Thursday, December 31, 2009

Is Cloud Computing Actually Environmentally Friendly?

As we end 2009 and prepare for the next decade there seems to be a nagging question, a question that I have to say, I frequently answer without any concrete proof. A question that seems to be becoming more important then ever. The question is simple yet profound in its implications as a global citizen, is cloud computing actually environmentally friendly?

First, I will admit, I am among the group of cloud advocates who routinely claim that cloud computing is green, I say this without any proof or evidence to support my statement. I make this claim as part of my broader pitch to use Cloud Computing, I say this as a sales and marketing guy, but not as an advocate. As an advocate I'd like to have some empirical data to support my position. Believe me, I've searched, and I've searched -- although there are piles of forecasts about the potential market for cloud computing, said to be in the billions, little exists to support the green / eco-friendly argument.

On the face of it, a major incentive to move to cloud computing is that it appears to be more environmentally friendly compared to traditional data center operational / deployment models. The general consensus says that reducing the number of hardware components and replacing them with remote cloud computing systems reduces energy costs for running hardware and cooling as well as reduces your carbon foot print while higher DC consolidation / optimization will conserve energy. But a major problem still remains, where is the proof?

The problem is there is no uniform way to measure this supposed efficiency. None of the major cloud companies are providing utilization data, so it is not possible to know just how efficient cloud computing actually is -- other then it sounds & feels more green.
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Tuesday, December 29, 2009

My 2010 New Year’s Resolutions

As we end 2009 and head into 2010 I thought I'd take a moment to publicly state some of my goals & resolutions for the upcoming year. You'll notice that most of these goals are business focused, but alas, lately I've been very business focused with Enomaly and my various other schemes.

5. Keep Giving Back. For anyone who knows me, knows that I am a doer. From CloudCamps, to Cloud Interop, from Advisory boards to mentorships. I will continue to give back whenever and where-ever I can. If there is an itch, I will do my best to scratch it.

4. Keep pushing myself. Lately, I've come to the realization that my only limit, is the limitation of my imagination and in that I will continue to push the boundaries of my own limitations. Whether it's ideas or ambition, house work or being a Dad. I will strive to be the very best man I can.

3. Make More Friends. As someone who works as much as I do, there seems to be a fine line -- scratch that, actually, no line between work life and social life. Although I enjoy going out for drinks with random people in random cities. I believe that having close friends, the kinds that you can count on is important. I will work harder at being a better friend to my current ones and make some new friendships along the way. I will do this without being too creepy about it ;)

2. Make more money. I'm not sure if you're supposed to include this type of goal, but unlike wishing on a star, which probably should be selfless, as an entrepreneur I think you must focus on the obvious reason you started your business in the first place, to make money. If Enomaly was a sports team I would characterize 2009 as a rebuilding year, where we focused on developing both our product line as well as our network of partners and customers around the globe. In direct contrast, 2010 will be the year all this hard work pays off. I resolve to make as much money as possible in the most moral, ethical and environmentally friendly ways possible.

1. Spend more time with my family. Yes, this may seem obvious for some, but for someone who has spent the previous 12 months traveling across the globe covering more then 100,000+ miles it's also the most important of all. Keeping in mind my son was born January 6th 2009 and I have another on the way due this June, I must do my best to find that work / life balance. And yes, it's easier said then done.
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Tuesday, December 22, 2009

Examining Economies of Scope

There has been a lot of discussion lately around the benefits of so called "economies of scale" found in the cloud. This scale has been described as a main driver for those choosing to use remote cloud computing services and infrastructure rather then using your own. The discussion usually points to the "fact" that these companies have greater economic scale that smaller companies can't match. A scale that dictates that only the largest companies can afford the capital expense required to the build out the massive global data center footprints required to adequately compete as multi-faceted cloud providers. I'm here today to propose another reason why these companies may have a unique advantage, and it's not only scale, but it's also scope, more specifically, Economies of scope.

According to Wikipedia, "Economies of scope are conceptually similar to economies of scale. Whereas economies of scale primarily refer to efficiencies associated with supply-side changes, such as increasing or decreasing the scale of production, of a single product type, economies of scope refer to efficiencies primarily associated with demand-side changes, such as increasing or decreasing the scope of marketing and distribution, of different types of products. "

So my hypothesis is that beyond just the money these companies bring to bear, they also bring the power of a large and well developed sales & marketing channel. In effect they can bundle a variety of applications and services to a well established network of customers and partners. Regardless if your product is better, if your brand, marketing and sales channels are strong enough you can sell anything. (Microsoft owns the Desktop, Google Owns the Net, both have key advantages) If one of your product lines falls out of fashion the company will, most likely, be able to continue operating because of diversification. It's been one of Google's key advantages, they can try out a million product directions, because they have the customer visibility and money (thanks for search world ads) to do so in the hope that one of these random products will revolutionize both their business and hopefully the world.

