Click here to close now.

Welcome!

Web 2.0 Authors: Tim Hinds, Elizabeth White, Adrian Bridgwater, Liz McMillan, Harry Trott

Related Topics: Cloud Expo

Cloud Expo: Article

Cloud Computing Debate: Booz Allen Hamilton Comments on Recent McKinsey & Co. Report

Two Booz Allen Hamilton Principals offer their take on McKinsey & Co. view of cloud computing.

Cloud Musings

(In a recent discussion document titled "Clearing the air on cloud computing", Will Forrest of McKinsey & Co. offered his view on cloud computing. Unedited comments on the report from Mike Cameron and Rod Fontecilla, Booz Allen Hamilton Principals are provided below, published at their request.)

The recent McKinsey report on cloud computing “Clearing the air on cloud computing” has caused a bit of a stir, primarily since it purports to demonstrate that cloud computing can be twice as expensive as traditional data centers in some applications. Since this report makes a claim to an analysis of cloud economics, we would like to weigh in with a couple of comments regarding the report.

The McKinsey report, as presented, seeks to be the “other voice” and offer a contrarian view of cloud computing. The first thing we noted was the statement, on slide 7, that “Cloud computing can divert IT departments’ attention from technologies that can actually deliver sizeable benefits; e.g., aggressive virtualization.” This view seems to be an underlying motif in subsequent discussions, yet it is a premise that is not substantiated.

We are also somewhat taken aback by a management consulting firm is proposing an “industry standard definition” for cloud computing, having rejected, for various reasons, the definitions used by the IT vendors and data center owners that are currently creating cloud computing in the industry, as well as by centers of academic excellence (e.g., the computer science department at Berkeley). We are surprised that McKinsey rejected a definition of cloud computing (slide 11) because the definition doesn’t provide “definitive economic implications.” Webster’s dictionary defines “bicycle” without making any economic implications.

Definitions say what something is. Economic implications are a value judgment. We do not understand how a definition, absent a value judgment. It is also an assertion by McKinsey that the definition fails because it does “not distinguish cloud services from clouds.” Interestingly, on slide 17, a cloud service is defined as having two of the three key requirements of a cloud. This leaves McKinsey’s definition of cloud services to mean “not quite a cloud.” The report does not attempt to define what cloud services are, stating only that “it could run on top of a cloud.”

They state that cloud offerings “are most attractive” to small and medium sized business, and “there are significant hurdles to the adoption of cloud services by large enterprises.” That would come as quite a shock to Target, Eli Lily, the New York Stock Exchange, the American Stock Exchange, NSADAQ, Toyota, E*Trade, Computer Associates, and a host other large enterprises that have been in the cloud for a couple of years.

The “significant hurdles” to cloud adoption by large organizations appear to be McKinsey’s opinions but not supported by hard data. For example, “business perceptions of increased IT flexibility and effectiveness will have to be properly managed.” What perceptions? Managed by whom?

We are trying to figure out how McKinsey got to the numbers they cite, on slide 24, in their comparison of CPU costs per month in the data center versus in the cloud. Taking the $14K/server cited on slide 23, and dividing that out over a three year refresh cycle, costing it out by month, and dividing by 8 to reflect the cost of each processing core, I got to $48/month. But that price does not reflect any power, facilities, or labor, so the “Total Cost of Assets” MUST be higher than the figure cited by McKinsey, unless they changed assumptions between examples. They also make an assumption of an Amazon large instance (discounted by 25% for reasons that are not provided) and calculate a cost per month of $270.

Where this example appears to break down is that, for the data center, they are calculating the cost per core, while for Amazon they are calculating the cost of a Large EC2 instance, which is four cores. On a single-core basis, an EC2 Small instance is only $72 month, running non-stop. Assuming the same 10% utilization used in other examples, the comparison should be $48/month for the data center and $7.20 month for EC2.

