What is Cloud

[bala murugan]

Hi Guys,

Can you please explain my question below in brief.

1. What is cloud computing
2. Why we need cloud computing for enterprise
3. What are the advantages of cloud computing.
4. who else offering cloud computing
5. In what way it is going to improve the business.
6. What microsoft is offering for cloud

I need the explanations for the above questions in brief.

Thanks,
Bala.

[Derek Sedlack]

Previous answers to this question include:

 

“…I've also started a blog about the Cloud Computing paradigm and its different views and definitions (www.cloudviews.org/about).”

 

“Much easier to view the gory details of the conference in my blog http://doubleclix.wordpress.com/2008/10/21/what-is-cloud-computing-and-do-i-need-to-be-scared/”

 

“If the Wikipedia article on ubiquitous computing is to be believed (I haven't checked the references) then ubiquitous computing is more focused on devices physically close to people (like personal area as in 'personal area network'). It seems to draw on home automation and autonomic computing concepts and an example of it would be lighting, heating and audio/visual adjustments in response to an individual entering a room.

I would suggest that some (but not all) ubiquitous computing implementations fall under the cloud computing umbrella... like the datafountain for example (albeit one of limited utility!). A music player which tweaks the genre of an internet radio feed might be a better one.”

 

Derek

 

---

[dan cox]

Wow, an interesting set of questions from a interested party. Bala, there has been 1000's of articles and papers written on the topics you address in your Question list. If you want, I'll send you a catalog of articles and papers that address your questions. It is not for the entire audience as it is voluminous and as most of the people in this forum are either techies or frustrated business guys. Love to help if you want.

----- Original Message -----

From: bala murugan

To: cloud-c...@googlegroups.com

Sent: Monday, June 29, 2009 12:26 PM

Subject: [ Cloud Computing ] What is Cloud

[dave corley]

Bala,

Start with this article in wikipedia...good intro sentence and segmentation of cloud computing into three general categories...IaaS, PaaS, SaaS. Definitions of each in the links as well as advantages/disadvantages.

http://en.wikipedia.org/wiki/Cloud_computing

Questions that may not be answered in the article...
-Microsoft - primary offering in the "cloud" is their "Azure" architecture and product line. Generally, this is a PaaS - allows developers to build SaaS services that are hosted in a cloud.
-Enterprise use: Many will argue whether "cloud computing" is restricted to services offerred by a "public" (non-enterprise) provider. However, all of the components of cloud computing are being marketed and sold to enterprises for much the same (and many different) reasons that they are delivered by public service providers.

Strongly suggest reading the wikipedia article, reading first level links, monitoring this group and the blog that Derek provides in previous posting. Then, armed with this knowledge, list the problems your enterprise (or your customer's enterprises) have that might be able to be solved using these technologies.

Dave

[Leon Katsnelson]

Here are one-liner answers:

On Mon, Jun 29, 2009 at 1:26 PM, bala
murugan<balamurugan...@gmail.com> wrote:
> Hi Guys,
>
> Can you please explain my question below in brief.
>
> 1. What is cloud computing

A model for delivery of IT resources to the consumers. In the 1960s we
had Centralized Computing. In 1980s we had Client-Server Computing and
now we see the emergence of Cloud Computing

> 2. Why we need cloud computing for enterprise

Reduce costs of delivery of IT reources and to provide better/faster
service to the consumers of these IT resources. Current economic
conditions dictate a need to reduce costs and IT's ability to respond
to ever growing demands of the business users dictates the move to a
more of a self-service IT deployment model that Cloud Computing
provides.

> 3. What are the advantages of cloud computing.

By using standartization, virtualization and automation Cloud
Computing has a potential to drastically reduce costs of delviery of
IT resources and to provide user experince that is greatly superior to
what the current models are able top deliver

> 4. who else offering cloud computing

Cloud Computing is deployment model so it is not really offered by
anyone. There are providers of public cloud infrastructure like Amazon
and there are vendors that provide Software as a Service (SaaS) like
SalesForce.com and vendors that provide Platform as a Service (PaaS)
like Google App Engine. And every IT company out there has aspirations
of providing you the bits you will need to build a private cloud
infrastructure.

> 5. In what way it is going to improve the business.

Has a potential to greatly reduce costs and improve IT resource
consumer service which in turn will lead to improvement in business
agility i.e. faster delivery of critycal applications to support the
business

> 6. What microsoft is offering for cloud

Nothing yet but plans to offer Azure late this year. Azure is a public
cloud offering that is probably best described as Platform as a
Service. Basically, if you commit 100% to Microsoft technologies
Microsoft will offer the cloud infrastructure to run your stuff (for a
price of course).

I just submitted an article to IBM Database Journal on the subject. I
am attaching it here

[Jan Klincewicz]

Bala:

There are no valid “short” answers to some of these. The definition
of “Cloud Computing” (and most of the topics you raise) are still
hotly debated. I will start with “Public” Cloud as opposed to
“Private” or Hybrid. As you asked for brevity, these responses are
highly simplified, and of course, debatable.

1. What is cloud computing? - Cloud computing is a utility-based
Service model where compute resources (CPU, Storage, network etc.) are
abstracted to the point where the Consumer of these resources are
unaware of the hardware providing them. CC offers the ILLUSION of
infinite resources which can be scaled up or DOWN as needs demand.
Three accepted delivery models are:

A. IaaS - Infrastructure as a Service – Raw compute resources are made
available (server – typically virtual, but could be physical, network
connectivity and Storage, for example.
B. PaaS - Platform as a Service – As above, but an Operating System
and perhaps APIs are included.
C. SaaS – Software as a Service – End-User applications are provided
over the Internet.

2. Why we need cloud computing for enterprise – We don’t necessarily
NEED CC in enterprises, but the model is (theoretically) highly
desirable from a cost and efficiency standpoint.

3. What are the advantages of cloud computing? In a Public Cloud,
Operating Expenses take the place of Capital Expenses, and Enterprises
do not bear the costs of acquiring, maintaining (and in some cases,
managing) physical depreciable assets. In “Private” Clouds,
Enterprises take advantage of the efficiencies of flexibility in
utilizing expensive resources by sharing and rapid (re)provisioning to
meet “just-in-time” needs. This is by utilizing technologies
associated with CC (grid and hypervisor-based servers, metering, etc.)

4. Who else offering cloud computing? – Large players include Amazon
(Web Services – Virtual Servers and Storage), SalesForce.Com
(Applications and Platforms as a Service) – Google (Apps as a
Service.) Many Managed Service Providers who have experience in
co-location, etc. are entering the business. Most large organizations
(HP,IBM, Citrix, Oracle, etc.) have some offering(s) that fall under
the “cloud” umbrella.

5. In what way it is going to improve the business? CC does not
automatically IMPROVE business, but it CAN substantially reduce
Capital expenditures (hardware), Maintenance, Licensing, Management
etc. “Hybrid” CC may take “non-core” parts of IT (Messaging, Backup
and Recovery, Billing, Payroll, etc.) to a Public Cloud while
maintaining security-conscious and proprietary processes in-house
(utilizing Cloud-like technologies to improve efficiency)

6. What Microsoft is offering for cloud? – Microsoft’s primary Cloud
offering is for developers and is called “Azure”
http://www.microsoft.com/azure/default.mspx This is an example of “PaaS.”