This may also be why often a product sold to Oracle, IBM, Google or Microsoft is more successful then one left independent. Of course there are aways exceptions to these rules. These very market leaders themselves at one point were all new entrants in the market and had to endure to overcome the incumbent players. But as a generally rule of thumb it certainly seems to give the incumbent a huge advantage. So the key to success may just be to be to outlast your competitors and continually try new things.

Just a random thought.

Thursday, December 17, 2009

Introducing the Private Partner Cloud

I'm currently in Seoul South Korea for a variety of meetings with SK government and technology industry folks. Yesterday I had a very interesting meeting with the largest South Korean mobile provider. During the meeting they described a great potential use case for telecom focused IaaS cloud offerings. Basically what they've done is created an on demand compute infrastructure specifically for their network of mobile application developers. The service is offered free of charge to their partners and provides all the tools necessary for the development, testing and deployment of mobile applications specifically tailored to their particular mobile network environment. This may be one of the best use cases for semi-private cloud I've heard of.

In a sense they're subsidizing the infrastructure costs for mobile application developers they work with. They are basically covering the costs associated with the more routine aspects of mobile app development while also empowering a new and broader group of potential partners by providing a quick and easy way to develop applications for their environment. Another advantage is in gaining a greater pool of potential network specific applications & developers. Very smart.

For me this use of a private partner cloud represents a great example of the opportunities for offering free cloud based IaaS services specifically for your partners, suppliers and best customers. The free to partners model for cloud computing may be the next logical step for cloud computing. Large technology companies like Microsoft, Intel, IBM, Oracle and others may start using these partner clouds as part of their channel and developer programs. If you develop for our platform, we'll give you everything you need to do so, free of charge. This could include everything from compute to storage, development to deployment.

Monday, December 14, 2009

Spot on, Amazon Commoditizes The Cloud

The consensus found in the more traditional areas of commerce is the longer your products are sitting in your warehouses the less money you're making off them. (This is also known as carrying costs) Over the years retail focused companies such as Walmart and Amazon have strived to keep these carrying costs to a minimum by implementing various just-in-time (JIT) inventory strategies. (A technique that was first used by Henry Ford at the Ford Motor Company in the early 20th century).

The philosophy of JIT is simple: inventory is waste. The idea behind a JIT strategy is to improve a business's return on investment by reducing the associated carrying costs associated with under utilized assets, this could be a toaster sitting in a warehouse or a hosting company's unused server. The Data Center business is in a lot of ways is very similar, the more unused rack space the less you are making. Cloud centric data centers make this problem even worse, not only do you need to have excess data center space, you now need to have physical hardware in place, just in case your demand spikes. For a lot of larger players this means un-utilized compute capacity is making you nothing.

The folks at Amazon Web Services have come up with a very interesting approach to solve the problem of DC carrying costs by implementing a spot pricing scheme for unused EC2 instances. In case you're not familiar with the concept, wikipedia describes the spot price of a commodity as the price that is quoted for immediate (spot) settlement (payment and delivery). In securities, the term cash price is more often used.

The new service is called Spot Instances and allows you to bid for one or more EC2 instances at the price you are willing to pay and more importantly the minimum price AWS is willing to accept. The Spot Instance request consists of a number of parameters including the maximum bid that you are willing to pay per hour, the EC2 Region where you need the instances, the number and type of instances you want to run, and the AMI that you want to launch if your bid is successful. It's a kind of cross between an arbitrage, auction and on demand web service.

The concept of spot pricing does have some challenges. Depending on the item being traded, spot prices can indicate market expectations of future price movements in different ways. For a security or non-perishable commodity (e.g., gold, Compute Capacity), the spot price reflects market expectations of future price movements. It will cost more in December because there is more demand, then it will in July, so you buy at July prices and Sell it in December. In theory, the difference in spot and forward prices should be equal to the finance charges, plus any earnings due to the holder of the security, according to the cost of carry model. In finance this is known as arbitrage -- the practice of taking advantage of a price differential between two or more markets: striking a combination of matching deals that capitalize upon the imbalance, the profit being the difference between the market prices. It's complicated, let's just say this is how Enron made it's money.

