The Business

perspective on
Cloud
Computing

25.05.2009

Copyright 2009 Macquarie Telecom

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The Logical Evolution of Virtualisation
Viewed in context, Cloud Computing is the natural evolution of the abstraction concept
delivered by virtualisation technology. “Cloud” is one term of many, which is used to describe
this evolving concept of computing. This new paradigm (whatever we choose to label it) is
promising to transform the computing model from a largely static connection between
Applications and Hardware, and discrete expansion dictated by physical equipment
limitations to an integrated computing platform capable of more granular scalability and
flexibility.

There is currently a tremendous amount of uncertainty about what Cloud Computing actually
is; epitomised by the multitude of differing interpretations and definitions. While generating
interest due to its novelty, the current generation of Cloud offerings are in the main, limited
to software services and in most cases, not suitable for business-grade requirements. These
best-effort services lack the necessary features such as Service Level Guarantees (SLG) and
Service Assurance to support mission-critical requirements. There will be multiple iterations
before the industry arrives at an acceptable business-grade Cloud Computing service.

Our understanding of Cloud Computing

The term Cloud Computing is a relatively new and all-encompassing catchphrase which is
used to describe any new offering that defies characterisation into traditional product
envelopes. As a result, different providers have their own interpretation on what a Cloud
service should be defined as.

Currently, Cloud Services can be roughly divided into two broad camps; “Cloud Software
services” and “Cloud Computing services”, as illustrated by Figure 1. They represent
different levels of abstraction of the underlying computing resources, which is ultimately
enabled through some form of virtualisation technology.

Figure 1 The different definitions supporting the Cloud Infrastructure

It is worth pointing out the differences here between Cloud Software services and Cloud
Computing services. Cloud Software describes services which are typified by the delivery of
ready-to-consume software services over the internet exemplified by services such as
Salesforce, Gmail and the like. Cloud Computing is the hardware equivalent – the delivery of

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previously unwieldy hardware components (with long purchasing lead-times and integration
issues) as user-definable and modularly scalable instances of computing services – which can
be raw computing power, storage capacity, server configurations, etc. Amazon’s EC2 is
arguably a first generation example of a “cloud computing service”.

These definitions are sometimes complicated through the use of “anything-as-a-service”

tags. As further detailed in Figure 1, the “anything-as-a-service” terms such as SaaS, PaaS,
IaaS are commonly used to describe the underlying layered component architectures which is
used to deliver end-user Cloud Services (either Software, Platforms or Computing
infrastructure).

The common markers which constitute a Cloud Service are:

> an underlying supporting infrastructure architecture which is shared
> the ability to scale quickly giving the impression of elastic expansion
> charging based on (variable or fixed) operational expenditures instead of large upfront
investments

The trends behind Cloud Computing

The Cloud paradigm brings together prevailing underlying threads in technology and
computing advances such as:

> Virtualisation which was originally a method for improving the efficiency of CPU loads on
mainframes but has since been applied to maximise the utilisation of x86 based
server/storage hardware. Virtualisation is a key building block for assembling cloud
infrastructure.
> The underlying networking architecture which allows us to bring together disparate
computers and networks to form a survivable platform – elements of this architecture support
the cloud. The internet is the prototypical Cloud architecture.
> Availability of high bandwidth is the necessary delivery mechanism and precondition for
successful Cloud Service distribution to end-users of the service.
> Utility paradigm confirms the acceptance of operational outlays as opposed to large
upfront capital intensive investments and provides the underlying shift in thinking about how
computing services are consumed, yielding increased cost flexibility and efficiency.

Business requirements for Cloud Computing

Cloud Computing can confer operational advantages stemming from its ability to remove
complexity from the business user, thereby freeing businesses from the constraints of
hardware technicalities in order to focus on delivering services to their customers.
When managed properly, some of the advantages of Cloud Computing for businesses are:

Increased Agility
The essence of cloud services is its apparent ability to flex by upscaling or downsizing
on-demand. Through Cloud Computing, a business can manage the swings in demand
without investing for peak demand. This is especially useful to cater for demand
spikes or itinerant requirements and also to offload batch processing jobs.

Reduced time-to-market
The abstraction of the underlying layers of computing hardware and the utility
delivery model allows businesses to compress development and design cycles enabling
faster time-to-market, instead of being dictated by hardware or procurement lead
time and integration issues.

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 Cost efficiency
The utility model of cloud computing converts the cost equation from one-off large
and lumpy hardware capital purchases to operational expenses which are spread to
match the consumption of the service. Utility based charging may be attractive
depending on the specific usage pattern or demand requirements.

