Saturday morning, I joined Dave Linthicum on his cloud computing podcast to discuss our impressions and findings from Cloud Connect.  Check out the podcast.  Learn what Kung Fu Panda is doing in the cloud.

Today and tomorrow I’ll be blogging from Cloud Connect 2011 in Santa Clara.  There are tracks on Cloud Economics, Security, Culture, Risk and Governance, Data & Storage, Design Patterns, DevOps, Performance and Monitoring, and (surprise) Private Cloud.  Last year, “private cloud” was more of a slur, than a strategy.  Nice to see the embrace of a common enterprise adoption strategy (or step path).

I’ll be attending a variety of sessions, taking some briefings and connecting with my cloud friends.  Follow my coverage here on elemental cloud computing and twitter.  The conference tag is #ccevent

This morning, I traded top cloud computing stories for January with David Linthicum and Bill Russell on the Cloud Computing Podcast.  We had one common story, giant hint on the left.  Check out our podcast.

Back in April 2009, McKinsey set the cloud computing community afire with a presentation arguing that corporate cloud computing adopters might expend more money using cloud versus traditional data center resources.  As reported by Steve Lohr in the NYTimes Bits blog:

“The McKinsey study, “Clearing the Air on Cloud Computing,” concludes that outsourcing a typical corporate data center to a cloud service would more than double the cost.”

Many in the cloud computing space, including Gartner’s highly respected Lydia Leong, immediately took the ‘math’ behind this report to task.

My issue at the time wasn’t the math, but the premise.  I couldn’t imagine any CIO – in their right mind – outsourcing their entire enterprise datacenter to the cloud.

To cloud or not to cloud, should be evaluated and employed in the context of specific business needs, accounting for fit, risk, cost, opportunity and overall value.  This is no different from other technology investments. 

Fast forward to late 2010, McKinsey published a couple of reports highlighting the value and role of cloud computing in flexible and responsive organizations.  Different lens, different result.

In November, McKinsey published the results of their 5th business technology survey.  The headline is that executives want more immediate value from IT as well as forward looking strategies that support growth and innovation.

“The demands on IT, results show, are more intense than ever. While many organizations express basic satisfaction with their own IT departments, new hurdles face IT executives as business units are demanding more value from the function. C-suite leaders are pressing IT executives for gains from transformational technologies like cloud computing, and they want IT to help turn growing stores of corporate data into information assets that support growth and guide innovation.”

Specific to cloud computing, 70% of the non-IT executives surveyed (n = 252) view cloud computing (any network delivered resource, including SaaS) as a way to increase business flexibility.  These executives also see IT and business continuity value, but not to the same degree as business flexibility.  I take this as a good sign.  Business executives “get” the true potential of cloud computing.

In December, McKinsey published an interesting paper entitled Reshaping IT management for turbulent times, which advocates “A new model for managing IT combines factory-style productivity to keep costs down with a more nimble, innovation-focused approach to adapt to rapid change.”

“In most organizations, IT began as a support function, leading to a one-dimensional management approach. However, technology-enabled products, interactive communications, and an “always on” information environment have thrust IT to the forefront, with critical implications for business growth and customer engagement. In addition, established practices, such as lean-management techniques, have highlighted the value of IT in reducing waste and increasing productivity.

This deeper recognition of IT’s potential has given rise to a new management model consisting of two categories: “Factory IT” and “Enabling IT.” Factory IT encompasses the bulk of an organization’s IT activities, applying lessons from the production floor—scale, standardization, and simplification—to drive efficiency, optimize delivery, and lower unit costs. Enabling IT is focused on helping organizations respond more effectively to changing business needs and gain a competitive advantage by spurring innovation and growth.”

According to the report, there are 3 key components of the Factory Model:

1. Industrial IT – applying traditional business-management techniques to IT (such as Lean, disciplined governance, performance measurement, transparency)
2. Flexible IT factories – building IT that’s more responsive to changing business conditions, utilizing the cloud and agile development techniques:
   

   “The cloud. Cloud computing offers access to information, processing, and storage through the network or an external service provider. This mode of delivery allows companies to purchase computer processing as a service, rather than making up-front investments in IT capacity and in-house support staff. The New York Times, for example, digitized and catalogued more than 100 years of archived articles for its Web site in a 24-hour period by using Amazon.com’s cloud
   offering, avoiding the need to configure and operate a set of servers for a onetime effort.

