Two Great Cloud Computing Articles

Cloud Computing

How the Cloud Looks from the Top: Achieving Competitive Advantage In the Age of Cloud Computing

The 10 Worst Cloud Outages (and What We Can Learn From Them)

These are two great articles about current status of cloud computing. One is published by the Harvard Business Review (HBR); it’s title is “How the Cloud Looks from the Top: Achieving Competitive Advantage In the Age of Cloud Computing”. The other article is published by the CIO magazine with title “The 10 Worst Cloud Outages (and What We Can Learn From Them)”. Both articles provide great insights about current status of cloud computing. In my previous blog, I talked about the problems of replacing data centers with cloud computing and concluded that cloud computing is not a feasible solutions to replace data centers. It is quite interesting to see that people are aware that ERP also does not work well with cloud computing. However, cloud computing may still work out for general businesses, especially when they are consumer-facing store front such as recently announced Apple iCloud. Here, I provide a high level summaries of both articles for your interest. Links to both articles are available at the end of the summaries.

The HBR article is a review conducted over 1,493 readers of HBR’s readers who were involved in making technology decisions for their organizations with 16 in-depth phone interviews with CIOs, business leaders, and cloud experts. Overall, people acknowledge the following high value benefits of the cloud computing:

  • Increased business agility (44%);
  • Flexible capacity (41%);
  • Faster adoption of new technology (36%);
  • Lower fixed cost (shift from capex to opex) (33%);
  • Lower up-front costs to develop / deploy IT systems (31%);
  • Always on newest versions of software without IT updates / patches (26%).

And, advantages of cloud are

  • Lets us experiment more easily at low cost (64%);
  • Enables deeper collaboration with business partners (61%);
  • Frees up IT resources to work on more strategic things (60%);
  • Is a source of competitive advantage for early adopters (57%);
  • Lowers the cost of doing business (55%);
  • Lowers overall IT costs (55%).

Significant concerns associated with cloud computing are

  • Data security (60%);
  • Reliability / business continuity (46%);
  • Legal / compliance issues (33%);
  • Lack of interoperability with existing IT systems (31%);
  • Vendor lock-in (29%);
  • Lack of control (26%);
  • Lack of transparency (21%);
  • Lack of standards (20%);
  • Lack of skills (19%).

Furthermore, people’s confidence on cloud computing is not that high with only 20% feeling confident and the rest feeling somewhat or not confident. There are also big gaps between how people feel important about cloud computing and what they really know about it.

Overall, these are very good and valid arguments about the cloud computing. Some of them are very useful, especially the benefits of cloud computing. However, there is still one more item that this article overlooks, that is, internet bandwidth limitation. Today, traffic of business IT systems is routed within the firewalls of companies. If all businesses adopted cloud computing, all of those traffic would move from within-firewalls to outside-firewalls. With today’s internet being already choking with increasing demand of video from Netflix and Youtube, the adoption of cloud computing would make the business traffic compete with video traffic in the same limited internet we have today. The internet will not be able to handle such huge volume of traffic without outages in the future. As a result, the cloud computing will remain beneficial only to limited areas of businesses today. You can download the HBR review article at this link.

Next, the CIO article lists the following 10 worst cloud computing outages and lessons learned:

  • Amazon web service 4-day outage in April, 2001, due to incorrect system routing and backup.
  • T-Mobile and Microsoft 7-day Sidekick outage in the fall of 2009.
  • Google 4-day email outage in February, 2009, due to bugs in codes.
  • Microsoft Hotmail outage in 2010 due to bugs in codes.
  • Intuit service outage in June, 2010, due to power failures.
  • Microsoft BPOS (Business Productivity Online Standard Suite) outage in May, 2011.
  • Salesforce outage in January, 2010 due to data center down.
  • Terremark’s outage in March, 2010 due to data center down.
  • PayPal outage in the summer of 2009 due to hardware failure.
  • Rackspace outages in 2009.

