The Cloud Is…

So exactly what is the cloud? Is it one thing or many? Is it a relatively new phenomenon or an outgrowth of the natural evolution and progression in computing? Why do data security questions pop up when the cloud is mentioned? Why should you care about it? And how did business and consumers ever live without it?

The very origin of the term “cloud” actually sheds light in an illustrative way as to what it is and what it does. Decades ago when hard-wired telephones were the chief means of one-to-one business communication, the public telephone network (think AT&T and subsequently the seven Bell companies when AT&T was broken up in 1984) was often represented as a cloud. It didn’t matter where a user was located or who their carrier might have been. The key was that all users could access these phone networks and later other telecommunications and network services through this ephemeral “cloud” of communications resources. Then, they were billed for the services they consumed.

Today, there is no single definition of cloud computing. However, the different definitions have several key things in common. Think of cloud computing as the delivery of computing services on demand. What kind of services? Pretty much anything, from applications to data storage to networking or even more processing power. Users can access the cloud to get just about any computing service they need, when they want and need those services. They are delivered over a private network or, more commonly these days, over the internet, in many cases on a pay-as-you-go basis.

A basic premise of the cloud is that the actual location of the services provided is totally irrelevant to the end users. It doesn’t matter what hardware is powering the applications or, for that matter, what operating system is dishing out application information. The cloud is computing-as-a-service, a concept that has been around in computing for 60 years now. But, as we show in this report, there are major differences between old-school time sharing and today’s cloud, so much so that the cloud is the dominant computing scheme today.

For consumers, common services like backing up voluminous smartphone photos and video files or accessing Gmail are tailor-made for the cloud. For the enterprise, the cloud can host literally all data and run all applications, including those deemed most mission critical. For Netflix, mission critical means flawless streaming of enormous video files to paying subscribers. And Netflix turns to the cloud for this vital service.

Something Old, Something New

This is all very different—and also very similar—to the way computing was handled in the earlier eras mentioned at the beginning of this report. In the mainframe era, users sat behind screens and keyboards known as dumb terminals—literally. They were attached to the mainframe via simple communications lines and lacked any ability to process anything on their own (hence, the term “dumb”). But through them, the users could get all the services and applications they needed to do their job, which is not dissimilar to today’s cloud environment.

The distributed computing environment saw computing power migrate away from mainframes exclusively, initially down to smaller minicomputers, which were often found in discrete departments or in small businesses. They also served users tethered to dumb or mostly dumb terminals over somewhat faster networks. Later on, PCs made a big splash in businesses everywhere, performing many tasks on their own that previously involved minis or mainframes. These tasks included word processing, spreadsheets, schedulers, and other personal applications.

But there is a sharp difference between those early environments and today’s cloud world. There was very little, if any, communication among these disparate systems. And the applications they powered had even less communication, not to mention the databases these systems generated. It was a computing free-for-all in many ways, with everyone doing their own thing. This proved to be not particularly productive in business environments, for which information sharing and collaboration were beginning to be highly prized as enablers of competitive advantage.

Client–Server Era Ushers in More Resource Sharing

The client–server era changed all of this. In client–server computing, a server (big computer) takes requests for services from client computers (small computers or workstations). In other words, a shareable resource environment handles the client requests over a high-speed network. The tasks are assigned to the servers best designed to handle the tasks—say, high-level computations versus database queries versus engineering queries. This client–server model or computing architecture drew even closer to today’s cloud model of services-on-demand. The pay-as-you-go features would come later.

Virtually all of these styles of computing occurred within the four walls of an organization, where protecting sensitive data was pretty straightforward. However, these styles of computing had many limitations and shortcomings. One was expense. Take, for example, a manufacturer that ran a seasonal business, like making lawn furniture, snow blowers, or pleasure boats. Or consider the retailers that sold these items to the public. At peak times of the year for each of these businesses, computing needs also would peak. That meant buying hardware, networking equipment, and software to insure optimal operations during those peak times, resulting in a lot of unused capacity for much of the rest of the year.