   …Together, the cloud and agility can make the IT factory more nimble, with lower costs and faster delivery.”

3. Holistic business cases – cutting complexity through improved planning (complexity builds over time, result of systems evolving beyond initial intent)

While not stated in the report, I believe cloud computing supports the Rapid Experimentation component of the Enabling IT Model:

“Where lean manufacturing and Factory IT seek to avoid errors, Enabling IT’s mind-set tolerates (and even encourages) the mistakes that result from experimentation and iteration as long as they happen quickly, the outcomes are measured, and the lessons are incorporated into the team’s thinking. More companies are embracing rapid experimentation as a way to develop, refine, and upgrade their services or products.

Capital One and Google, for example, have been at the forefront of this trend with their credit cards and online services, respectively. That wave is spreading to traditional players: P&G’s Vocalpoint, a network of mothers, provides feedback on new product ideas. Similarly, a leading fast-food company is using IT systems and analytics at test sites to gauge the impact of new menu choices on store-level revenue, operations, and customer experience.

Such experimentation requires the right set of technical capabilities and a flexible IT environment. Managers must employ tools to define, build, test, and improve new products quickly, integrating feedback from both internal stakeholders and a set of users or customers.

Responsive IT support is a vital component of this effort. By assembling a team to work hand in hand with the managers on these new business offerings, IT provides essential support to help build and modify business processes and systems rapidly.”

Changing their lens from IT expense to business value, McKinsey has identified several (viable) value propositions for cloud computing.  Switch your own lens.  What do you see?

If the word wasn’t outlawed, I’d give myself a “fail” for Cloud Watch blogging in the second half of 2010.  It wasn’t intentional. Or lack of interest.  And definitely not lack of material.  It’s just that one project led to another and another, and then it was 2011. 

However, I wasn’t completely silent on Cloud Computing.  (As if that’s possible).  I continued my monthly appearance on David Linthicum’s podcast to exchange Top 3 Cloud Computing stories with Dave and Bill Russell. 

Last week, Dave and I traded Top 3 Cloud Computing Stories for 2010.  Check out our podcast.

Apparently, our Top Cloud Computing Stories for May podcast was well-received, because David Linthicum invited me back to swap top stories for June.  Check out our podcast.  Then, consider this: What will be the ‘Tang’ of cloud computing?

Last week, Dave Linthicum invited me back to his podcast to discuss top cloud computing stories for May.  There were no set rules on what constituted “top”.  We each picked 3 stories, which we didn’t reveal to each other beforehand. 

As for the results, I will say that we had one story in common, two mainstream stories (one each) and two wildcards (one each).  The format was fun, so we’ll do another at the end of June.

To listen to the podcast (16 minutes or so), go here.

Keynote Speech: How Much Of Your Future Will Be In The Cloud? Strategies For Embracing Cloud Computing Services, James Staten, Principal Analyst, Forrester

Cloud computing has shifted from being a question of “if” to one of “when” and “where” in your IT future and portfolio. Is it best to stick with SaaS, or should you be deploying new services directly to the public clouds like Amazon EC2 or Windows Azure? What applications are candidates for the cloud, and which should remain in-house? And for how long? This session will explore the enterprise uses of cloud computing thus far and synthesize the thinking across Forrester on this issue to present you with a road map and a strategy for embracing the cloud that benefits both your business and the IT function. Cloud can be a catalyst for the IT-to-BT transition so long as you harness it effectively.

Session attendees can expect to learn:

• How to tell a true cloud solution and its relative maturity from simple cloud washing.
• The truth behind the economics of cloud computing.
• The best places to start and strategies to build your own path to cloud efficiency.

Prior to the conference, James wrote a positioning/discussion piece, which is published on ZDNet.  From what I saw on Twitter, the most controversial idea was the “Pay per use or metered consumption” requirement to be consider cloud computing.

