It is an unfortunate fact that “the cloud” is still heavily overhyped to the point where a good deal of IT activity is devoted to convincing business decision makers that cloud computing is actually not some ephemeral science fiction story, but a legitimate way to augment and improve in-house computing capabilities.
It is ironic that cloud storage is often justified strictly on the basis of cost reduction.
Mike Jude, Program Manager, Stratecast/Frost & Sullivan
This disconnect between hyperbole and reality has led many cloud implementations to fall short of expectations, usually as a consequence of cost savings that never materialize. Not incidentally, this focus on hand waving and cost reduction has also hurt the community of cloud vendors. Yet the story around cloud services is actually quite good.
Cloud storage, in particular, is well established and well on its way to being an important arrow in the enterprise IT quiver of solutions. In fact, this portion of the cloud market is estimated by some analysts to be in the $400 million range annually, according to Frost & Sullivan.
It is important to note that cloud storage solutions are not necessarily less expensive than simply implementing storage arrays in the data center. They do, however, confer a substantial amount of survivability to the business. In fact, cloud storage is more of an insurance policy than it is an alternative to reasonable levels of IT investment.
Cloud storage poised to become business enabler
Storage has generally followed the Moore’s Law dynamic of delivering double the density at half the cost every 18 months. This means that even in the most extreme levels of data growth, if an enterprise simply waits a bit, it can be assured of being able to meet its data storage needs at a reasonable price. Storage is not simply about the physical capability of storing bits, however. Storage is often the central enabler of a business: It contains customer records, financial records and the intellectual property of the company. Loss of any of this information could be damaging, if not terminally so.
So it is ironic that cloud storage is often justified strictly on the basis of cost reduction. Many CIOs and cloud storage providers themselves pitch cloud storage solutions as a way to reduce enterprise IT costs. This is true to a point. After all, it can appear to IT planners that it would be expensive to deploy the infrastructure necessary to maintain a complete backup image of all current and archived data. But it is likely, for the Moore’s Law reasons cited above, that the cost need not be substantially more than simply over-provisioning storage in the first place.
In terms of an insurance policy, however, the cost of not effectively backing up critical data offsite can mean a catastrophic loss to the business. If cloud storage were configured and marketed in those terms, it would actually be priced quite a bit higher than it currently is.
Concerns arise about cloud storage solutions as business insurance
Looking at cloud storage as a business insurance policy is problematic, though, for several reasons.
- First, cloud storage providers take a rather simplistic view of liability. While most service -level agreements (SLAs) provide for damages in the event of data loss or corruption, in practice, the total amount of any penalties is insufficient to compensate for the real cost of failure. In fact, in the world of cloud storage, liability is mostly intended as a deterrent to make sure the cloud service provider doesn’t deliver bad service— a penalty that is intended to provide an incentive to take the proper precautionary steps.
Closely aligned with this is the notion of securing data in the cloud. As several rather spectacular failures have demonstrated, just because a cloud storage vendor says managed data is secure does not make it so. In order to absolutely safeguard data, the enterprise should seriously consider encrypting all data stored outside the corporation. It should also consider having multiple images to ensure no loss of critical data if one cloud storage provider is compromised.
- Second, as noted above, almost any cloud service is viewed generally, and by IT and cloud service providers, as a low-cost alternative to having the enterprise perform the function itself. This places significant pressure on IT and the cloud provider to collude in distorting both the price of the service as well as the value that is provided by adopting it.
- Finally, cloud storage solutions are not an exact replacement for enterprise storage arrays. Because it hangs on the end of what is frequently a connection to the public Internet, cloud storage often has a much different latency dynamic. In other words, storage and retrieval do not necessarily take place as quickly as they do for directly connected storage. Network congestion can and does have an impact.
Positioning cloud storage solutions to the enterprise
It is important that rather than pitching cloud storage solutions as a cheaper alternative to building additional dedicated storage, IT should consider cloud storage solutions as a flexible way to support operations and as an insurance policy that backstops conventional disaster planning. Viewed from this perspective, C-level management would likely expect and approve higher costs to support such contingency planning. Rather than being a zero-sum game where the pressure is to reduce costs as much as possible—even at the risk of reliability—cloud storage would become simply another component that guarantees corporate survivability in the case of unforeseen disasters.
The consequence of this new approach by IT is that the cloud provider must think in terms of bulletproof solutions that are truly survivable. This means providing data mirroring, encryption support and real-time, active management to detect and prevent compromised or lost data. It also means marketing cloud storage solutions not as a cheap alternative to dedicated storage and archival, but as the insurance policy these solutions are, with a commensurate price.
Finally, cloud storage services must be secured with realistic liability penalties. This can be exceedingly expensive, but as in any insurance policy, there can be differing levels of liability coverage for different levels of performance. Ultimately, cloud service providers may need to partner with the appropriate insurance underwriters to provide meaningful levels of liability protection.
About the author: Mike Jude is a program manager at Stratecast/Frost & Sullivan in charge of the consumer communication services practice. He brings 30 years of experience in technology management in manufacturing, wide-area network design, intellectual property management and public policy. Jude holds degrees in electrical engineering and engineering management and a Ph.D. in decision analysis. He is co-author of The Case for Virtual Business Processes: Reduce Costs, Improve Efficiencies and Focus on Your Core Business, Cisco Press, 2003.
This was first published in May 2011