Although people claim that cloud computing faces the same challenges as operating your own data centers, the environment of the cloud computing is much more complicated than a stand-alone data center. Therefore, the cloud computing is more vulnerable than the data center today. People need to be aware of the risk and the business areas which can really leverage of the cloud. The CIO article is available at this link.

[6/28/2011] As a new side note, there is another article stresses the idea that cloud computing is not for everything and people should address the security issues of cloud computing more than they are today. Check out the following CSO article: Public Cloud Can’t Be Used for Everything, Says UBS CISO.

A Great Reference About Reverse Logistics

I recently attended the following Havard Business Review webinar: ” Reverse Logistics: How to Find Hidden Profits by Managing Returns”. The speaker is Curtis Greve. Curtis is currently a principal partner of his own consulting frim, Greve-Davis. He was a VP of Reverse Logistics at Wal-Mart and a president of Reverse Logistics at GENCO. In the webinar, he provided a lot of great insights about his experience in reverse logistics (RL).

The core idea of RL is to recover lost profit and improve revenue through return recovery. It has become more important these days, because of the following reasons:

  • Poor product design,
  • Poor product quality,
  • Poor product instruction,
  • End-of-life cycle,
  • Introduction of newer products,
  • Consumer remorse,
  • Consumer complaints,
  • Product safety concern,
  • Regularity requirements.

Especially, there are increasing regularity requirements to cause product return or recall due to safety, theft, quality, or environmental reasons. Due to increasing global manufacturing output, the total return is increasing (although the global return percentage could remain stable). Furthermore, an average of 80% of returned products are free of defects and can be resold. Companies have increasing responsibilities to manage their return.

In the webinar, Curtis provided a very good flow diagram of the RL with very detailed analysis of both RL’s input and output channels (although he misses the new product buy-back channel today). He also provided a very good insight to reposition RL as a revenue generator than a cost center. I would definitely recommend you to check out and bookmark his blogs and web site.

 

Cloud Computing Is Just A Nice Dream for Business Data Center

Cloud Computing

Cloud computing was created to outsource companies’ data centers to internet vendors such as Amazon, Google, EMC, Facebook, Twitter, UploadingIt, and other private firms. After experiencing a bunch of security and reliability issues, today, I am announcing that Cloud Computing is just a nice dream. It does not meet the bottom line of businesses.

The bottom line of businesses is to maintain IT service around the clock. It becomes much more important, if the IT service supports day-to-day transactions of businesses.

If we look at recent incidents of cloud computing, Amazon had its east coast cloud crash for a week, Google had its office suite down for a few days and some users’ emails wiped off, and Facebook accidentally leaked user data to applications. All were due to incorrect codes being deployed to production without proper testing. When these cloud computing vendors miss their contractual service levels, what they can offer to businesses is only refund of service fee or cash compensation. Cash compensation is never acceptable to the sustainability of IT service to businesses. What businesses want is the assurance of their IT service running around the clock. So, cloud computing fails the bottom line badly. If the cloud computing vendors are not able to guarantee around-the-clock service level, cloud computing can never replace the need of private data centers.

In addition, cloud computing remains a major security concern to businesses. It appears that keeping critical systems within a firewall is still safer than moving them to the cloud. It just becomes too venerable when running a system in the cloud, because it adds too much external exposure to the cloud system and, therefore, making its security much more difficult to maintain. Cloud computing is just unable to deal with security well, when there are too many security variables to consider.

Lastly, cloud systems are still not reliable and efficient. The internet can not provide the same reliability and performance as the private network of a company. There is always delay to get emails over the internet. Netflix movies do not run continuously from time to time. Cellular phones get disconnected sometimes. So, putting a transactional system in the cloud, such as Point-Of-Sale (POS), warehousing, or logistics systems, simply does not work. Those systems require a very reliable network with extremely high throughput, which is not what the internet provides today.

However, cloud computing still has its value for supporting non-critical IT service such as the support of collaboration, storage, and social networking. So, the cloud computing could still stay but it will never replace the need of maintaining traditional in-house data centers.