How to make sense of cloud computing

Given the hype surrounding cloud computing, you'd be forgiven for thinking every CIO has a cloud deployment strategy. A deluge of analyst predictions of rapid cloud take-up has driven suppliers, rather than business users, to take a leading role in the evolution of the cloud industry.

Cloud technology obscured by hype and jargon

Omitting the words "available in the cloud" from any business proposal for software could be commercial suicide for suppliers. But cloud is still very much an early adopter technology.

Given the hype surrounding cloud computing, it easy to be mistaken into thinking every CIO has a cloud deployment strategy. The multitude of analyst predictions of its rapid take-up has driven suppliers, rather than business users, to take a leading role in the evolution of the cloud industry.

There is a lot of confusion surrounding cloud computing. Marketing teams and salespeople blind customers with reams of jargon. But the easily elucidated promises of savings on hardware and people - as well as the ability to pay for IT in smaller regular payments - are enough for businesses to listen.

Although cloud computing take-up might be slowed by confusion, ignoring it could be professional suicide for the CIO. Analyst firm IDC expect spending on public cloud services alone to grow four times faster than the entire IT market over the next four years. The IDC report shows this will reach $72.9bn in 2015, a compound annual growth rate of 28%.

But what is cloud computing? Wikipedia says cloud computing is the method of "using multiple server computers via a digital network, as though they were one computer."

Simple then? No. The cloud is as broad as the businesses it supports and there are sub groups. Public, private and hybrid clouds are just three.

IT dictionary describes cloud computing as a general term for anything that involves delivering hosted services over the internet. It adds that cloud services are broadly divided into three categories: infrastructure-as-a-service (IaaS), platform-as-a-service (PaaS) and software-as-a-service (SaaS).

It is important to understand that cloud computing is a broad church, says Neil MacDonald, analyst at Gartner. He outlines some of the things that annoy him about the cloud debate in a recent blog post. The first of these was that the cloud is too often classed as one thing. He recommends businesses make it clear what they want when they look at the cloud. "At a minimum, clarify whether you are talking about SaaS, PaaS, or IaaS - and whether you are talking about public or private cloud implementations," he says.

Even when businesses clarify what the cloud is and what it means to them, there are still complexities to overcome and one is a contractual conundrum.

According to Speechly Bircham lawyers Nathalie Moreno and Mark Bailey, the contracts which underpin cloud services are taking time to mature and often fail to address important commercial objectives or the security concerns of the customer. Bailey and Moreno say there needs to be more focus on the contracts.

The benefits of cloud computing may be easy to grasp but that is only the beginning. Big questions remain around which suppliers, which flavours of the cloud and what type of contracts are required to name a few.


Different flavours of cloud services explained by IT dictionary

Software as a service


Platform as a service


Infrastructure as a service


Public cloud


Private cloud


Hybrid cloud

  • A hybrid cloud is a composition of at least one private cloud and at least one public cloud. A hybrid cloud is typically offered in one of two ways: a vendor has a private cloud and forms a partnership with a public cloud provider, or a public cloud provider forms a partnership with a vendor that provides private cloud platforms.
  • A hybrid cloud is also a cloud computing environment in which an organisation provides and manages some resources in-house and has others provided externally. For example, an organisation might use a public cloud service, such as Amazon Simple Storage Service (Amazon S3) for archived data but continue to maintain in-house storage for operational customer data.


Neil MacDonald's seven cloud computing pet peeves

Neil MacDonald, analyst at Gartner Research, gives his seven cloud pet peeves:

1) Treating cloud as one thing

  • At a minimum, clarify whether you are talking about SaaS, PaaS, or IaaS - and whether you are talking about public or private cloud implementations.


2) Assuming cloud always means public cloud

  • Cloud is a computing style, not a location.


3) Citing security as the number one issue to the adoption of cloud without digging deeper

  • "Security" is too vague. "Cloud" is too vague. Combined, this statement is pretty much meaningless. See #1 above. Cloud isn't one thing, so securing the cloud can't be one thing either.


4) Equating virtualisation to the cloud

  • Virtualisation is a stepping stone for cloud, especially in enterprise datacentres but is not required for cloud computing.


5) Assuming cloud is always less expensive

  • In most cases, the driver is speed and agility, or that the cost is operational expenditure not capital expenditure. Overall costs are likely to be the same - or higher.


6) Assuming that moving to the cloud gives applications resiliency

  • If you have a critical application, the move to the cloud doesn't automatically endow your application with resiliency. You have to architect for this. Amazon AWS users found this out the hard way.


7) Referring to traditional hosting as "cloud"

  • Many deployments of Microsoft's BPOS and now Microsoft's Office 365 use Microsoft's "dedicated" offering with servers dedicated to the enterprise, but run by Microsoft. Call it what you will, but this is traditional hosting under the cloud moniker.


Cloud contracts: Utility contracts for utility services?

Cloud contracts are currently inadequate and the risks posed by cloud computing require a greater focus on the contract, write Nathalie Moreno and Mark Bailey of Speechly Bircham LLP. At first sight they may resemble typical software licenses.

Faced with a provider's ultimate aim to limit its liability to a level which does not reflect the potential risks and with a standard commoditised offering based on standard terms, what are the options left to customers?

Selecting the providers

  • Are there many providers offering a similar service? It is an opportunity for the customer to take advantage of the competition between market players in a tender-like process and ensure their requirements will be met by the chosen provider.


Evaluation versus negotiation

  • Cloud contracts require dynamic due diligence of the supplier and its supply chain (datacentre and hosting, subcontractors, etc). Customers are advised to keep the due diligence mantra they apply to other similar contracts such as outsourcing. Many cloud contracts contain structural deficits. More often than not, service level agreements are not included and the customer is left with a choice of gold, silver and bronze levels. They also frequently lack supply chain transparency. Data protection and data security issues should be addressed from the outset as customers may or may not remain data controllers in a cloud environment.


International options

  • As competition broadens and the market offerings for cloud services develop, customers may enjoy increased bargaining powers through forum shopping. Would an EU-based cloud provider be better placed than a provider in India for EU customers? This will depend on the balance of quality, risks and price sought by the customer.


Move towards sector-specific cloud contracts

  • Many sectors, notably financial services, retail and pharmaceutical, have specific regulatory requirements. Sector-specific contracts will address these issues.


Modular contracts

  • Adopting a modular approach would allow suppliers to control the basic contract form, SLA, security standards, and business continuity, and allow customers to include their specific requirements, with the final contract being adapted to mix and match both customer and supplier's requirements. If compromise is not an option, customers need to be prepared to pay more for a better quality service.

Read more on IT outsourcing