On Mon, Jun 29, 2009 at 1:26 PM, bala
murugan<balamurugan...@gmail.com> wrote:

--
Cheers,
Jan

[Jan Klincewicz]

In addition, this document-in-progress from NIST expands on the
responses I and other have offered. As you will begin to realize,
there are no short answers, lots of opinions, and room for debate in
this topic.

http://csrc.nist.gov/groups/SNS/cloud-computing/index.html

--
Cheers,
Jan

[mij...@sbcglobal.net]

Incredible how complicated sound last year explanations of what CC is...

They have historical value. Or literary value

M

Sent from my Verizon Wireless BlackBerry

---

From: "Derek Sedlack"
Date: Tue, 30 Jun 2009 09:29:13 -0400
To: <cloud-c...@googlegroups.com>
Subject: [ Cloud Computing ] Re: What is Cloud

[David Levy]

I like this, its short, so I am going to spoil it by adding some comments :-)

This contribution is strong on cost containment, and less effusive on the enabling new classes of application which is a more important driver of the cloud as far as I am concerned.

It is my view that large enterprises who have up till now deployed their own IT will be slow to move to the cloud because

1. there is a counterparty risk
2. there is a security risk
3. they don't want to outsource,

Smaller companies and others (i.e. consumers and non-profits) and those who want to sell their IT will behave differently.

I have also inserted some comments below.

Leon Katsnelson wrote:

Here are one-liner answers:

On Mon, Jun 29, 2009 at 1:26 PM, bala
murugan<balamurugan...@gmail.com> wrote:
  

Hi Guys,

Can you please explain my question below in brief.

1. What is cloud computing
    

A model for delivery of IT resources to the consumers. In the 1960s we
had Centralized Computing. In 1980s we had Client-Server Computing and
now we see the emergence of Cloud Computing
  

based on a distributed multi-system computing platform.

2. Why we need cloud computing for enterprise
    

Reduce costs of delivery of IT reources and to provide better/faster
service to the consumers of these IT resources. Current economic
conditions dictate a need to reduce costs and IT's ability to respond
to ever growing demands of the business users dictates the move to a
more of a self-service IT deployment model that Cloud Computing
provides.
  

Key driver is changing nature of applications, you are right that cost management will drive the enterprise, but the need for new age applications is more import IMO

3. What are the advantages of cloud computing.
    

By using standartization, virtualization and automation Cloud
Computing has a potential to drastically reduce costs of delviery of
IT resources and to provide user experince that is greatly superior to
what the current models are able top deliver

  

4. who else offering cloud computing
    

Cloud Computing is deployment model so it is not really offered by
anyone. There are providers of public cloud infrastructure like Amazon
and there are vendors that provide Software as a Service (SaaS) like
SalesForce.com and vendors that provide Platform as a Service (PaaS)
like Google App Engine. And every IT company out there has aspirations
of providing you the bits you will need to build a private cloud
infrastructure.
  

PAAS should include MS Azure as an example, particular because the initial correspondent asked about it.

5. In what way it is going to improve the business.
    

Has a potential to greatly reduce costs and improve IT resource
consumer service which in turn will lead to improvement in business
agility i.e. faster delivery of critycal applications to support the
business
  

and enable applications that can't be deployed on traditional platforms

6. What microsoft is offering for cloud
    

Nothing yet but plans to offer Azure late this year. Azure is a public
cloud offering that is probably best described as Platform as a
Service. Basically, if you commit 100% to Microsoft technologies
Microsoft will offer the cloud infrastructure to run your stuff (for a
price of course).
  

I think they're a bit further ahead than that, but I don't work for 'em, some one who does or who buys from them is in a better position to comment.

I just submitted an article to IBM Database Journal on the subject. I
am attaching it here

  

--

Dave

David Levy Chief Technologist Sun Microsystems Europe Global Sales & Services London, United Kingdom

Blog http://blogs.sun.com/DaveLevy Email David...@Sun.COM

[mij...@sbcglobal.net]

The CC can replace the word "cost" with the word "profit". It is global "replace all"

It does "reduce cost" to the point that costs are negative, meaning they become profit

M

Sent from my Verizon Wireless BlackBerry

---

From: David Levy
Date: Wed, 01 Jul 2009 12:21:06 +0100

To: <cloud-c...@googlegroups.com>
Subject: [ Cloud Computing ] Re: What is Cloud

[Nati Shalom]

 

You can also see a summary from a previous discussion on this topic:

 

What is the cloud? An end-user view:

http://natishalom.typepad.com/nati_shaloms_blog/2009/02/there-has-been-a-continues-hited-debate-around-the-definition-of-cloud-computingis--it-just-virtualization-is-it-grid-is.html

 

 

Nati S.

www.gigaspaces.com/mycloud - Enterprise PaaS on AWS

 

 

---

From: cloud-c...@googlegroups.com [mailto:cloud-c...@googlegroups.com] On Behalf Of David Levy
Sent: Wednesday, July 01, 2009 2:21 PM
To: cloud-c...@googlegroups.com
Subject: [ Cloud Computing ] Re: What is Cloud

 

I like this, its short, so I am going to spoil it by adding some comments :-)

[Jan Klincewicz]

Read any accounting 101 textbook. Reducing costs EVEN TO NEGATIVE
(which is highly unlikely in any real scenario) DOES NOT create PROFIT
!!!

--
Cheers,
Jan

[Miha Ahronovitz]

> Read any accounting101 textbook. Reducing costs EVEN TO NEGATIVE

> (which is highly unlikely in any real scenario) DOES NOT create PROFIT
> !!!

You keep quoting 101 textbooks (Accounting , Marketing).
Did you ever ask why the accountants are not the richest people in the
world?
Because they know how to administrate, and legally set up accounts for
other people who really have and produce the money.

These people are Entrepreneurs and they produce business models. A
business model is a machine - real or virtual - to make real money.
The Business Models are NOT accountancy procedures.

A private cloud is not a cloud if it does not have either billing or
a fine grained measurable resource reporting that can be easily
transformed into a billing system.

To select to use the billing or the historical resource reporting for
costing, it is up to cloud owner. A bad cloud owner, will avoid
implementing billing.
A good cloud owner or manager, - who really wants to make money and
not working for just a salary check every two weeks - will want to
have billings.

Before the cloud with billing, it is virtually impossible to decide
what IT cost I shall ultimately charge correctly either (1) the
customers or (2) the multiple budget providers who have a stake in
the IT services. They want to know that their budgets are NOT eaten
away by other departments.

One way to look at IT is as cost center. We are talking about costs.
But imagine I know exactly what portion of the total costs I can add
to the billing of Customers A, C, X and Y. Then the customers A, C X,
and Y will pay bills that compensate 100% or 150% the Sigma Billings
internally that can be assigned to them precisely. A cost that was
previously not identified, it is now very clearly available for
billing purposes. This is what I call a "negative" cost. I know it is
not an accountant terminology. It is a business model terminology.