This new spot pricing approach may open the door to EC2 capacity squatters who buy up all the excess compute capacity and in turn sell it to at a higher cost, but still lower then the market cost for a traditional EC2 instance. This would be a practical approach for the costly larger instance types.

The potential for misuse does seem to be something Amazon has already put some thought into saying in a recent blog post. "As requests come in and unused capacity becomes available, we'll evaluate the open bids for each Region and compute a new Spot Price for each instance type. After that we'll terminate any Spot Instances with bids below the Spot Price, and launch instances for requests with bids higher than or at the new Spot Price. The instances will be billed at the then-current Spot Price regardless of the actual bid, which can mean a substantial potential cost savings versus the bid amount." To me this says they will have a preference toward higher bids.

The post goes on to outline; "From an architectural point of view, because EC2 will terminate instances whose bid price becomes lower than the Spot Price, you'll want to regularly checkpoint work in progress. (Meaning you may lose your EC2 instances if a better rate comes along) Many types of work are suitable for this incremental, background processing model including web crawling, data analysis, and data transformation (e.g. media transcoding). It wouldn't make much sense to run a highly available application such as a web server or a database on a Spot Instance, though."

So what does Spot pricing mean to the IaaS world? For one, we may for the first time start to see compute capacity treated in the same way traditional commodities are with the emergence of an active secondary market for compute capacity. Very exciting times, lets just hope we don't see another Enron.

Check out the new EC2 spot instance service here >

Thursday, December 10, 2009

2010 Predictions - Cloudy with a Chance of Convergence

I'm off to Seoul, South Korea next week, but before I leave I wanted to give you a little holiday gift, yes, the gift of my prognostication.

Before I do, as anyone who routinely reads my blog will understand, all I pretty much do is attempt predict the future.

As an entrepreneur that has always been a key part of my successes & failures. (That and I also seem to be an eternal optimist) Generally my view of the future is not shaped by selecting any particular point in time but instead done from what I see from my ever changing vantage point in the present.

Before I dive into my predictions, I first must give you my ideology. It is my belief that before you can predict the future, you must first understand the past. In turn by understanding the past you are able to visualize your ideal future and more importantly the way to get there. The future is not predetermined, but rather guided by the decisions we as global collective make today. (Cheesy, but hey -- I'm predicting the future.)

Anytime Data - Real Time, Anytime and Anywhere
As we continue our long march into the world of Cloud Computing and Internet centric applications in 2010 I believe that real time information (data) will be the most important asset any business large or small can have. With the sudden influx of Cloud resources those who learn to tap into this wealth of data and do so the most efficiently will ultimately succeed.

The one thing that Moore's Law and software development has taught us over the last 30 years is the more compute resource we have available the more we use. I see this holding true, except now we're not limited to any single CPU or Data Center. The future of computing will be about the speed in which we can make decisions (data analysis). This will be enabled by on an endless supply of real time information being gathered by a worldwide network consisting of both human and automated sources. The world has become one giant computer network with the Internet the glue that holds it together.

Emergent Clouds
As I've written about previously, I believe that the biggest technological business opportunities are not found in the established western countries, but instead are found in the new crop of upstart economies in regions such as Asia, South America and even Africa. The primary reason being these emerging economies have large population bases and more importantly they don't have the legacy infrastructure that most Western economies suffer from. These regions offer in a very real sense a greenfield opportunity. These (fast growing) emerging economies have an opportunity to choose the latest & best technology solutions without regard for how it may effect legacy systems -- since there really isn't any. In 2010 as we emerge from the recession I believe that we'll start to see these regions quickly become the brightest, biggest and fastest growth opportunities. Help equip these economies and you'll equip yourself for a profitable future.

Technological Convergence
Lately I've come to understand that beyond just being a buzzword, for me Cloud Computing has come to represent the convergence of many technologies. A kind of technological evolution where many existing IT systems, processes and applications have come together -- brought about by the Internet as both an operational as well as a delivery model.

This may be obvious to some, but in 2010 I see the use of Cloud Computing continuing to be developed and utilized in many different more radical contexts. Things we've never thought possible are now being made possible by the rapid advancements being brought about by near limitless access to compute resources. Any one individual in any one basement is now able to compete with the largest companies. What we're seeing for the first time are the barriers to large scale, compute intensive innovation being made available to all. It won't be those with the most money who win, but instead those with the best ideas.

Monday, December 7, 2009

Open Cloud Services & Co-operative Community Clouds

Now that I'm back and have had chance to recuperate from from my trip to Israel I thought I'd share a few of the more interesting ideas to come out of the conversations I've had. In particular were several comments that Alistair Croll made at CloudCamp Tel Aviv about the potential opportunities for what he described as "Free / Open Cloud Services" as well as an idea I had around the potential of so called "Cooperative Community Clouds".