James opens with “Cloud computing isn’t an if, it’s a when and a how”.  He says it won’t change your entire world (Nick Carr), nor is it complete hype (Ellison).  But, you will use it, situationally.

Definition: A standardized IT capability (services, software or infrastructure) delivered in a pay-per-use and self-service way.  On the pay-per-use, you should be able to go to zero.  That’s the economic power, according to Staten.  On self-service, the request is immediately processed, in an automated manner.  [This eliminates all the “managed service” cloud players].

James says enterprises need to take a portfolio approach to IT infrastructure and applications.  Make best cloud/not cloud decisions.

On private clouds, James offers a reality check.  Cloud infrastructure requires the following.  Is your enterprise there?

• Standardized operating procedures
• Fully automated deployment and management
• Self-service access for deployers
• Business units sharing the same infrastructure

[James says the 4th is the hardest.  I would (respectfully) disagree.  Cloud computing or not, the business units should not care, nor have a say, in the underlying technology infrastructure, or the placement of their applications within it.  If business people are worrying about IT infrastructure and deployment, then who is worrying about the actual business?]

Now, James is talking about virtualization maturity.  He has a 4-stage journey: acclimation, strategic consolidation, optimization and “cloud”.  At “cloud” you have automation, self-service, optimization etc.  James cautions the audience on virtual machine sprawl.  While you would save on physical resources, the management of virtual machine sprawl can be counterproductive.

In a portfolio approach, James has dedicated infrastructure, virtualized infrastructure and private cloud.  The scale goes from custom to common, fixed to transient, owned to metered. 

In a slide transition, James adds a huge Public Cloud circle.  Don’t forget/discount the public cloud.  If public cloud isn’t part of your portfolio, you are missing out on economic benefit of going to zero.

James gives some examples of cloud cases on Forrester site: Associated Press (time to market gain), PathWork Analytics (run heavy data analysis, then go to zero), Data.gov (cost reduction story).

Now James is telling the Animoto story (scale on EC2), and other business disrupters leveraging the cloud, such as bizo, Good Data and Flight Caster.

Move from Capex hard commitment to Opex.  James places public cloud computing in a broad outsourcing family, along with managed hosting and SaaS.  Difference for cloud is the ability to go to zero.

Organizations will need a decision tree to place right applications in right deployment to get best economics for business.  Two factors are workload management and GRC.

Next 90 days:

- Built a cloud leverage team

— Invite your most innovative thinkers

— Use hybrid architectures to optimize deployments

— Build a Cloud management model

Longer term

- Start in pockets

— test and development

— green-field applications

— throw spaghetti (public cloud)

- Create a cloud migration road map (beyond dev/test and green-field)

Or, fall for “cloud is hype line” at your own peril.

I’m at the Information Technology & Logistics Council (ITLC) conference on Amelia Island in Florida.  I was invited here to speak on SOA.  Now, I’m sitting in on a cloud computing session.  The format is three mini-presentations, followed by a panel discussion.

• Chris Rafter, Solution Services Group, Logicalis, Inc.
• Jackie Baretta, CIO, Con-Way Inc.
• Dave Tezler, Oracle
• Moderator: Steve Chaffee, Logicalis

Steve Chaffee opened quoting the Forrester paper by Gene Leganza on Enterprise Architects and Cloud Computing Adoption.  He also mentioned the citizen development aspect of cloud, as familiarized by Gartner.

First up is Chris Rafter, Logicalis is an IT Services Company.  Chris is starting with some Cloud Computing fundamentals.  After some What is Cloud? Chris is talking about how cloud computing isn’t just an IT topic.  It’s also a business topic and finance topic.  The overall value prop: “Deliver the same application, with “good enough” quality of experience, for dramatically lower cost.”

He’s going over some cost savings details now.  Cites small companies moving over to Google Apps, and companies without dedicated data centers, getting IaaS services from Amazon.  So, not completely “moving” to cloud computing.  But, utilizing cloud services.