To make an analogy, the future price of a share or derivative was in
the past calculated empirically. Before 1973, a put of the share X
6 month from now is - for illustration sake - $20 when I have no way
to predict with a level of confidence the future value. There were no
mathematical models to predict risk levels. Then, in 1973, the Black–
Scholes model is invented at Stanford.The first post - 1973 companies
to use the Black-Scholes equation, were able to calculate at whatever
risk level, say 5%, a predicted price of $10 per contract. Guess who
will sell more contracts? Guess who will make more money? The
companies able to know the risks in details forced the competition to
quickly buy computer programs based on Black-Scholes stochastic
models. But the early adopters made TONS of money.

The same it will happen with cloud computers. Knowing exactly what IT
cost component can be charged fine grained to each customer or
project or benefactor, will create additional income,and this
additional income should ideally cover 100% the cost of the IT center
operated as a cloud. Note that this does NOT necessarily mean the
organizations will offer services more expensive to their external
customers. Right now, the cost of IT is covered with layers and layers
of safety factors, because, - just as the pre-1973 future trades
people - we do not know real fine grained IT costs and we over
charge just in case...

A cloud with the billing implemented will add $ to the bottom line and
will become a local profit center, or at least it can break even. But
an internal profit of more than $1.00 dollars per day for an IT cloud
is better than an IT cost of ( $1) per day.

BTW, as you love the101 literature (recently 101 synonyms are Idiot
Guide, Dumb Guide, etc) , perhaps you can help one day to write the
101 for cloud computing business models. In that case please refer to
this post as inspiration. You are a perceptive contributor.

2 cents,

miha

[Jan Klincewicz]

Miha:

Accounting is an exacting discipline (financial accounting anyway.)
It is not a matter of opinion, and you cannot make up your own
definitions. I suggest you read an Accounting 101 book so you can
learn the fundamental equations and definitions of commonly accepted
business terms.

If you present false statements as facts, it does little for your
credibility, and serves only to confuse those who might expect you
actually understand the subject.

You are free to do as you wish, and I really don't care, but I think
as a public service to my fellow man, I need to point out erroneous
statements presented as facts when I come across them.

--
Cheers,
Jan

[Ray]

That would be Public Service as a Service?

[Jeanne Morain]

Miha,
Nice post - I absolutely agree that Chargeback is critical for the cloud and have heard this for several years now from organizations large and small.. 

Jan
A few comments on your comments:  I am glad to see that you are acknowledging the importance of "Compliance" (Security, Audit, etc).  You are correct in the recent study by ITPI - over 75% of companies looking at virtualization and the cloud cite Compliance as a stumbling block to their overall initiative.  As Shane indicated in this day and age understanding the requirements is key.

Back in the mid 90s after finishing my masters - my Director had a great quote for my textbook examples: Degrees are starting blocks that show we can accomplish a goal but we all know and realize that textbooks take awhile to publish and often can be made obsolete.  Particularly when applied with technology.  This rings even truer today!  I have seen and been humbled by more peope that do not even have college degrees over the years but have built companies, hold several patents, and have truly innovated our industry.  The key here - is how does what we are doing relate to the real world.
 
Examples that Textbooks are not Always Right in Today's Technology Age
Over the last 20 years as technology has automated many of the processes etc - general accounting principles and even marketing principles have been put to the test and in many cases need to evolve.  Personal examples include - adding a "CD" (in the 90s) versus a Floppy - significantly reduced costs associated with support, loading, and manufacturing time (the system had over 98 Floppies - Voicemail) and thus improved overall time to market, reduced margins and signficantly increased "profit".   Experian would be another great example with their push away from traditional marketing to online/web based advertising due to changes in user patterns.  As would the very existance of this group versus a decade ago.

Real World Research - Analysts, Vendors (like Oracle/Siebel prior to acquisition) have proven through their research that enhancing servlice levels or customer satisfication has a direct correlation with increasing revenue (which in turn coupling that with reducing costs would increase profit). 

Relates to Cloud
Virtualization of various stacks combined with reducing the setup, costs to purchase the "physical" hardware etc have had significant improvements on overall margins for the MSPs we have worked with on their "Cloud" deployments.  One in particularly is reporting a 30%+ increase in profit margins for 2 reasons:

1)Hardware Costs are virtually elminated -  Not having to have the physical datacenter investment to onboard or setup customers. This also does not take into account opportunity costs of not being able to service additional customers or scale the business because they have to "wait" to build out more capacity.  Building a new datacenter for an ISP/MSP/ASP, etc takes time, planning and does have significant costs associated with it.

2) Complexity of Managing the Applications is reduced - Virtualization reduces some of the complexity associated with managing the "physical" paradigm.  Enabling more dynamic environments and enhancing IT's ability to quickly react to both customers requirement for flexibility but also adhere to compliance (security, regulatory, and business continuity).  The example - Shane provided is perfect one here of how leveraging the two paradigms results in new ways of servicing customers that was not readily available at a much lower costs.

3)IT as a Service - can turn costs centers into profit centers - Many of the customers I have been working with for years in Insurance, Telecommunications, Healthcare, Financial Services and Government are putting together some fairly comprehensive and interesting business models to leverage virtualization and various types of clouds (Private, Public, Hybrid) to build efficiencies with their current practice and extend services to their "extended" enterprise.  For example, one large insurance company (also in banking - so they are highly regulated) has 8000 agents that they must provide application and package updates to on a pretty frequent basis.  One issue they have is locking down the agents because they own their PCs.  They have built a case around virtualization and a "hosted model" aka Cloud - to provide the updates in a secure fashion to the agents but eliminate the costs associated with servicing the underlying OS - particularly slowing
migrations down to newer apps or OS types due to having to coordinate with a 3rd party group.  In this case their SLAs to their agents are improved, they can charge a premium (chargeback is critical) to the channel for their service and turn a profit.

Another example of Costs Savings Improving Profit - large Consumer Products company has estimated that a specific CRM application spends over 100 minutes per week in reboots during the application update process.  This stems across the company, their service providers (outsourcers), and other business units (4).  By combining an Internal Cloud with Application Virtualization - they are eliminating over 2/3 of the time spent on reboots.  Each minute is estimated over $5 per call center rep based on the "customer sat" surveys above or roughly $200,000 per minute (based on research around customer retention, loss of sales because reps not available in peak times, additional discounts provided from reps not having the "most up to date" pricing/packaging, down time, IT, etc).  By eliminating reboots - the IT Group supporting this application not only contributes quite a bit to the bottom line but can also build out "via Chargeback/Billing" powerful data
to not only charge other BUs in the company but reduce the costs of during negotiations with their "outsourcer" based on the services they are providing back to reduce the downtime of the reps.  For example - reps can have the same application live side by side with another one that requires a different version of Java.  What's the big deal?  Today the customer would have to be routed to another phone line next to a PC that has the correct "Call Center" application to service that product.  This has often resulted in human errors - dropped calls, increased service levels, and attributed to customer loss.

Hope these real world examples - help the group to understand some interesting models that can be leveraged to turn the Cloud into a powerful tool for IT to help their company turn a profit in a down economy.

