By 2020, large U.S. companies that use cloud computing can achieve annual energy savings of $12.3 billion, or enough oil to power 5.7 million cars for one year. illustration by Michael Waraksa

How Cloud Computing Lets Companies Do More

And, just as importantly, waste less.

This whole cloud computing thing is our fault. We consumers spur the formation of clouds every time we download documents, photos, or videos from a server that we don’t own or even rent. The same holds true when we pay for online storage or PC backup to avoid having to litter our homes with hard drives dedicated to various tasks.

We seed those clouds when we don’t balk at paying more money when we use more storage space and online resources. And when we expect that our data, wherever it is, to be available on whatever device we’re using, we’re wishing more clouds would come our way.

Indeed, these consumer expectations—wanting stuff to “just work” and demanding data wherever you are—have helped inspire companies to turn themselves inside out over cloud computing.

The cloud is more than a fad; it is the promise of the Internet fully realized in corporate computing. Cloud computing will change how devices are designed and used and it will give data center-friendly cities like Dallas a seat of influence in the new Internet economy.

Like most major computing trends, this one will take years to play out. The first benefits for companies and governments that embrace cloud computing will be a subtle savings in the costs of operating their IT infrastructure.

One of the most compelling reasons companies are moving more data, storage, applications and testing to the cloud is simply to rent what they used to buy (and barely, if ever, use).

“On average, roughly 50 percent of storage infrastructure is utilized and 50 percent is latent capacity,” says AT&T’s John Potter, vice president of the company’s As-a-Service Business. “When you look at computing infrastructure, it is even worse than that. You’ve got 20-25 percent utilized and roughly 75 percent latent capacity,” Potter says. “So the pure economic benefit of transitioning workloads and applications to the shared, multi-tenant environment that cloud provides is a big attraction for both enterprises and small-to-medium businesses.”

A study sponsored by AT&T and conducted by analyst firm Verdantix put some numbers to Potter’s words. Normally we hear what cloud computing’s impact will have on IT spending, but for many companies, money saved in energy equates to money spent on IT and communications services. Verdantix’s research says that by 2020, large U.S. companies that use cloud computing can achieve annual energy savings of $12.3 billion, or enough oil to power 5.7 million cars for one year.

Therein lies a strong motivation for companies to behave more like consumers. Don’t buy; rent. Sharing massive computing and storage resources with thousands, even millions, of other users at a time makes sense. So does using software to emulate offsite physical assets in such a way that a hard drive, server, or application in the cloud looks and acts the same way as one in your home, office, or corporate headquarters.

The Internet Analogy
As the largest consumer of IT products in the world, the U.S. government is now turning its attention to cloud computing, and at least one Dallas executive is playing a big role in educating those in control federal IT spending.

In July, Michael Capellas, CEO of Dallas-based cloud computing specialist VCE (the Virtual Computing Environment Co.), led a delegation of 70 industry execs and academics—called the TechAmerica Foundation—in providing the White House with some specific recommendations on how federal agencies should adopt cloud computing. During TechAmerica’s Washington D.C. press conference, Capellas noted that cloud-based technologies should be seen as a baseline to improve the United State’s global competitiveness.

He says cloud computing is following a similar trajectory as the development of the commercial Internet. Capellas notes the World Wide Web really took off when everyone wrote programs to a single protocol: Internet Protocol (IP). No longer would different applications have to be written for different networks—and the same networks could finally carry voice, data, and video simultaneously.

“The fundamental thinking of a cloud is that you don’t have to know or care where all the physical underlying components are,” Capellas says. “You don’t have to know where the servers, storage [units], or networks are, and you can write to a single layer—causing, again, an explosion of rapid adaptation of applications and another level of innovation. We believe that it launches another massive level of innovation and productivity.”

“The real impact of the cloud will be in all types of companies, all levels of government, and in the nonprofit and academic sectors as well,” adds Mike Nelson, visiting professor of communications at Georgetown University, who was also a contributor to TechAmerica’s Cloud
Computing Buyers Guide.

Outside Washington, big IT firms are spending on technologies that help prepare companies to move software to the cloud. CA Technologies spent $330 million in cash to acquire Plano-based Interactive TKO Inc., a firm whose software, named Lisa, helps companies test the applications they use in unique ways. So Lisa simulates all the databases and other systems that are interdependent on a particular application so there’s less risk of breaking something when an application is moved to the cloud, meaning it is suddenly more widely distributed and accessible.

Security, Support, and Simplicity
Several local services firms here say there are three things that will make cloud computing take off: the level of security, support, and simplicity inherent in any cloud-based service.

The security concern is understandable. The distributed nature of cloud computing means the risks are also distributed. Guarding a data center is tough. Protecting a cloud requires an extra measure of vigilance, as the data and services can be extended over a virtually unlimited geography.

Local cloud services companies see security as a selling point. Plano-based Layered Tech offers what it calls compliance clouds, where it groups together customers with similar security requirements (say, retailers doing credit-card transactions). Think of it as a dignitary and a tourist staying in the same hotel but with the former having a private elevator to a more secure floor.

Brad Hokamp, president of Layered Tech, says those multitenant compliance clouds can enjoy a high level of security while still taking advantage of the efficiency of not having to own dedicated infrastructure. “A lot of hosting companies don’t offer a full PCI-compliant solution,” says Hokamp, referring to the PCI DSS (Payment Card Industry Data Security Standard) standard, which specifies the critical measures to protect the security of payment card account data. Without a worldwide cloud security standard, Hokamp says industry-specific requirements provide some guidance.

Dallas-based FireHost is a cloud provider that offers PCI-compliant hosting and counts The Richards Group and Fossil among its customers. FireHost CEO Chris Drake says support is another watchword for executives evaluating cloud services—even if it’s just to run some development tests. “We’re providing security, scalability, and fully-managed support,” he says. “A lot of cloud providers when they first came out, there was no one to call if you had an issue with a cloud environment. All of our customers have 24/7 support.”

For simplicity, Dallas-based SoftLayer tempts customers to ‘Build Your Own Cloud’ via its website, where prices are clearly marked and customers are just a few clicks away from a completely secure, cloud storage solution for as little as 10 cents an hour to handle 25 GB of data.

Gone are the days of having to buy single-purpose servers, collocate, and provision them and sign a lengthy contract so that a hosting provider can recoup its expenses. Cloud services billed at monthly—or even hourly—rates can be set up and torn down instantly. That’s not just convenient; it is pushing the hosting companies themselves to be more agile.

“We went the first five or 10 years of hosting selling what we had,” said SoftLayer CEO Lance Crosby, speaking at the Parallels Summit 2011 in February. “Now the rules have changed. Now we have to sell what the customer wants. And the customer is getting very finicky, and the customers are getting very educated about what they want from their hosters.”

Crosby’s words echo that consumer way of computing. Each time we’re at work and say, “Why isn’t this easier?” or “Why can’t I access this on my iPad?,” we are continually stirring that momentum that took computing from mainframes to PCs, from corporate campuses to the Internet, and from server farms in locked basements to services in the cloud.

Harvey is the editor-in-chief of Light Reading, a UBM TechWeb publication covering the next generation of communications infrastructure and services.