A business-grade Cloud Computing service must offer all this without compromising mission-
critical performance and availability.

Aspects of Cloud Computing to be mindful of

The nature and broad definition of Cloud Computing makes it unwieldy to define and
characterise. Hence the suitability of one form of Cloud Computing to another rests heavily
on the business objectives sought and acceptable risk profile and should at least be
considered (or measured) along these dimensions.

Different Types of Clouds

There are several options when it comes to deploying Cloud services – anywhere from
building and managing your own cloud (i.e. an Internal Cloud) at one end of the
spectrum to the other end of the spectrum where you can buy services when you need
them from a Cloud provider. Of course, there are many intermediate options between
the extremes of Internal Clouds and Public Clouds scenarios and many permutations in
between (i.e. shared vs dedicated, etc). One such option is the Private Cloud.
Private Clouds provide the flexibility and control of your own cloud platform without
compromising security and data integrity. This version of the cloud is a federation of
internal clouds and external clouds segments managed by a Hosting provider. Public
Clouds on the other hand, are by definition operated by integrated third-party
providers and enables many businesses to share a pool of computing resources.
Ultimately business objectives will dictate whether a certain cloud configuration or a
combination (i.e. hybrid) configuration is actually deployed.

Flexibility to match your applications

Most large public cloud offerings are based on a particular platform which means that
applications needing to utilise the cloud computing offering needs to conform to the
strict boundaries imposed by the underlying platform architecture. This “take it as it
is” mentality is evident in first-generation cloud services and before your business
considers utilising a public cloud computing platform, careful consideration needs to
be given to the application re-engineering costs and the ensuing complexities. This
will especially affect the early stages slowing down the migration process which runs
counter to the agility promised by cloud services. Generally, the more customised the
applications, the more challenges will be faced when trying to shoehorn it onto a
public cloud offering. The private cloud route provides a more viable option for
proprietary application requirements.

Visibility and Management of the cloud

Another advantage promised by Cloud Computing is the ability to view and manage
your instance of the cloud. The ability to “look” into the cloud and to control how its
resources are used is a vital component of the equation. Typically the management
tool is used to track utilisation levels, analyse trends and may even extend to some
form of Virtual Machine self-service instantiation. A cloud offering is only as strong as
the available management tools which accompany it – imaging flying an aeroplane
without any dials or indicators!

Quantifying the real costs

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 While cloud computing promises to reduce the costs of IT operations, its unclear
whether this will apply across the entire range of cloud services offerings and for
what circumstances this will apply to -as an example it could be argued that it would
cost more to use cloud services if a large business needs a customised
implementation, as opposed to “off the shelf” requirements of a small business.
Initial market adoption patterns are indicating that cloud services are cost-effective
mainly for smaller businesses exemplified by their pervasive use of cloud software
services such as Salesforce.com, GoogleApps, etc.

Service Reliability and Performance

The impact of delivering business critical applications over cloud computing on the
application performance metrics need to be considered. Specifically, will the physical
location of the cloud platform change the latency characteristics of the application
thereby adversely affecting usability and more importantly, what is the availability of
the cloud platform - does the SLA match your business requirements and will the
cloud provider back it up with appropriate Service Level Guarantees (SLG). When your
service goes down, who can you call to get it back on line?

Data Transfer
With the demand for richer media and the continuing commoditisation of computing
hardware, applications are continually churning out more and more data. However,
Internet data transfer charges remains relatively expensive and even worse, Internet
data transfer rates (i.e. speeds) have not kept pace with advances in computing
hardware. The data transfer costs and the time taken to transfer large datasets (in
the order of Terabytes) into the cloud for processing is considerable and significant
enough to be considered as its own cost item which needs to be factored in when
considering utilising cloud computing services.

Data security and Confidentiality

One of the risks inherent in current Cloud Computing offerings is data integrity.
Businesses have to weigh-up the risk of storing their data on the cloud provider’s
platform (many of whom are located out of country); which may have specific
regulatory and privacy implications depending on which industry or country the
business is operating in. What will happen to your business data if the cloud provider
is no longer a going concern?
Furthermore, in a public cloud environment different business applications are all
sharing a common infrastructure platform so consideration needs to be given to
whether there could be any risk of data contamination from virus transfers or
otherwise.