Or, consider a bank that advertised a series of new promotions designed to drive new depositors to open accounts or purchase mortgages. Business would peak sharply as the promotion campaign was running, only to return to normal rates of business when the campaign concluded. Building and maintaining computing infrastructure to accommodate such common business practices became very expensive and difficult to justify.

As we show in this report, cloud computing models can meet normal or minimum demand levels, while organizations can take advantage of cloud service providers to meet peak service demands.

Along Comes the Internet and Cheap Networks

The rise of the internet and very high-speed, relatively cheap networks began to open up new possibilities. What if some of these services, such as increased processing power, more network capacity, bigger storage demands, or even the applications themselves were available, on an as-needed basis, from remote servers hosted on the internet? What if businesses of all sizes and in all vertical areas didn’t necessarily need to build, maintain, and own all of the computing infrastructure they need to survive and grow? And for businesses that already had excess capacity of processors, networks, and storage capacity, what if they could rent this out to those in need of such services?

And so it was, with cloud starting in earnest about a decade ago. The cloud isn’t any one thing when seen in this context. Rather, it was the confluence of many things, including the internet, rapidly shifting business requirements for speed and agility, and plummeting prices for mass storage. In addition, there arose the need to store and process very large volumes of so-called unstructured data, such as emails or social media photo and video files. The cloud was a perfect storm of technology innovation and business and personal demands.

All of this explains the extraordinarily rapid and continued growth of cloud computing by businesses as well as consumers. Today, there are literally thousands of viable, growing businesses that own little if any computing resources—other than their data. Their business is “in the cloud.”

Different Kinds of Clouds

To this point, this ebook has “defined” the cloud largely by how it works, namely as a repository of computing resources available on demand—anything from raw compute power to storage to networking to applications. Users request these services and they are provided, for the most part, using advanced automation technology with little or no human intervention. Far and away the main feature or “calling card” of the cloud comes down to one word: agility. In business, that translates to faster time-to-market and a definitive competitive advantage.

All that being said, there are three main cloud models in use today, each serving different needs and requirements for businesses and consumers.

The Community Cloud Model

Lesser known and therefore less prevalent than the other three cloud models, the community cloud is a variation of the private cloud offering a comprehensive cloud solution for a specific business community. The community model caters to multiple organizations that want to collaborate and pool resources to establish cloud services under which all the organizations operate, using a common information technology governance model. Examples of a community cloud include the US Federal Government Community Cloud, which operates under the Federal Risk Authorization and Management Program (FedRAMP) IT governance model. Healthcare’s Optum of the UnitedHealth Group and the IGT Cloud for online gaming companies are two commercial community cloud examples.

What Are Cloud Services?

As mentioned, cloud services are pretty much any computing-related feature that can be provided through a typical datacenter. These include network services, database services, applications of all kinds, raw computing horsepower (e.g., to crunch through a pile of scientific or engineering data), storage, application testing services for developers, security services, and so on. Cloud services are usually scalable on demand and available on some sort of fee or pay-as-you-go basis.

The usual alphabet soup of acronyms of which the computer industry is so fond represents the most common of these services.

Case Study: Airbnb Books Room in the Cloud

Airbnb, perhaps the best known of companies allowing property owners and travelers to connect with one another, is barely 10 years old. At an estimated market value of $31 billion, it is second in size as a startup only to Uber. Growing a company from zero to $31 billion—twice the market valuation of American Airlines—in just 10 years would have meant very heavy capital spending on information technology and heavy operational spending on IT staff to run such an infrastructure. Instead, Airbnb increasingly has gone to the cloud to essentially rent infrastructure and services, specifically from AWS. The company had made a decision a year after its founding to deal with AWS exclusively for all of its cloud computing functions, seeking greater ease of management of IT resources. AWS quickly found that it was simple to ramp up more servers and compute power without having to contact anyone and without having to make large service usage commitments, according to company cofounder and CTO Nathan Blecharczyk.