[Jan Klincewicz]

I acknowledge the importance of Compliance as a viable alternative to
being raped in prison. It is not a passion of mine, but a necessity
for those who operate in a regulated environment. Accountancy was
never among my favorite subjects ,, just a prerequisite.

The point I was attempting to make was that unlike Marketing which is
highly subjective and malleable as a discipline, Accounting has well
accepted standards (GAAP for example) and those definitions are not
subject to opinion. Yes, GAAP may evolve, but fundamental concepts,
such as what defines "profit" are not among those which are hotly
debated. "Negative Cost" is a bizarre concept no matter what model is
involved, and my choosing "textbooks" in my response was merely
allegorical.

Common sense dictates that centuries-old definitions remain that way
for a reason, and to re-define such is arrogant and can confuse those
who despite possessing admirable technical acumen and experience, have
not had exposure to formal financial eduction.

I do not propose that a formal education at any level is a
prerequisite for knowledge, capability or credibility. I do, however,
believe that there are immutable principals out there which are not
subject to whimsical or causal definition, and that the general public
is better served by abiding by those which are generally accepted as
the norm.

--
Cheers,
Jan

[Jeanne Morain]

David & Leon,

 

Your post is very nice and to the point.  There are a few areas that I thought this group may find interesting as they contradict some of the current thinking around the Cloud.  I thought it may also be useful to see how are the "market" experts categorizing and looking at the cloud from a broader research perspective so as we look to define this piece out - we are not contradicting or redefining already defined terms. 

 

I believe the Service based definition from Gartner to be the biggest difference between Today's cloud and what they evolved from.  Many of these other areas have existed for quite some time - particularly in my previous company (Marimba) with customers like MusicMatch(PreYahoo), Electronic Arts, Intuit, etc that pioneered deploying applications and updates to millions over HTTP/HTTPs with dynamically provisioned N-Tier back end.  It would be good to see this groups opinion on the evolution of how this research coincides.  Meaning although the Cloud appears fairly Nascent - the technologies and methods from a customer perspective have been around for over a decade - Virtualization, N-Tier Dynamic Distribution over HTTP/HTTPs - wouldn't one assume then the comfort level for companies coincide that the Cloud from Internal to External is more of an evolution of the current infrastructure by combining the various technologies to address the User Focused Paradigm Shift? 

 

1) Interesting article and findings citing Forester research -

Mon, June 29, 2009

Forrester Bucks Conventional Wisdom on Cloud Computing

Leave a comment

By Bernard Golden

 

Key Findings

- Of the enterprises responding to the Forrester survey, about one quarter of enterprises plan to spend or are spending on IaaS via an external service provider.

 

- Firms are slightly less interested in internal clouds than in external IaaS. By a margin of 10 percent, companies of all sizes prefer to focus on external providers rather than implementing a cloud internally

 

- Firms are interested in an internal cloud or an external cloud but not both. When the percentages of those companies who have selected either internal or external clouds are summed, less than half of all companies would like a mixed cloud environment

 

- Larger firms are more interested than smaller firms in leveraging external IaaS capability.

2) Gartner Defined Attributes of what is cloud computing - http://www.gartner.com/it/page.jsp?id=1035013

 

• Service-Based: Consumer concerns are abstracted from provider concerns through service interfaces that are well-defined. The interfaces hide the implementation details and enable a completely automated response by the provider of the service to the consumer of the service. The service could be considered "ready to use" or "off the shelf" because the service is designed to serve the specific needs of a set of consumers, and the technologies are tailored to that need rather than the service being tailored to how the technology works. The articulation of the service feature is based on service levels and IT outcomes (availability, response time, performance versus price, and clear and predefined operational processes), rather than technology and its capabilities. In other words, what the service needs to do is more important than how the technologies are used to implement the solution.
• Uses Internet Technologies: The service is delivered using Internet identifiers, formats and protocols, such as URLs, HTTP, IP and representational state transfer Web-oriented architecture.
• Metered by Use: Services are tracked with usage metrics to enable multiple payment models. The service provider has a usage accounting model for measuring the use of the services, which could then be used to create different pricing plans and models. These may include pay-as-you go plans, subscriptions, fixed plans and even free plans. The implied payment plans will be based on usage, not on the cost of the equipment.
• Shared: Services share a pool of resources to build economies of scale. IT resources are used with maximum efficiency.
• Scalable and Elastic: The service can scale capacity up or down as the consumer demands at the speed of full automation (which may be seconds for some services and hours for others). Elasticity is a trait of shared pools of resources. Scalability is a feature of the underlying infrastructure and software platforms.

Cheers,
Jeanne

www.installfree.com

---

From: David Levy <David...@Sun.COM>
To: cloud-c...@googlegroups.com
Sent: Wednesday, July 1, 2009 4:21:06 AM

Subject: [ Cloud Computing ] Re: What is Cloud

[Jeanne Morain]

Jan,

Thankfully this is a "technology" user group - not Accounting or English.  No one is trying to "redefine" accounting or marketing principles (hopefully none of the accountants were offended).  

"I do, however, believe that there are immutable principals out there which are not
subject to whimsical or causal definition, and that the general public is better served by abiding by those which are generally accepted as the norm."

What would be great moving forward is to live by your words of wisdom and provide real world examples of why you disagree or profess your opinion. Similar to how I responded when you tried to "redefine" Application Virtualization with what is known by many as Terminal Services or Presentation server. 

Ironically distributing applications, content and services over the Internet AKA Cloud and Virtualization are not new concepts and have been around for well over a decade.  Many of us have seen this industry we have worked in redefined continuously because of a combination of lack of knowledge by "newcomers" from adjacent areas and convergence of disciplines (Server Based Computing and Client, etc)  As in the case of your definition of Application Virtualization - providing an incorrect "correction" to a generally accepted definition. 

At best I was not offended but amused because this is an area that I have worked in and led across several companies (Selectica, Marimba, BMC, Thinstall, VMware, and InstallFree) from both a new product introduction, partner ecosystem perspective (including WTS/Citrix integration) and customers. This was not a reason to take offense but more of an opportunity to listen and see why someone views things differently and provide real world examples to help them understand current paradigms and gain new insights so we can all evolve. 

The "Cloud" in and of itself is actually shows that through combining old and new (technologies, concepts, thoughts) - collectively can create a convergence that enables yet another paradigm shift - User Focused - based on varied experiences. 

Enough deflection - as there is real work to be done before the weekend - have a great day!

 Cheers,
Jeanne
www.installfree.com

[Miha Ahronovitz]

I love your words below:

> I do, however,
> believe that there are immutable principals out there which are not
> subject to whimsical or causal definition, and that the general public
> is better served by abiding by those which are generally accepted as
> the norm.

> Common sense dictates that centuries-old definitions remain that way
> for a reason, and to re-define such is arrogant and can confuse those
> who despite possessing admirable technical acumen and experience, have
> not had exposure to formal financial eduction.

Bravo!

m

----- Original Message ----
From: Jan Klincewicz <jan.kli...@gmail.com>
To: cloud-c...@googlegroups.com

Sent: Thursday, July 2, 2009 10:38:06 AM

[Partha Panda]

Hi Miha

It was refreshing to note your analogy around Black Scholes. You have addressed the issue of adoption very appropriately but my views are divergent on a section of your comments -

"A private cloud is not a cloud if it does not have either billing or
a  fine grained measurable resource reporting that can be easily
transformed into a billing system."