First in regards to Open Cloud Services, basically the concept goes like this; as we move away from the traditional client/server based models of the past to more web centric / service oriented opportunities of the future, we will see open source shift from application centric (source code) toward free open services and information. Cloud providers will essentially give away access in return for greater adopt of their platforms / services, increased customer acquisition and to accelerated creation of data and information. Basically the same reasons companies open source their applications today, just applied in a cloud context.

His comments really did get me thinking and reminded me of a potentially huge but generally overlooked opportunity for Cloud Computing. What I'm talking about is that of the "Community Cloud" or "Cloud Cooperative" which may be a potential avenue to enable these types of free or shared cloud services.

For those of you unfamiliar with the Community cloud concept, NIST defines it as "a cloud infrastructure that is shared by several organizations and supports a specific community that has shared concerns (e.g., mission, security requirements, policy, and compliance considerations). It may be managed by the organizations or a third party and may exist on premise or off premise."

For me the concept of a community cloud represents an opportunity to create shared pools of compute resources which could be made freely available among a diverse but related group of contributors. This could be for compliance reasons such as HIPAA in the US, geographical or economic rationale. The idea of a community cloud is a logical offshoot of the more traditional aspects of a co-operative (Co-op), a concept that dates back as long as human have been organizing for mutual benefit (expressed today as "profit-sharing" and "surplus sharing" arrangements). Historically Coop's were organized as cooperative structures, allocating jobs and resources among each other. The concept of a cloud co-op seems fairly well suited for the smaller cloud hosting & service providers who are now forced to compete with global multi-billion dollar cloud competitors. In a sense a Cloud Co-op provides the power to group many smaller independent cloud operators together creating a much stronger organization then any single contributor could hope accomplish on their own.

For example a group of European cloud providers could all agree to pool their resources and seamlessly offer capacity to each other. In someways this is already happening within the broader research realms such as the various grid & HPC organizations (i.e CERN). The key difference is applying this model to for profit businesses who need to compete against the larger players.

Back to the idea of open services, I agree we very well may be moving toward the free (as in beer) model for cloud providers as a method of customer adoption in the same way free software has helped in the adoption of traditional software. Although a major issue still remains. The biggest problem in providing free cloud resources, like in most other areas of open source is how to eventually monitize it. Right now it seems the quickest route to the monitization of free is to sell (your business, and your users) to some larger organization, making it their problem. Open source is a great tool in an established market (MYSQL Vs Oracle, etc), but in an emerging market it has the potential to cause more harm then good potentially driving the price to zero. Which in the long run isn't sustainable. But on the flip side, near zero cost capacity does open a wide range of other potential applications and usages for things we probably haven't even consider yet. I call it the twitter business model, build it, grow it, then figure out a way to monitize it.

Sunday, December 6, 2009

My 48 Hours in The Israel Defense Forces

Stepping off the airplane last Tuesday at Tel Aviv's Ben Gurion Airport I knew I was in for a memorable business trip. As I left the airplane I was greeted by a young female Israeli government official who seemed to recognize me by sight. This was to be my first indication of what was to become a very interesting few days in Israel.

Before I go into the details of my trip, I first need to give you some background which lead to my bizarre series of events. Although I was born in Haifa, a city in North Israel, I had left the country in 1982 at the age of 4, moving with my parents to Canada. Over the nearly 30 or so years since I left I have been lucky enough to travel all over world with generally little in the way of problems. Regardless of where I travel I've always use my Canadian passport, generally the Canadian passport provides me with a warm welcome regardless of the country I'm visiting. As an individual I've always identified myself both professionally and personally as a Canadian. When I speak, I like many other Canadians throw in the casual "eh" at the end of sentences, and Americans routinely make fun of my "outs" and "abouts". I'm told they sound funny. So for all practical purposes, I am Canadian.

But because of where I was born, in the back of my mind I knew I was technically an Israeli citizen but never gave it much thought. Being born in Israel to a Swiss mother and Canadian father gave me a unique gift. This unusual "gift" is that of having three citizenships. Two of which, Israel and Switzerland require military service. Since leaving Israel at the age of 4 I have never had the opportunity to go back, not so much as a conscience decision as much as I never really had any reason to visit -- albeit for business or otherwise. But unlike Israel I have been to Switzerland many times over years and even have an active Swiss passport (which I rarely use). During my many trips to Switzerland, I have never been asked about military duty, so I falsely assumed the same would be true in Israel. Making what transpired all the more surprising.

