully integrated manner, to the enterprise data centers, their databases and systems of record.

These gateways will take many forms.  They may be SOA gateways using XML and virtual XML firewalls, virtual messaging systems such as MQ, virtual EAI appliances or customized appliances encapsulating organizations’ proprietary techniques for reliably and securely communicating among systems (and anything new that comes along to supplement or replace these things).

Second, infrastructure/architecture agnostic Cloud platforms (what we at 3tera call Cloud Computing Without Compromise) will be installed in enterprise data centers.  There will be two factors that will drive this.

(1) As more and more applications are offered on line, those same applications will often be used internally by the enterprise employees.  Why incur the cost of having separate experiences for employees and customers who are accessing the same information and functionality.  Also, when connecting the on line applications in the Cloud to the data center and SORs, having them on similar platforms will make it seamless and efficient.  ‘

(2) A Cloud infrastructure done right, behind the corporate firewall, enables the enterprise to run their data centers as metered utilities.  It enables them to more efficiently use their hardware resources by provisioning what is needed for each application on demand and releasing those resources when no longer needed for other applications to use.  It enables them to more efficiently use intellectual capital by shifting IT administrators from managing machines to managing applications.  And, most importantly, it greatly decreases time to market because the lengthy provisioning, configuring, etc., of hardware and infrastructure resources is, pardon the pun, virtually eliminated.  So albeit humongously significant, forget all the talk about cost reduction and avoidance.  Cloud Computing in the enterprise has the potential to greatly increase revenue and beat the heck out of competitors implementing like products using traditional data center deployment methods.

OK - so what’s the next step in the evolution?

At the same time that enterprises are growing comfy with applicatons in Clouds and realizing the upside of dynamic provisioning and scaling, they will be developing new applications and replacing/changing existing ones.  They will start building the new applications in Clouds and as they change existing applications, will consider migrating them to the Cloud in the process.  This will afford them the advantages of much faster times to market, the ability to run applications on demand in multiple data centers (globally if appropriate) creating their first truly complete disaster recovery abilities and concentrate on their core businesses which may be financial services, health care, manufacturing, etc., but certainly is not data center operations (they will leave that to the companies whose core business IS data center operations).

Now the final step (well, as my limited vision can see it - of course there will be much more beyond this):

Enterprises will find themselves with data centers that only contain data.  Finally, a data center will be what its name implies.  All of their functionality - all the non-data tiers of their services, will be in Clouds connected to the data centers’ data.  At that point, evolution will have to start behaving like the data center is an appendage.  Over time, the corporate data will move to the Cloud just as many smaller businesses without data centers are using storage services in Clouds today.  The corporate data center will be a vestige, and eventually evolution will cause it to disappear.

Discussion of this step always raises questions of privacy and security.  I maintain that when corporate data is in the Cloud it will actually be more protected than it is in the enterprise data center.  But I’ll save that for a separate, devoted future posting.

In short, the corporate data center is not a stupid useless entity.  There have been no alternatives.  My hat is off to the brave men and women who devote their careers to thanklessly operating them.  They are profound necessities.  But neccesity truly is the mother of invention, and the corporate data center, with all of its overhead, has bred Cloud Computing.

So, as I started this with a PC comment, I feel like ending it with one.  As I composed this, I did realize that there are many people out there that discount Darwinian evolution in favor of Creationism.  I assure you that I have the utmost respect for all beliefs, no matter how different from my own.  And my references to evolution here, obviously have to do with the evolution of technology, not of the human race.  Furthermore, I am very happy to depict the corporate data center as the eventual dinosaur with a saddle on it’s back being ridden by a member of the Cloud Computing species.

We (other members of the 3tera team and I) had the pleasure of talking to John Foley this week. John is writing for InformationWeek and is focusing on Cloud Computing. This is a knowledgeable guy who has thoroughly researched the space.

During the chat, something very important dawned on me. This space is getting noisier and noisier – rightfully so – Cloud Computing is hotter than Hades and better than sliced bread! And we are making it even noisier with our semantics.

People do not define terms in this space consistently. I think it’s ironic that the semantics of Cloud Computing are, er, uh …, well, cloudy.

I’ll paraphrase:

IW – You talk about internal Clouds behind firewalls. How can a Cloud be private and internal?

3tera – We think of Cloud Computing in terms of how, not where?

IW – I disagree. Cloud Computing is running on IT infrastructure that you don’t own – someone else is the datacenter operator.

3tera – Maybe this is just semantics. We could call private Clouds “internal utilities” instead of private “Clouds”. If an enterprise were to run an app in an external Cloud and wants to connect that to their systems of record in their own datacenters, they might want to consider the same platform in their data centers.”

…. and so on.

After wrangling about that for several minutes, the subject changed. All we accomplished though was an addition to the confusion.