I don't believe the above is completely true. While I truly believe that the lack of a proper billing (chargeback/cost transfer) system is one of the factors preventing faster adoption of the Cloud, it can not be tagged to the definition of a private cloud itself. While cost is billing is a very important aspect of a Cloud strategy, the efficient and effective use of resources (hardware, software and people) is equally important as well specially in large enterprises. Private Cloud is letting a lot of enterprises implement private clouds to centralize the availability of redundant hardware and software resources. In a typical IaaS or SaaS settings, both hardware and software is now shared across a wider audience. Cloud is also about elasticity - The ability scale up and down per demand. Lots of enterprises have taken the first step where they can allocate resources efficiently which affects their bottom line - Mostly driven by the lack of a (or reduced) capital budget in times such as these. While adoption of proper billing strategy might help some coast along faster as they will be able to present metrics/stats around the immediate benefits of Cloud, others may take a more phased approach. The second set of customers may start with an initial Cloud setup and then follow that up with a chargeback system. Even today the chargeback is still a big myth in a lot of enterprises. A lot of enterprises still treat IT as a centralized cost center. Some have even tried treating IT as a profit center (with breakeven or profit goals) albeit unsuccessfully. 

Anyways my $0.02.....

Cheers

Partha

[Miha Ahronovitz]

Jeanne, thanks for the wise words

The terminology of :negative costs was introduced by another
contributor, Ian K in this post:

http://groups.google.ca/group/cloud-computing/msg/c7807f221f71a7fa?hl=en

Ian K wrote that the costs can be reduced by 200% in a cloud. I
clarified in my reply that a 200% cost reduction means a profit.
Simple math show that a (-$100) expense less 200% is $100 positive
amount.

Miha

> On Thu, Jul 2, 2009 at 12:41 PM, Jeanne Morain<jmor...@yahoo.com> wrote:
>
> > Miha,
> > Nice post - I absolutely agree that Chargeback is critical for the cloud and have heard this for several years now from organizations large and small..
>
> > Jan
> > A few comments on your comments:  I am glad to see that you are acknowledging the importance of "Compliance" (Security, Audit, etc).  You are correct in the recent study by ITPI - over 75% of companies looking at virtualization and the cloud cite Compliance as a stumbling block to their overall initiative.  As Shane indicated in this day and age understanding the requirements is key.
>
> > Back in the mid 90s after finishing my masters - my Director had a great quote for my textbook examples: Degrees are starting blocks that show we can accomplish a goal but we all know and realize that textbooks take awhile to publish and often can be made obsolete.  Particularly when applied with technology.  This rings even truer today!  I have seen and been humbled by more peope that do not even have college degrees over the years but have built companies, hold several patents, and have truly innovated our industry.  The key here - is how does what we are doing relate to the real world.
>
> > Examples that Textbooks are not Always Right in Today's Technology Age
> > Over the last 20 years as technology has automated many of the processes etc - general accounting principles and even marketing principles have been put to the test and in many cases need to evolve.  Personal examples include - adding a "CD" (in the 90s) versus a Floppy - significantly reduced costs associated with support, loading, and manufacturing time (the system had over 98 Floppies - Voicemail) and thus improved overall time to market, reduced margins and signficantly increased "profit".   Experian would be another great example with their push away from traditional marketing to online/web based advertising due to changes in user patterns.  As would the very existance of this group versus a decade ago.
>
> > Real World Research - Analysts, Vendors (like Oracle/Siebel prior to acquisition) have proven through their research that enhancing servlice levels or customer satisfication has a direct correlation with increasing revenue (which in turn coupling that with reducing costs would increase profit).
>
> > Relates to Cloud
> > Virtualization of various stacks combined with reducing the setup, costs to purchase the "physical" hardware etc have had significant improvements on overall margins for the MSPs we have worked with on their "Cloud" deployments.  One in particularly is reporting a 30%+ increase in profit margins for 2 reasons:
>
> > 1)Hardware Costs are virtually elminated -  Not having to have the physical datacenter investment to onboard or setup customers. This also does not take into account opportunity costs of not being able to service additional customers or scale the business because they have to "wait" to build out more capacity.  Building a new datacenter for an ISP/MSP/ASP, etc takes time, planning and does have significant costs associated with it.
>
> > 2) Complexity of Managing the Applications is reduced - Virtualization reduces some of the complexity associated with managing the "physical" paradigm.  Enabling more dynamic environments and enhancing IT's ability to quickly react to both customers requirement for flexibility but also adhere to compliance (security, regulatory, and business continuity).  The example - Shane provided is perfect one here of how leveraging the two paradigms results in new ways of servicing customers that was not readily available at a much lower costs.
>
> > 3)IT as a Service - can turn costs centers into profit centers - Many of the customers I have been working with for years in Insurance, Telecommunications, Healthcare, Financial Services and Government are putting together some fairly comprehensive and interesting business models to leverage virtualization and various types of clouds (Private, Public, Hybrid) to build efficiencies with their current practice and extend services to their "extended" enterprise.  For example, one large insurance company (also in banking - so they are highly regulated) has 8000 agents that they must provide application and package updates to on a pretty frequent basis.  One issue they have is locking down the agents because they own their PCs.  They have built a case around virtualization and a "hosted model" aka Cloud - to provide the updates in a secure fashion to the agents but eliminate the costs associated with servicing the underlying OS - particularly slowing
> >  migrations down to newer apps or OS types due to having to coordinate with a 3rd party group.  In this case their SLAs to their agents are improved, they can charge a premium (chargeback is critical) to the channel for their service and turn a profit.
>
> > Another example of Costs Savings Improving Profit - large Consumer Products company has estimated that a specific CRM application spends over 100 minutes per week in reboots during the application update process.  This stems across the company, their service providers (outsourcers), and other business units (4).  By combining an Internal Cloud with Application Virtualization - they are eliminating over 2/3 of the time spent on reboots.  Each minute is estimated over $5 per call center rep based on the "customer sat" surveys above or roughly $200,000 per minute (based on research around customer retention, loss of sales because reps not available in peak times, additional discounts provided from reps not having the "most up to date" pricing/packaging, down time, IT, etc).  By eliminating reboots - the IT Group supporting this application not only contributes quite a bit to the bottom line but can also build out "via Chargeback/Billing" powerful
>  data
> >  to not only charge other BUs in the company but reduce the costs of during negotiations with their "outsourcer" based on the services they are providing back to reduce the downtime of the reps.  For example - reps can have the same
>

> ...
>
> read more »

[Rao Dronamraju]

Isn’t it a fact that the requirements should come from the customers not the vendors?...This should be true of clouds too…

 

So why don’t we leave it to the market to define what a private cloud is?...whether a private cloud needs metering and billing.

 

Already IBM and HP are out with their first private cloud products, and probably others too. So why not we wait and see if the market buys them with metering and billing or without metering and billing. 

 

I think you as a vendor should be flexible enough to meet the customer requirements. If the customer says he/she wants Private Cloud with metering and billing, sell them one.

