it’s about management, not technology

Clouds are grey fuzzy things that rain on you.  Is that really the best metaphor for delivering new technology?

One thing is clear: the more we talk about “the cloud”, the fuzzier it gets.  IT vendors have unashamedly stretched the definition in so many different directions that it’s becoming increasingly difficult to work out just what this cloud is.  That’s a problem, because the cloud offers real opportunities in situations where you have to deal with highly variable demand for IT services.  Many marketing campaigns fit that profile, so let’s look a little more closely at what the cloud is about.

A “cloud” is essentially a pool of computational resources that can be accessed via the Internet.  This resource pool is shared across many users in such a way that each of them is given the illusion of having their own private set of resources.  They’re also able to add or remove resources from this set easily, adjusting the amount of capacity they have to match their variable demand.  It’s called a cloud because the location and nature of specific resources is invisible to the user – the service provider manages all such details.

The cloud changes the economics of meeting variable demand.  Instead of paying for dedicated resources whether you’re using them or not, you only need to pay for the resources you actually need at any point in time.  That opens up all sorts of opportunities: to reduce costs, to create more flexible campaigns, to respond to external events, and so on.  Here are six things you need to remember if you’re going to exploit those opportunities:

1. Cloud is about economics, not technology.  Most of the technologies underpinning the cloud have been around for years.  Mainframe computers managed pools of resources decades ago.  The Internet isn’t exactly new.  Cloud is largely an evolution of such technologies.  It’s the economic model that’s changed.

1. It’s not even a new economic model.  In effect, the cloud enables you to rent resources as you need them, rather than purchase them outright.  That’s hardly a new idea, even for IT.  Many organisations rented access to mainframes long before they purchased minicomputers or PCs.  It’s only the parameters that have changed.  Mainframe capacity was specialised, expensive and tightly rationed.  Cloud capacity is commoditised, relatively cheap, and abundant.

1. Changed parameters require a different management style.  Managing abundance is very different to managing scarcity.  When resources are scarce, you grab as much as you can and hold onto it.  That’s expensive, so you focus on efficient utilisation of those resources.  You optimise as much as possible.  You analyse carefully before you act.  When resources are abundant, on the other hand, you only take what you need as you need it.  You might choose to spend resources in one area in order to buy value (e.g. flexibility or resilience) somewhere else.  This increases the number of variables you’re managing, so analysis is no longer tractable – instead, you focus on experimentation and learning.  That requires a very different management style.
2. Managing abundance is hard.  Many people think it’s easier to manage when resources are abundant.  You have fewer constraints, so things should be easier, shouldn’t they?  Not necessarily: remember that you have more variables to manage.  For example, the best economic model might be to buy a base level of dedicated resources and then rent additional resources as you need them.  Where do you set the base?  At the minimum likely workload, or somewhere higher?  How much higher?  This all depends on the shape of your demand patterns, and on the cost of different types of resource.  Finding the right level probably requires some combination of experimentation and scenario modelling.  This isn’t an option when resources are scarce – you have to estimate your peak demand and reserve enough resources to meet it from the outset.  That’s expensive, but it requires a lot less management overhead.
3. Competing under abundance is hard.  Your competitors also have abundant resources, so competition is no longer about protecting and exploiting scarce resources.  Instead, you compete by being smarter, faster and more flexible in the way you use resources.  Even though resources are abundant, you can’t afford to waste them – you have to work them intelligently.
4. Tools for managing abundance are still emerging.  Vendors who really get the cloud are starting to focus on helping people manage this abundance.  We need ways to model demand patterns and make economic trade-offs.  We need ways to monitor resource utilisation and build capacity management into our applications.  This is where the technology is immature: resource management tools and standards still have a long way to go.

Cloud is about management.  You need to change the way you think about resources: what can you do with abundant resources that you couldn’t do before?  How can you use those resources to shape and respond to demand?  If you focus on the technology, you’ll get trapped in the grey fuzz.