Part I. Cloud Computing Foundations and Business Requirements
Today âcloud computingâ may be one of the most popular buzzwords in nearly every IT professionalâs vocabulary, but not many people deeply understand the term. What are the differences between traditional computing and cloud computing? Why do we need cloud computing? What does it mean to my business? If the cloud is as good as many consulting firms claim, why do some companies still stick to traditional computing? How can I apply it to my business? How significant is it to my business? Why now?
All these questions will be answered in Part I of this book. It consists of three chapters. In the first chapter, we will first focus on the term âcloud computingâ from three historic phases: build, buy, and lease. Before we unveil our definition of cloud computing, we will review four other types of computing that are closely related to cloud computing, namely grid, parallel, distributed, and utility computing. Then we will introduce some widely adopted terms, such as NISTâs cloud definition. In order to serve the purposes of this book, we define cloud computing using a functional definition. Of course, it doesnât matter how we define the term âcloud computing,â the real purpose of our definition is to set up the groundwork for us to establish the cloud cost model or framework.
Why do we need a cost model of cloud computing? It is because we want the cloud to serve our business needs. In Chapter 2, we will describe how to define the business needs via three aspects (volume, variation, and variety) and how to implement a business analysis from a professional business analyst perspective. With respect to the five-phase process for business problem solving, we will only focus on the first three phases, namely problem definition, requirement gathering, and solution definition. In order to achieve the best problem solving results, we briefly discuss the topic of expectation management.
Chapter 3 puts the theory into practice. It contains a real business case of a leading telco company. In order to solve the real business problem of saving a significant amount on opex, we propose a cloud solution, which this book will unveil in all its details in other parts (II to V).
Chapter 1
Cloud Computing
The main topic of Chapter 1 is to define âcloud computingâ. Throughout the definition, we will explain that the cloud is not a new information technology rather than the new business model that is shaped by three emerging technologies: virtualisation, multitenant and auto-orchestration.
In order to illustrate this proposition, we will review the history of different types of computing based on the chronologic order and show how these different types of computing related to the new term of cloud computing. From the evolution of computing, we can understand the ultimate goal or incentive of cloud computing is to drive the cost reduction or to increase utilization efficiency. The significance of cloud computing is for a business to gain a competitive advantage in a market place, whether you are a cloud service provider or a consumer. In term of cost reduction or cost saving, different people have different opinions. The gap different opinions for the cost saving is as wide as 644%. This leads to the topic of the 2nd Chapter. Why do we need the cloud?
Keywords
Cloud Computing; Capital expenditure; Operational expenditure; Functional Definition; Revenue; Emerging technology; Hyper-cycle; Chasm; Parallel computing; Distributed Computing; Grid Computing Utility Computing
This chapter aims at laying out the groundwork of cloud cost modeling. We will use a functional definition to define the term âcloud computingâ to establish a cost framework for supporting strategic investment decision making.
The chapter will review the evolution of different computing paradigms and how they relate to cloud computing. From a business perspective, the ultimate goal of cloud computing is to drive cost reduction or to increase utilization and reduce provisioning time. The significance of cloud computing is for a business to gain a competitive edge in a marketplace.
In order to illustrate this significant point, we will first introduce some popular terms related to the cloud and then discuss four different types of traditional computing that are closely associated with the cloud. Finally, we will give our functional definition of cloud computing and describe the relationship between cloud and traditional types of computing.
1.1 Introduction
The time was late 2008. The world had just experienced the shock of the global financial crisis. One of the senior business directors of a large organization asked his IT (Information Technology) people to rationalize the cost for many IT services. These IT services were mainly dedicated to hosting, web contents, managing services, utility computing, data storage, and Ethernet network connectivity for many enterprise customers. The reason for this exercise was very simpleâthe sales revenue could not keep up with the pace of the capital expenditure (capex) and operation expenditure (opex) growth of IT infrastructure. From a business perspective, the profit margin was shrinking due to the growing IT expenditure. Unfortunately, when IT staff tried to identify some cost items for cost reduction, it appeared none of them could be eliminated. Does this sound familiar to you? If so, you are not alone.
1.1.1 Operation Cost Rationalization
Actually, this issue is quite common for many IT professionals of large enterprises and government agencies, which are constantly battling with this issue due to cost pressures. If we dive into the details, we can find a few fundamental issues behind this symptom:
âą Although many IT cost items have no direct sales revenue contribution, they are an essential part of business because they are either critical to maintain the current business operation, such as data storage, corpor...