If they say they want without M & B, sell the same Private Cloud without it.

 

As a business you want a sale/satisfy the customer, not what it is called.

 

---

[Miha Ahronovitz]

Partha,

I share all your views below. I believe a private cloud solution should have a billing system module, but if the buyer does not want to use it, that's fine. The lack of capital budget is the exact reason why billing is handy. If someone gets into the business of selling private clouds software or turn key, that someone must have an answer to the question: "Do you offer a billing system?"

Imagine answering: "No. We believe that a cloud does not need a billing system. Go and buy a third party billing system." Believe me, the sale is almost lost. The customer may ask. "And how do I handle the bills I received from Amazon.com? Doesn't  your software have a connector to EC2?" "Yes" I say.  Then   "How do I handle whom to charge and whom not to charge in my private cloud?" 

If I say; "I don't have an answer", not only I loose the sale, but my reputation goes down the ditch. I shoud say: "We are working at it and should have it available by the next release"

What you suggest "Cloud is also about elasticity - The ability scale up and down per demand. ", absolutely true. I think this is the first requirement. The second is billing, if I want to make it a  success in the business of selling private clouds.

Many IT orgs do not want billing.  But Amazon can not  be stopped. They started this billing system as they created the first cloud. Billing is here to stay for a long time. Right now the billing idea is as exotic as ordering Campari with soda in cowboy town.

But soon it would it will be as common as drinking Budweisser.

M

---

From: Partha Panda <parth...@gmail.com>
To: cloud-c...@googlegroups.com
Sent: Saturday, July 4, 2009 6:30:24 AM

[Babak Hosseinzadeh]

http://www.slideshare.net/babakh/cloud-computing-overview-and-case-study
Regards,
Babak Hosseinzadeh


On Jun 29, 10:26 am, bala murugan <balamurugan.alaguma...@gmail.com>
wrote:

[Nuno Godinho]

Hi Bala,

I'll try to be brief in the answers.

1. What is Cloud Computing?
As Wikipedia says "style of computing in which dynamically scalable and often virtualized resources are provided as a service over the Internet.".
"A pool of highly scalable, abstracted infrastructure, capable of hosting end to end-customer applications, that is billed by consumption. " - Forrester
"Cloud Computing an emerging IT development, deployment and delivery model, that enables Cloud Services. Cloud Services: Consumer and Business products, services and solutions that are delivered and consumed in real‐time over the Internet" by IDC.
So basically this is a new style of computing that is based on the internet and provides a way to have scalable environments easily.
It can exist in several layers:
- IaaS - Infrastructure as a Service - Think about having a Data Center where you place your "stuff" and only pay what you use
- PaaS - Platform as a Service - Think about having a platform were you place your "stuff" without having to think about the OS and were you get several services already prepared to use and make your solutions easier. Don't think about what Servers you need, what OS you need, what maintenance plans you need.
- SaaS - Software as a Service - Think about using solutions and paying only what you use and not having to think about Servers to place the application in, Maintenance of those servers and Applications related resources. Just use the application without thinking anything else

2. Why we need Cloud Computing for enterprise
Normally in enterprise there's a need to focus on what's really the core of the company and not having our focus on any other place, and not strangely we are normally thinking of things that aren't core, like Data Centers, OS's and so on, and most often thinking that because during the year we have a peak of usage on our solutions we need to have more servers on the Data Center, but this is only for 1 month a year, but we need to have them all year because this is not billed based on the usage, it's only, you buy it or not.
Cloud computing can help enterprises here since we will not focus on the Data Center, machines needed during peak times and the costs of having them all year because we have a scalable and pay-as-you-go system that we can use and make our focus back on Core Company Business instead of parallel problems.

3. Advantages of Cloud Computing
There are several and depends on what we need and want when going into the cloud, but Scalability, Performance, Pay-as-you-go, no infrastructure costs are some of the most interesting.

4. Who else is offering Cloud Computing
Current main vendors are:
- Amazon: EC2 - IaaS
- Citrix : Xen Server - IaaS
- Microsoft: Azure - Iaas/PaaS
- Google : AppEngine - PaaS
- SalesForce : Force.Com - PaaS
- Microsoft: CRM Online, Office online, etc - SaaS
- SalesForce: SalesForce.com - SaaS

5. In what way is it going to improve the business
First you can focus on what is really important. The Business.
Forget about the Data Centers, Servers, and so on.
Pay-as-you-go. This makes your costs adjustable to your business.

6. What is Microsoft offering in the Cloud:
Windows Azure - IaaS
- Basically a Cloud OS, that we can use but this is not directly manageable by us.
Windows Azure Service Platform - PaaS
- Complete set of Services to the Cloud, like:
- Access Control - Security Token Service
- Service Bus
- Workflow Services
- SQL Services - a type of SQL Server in the Cloud
- Live Services - Live Mesh - Synchronization Services


Hope this helps you answer your questions.

Best Regards,

Nuno Godinho

-----Original Message-----
From: cloud-c...@googlegroups.com [mailto:cloud-c...@googlegroups.com] On Behalf Of Babak Hosseinzadeh
Sent: sexta-feira, 17 de Julho de 2009 14:19
To: Cloud Computing
Subject: [ Cloud Computing ] Re: What is Cloud

__________ Information from ESET Smart Security, version of virus signature database 4254 (20090717) __________

The message was checked by ESET Smart Security.

http://www.eset.com

[Maria Spinola - Strategic IT Marketing And Innovation Adviser & Cloud Computing Evangelist]

Hi Bala,

Great questions.

I know you wanted brief answers, and you already great answers, like
for example the Nuno Godinho answer, among others.

Of course there are a lot of Advantages, but there is also Challenges
and Risks that enterprises need to take in account, before deciding to
move and what to move to "the Cloud".

I will leave here the reference to a White Paper I just published:
"An Essential Guide to Possibilities and Risks of Cloud Computing ---
A Pragmatic, Effective and Hype-Free Approach For Strategic Enterprise
Decision Making"
that you can find here:
http://www.mariaspinola.com/whitepapers/White_Paper_An_Essential_Guide_to_Possibilities_and_Risks_of_Cloud_Computing.html

There you can find the answers to your questions, and to some more
questions (here is the Table of Contents):

1 Defining Cloud Computing
1.1 Myth: Cloud Equals SaaS, Grid, Utility Computing, Hosting, etc.
etc
1.2 What is Cloud Computing?

2 Overall Cloud Computing Adoption
2.1 Why Large Public and Private Sector Organizations (not just SMB's)
Are Seriously Considering Cloud Computing?
2.1.1 Cloud Computing Benefits Example (IaaS)
2.2 What are the Cloud Computing Challenges and Risks?
2.2.1 Security Issues in Cloud Computing Environments (Advantages and
Challenges)
2.2.1.1 Cloud Security Advantages
2.2.1.2 Cloud Security Challenges
2.2.1.2.1 How can you be sure your Data is Safe?
2.2.1.2.2 Ensuring Compliance in the Cloud
2.2.1.2.3 Monitoring SLA's and Contracts
2.2.2 Integration with Your Legacy Systems
2.2.3 Can Applications Move From One Cloud to Another?
2.4 The Delicate Balance Between Risks and Benefits
2.4.1 Real-World Cloud Computing Applications

3 Cloud Computing Implementation Road-Map
3.1 Determine the Bad and Good “Candidates” for the Clould
3.2 Prepare Your IT portfolio for the Cloud
3.3 Key Questions to Ask to Cloud Computing Providers
3.4 Test, Deploy, Monitor and Measure ROI

4 Summary And Recommendations
5 References


I hope this help you.