The epiphany for me during that conversation is that whatever I call Cloud Computing and whatever someone else calls Cloud Computing is kind of irrelevant. A couple of years from now, someone will obsolete the term Cloud Computing with something more trendy and we’ll debate what THAT is.

For me, the future holds computing services on demand – Information Technology as a Service – MASSIVELY scalable IT as a Service. ITaaS – the sound of that tickles my funny bone. ITaaS will use the Internet and, I think, intranets as well. End users will need no regard for the underlying technologies that support their services. They will only need to know that the services are available and perform at any scale on demand.

If someone installs a generator in their home instead of using the power utility, they get electricity on demand, the same as if they plug into a public utility.

I concede though, at face value, the economics of Cloud Computing seem to favor Clouds as external entities. After all, the hallmark of anything on demand is that you only pay for what you consume. External Clouds can accomplish this by making the same hardware available, at different times, to different users, thus, eliminating idle time and getting the most bang for the buck. But looking deeper, the economics favor internal, private Clouds as well. If a data center manager wants to be provisioned only for average usage rather than peak usage, he/she can do that if he/she is on a Cloud infrastructure that can grab resources from external Clouds only occasionally, when needed. If you add to that, with a Cloud done right, the data center manager manages applications rather than servers, decreasing administration costs; and, time to market is greatly reduced due to the lack of need for tedious provisioning, configuring, etc., the economics of the private Cloud become quite compelling.

To me, the bottom line is this. This is the 21^st century. It has been almost forty years since a man walked on the moon. For most of those forty years, almost all businesses have relied to some degree on Information Technology. It’s about time that IT is available on demand – really on demand – and everyone can have access to world class technology, only paying for what they consume.

So, call it Cloud, call it Utility, call it Platform as a Service, call it ITaas, call it whatever you want to call it. But please, don’t call me late to dinner … and, pretty please, don’t call me late to the on demand computing revolution!

Willy Chiu, VP of High Performance Computing at IBM, wrote a cio.com article identifying five business trends propelling cloud computing. Among his observations is this gem “Cloud computing is tailor-made for bringing order out of chaos.” I couldn’t possibly have said it any better myself!

Alistair Croll recently posted an excellent writeup on Gigaom that attempts to segment our somewhat noisy market into 9 vendor sectors that IMHO many prospective users may find helpful in understanding vendor positioning. Alistair put 3tera’s AppLogic alone in his “cloud building” sector, but like most of Alistair’s work the whole piece is worth a read so I won’t repost it all here.

Sys-con ran a three page piece today with 20 experts trying to define cloud computing. The results run the gamut from the uselessly broad “internet centric software” to the only somewhat more pragmatic ”infrastructural paradigm shift that enables the ascension of SaaS” to the disbelieving “Clouds are the next hype-term for the next year or two.” So, why are folks having so much trouble defining cloud computing?

IMHO there are two reasons. First, cloud computing really is still being defined as those of us developing the technology work closely with early adopters putting the new technology to work. In other words, whatever cloud computing is today, it will evolve before it stabilizes. Don’t fret this as a bad thing, though, because it’s quite the opporiste. A little competition will benefit all as more vendors produce useful technology and elevate user expectations of cloud computing. Second, as most readers will already have noticed, a great deal of the noise in the space is being propagated by companies with no new technology; they simply want to share in the attention. While this creates noise, it’s actually normal in developing spaces. So, rather than provide yet another definition, let me provide a use case to show just how real and different cloud computing makes infrastructure.

About four months ago one of our customers was having an issue; a small percentage of page requests were getting dropped. The application involved was a search engine, and ran on around 100 servers in production. The problem wasn’t severe, but was evident to customers. After investigating the issue on their own, they requested our assistance along with a couple other vendors. A two hour Webex trial and error session ensued, but the problem persisted. If you’ve ever had to hunt for intermitant errors then you know what we were going through. At this point, though, the story diverts from your typical experience. The customer application was running on AppLogic after all, so it was a packaged system, literally scalable and portable as a unit.

Rather than proceed with tests on the production system, the customer agreed to send us a copy of their application! Yes, that’s right, a complete copy of the search engine - ready to run in our labs. Just as easily as you exchange Word documents with coworkers, they sent us a complete 100 server application. We then made several copies, each of which ran on just a few servers, and started destructive testing. We failed servers, dropped connections, deleted volumes - anything we could think of to exacerbate the error and make it repeatable. A few hours later the problem was solved - a simple misconfiguration in a third party piece of software.

Had this application been running on standard infrastructure, no doubt this story would have had a completely different ending. In all likelihood the error would have persisted for days or even weeks, because the type of troubleshooting we did wouldn’t have been possible. Cloud computing provided this customer a new way to deal with errors in production resulting in a better user experience, reduced manpower, and of course lower cost. 

So yes, there is a very real difference provided by cloud computing technology and its impact will be felt across our industry. Just don’t expect anyone to agree on exactly what it is for a while.