Cloud: Turning IT into a Raw Commodity

Emerging Cloud model has some essential characteristics that relate to the flexible sharing of assets and benefits users with the cost efficiencies. Besides making the IT industry more capital-intensive, this shift to the Cloud distances users from the complexity inherent in building and running modern IT systems. Thus, leading to the further commoditization of many of the industrys outputs. It is already quite clear that cloud computing is emerging as the dominant new technological model for computer systems. The models it supplants, such as, notably, the client-server model, entailed tight connections between hardware and software and between systems and users. Computers and related gear were dedicated to particular applications, and those applications were dedicated to particular individuals (in the case of PCs) or groups (in the case of servers). These models were, as a result, highly fragmented, characterized by redundant assets and investments and low levels of capacity utilization. The cloud model, in contrast, is built on the assumption of sharing, in particular the pooling of assets to support a diversity of uses and users. Hardware is shared flexibly by applications, and applications (and other resources) are shared flexibly among heterogeneous users. As with any utility system, the shared, or multi-tenant, infrastructure dramatically reduces redundancy, improves utilization, and in general capitalizes on scale economies. As defined by the National Institute of Standards and Technology (NIST), the emerging cloud model has five essential characteristics, all of which relate to the flexible sharing of assets: On-demand self-service. A consumer can unilaterally provision computing capabilities, such as server time and network storage, as needed automatically without requiring human interaction with each services provider. Broad network access. Capabilities are available over the network and accessed through standard mechanisms that promote use by heterogeneous thin or thick client platforms (e.g., mobile phones, laptops, and PDAs). Resource pooling. The providers computing resources are pooled to serve multiple consumers using a multi-tenant model, with different physical and virtual resources dynamically assigned and reassigned according to consumer demand. There is a sense of location independence in that the customer generally has no control or knowledge over the exact location of the provided resources but may be able to specify location at a higher level of abstraction (e.g., country, state, or datacenter). Examples of resources include storage, processing, memory, network bandwidth, and virtual machines. Rapid elasticity. Capabilities can be rapidly and elastically provisioned, in some cases automatically, to quickly scale out and rapidly released to quickly scale in. To the consumer, the capabilities available for provisioning often appear to be unlimited and can be purchased in any quantity at any time.

 Measured Service. Cloud systems automatically control and optimize resource use by leveraging a metering capability at some level of abstraction appropriate to the type of service (e.g., storage, processing, bandwidth, and active user accounts). Resource usage can be monitored, controlled, and reported providing transparency for both the provider and consumer of the utilized service. Along with the cost efficiencies and flexibility benefits that come with shared infrastructure and applications, the cloud model benefits users by distancing them from the complexity inherent in building and running modern IT systems. The users purchase and configure IT services through relatively simple interfaces without regard to either the location or the architecture of the systems delivering the services. In other words, cloud systems allow not only the consolidation of physical assets but also the consolidation of the expertise required to build and maintain the systems. The consolidation of assets and expertise in large-scale, industrialized IT plants also spurs rapid innovation in data-center and systems design. Already, for example, the growth of cloud computing has led to important breakthroughs in energy efficiency and coolingbreakthroughs which in time will disseminate throughout the industry, benefiting all. Because information technology is highly modular, new architectural models do not simply replace old ones. Rather they build on top of, or at least alongside of, the old models. Companies continued to use mainframes along with client-server systems, and both those models will continue to be used along with cloud models. Nevertheless, because of its fundamental advantages in cost, flexibility, energy efficiency, and ease of use, the cloud model will increasingly be the model of choice for building new systems. As devices and applications are built to take advantage of cloud systems and central databases, moreover, the cloud model will gain further momentum and become increasingly entrenched at the core of modern information processing. With total worldwide spending on information and communication technology now exceeding $2 trillion annually, according to the World Bank, the shift to the cloud is having far-reaching economic implications. The epicenter of the transformation is the IT industry itself. The industry is being challenged to move from a business model based on selling or licensing expensive high-tech components (and then assisting buyers in melding the components into purpose-built systems) to a business model based on selling services for fees that vary with consumption. This shift promises to make the industry more capital-intensive, as large IT providers will need to own and operate data-center networks, often global in reach, in order to provide services, as well as more competitive, as companies that once specialized in particular components (Cisco in networking, EMC in storage, AT&T in telecommunications, Oracle in applications, and so forth) increasing battle head-to-head. The shift should also, in the long run, lead to the further commoditization of many of the industrys outputs, particularly at the infrastructural level. The cut-rate, low-margin pricing of pure-play IT utilities like Amazon Web Services testifies to the pricing pressures that lay in store for many core IT services. Given these characteristics of cloud computing, particularly the pressure to achieve scale economies, we

will likely see a further consolidation of many segments of the industry, with success increasingly going to those companies that prove themselves most adept at building and running multi-tenant systems and marketing the services the systems generate. An Excerpt from the Afterword To read entire Afterword, visit http://cloudsrollin.com About Nicholas G. Carr Nicholas Carr (aka Nick) writes about technology, culture, and economics. His books have been translated into more than 20 languages. Nick has been a columnist for The Guardian in London and has written for The Atlantic, The New York Times, The Wall Street Journal, Wired, and other periodicals. Nick is a member of the Encyclopedia Britannica's editorial board of advisors, is on the steering board of the World Economic Forum's cloud computing project, and writes the popular blog Rough Type. He is a sought-after speaker for academic and corporate events. Earlier in his career, he was executive editor of the Harvard Business Review. He holds a B.A. from Dartmouth College and an M.A., in English and American Literature and Language, from Harvard University. For more information, please visit http://cloudsrollin.com About HCL ISD HCL Technologies Infrastructure Services Division, also known as HCL ISD, falls in the category of the 4 percent American new public companies that have crossed, or are set to cross, the one billion revenue mark in the first 10 years of their inception. HCL ISD manages mission critical environments and handles over 3 million devices for over 1.7 million end users. The companys clientele includes 20 percent of Fortune 100 organizations and has over 250 customers, Fortune 1000 companies. The company's fast growth has attracted several bestselling authors to include the HCL ISD case study in their bestsellers. For more information, please visit www.hclisd.com