Back to my arrival in Israel, at first I thought "Wow, Avner and the folks from the Israeli Association of Grid Technologies (IGT) who had invited to speak at their annual summit really go all out. I hadn't even gone through passport control and I'm already being greeted with a warm welcome". Well it turns out the welcome wasn't as warm as I thought. Next thing I know I'm being escorted to a secret label-less backroom at the airport. At this point I was told to wait. So for about two hours I waited as occasionally attractive young Israeli women with large machine guns would come in saying something to me in Hebrew, which I don't speak. After awhile they realized I didn't speak Hebrew and said "What kind of Israeli doesn't speak Hebrew" To which I responded, "A Canadian" They then ask me a series of questions. (Who my parents were, where I was born etc. Which they already knew)

The next part caught me by surprise, remember this is supposed to be a short (72hour) trip to Israel. A young woman tells me that as an Israeli citizen I have two conditions before I can leave: First I can't leave the country without permission from the dept of Interior and must get an Israeli passport. When I asked how long she tells me several weeks. Then the best part, secondly I must report for my Israeli military service in a place called Tiberias not far from Jordan and Syria on western shore of the Sea of Galilee as soon as possible. When I said again that I was just visiting, the official indicated that I was now officially in the Israeli defense forces (IDF).

I was now on my own in a country where I didn't speak the language and certainly didn't identify myself with. I was on my own effectively drafted into one of the most well funded and active defense forces on the planet. To give you some background on the Israel Defense Forces (IDF), in 2008 Israel spent $16.2 billion on its armed forces, making it the country with the biggest ratio of defense spending to GDP as a percentage of the budget of all developed countries.($2,300 per person). Also all male citizens are required to serve three years in the IDF with exceptions made only on religious, physical or psychological grounds. Arguably the IDF is one of the most politically charged defense forces on the globe, not exactly how I envisioned spending my next three years.

It wasn't that I was afraid of being in the army, so much as the thought of potentially being away from my family in what most certainly felt like a strange foreign land. With an 11 month old baby at home and my wife and I expecting another I focused on how to get out of this most awkward predicament I suddenly found myself in. So now instead of focusing my attention on the business meetings and presentations I was supposed to have over the next few days I would have to focus on what felt like getting back my freedom. Luckly my new Israeli friends and business partners stepped up to help me out.

Some of the biggest help came from an Israeli business partner (who asked not to be named). When I eventually emerged that evening from the holding area in the Airport, he was there waiting for me and sprung into action. Within minutes he had called senior contacts within the Israeli Government, contacts that would eventually include the Deputy Prime Minster of Israel as well as various other high ranking officials. He then detailed a strategy that would have me visit both the Dept of the Interior as well as the biggest Army base in the country.

While my business partner was calling everyone he knew, the second day of my trip I attendeed the conference as much as I could. After all I was in Tel Aviv for the World Cloud Computing Summit and a CloudCamp Tel Aviv which ended up being both successes having great turn outs. Needless to say there is a tremendous amount of interest in cloud computing in Israel with several hosting companies announcing they would be offering cloud related products and services. But alas, this aspect of my trip was greatly overshadowed by my worries of being conscripted into the military as well as not being able to leave the country. Anyone who follows my twitter account could easily see I was somewhat stressed over the situation. But thanks to the huge outpouring of support from the Israeli's I met, my situation would soon be resolved with the greatest of efficiency. Literally dozens of people made phone calls and provided me with advice. It seemed that if you had a friend in the IDF, they would call on my behalf with at one point one senior military commander noting that that I must of been a very special person because he had received no less then 10 calls about me in the previous 24 hours.

All in all it took roughly 48 hours to get my situation fully resolved. First with the issuing of an Israel passport (which was given to me 45 minutes after it was requested, a new record I'm told) as well as a visit to the largest military base in the country called Camp Rabin named for Yitzhak Rabin. The base was one of the first IDF bases and has served as the IDF headquarters since Israel's founding in 1948. Think of it like the Pentagon in the U.S.

One of things that struck me at Camp Rabin (other then it reminded me of a good unconference name) was the age of the average enlistee, somewhere between 18-21 years old, unsurprisingly all of which were heavily armed. It felt like a summer camp with guns.

After a few hours of back and forth between the IDF HQ and my outpost in Tiberias I was given my release papers. The papers were in Hebrew, but luckily my local partner who seemed to have became both my chauffeur and translator was there to help. He told me that I had been discharged from the IDF for the reason of "Old Age" and that it also said that I was free to leave the country.

Yes, one crazy business trip.
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