Thanks and please let me know how I can help you,
Maria Spínola

> __________ Information from ESET Smart Security, version of virus signature database 4254 (20090717) __________
>
> The message was checked by ESET Smart Security.
>

> http://www.eset.com- Ocultar texto citado -
>
> - Mostrar texto citado -

[Charlton Barreto]

Fine grained resource reporting is a critical component of any enterprise IT operation since the 90s, and in the US with Sarbanes-Oxley, it is a requirement. IT in the enterprise already has billing for some time. It just has been available internally to the enterprise's users, rather than to any consumer publicly.

2009/7/1 Miha Ahronovitz <myinne...@gmail.com>

[Miha Ahronovitz]

Charlton, this is good news. I appreciate very much your comment. Sun Grid Engine, the product I am working with, has full accounting and reporting capabilities.

http://wikis.sun.com/display/gridengine62u3/Accounting+and+Reporting+Console

The question I am asking is how do we use it to make sure that each user pays only for what s/he uses in the cloud. Similar to the light. I switch on, the meter records consumption and I get a bill. I switch it off, I pay nothing.

If we already do fine grained resource reporting, we need to naturally do the next stage for cloud computing. Call it charge-back. Call it billing. It is something that confers the assurance that we pay only for what we use.

VMware already has a Charge Back module. VMware must have, by definition a complete inventory of the physical and virtualized resources. So billing is a natural extension


http://www.vmware.com/products/vcenter-chargeback/features.html

I quote:
-----start-------------

Cost Configuration
Define cost metrics related to virtual infrastructure resources.
* Cost templates. Simplify and standardize the process of adding costs for VM’s.
Templates can be used to apply existing models quickly to expanding or
new environments.
* Billing policies. Supports fixed costs, allocation-based costing, utilization-based costing, or a combination
* Cost accounting metrics. Allows for entry of cost accounting structures, base cost models, fixed
costs, and multiple rates needed to calculate true costs.
* Base rates. Define base rates associated with metered elements (e.g. CPU, memory, disk, disk I/O or network I/O)
* Fixed costs.
Add fixed costs to the hierarchy to account for non-compute attributes
(e.g. software licenses, power/cooling, custom fixed costs)
* Multiple rate factors / Rate multipliers. Account for use of higher-end storage or servers, or higher SLAs (e.g.
DR or backup included, production vs. development systems).
* Currency selector. Define cost metrics in different currencies for enterprise-wide chargeback.-------------end----

Just read the whole page. If VMware made this decisive step, while others will not do it? This is an extremely shrewd strategy of VMware, I take my hat off. They have now a clear competitive advantage as a prefer virtualization for the web, because they offer this tool in expectation for the minimal requirements of a real cloud.

Mothers advise to children" "Make yourself indispensable, then do what you want".

miha

________________________________
From: Charlton Barreto <charl...@acm.org>
To: cloud-c...@googlegroups.com
Sent: Saturday, July 18, 2009 9:17:56 AM

Subject: [ Cloud Computing ] Re: What is Cloud

[Charlton Barreto]

Indeed, anyone wanting to compete in Private Cloud has to support - or better yet, ease - billing/chargeback. Without it, the enterprise will look at the offering and see their TCO reduction offset by the efforts they have to engage to integrate with their present billing/chargeback methodology and automation. 

2009/7/19 Miha Ahronovitz <mij...@sbcglobal.net>

[Jim Starkey]

Miha Ahronovitz wrote:
> The question I am asking is how do we use it to make sure that each user pays only for what s/he uses in the cloud. Similar to the light. I switch on, the meter records consumption and I get a bill. I switch it off, I pay nothing.
>
>

But Miha, electricity one has one dimension. Computing has many.
Computing esources consumed include:

* Cycles used
* Cycles available
* Cores
* Memory used
* Memory allocated
* Local storage used
* Local storage allocated
* Persistent storage used
* Persistent storage allocated
* Presence (eg idle but prepared to respond to client)
* Bandwidth (allocated / used) in the cloud
* Bandwidth (allocated / used) to the external world
* Wear and tear on software

To meet your restrictive model of a cloud, must a provider charge
individually for each of the line items, or a (purported) cloud provide
allowed to use business judgment to develop a simpler model.

And do note that EC2 doesn't charge anything for resources consumed,
only presence. An instance with four cores churning at full bore has
the same price as an instance sitting idle waiting for work.

I continue to argue that charge back is often appropriate, but not
always. A cloud dedicated to providing computer services to non-profits
may never charge back but be a cloud never-the-less.

What makes economic sense will persist and what doesn't will go away.
Fads always end (even the XML mania has largely subsided, happily
leaving useful technology). It isn't necessary to argue the economics
unless you're either a prospective user or a potential investor. If
you're a user, it makes sense or it doesn't. If you're an investor,
well, so far it doesn't look very interesting, at least in the sense
that major players are big companies spending internal funds to build
out infrastructure.

Personally, I'm beginning to tire of cloud pundits wannabes and cloud
consultants wannabes. I'd much rather hear from actual cloud users (a
rare bird on this forum), cloud providers, and other cloud technology
developers.

[Charlton Barreto]

Miha, I would be interested in your view on how fine grained metering should be in your model. Enterprise IT has employed a number of approaches to this, some of which are as fine grained as Jim proposes above.

However, the cost measure of *many* of these are in kW/year, so this is rather partitioning your power consumption metering further.  

Jim, interesting that you mention software 'wear and tear' - care to elaborate on that a little? 

2009/7/19 Jim Starkey <jsta...@nimbusdb.com>

[Miha Ahronovitz]

Charlton, Jim,

Prices are nothing but instruments to create revenues. In the case of a cloud, they are essential. My angle is from the point of view of vendor for cloud computing. As I said before, we want to offer the billing system as part of the capability. The customers - meaning the cloud owners who buy the solution - may  use it or not, is their decision. Unless their  only users are charity non-profits from Canada, - as we read requests here and I wish I'd be so rich to be able to honor these requests - , any business owner in his right state of mind will want to charge for the cloud usage. Even for charity, I need to know how much I donated (in loss of income) for tax credits, if applicable.

The price is a business model decision, not a an engineering decision. SW licenses can be per core CPU, per processor, per node, per site, enterprise wide, can be one time fee or they can be subscription based, Infrastructure pricing can be per CPU hour, CPU month, per GB storage, etc. Sure we can separate  in various categories Local storage, Local storage allocated, Persistent storage used,  Persistent storage allocated. But the litmus test is: Is it significant as a unit of measure from the user point of view? A complicated pricing chases the users away. The simpler the pricing will attract more users

As Jim  proposes, lets look at an example. I copy and paste VMware new Charge Back module. I insert the quote after the sig line, for continuity.
The URL is  http://www.vmware.com/products/vcenter-chargeback/features.html

As we see VMware defines as ChargeBack Hierarchy, the way the cost are shared within the hierachy, and custom attributes. Next they do a cost configuration (templartes, Billing policies, etc. This VMware Charge Back is very interesting concept. It allows to include all the elements - I think - that Jim brings about. One can be as complicated and complex as s/he wishes, VMware charge back model can accomodate any data,  it it as long as the data is collected.