Airbnb even moved one of its most prized data assets, its relational database, to AWS in hopes of simplifying many of the time-consuming and costly administrative tasks often associated with relational databases. What’s more, Airbnb completed the entire migration of this key data repository to AWS with only 15 minutes of system downtime. This was vital to Airbnb, because shutting out users from its community marketplace for any extended period of time could drive repeat users into the eager clutches of competitors.

Ultimately, the cloud benefits for Airbnb include optimal flexibility and responsiveness to enable greater growth in this red-hot market. Airbnb also lauds the cloud’s relatively low costs and simplicity of bringing new computing services on stream with maximum speed and minimum effort.

Case Study: Heineken, James Bond, and the Cloud

One of the most recognizable brands on earth owing to its distinctive green bottle, Heineken is always on the prowl for joint marketing deals to extend its global reach. Such efforts included teaming up with James Bond and the release of the smash hit movie Skyfall, which racked up more than $1.1 billion in box office sales.

Where did Heineken fit into this success? The company’s marketing department hatched plans for a worldwide joint campaign, an unusual gesture for a company used to highly decentralized and localized advertising efforts. This meant the Skyfall promotional 100 MB movie segment had to play absolutely flawlessly for potentially millions of viewers around the globe.

As this was a one-time event, it was unfeasible for Heineken to invest in the computing resources needed to pull this off. Besides, the people pushing this campaign were marketers, not IT professionals. Thus Heineken turned to Microsoft and its Azure cloud services to drive the campaign’s success. In particular, Heineken took advantage of a Microsoft service called Azure Content Delivery Network to make a very large block of video available with very high reliability to more than 10 million viewers around the world.

Case Study: American Airlines Reroutes to the Cloud

As any business or leisure flyer knows, the quality of airlines is gauged largely by customer service. In today’s hyper-connected world, that quality of service in an airline often relates to the level and ease of use of self-service and instant information the airline can provide. To that end American Airlines moved several of its critical applications to the IBM cloud, using new cloud technology to create innovative customer-facing applications to boost the overall customer experience.

American had been using a variety of “legacy” applications to power its customer self-services. Legacy in computing is often synonymous with slow, inflexible, user-unfriendly, and expensive. With IBM Cloud, American replaced these apps with cloud services available instantly to customers worldwide on a 24/7 basis.

One notable example of the benefits of cloud relates to the usual tedium and frustration customers feel when rebooking a flight due to weather issues, which every flyer has experienced. Precloud, American passengers had to call a reservation desk (good luck with that during a major outage!) or find an available agent at the airport. American sought to put customers in control by allowing them to see the alternate flights available and then rebook themselves on smartphones or at self-service kiosks. Working with IBM, American developed its Dynamic Rebooking application, which was deployed in the cloud in less than half the time American anticipated.

Global deployment of that app coincided with a major hurricane striking the US mainland and the resulting mega-mess to the flight system. Customers using the app found that it walked them through the rebooking process and the reissuing of tickets while serving up an e-boarding pass and sending other messages to reroute checked luggage. All this was accomplished without any intervention by American agents. Looking ahead, American will further utilize cloud services to foresee delays and cancellations based on weather predictions, allowing customers to decide for themselves on rebooking in advance.

Case Study: Colgate-Palmolive Cloud Supercharges Collaboration

With one of the most ubiquitous brands in the world, Colgate-Palmolive sought to boost collaboration among its 38,000 global employees to drive greater efficiency. With these workers spread across offices and facilities in 130 countries, collaboration is key to smoother operations. Greater collaboration translates into better information on local market conditions, the competition, and insights into new opportunities. This means engaging cross-functional, often far-flung teams to get important work done.