Chris says “amazing deals” right now.  The low price is all about a land grab.  He infers this won’t last.  Many people speak to the eventual race to zero.  Chris sees this differently.  More laws of supply and demand, versus just economies of scale.  [I agree with Chris. I don’t see zero as an efficient (market) end goal for providers.  At least those providers with shareholders.]

Now, the requisite Private | Hybrid | Public cloud slide.  He’s giving good information.  For many here, this is an initial exposure.  In general, trucking and logistics organizations are not early adopters. 

[Interesting note, while this session is well attended, the SOA session was fuller.  In other industries, or at Analyst conferences, I see the opposite trend.  More people in Cloud Computing sessions, as SOA is well underway.]

Next up is Dave Teszler of Oracle.  Dave is a Sun guy, datacenter, cloud computing and HPC background. 

Dave has Oracle’s Logistics IT Services Footprint up now.  Talks about the potential need for high performance compute with the “traveling salesman problem”.  What happens when the planned route is interrupted.  How do you re-route with least impact on subsequent appointments.

Dave is going over a Private PaaS Lifecycle:

1. setup cloud: virtual machine, o/s, database, middleware and management software, with shared service layer
2. build app
3. use app
4. scale up/down
5. chargeback

Private Cloud Evolution:

silo’d –> grid –> private cloud (self service, policy based) –> hybrid solution, spanning private & public clouds. Hybrid includes virtual private cloud, SaaS, PaaS and IaaS

Dave is giving some examples of Cloud Computing within Oracle.  First, Oracle Development is self-service private cloud.  [Sounds like early Amazon AWS driver].  Second, Oracle University.

In closing, Dave does point out there are both “compelling benefits as well as serious concerns”.

Finally, Jackie Barretta, CIO of Con-Way.  Her brief definition: A standardized IT capability (services, software, or infrastructure) delivered via internet technologies. 

Real promise, especially in transportation, is public cloud.  The reason, the spikes of transportation.  Not carrying high cost burden just to meet spikes.  Leverage the public cloud for those spikes.

Biggest benefit, “Cloud Computing allows us to concentrate on our differentiators”. 

Strategic Value compared to Internal vs. External Efficiency.  Differentiators: Business Unit Application design, Integration, Business Intelligence and Enterprise Architecture.  Focus on these things.  Commodities: Help Desk, Development & Support, Infrastructure.

Mapped application categories to 2×2 box, strategic value (X), Internal vs. External proficiency (Y).  High Strategic, Low Internal –> External Novelties. (Salesforce.com)  Upper right box, stays within Con-Way.

SWOT Diagram: Platforms from the Cloud (development platforms).  Only one viable for them, is Force.com.  Con-Way is Java shop.

S: Rapid Ramp Up for developers, rapid application delivery

W: No SLA’s, Will not run existing code (proprietary Java, hopeful of new Force.com release)

O: Faster time to market, rapid scalability

T: Data & Apps may not be secure, Vendor Lock-in (biggest concern)

Moving on to Infrastructure.  Mix of co-location, cloud computing, managed infrastructure and on-premise.  Not confident in cloud computing infrastructure (right now) to fully “move” to the cloud.

Business functions that are core competencies and differentiators are NOT in, or moving to, the cloud. 

Con-Way has always controlled own infrastructure.  Just signed agreement with HP for 6 year outsourcing deal.  There are “shades of cloud” in that agreement.  Co-location, managed services, and SaaS on public cloud (such as email). 

Also pursuing a pilot on Amazon EC2 for one of their “spikiest” applications.  Deal structure allows for movement to public cloud without penalty, if public cloud offers better deal (cost, performance, etc).

Jackie is addressing the renegade (citizen) cloud adoption threat.  Advice: Embrace cloud computing.

Q&A has started.

Jackie on Security in the cloud.  In many ways, cloud computing providers are more secure, because they have more funds to put towards security.  This is a general (industry) statement, not Con-Way specific.

Chris: Encryption.  Insist on encryption: data in flight, PII data at rest.

Good question on application response (latency).  How long do users need to wait for response from cloud.  General agreement from panel of criticality of network architecture as moving to cloud.  Might be big concern for shops with thick client applications.  Shops with “thin client” or “web based architecture” are probably better positioned.