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The Natural Fit of Cloud Computing and Service Industry.
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The Natural Advantage Created for the
Service Industry by Cloud Computing
Niraj Juneja
Webscale Solutions
http://www.webscalesolutions.com
Consulting , IT Strategy and Research
2© Webscale Solutions - 2010
What is Cloud Computing
Key Benefits of Cloud Computing:Changes the economics of IT from
being a capital investment to utility cost. Just as, you buy electricity as compared to buying generators , with cloud computing, you buy computing as compared to buying computers
Allows you to smoothly scale your business based on customer growth
Efficient use of computing power with ability to support elastic demand needs. Renting 1 Machine for 1000 hrs is nearly the same renting 1000 machines for 1 hr.
Drastically reduces complexity in Information Technology Management and administration lowering the total cost of ownership (TCO) of IT.
Wikipedia: Cloud computing is Internet based development and use of computer technology whereby shared resources, software, and information are provided to computers and other devices on demand, as with the electricity grid.
3© Webscale Solutions - 2010
Cloud Types and Stages of Adoption Starting with Infrastructure as a Service , “the Cloud” stack’s up to
Platform as a service and then to Software as a Service – which offers the maximum level of Service Modularity and consequently maximum opportunity for service industrialization.
Increasing Service Orientation (Modularity and Service Industrialization)
Increasing Cost Savings
4© Webscale Solutions - 2010
SaaSSoftware As a
Service
PaaSPlatform as a
Service
IaaSInfrastructure as a
Service
Traditional
Traditional Bare Metal Custom
Cloud Types – Examples and Key Players Amazon, a retail shop, started the Cloud Computing revolution by offering
incremental compute and storage services to small businesses. It came from the bottom of the market , as compared to traditional top-down Enterprise focused approaches and kick started the creation of an industry
In
creasi
ng
Focu
s
Decreasing Flexibility (Decreasing ability to Customize)
Traditional$2-$5 per server per hr C
SC
/IB
M Private$1 per server per hr
.GO
V
osl
vCommunity50 cents per server hr
AW
S /
G
oog
le Public1.5 to 5 cents per hour
Traditional in housedatacenters
Managed Services type offerings from vendors like HP / IBM / CSC
Enterprise Vendors like IBM / CSC / HP – mainly private cloud offerings
Amazon EC2 and S3
Google Storage
Google App Engine , Google Predict
Amazon SDB , Beanstock
Twilio
Gmail , google apps
Force.com
Salesforce.com
Microsoft azure
Microsoft Live
VMVare has the most significant PaaS Offering for the Enterprise
5© Webscale Solutions - 2010
State of Cloud Adoption
Adoption faster than generally anticipated for a new technology
Government’s and Large Enterprise’s are aggressively adopting this technology
Industry Adoption ExamplesNew York Times — Using 3000 servers for 2 days of batch
processing(converting TIF to PDF)Los Angeles County and GSA – Google Apps collaboration software(reducede
mail cost by 50%)Wendy’s — Short-term, interactive promotional site for $0.99 menu.USA.gov and Data.gov — Govt. information web site elastically scalesNASDAQ — Market Replay serviceUS Army — Testing troop vulnerability application on cloud platformEli Lilly — drug research Indy500.com — streams live race footage and statistics
We are here2006-07 2008-09 2010
2010 has seen Cloud Computing move through the Chasm of “early adopters” to “pragmatists”
6© Webscale Solutions - 2010
Opportunity for Combinatorial Innovation Cloud Computing and its successful adoption in the life of consumers and
Enterprises will enable combinatorial innovation leading to creation of a new breed of focused IT-BPO providers.
As seen in the build-out of the last big cloud – the electricity grid - in the 20th century, the real revolution was not the way it reduced the cost structure for corporations dependent on electrical power, but the way it created new businesses altogether. We saw an avalanche of new products outfitted with electric cords, many of which were inconceivable before the grid's arrival. We should expect the same with the build out of the service grid.
Cloud Computing enables sharing of data, at an unprecedented level in the terms of the breadth and depth of data. This creates a natural advantage for the service provider in providing value-added services that rely on analytics and big data.
Economics of scope and scale naturally favor the cloud provider.
Focused Service Firms
7© Webscale Solutions - 2010
The Proliferation of Data Cloud Computing enables the digital life like nothing before. All Data resides
in the cloud , we have direct instantaneous data access on any device , we have read-write to the data access from any device.
Just like the assembly line , in 1909, optimized the assembly of mechanical parts revolutionizing the factory , the cloud has the potential to optimize the knowledge industries creating new levels of efficiency and new organization structures.
Examples. Twilio utilizes the cloud and the economics of scale that comes along
with that to provide a telephony infrastructure that is not only cost effective by several factors compared to traditional vendors but also offered on a pay as you go pricing/
GetSatisfaction.com can do a better job of improving customer satisfaction for clients by not only having a dedicated team for the job , but also , by knowing the consumers , living the digital life, much better than any other Enterprise
Open Table is best placed to underwrite restaurant insurance policies because it controls the restaurant inventory and knows the menu, the items people eat , the number of people visiting the restaurant etc , more so than the traditional insurance carriers.
8© Webscale Solutions - 2010
Cloud Brokers - The Micro-Multinationals
“ There will be small number of big
players and a large number of small players in the cloud computing space ”.
– Dr. Eric Schmidt , CEO Google
The barriers to entry for online businesses have been dramatically reduced with cloud computing.
The Cloud Computing Market is evolving into a three Tier Structure Tier 1 – The Big Cloud Vendors : • The World only needs 5 Computers – Thomas Watson – IBM CEO (1943)• These are typically hyper-scale , pan-global , broadband service giants with massive
data centers. These are like the shell’s of the Oil industry Tier 2 – Cloud Brokers /Micro-multinationals,• Small vendors that add a specific value add(regional , domain specific , custom
suitability).• They might have their own data center , but typically rely on the Tier 1 vendors for
sourcing their computing power.
Tier 3 – Cloud Users – Individuals , Small businesses , Enterprises. Source their needs from Tier 1 or tier 2 based on their specific needs and scale.
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