I am lucky as in HPC Sun Grid Engine, the applications are not persistent. So SGE knows for each job that executes and terminates, exactly what resources were used and for how long. SGE mission is to manage workloads. So it keeps very accurate accounting. In a persistent application, lets say Oracle., if you have an Enterprise license of Oracle, you pay only the AWS bill. If you don't have a Enterprise license, you must buy a special license, up to maximum 16 host instances:

If we think that the price per kwh is a clearly understood for electricity, think again. Here is a bit of history:

start quote-------

The British Association for the Advancement of Science appointed in 1861 a specialized committee under Lord Kelvin (then William Thomson) to study the question of electrical units. Foremost to recognize their importance, Kelvin insisted that ‘when you can measure what you are speaking about, and express it in numbers, you know something about it’. The following year, as well as recommending the use of the metric system, he emphasized the need for a coherent set of electrical units. At the 1881 Paris Congress, although lacking precise definitions, the ampere, volt, and ohm were recommended as practical units

----end quote--------
http://www.iec.ch/about/history/articles/world_of_electricity.htm

In 1861, the energy electrical could not be transported. But once the high voltage lines were discovered, one might have proposed the ohm and time of the power is on , for examle. Is it possile? Yes. Is it easy? The Hell, no!! We are now, in a similar situation with cloud computing, but our pricing problem is much easier. 

This reminds me of a silent movie with Chariie Chaplin. His  character lands in a taylor shop  and a customer believes he is the real master taylor. Charlie, takes the tape and measures the length of the ear, the nose, , the opening of the mouth and dutifully writes down  all the measurements.

We really need to decide  the essential measurements of a human body that allow us to make a perfect suit. In a cloud, this is not different.

2 cents,

Miha


-----------start quote-------
Chargeback Hierarchy Management

Easily associate VM's and costs to different departments, business units, and groups.

    * Chargeback hierarchy. Map IT infrastructure to business structure for cost accounting purposes. Define how virtual machines and VMware ESX hosts are assigned to and shared by different departments, cost centers, or business units in an organization.
    * Cost sharing. Associate costs to virtual infrastructure entities in the hierarchy. Share costs of a virtual machine across different business departments.
    * Custom attributes. Specify custom attributes at any hierarchical level.

Cost Configuration

Define cost metrics related to virtual infrastructure resources.

    * Cost templates. Simplify and standardize the process of adding costs for VM’s. Templates can be used to apply existing models quickly to expanding or new environments.
    * Billing policies. Supports fixed costs, allocation-based costing, utilization-based costing, or a combination
    * Cost accounting metrics. Allows for entry of cost accounting structures, base cost models, fixed costs, and multiple rates needed to calculate true costs.

          o Base rates. Define base rates associated with metered elements (e.g. CPU, memory, disk, disk I/O or network I/O)
          o Fixed costs. Add fixed costs to the hierarchy to account for non-compute attributes (e.g. software licenses, power/cooling, custom fixed costs)
          o Multiple rate factors / Rate multipliers. Account for use of higher-end storage or servers, or higher SLAs (e.g. DR or backup included, production vs. development systems).

    * Currency selector. Define cost metrics in different currencies for enterprise-wide chargeback.

Data Collection

Monitor and measure costs associated with VM's.

    * Automated utilization tracking. Built-in data collector collects usage and configuration data for computing chargeback costs.
    * Temporal cost models. Track changing of cost parameters and policies with time.
    * Chargeback database. Maintain a database of cost and usage metrics gathered from vCenter Server.
----end-quote--

---

From: Charlton Barreto <charl...@acm.org>
To: cloud-c...@googlegroups.com

Sent: Sunday, July 19, 2009 5:08:09 PM

Subject: [ Cloud Computing ] Re: What is Cloud

[Gordon Jackson]

I find it pretty interesting that this is not the first thread in this group discussion that has morphed into a conversation on metering, billing, and charge back. Interesting, but not surprising (in fact, I think that it is only natural, from a "we ARE in business, after all!" point of view) that the conversation inevitably turns to monetization, in some form, of the technology. 

Who is paying for this Cloud Computing? How much does this Cloud Computing thing cost? If we don't own this Cloud Computing thing, how are we billed for it? How do I charge for Cloud Computing? How much of the Cloud do I charge for? How can I use Cloud Computing to reduce my costs? and so on...

From the Cloud (Internal/Institutional/Private/Public/Hybrid) Provider perspective, accounting for resource consumption/utilization/allocation and charging for it are two very different (as that horse has been beaten senseless around here :), albeit related (by the data), activities. Ensuring that an organization has the information needed to perform the former is necessary from a resource acquisition stance (e.g. planning and budgeting) and should lead naturally to enabling the latter.

Jim, you are right that there are many more dimensions, and to Miha's point, these other dimensions could be incorporated into a bill. I do not think that it is restrictive to think of providing cloud computing in these much more fine-grained terms, rather it is inevitable. The Providers that we are speaking to are also considering these many dimensions as they assess their shift from delivering traditional (static) services to Cloud (dynamic) services. 

How (if) the data is ultimately used to generate a bill is between the provider and the consumer. Having the data and knowing what to do with it is essential to delivering these Cloud services, though.

Cheers,

Gordon

--
Gordon Jackson
Technical Director, Data Center Automation
Univa UD

www.univaud.com/reliance

[Jim Starkey]

Charlton Barreto wrote:
> Miha, I would be interested in your view on how fine grained metering
> should be in your model. Enterprise IT has employed a number of
> approaches to this, some of which are as fine grained as Jim proposes
> above.
>
> However, the cost measure of *many* of these are in kW/year, so this
> is rather partitioning your power consumption metering further.
>
> Jim, interesting that you mention software 'wear and tear' - care to
> elaborate on that a little?
>

OK, I'll confess that the terminology was a teaser to see anyone reads
things stuff. "Wear and tear", however, is a pretty good description of
the perpetual grind of software acquisition, installation,
configuration, maintenance, re-installation, re-configuration,
re-acquisition, conversion, replacement, etc. Free software is, well,
free, but open source guys haven't the least respect for the concept of
upwards compatible, so "free" means either total stagnation or perpetual
administration. [I've just discovered that installation of a Linux mail
server has gone from a yes / no question to a one to three month
exercise, and don't like it very much.]

Anyway, software absolutely wears out. As time goes one, usage changes,
stressing software in directions the designers hadn't anticipated, the
platform moves, expectations change, etc. Software that once worked
flawless eventually ceases to be useful. Happily, this keeps the
software industry alive. If software didn't wear out, software
companies would go out of business when the last potential user got
signed up.

--
Jim Starkey
President, NimbusDB, Inc.
978 526-1376