Risk to Business Reputation

Consider this - your business data or applications could be hosted on the same cloud
computing service as potential Internet villains, who use the cloud platform to launch
DoS attacks or spam storms. This one customer’s bad practices could reflect
negatively on the cloud platform as a whole. In extreme cases, entire ranges of IP
addresses from the offending cloud provider could be blacklisted, rendering your
business a victim of inadvertent collateral damage of other businesses unsavoury
practices.

How is Macquarie Hosting approaching Cloud Computing

As the leading provider of mission-critical application hosting services in Australia, Macquarie
Hosting is committed to the evolution and progression of the underlying technologies which
enables the delivery of advanced hosting services to the end customer. It is our aim to ensure
that cloud computing services delivers net operational advantages to businesses without

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unduly complicating an already complicated environment. Ultimately, we believe the
computing and hosting industry has started its journey on the path to a utility-based
computing model – however Cloud Computing is still very much conceptual in nature and
needs to be developed and refined further.

Cloud computing is the natural evolution of a virtualised ecosystem. Colocation, dedicated

servers, Virtualised servers and Cloud Computing are all points along a continuum of managed
hosting services. The current trend toward cloud computing is a convergence of the evolving
trends in computing - abstraction (enabled by virtualisation technology) and automation.
Cloud Computing is large-scale platform virtualisation as opposed to per hardware
component virtualisation (i.e. individual server virtualisation). As the leader in business-
grade virtualised ecosystems, we are well placed to deliver this next-generation computing
service.

The concept of “Cloud” is still being developed. The Cloud Computing concept is currently
still work-in-progress and is undergoing continual development and refinement; and will
manifest itself in many forms – there won’t be a one size fit all silver bullet solution.
Customised computing services and hybrid environments consisting of federated public and
private clouds, will be required to support the differing needs and to meet the objectives of
different businesses.

Mission-critical performance. Making the decision to move from in-house to a managed Data
Center environment does not mean businesses have to suffer a degradation of service levels
which put the business at risk. Cloud Computing services must provide equivalent if not
improved availability, security and data security – only a business-grade computing service
can deliver these requirements. Our focus remains on providing innovative customer solutions
based on proven technology which reduces the operating risk of doing business online -
consistent with our focus on providing the highest uptime for online businesses. The business-
class version of cloud computing is the version we are working towards.

Tools to effectively manage the Cloud. You can only react to a situation if you have an
indication of the current operating state – so the agility promised by Cloud Computing relies
on having the tools to get up-to-date performance and status indicators for your services.
InView, Macquarie Hosting’s real-time management portal, provides the management tools to
interrogate and report on a range of parameters to ensure visibility, control and
administration for individual customer services. We are set to continue this focus as we move
toward Cloud Computing.

“Cloud-like” Agility Available Today

Today Macquarie Hosting already delivers mission-critical hosting solutions as part of our
existing capabilities, which enables “cloud-like” flexibility and scalability for your business.
Examples of these services are outlined here:
SaaS Software Incubator is a multi-tenant virtual infrastructure service that enables
SaaS Software Providers, ISV’s (Independent Software Vendors), Application
Developers and Application Designers to test, pilot and proof their new application
initiatives in a simple and affordable manner to ensure success in Software as a
Service offerings. This service allows multiple OS types and versions to be tested,
enabling SaaS providers to achieve “cloud-like” agility and get to market faster,
without the need for expensive upfront investments in hardware infrastructure.

Virtual Disaster Recovery provides an affordable end-to-end managed solution to

provide further levels of availability for your mission critical online applications in the
event of an unforeseen disaster striking your production infrastructure or facility. We
achieve this by building a replica of your production environment on a virtual server

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 platform, located at an alternate interstate certified hosting facility. Complete with
true Internet fail-over capability.

Private Hosting Environments deliver customised dedicated hosting solutions for

mission-critical online applications. These flexible Enterprise Virtualisation solutions
are housed in a purpose-built carrier grade data centre that integrates with our IP
data, voice and mobile networks providing you with the scalability, security and
proven processes to cost-effectively meet all your hosting requirements today and
beyond. In other words, we have the capability to deliver Private “Cloud-like”
environments today.

About Macquarie Hosting

A division of Macquarie Telecom; Macquarie Hosting is the Australian leader in mission-critical
application hosting for companies who rely on their websites for their business. Macquarie
Hosting owns and operates Australia’s most highly accredited Data Centre, the Intellicentre,
and has the people and processes in place to provide the highest levels of security and
uptime. Macquarie Hosting enables greater flexibility, agility and on-demand scalability for
organisations to respond to spikes and increases in web-site performance.
To find out more www.macquariehosting.com

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