Wednesday, August 5, 2009

Why Cloud Computing Matters In Spite of the Hype

The hyperbole to reality ratio that surrounds cloud computing is higher than anything I have seen since ATM. If you remember ATM, industry pundits told us that ATM would be our next and last networking technology. It wasn't.

One of the big differences, however, between cloud computing and ATM is that there were well agreed to specifications that defined ATM; e.g., constant bit rate, variable bit rate, etc.. Unfortunately, there is relatively little agreement in the industry, particularly on the part of IT organizations, as to what is meant by cloud computing.

A lot of my interest in cloud computing was driven by a very important article in Network World ( In that article Carolyn Duffy Marsan interviewed Geir Ramleth, the CIO of Bechtel. Marsan described how Ramleth had benchmarked Bechtel's IT operation against leading Internet companies such as, Google, and YouTube. I believe that the results of that benchmarking laid down a gauntlet for other IT organizations. Relative to WAN bandwidth, Bechtel estimated that YouTube spends between $10 and $15 per megabit/second/month for bandwidth, while Bechtel spends $500 per megabit/second/month for its Internet-based VPN. Relative to storage, Bechtel identified the fact that was offering storage for 10 cents per gigabyte per month while Bechtel's internal U.S. rate was $3.75 per gigabyte per month. In round numbers, Bechtel was paying roughly forty times more for a unit of WAN bandwidth or a unit of storage that the Internet companies were paying.  

I have been involved in a number of benchmarking projects. As such, I realize that the results can sometimes lack precision. However, a factor of forty in terms of cost savings is indeed compelling. It says to me that there is something here that is important for IT organizations to understand and apply judiciously in their organization. We just have to cut through the myriad layers of hype to find exactly what the reality is.