Colgate felt this would be an ideal task for the cloud, given the universal access to data and communications that the cloud provides. IT leaders set about finding an employee-friendly, cloud-based toolset to support innovation and boost productivity across the board. For Colgate, the solution is Google GSuite, a highly integrated toolset with the convenience of single sign-on (SSO). The solution also works independently of Colgate’s legacy systems. More important, Colgate was able to adopt GSuite while avoiding any large upfront investments in hardware, software, and the expense of managing it all.

Employees reacted enthusiastically to the new toolset, with 28,000 of them migrating to GSuite within just six months. In the first month alone, employees logged some 57,000 hours in Google Hangouts Meet sessions, collaborating on myriad business-related topics. As one Colgate manager noted, employees using GSuite applications on mobile devices are able to create, manage, and accept meetings easier than ever before, often with a single click.

Case Study: Schneider Uses the Cloud to Bring Electricity to the Masses

With instant communications and ubiquitous connectivity, it can be difficult to grasp the reality that some two billion of the world’s people lack electricity or reliable sources of energy. Schneider Electric, a global specialist in energy management and automation, holds as a central part of its mission statement the belief that access to energy is a basic human right. To that end the company constantly strives to find pathways to safe, sustainable, and affordable energy for everyone.

To achieve its lofty goals, Schneider partnered with SalesForce, the world’s biggest supplier of SaaS apps, to link employees and partners globally and transform how they share information and conduct their daily business.

Schneider’s rapid growth since the turn of the millennium put great pressure on IT and IT resources to make better sense out of scores of disparate systems and databases throughout the company, some of which resulted from Schneider’s many acquisitions. And with 120,000 internet-connected employees worldwide, the company needed to insure seamless communications among them as well as seamless access to the data they needed to perform. That simply wasn’t feasible with the mélange of legacy systems the company operated.

Working with Salesforce, Schneider sought to replace this slew of disparate systems from multiple vendors—more than 100 in all—with a single solution easily shared by all 120,000 employees, and partners, as well. The goal was to give Schneider’s sales team the coveted “360-degree view” of their customers while helping individuals and teams collaborate optimally across geographies and departments. After a slow start (users can be notoriously sluggish when confronted with new technology solutions), Schneider now boasts more than 43,000 Salesforce cloud users and an additional 400,000 users at partner organizations. As one Schneider executive noted, the cloud solution has “completely transformed the way we manage our customer base…with one version of the truth to rally the company behind.”

Summary

The rapid growth of the cloud is well documented, as are the lofty projections of continued growth at least for the next five years. There are several reasons for this cloud growth optimism, all based on the steady stream of benefits that the cloud delivers. In today’s world, perhaps the two most prized attributes of business operations—and for all organizations, for that matter—are flexibility and agility. These attributes allow organizations to respond quickly to the very rapid changes in the global business environment.

In addition, there are significant potential economic benefits from using the cloud. Many, if not most, organizations do not accurately document, monitor or measure the total cost of delivering their internal IT services. Costs like datacenter real estate, property taxes, electricity, and environment management are covered under non-IT budgets. In some organizations that have an accurate read of the total costs of owning and operating their own IT infrastructure, switching to public cloud for standardized services can yield immediate cost savings. Even greater savings can accrue from efficiencies gained via the cloud. When relatively scarce IT staff are freed from the drudgery of maintaining infrastructure, a task that can consume up to three-quarters of their time, their efforts can be redirected on more strategic tasks. This often includes developing better customer-facing applications, which can lead to specific competitive advantages, increased revenues, and increased profits.

Interestingly, research shows that some concerns about cloud security persist, even though major CSPs have excellent security records. The reality might be that security issues are primarily driven by the customer organization’s inability to properly classify data and apply appropriate data security controls, not by the cloud providers themselves. Whatever the case, organizations obviously feel that perceived risks of the cloud are outweighed by the benefits, given the continued growth in cloud usage.