Their assertion that moving a data center to the cloud provides a 10-15% savings in labor seems to be well off the mark. In the discussions with cloud providers, we learned that labor went from being one of the largest components of cost to an insignificant component of cost, largely because of virtualization (reduced hardware baseline plus ease of provisioning logical, rather than physical, devices) and elasticity (automated resource management).


( Thank you. If you enjoyed this article, get free updates by email or RSS - KLJ )

More Stories By Kevin Jackson

Kevin Jackson, founder of the GovCloud Network, is an independent technology and business consultant specializing in mission critical solutions. He has served in various senior management positions including VP & GM Cloud Services NJVC, Worldwide Sales Executive for IBM and VP Program Management Office at JP Morgan Chase. His formal education includes MSEE (Computer Engineering), MA National Security & Strategic Studies and a BS Aerospace Engineering. Jackson graduated from the United States Naval Academy in 1979 and retired from the US Navy earning specialties in Space Systems Engineering, Airborne Logistics and Airborne Command and Control. He also served with the National Reconnaissance Office, Operational Support Office, providing tactical support to Navy and Marine Corps forces worldwide. Kevin is the founder and author of “Cloud Musings”, a widely followed blog that focuses on the use of cloud computing by the Federal government. He is also the editor and founder of “Government Cloud Computing” electronic magazine, published at Ulitzer.com. To set up an appointment CLICK HERE

@ThingsExpo Stories
SYS-CON Events announced today that MetraTech, now part of Ericsson, has been named “Silver Sponsor” of SYS-CON's 16th International Cloud Expo®, which will take place on June 9–11, 2015, at the Javits Center in New York, NY. Ericsson is the driving force behind the Networked Society- a world leader in communications infrastructure, software and services. Some 40% of the world’s mobile traffic runs through networks Ericsson has supplied, serving more than 2.5 billion subscribers.
The 17th International Cloud Expo has announced that its Call for Papers is open. 17th International Cloud Expo, to be held November 3-5, 2015, at the Santa Clara Convention Center in Santa Clara, CA, brings together Cloud Computing, APM, APIs, Microservices, Security, Big Data, Internet of Things, DevOps and WebRTC to one location. With cloud computing driving a higher percentage of enterprise IT budgets every year, it becomes increasingly important to plant your flag in this fast-expanding business opportunity. Submit your speaking proposal today!
17th Cloud Expo, taking place Nov 3-5, 2015, at the Santa Clara Convention Center in Santa Clara, CA, will feature technical sessions from a rock star conference faculty and the leading industry players in the world. Cloud computing is now being embraced by a majority of enterprises of all sizes. Yesterday's debate about public vs. private has transformed into the reality of hybrid cloud: a recent survey shows that 74% of enterprises have a hybrid cloud strategy. Meanwhile, 94% of enterprises are using some form of XaaS – software, platform, and infrastructure as a service.
The Internet of Things is not new. Historically, smart businesses have used its basic concept of leveraging data to drive better decision making and have capitalized on those insights to realize additional revenue opportunities. So, what has changed to make the Internet of Things one of the hottest topics in tech? In his session at @ThingsExpo, Chris Gray, Director, Embedded and Internet of Things, discussed the underlying factors that are driving the economics of intelligent systems. Discover how hardware commoditization, the ubiquitous nature of connectivity, and the emergence of Big Data a...
With major technology companies and startups seriously embracing IoT strategies, now is the perfect time to attend @ThingsExpo in Silicon Valley. Learn what is going on, contribute to the discussions, and ensure that your enterprise is as "IoT-Ready" as it can be! Internet of @ThingsExpo, taking place Nov 3-5, 2015, at the Santa Clara Convention Center in Santa Clara, CA, is co-located with 17th Cloud Expo and will feature technical sessions from a rock star conference faculty and the leading industry players in the world. The Internet of Things (IoT) is the most profound change in personal an...
All major researchers estimate there will be tens of billions devices - computers, smartphones, tablets, and sensors - connected to the Internet by 2020. This number will continue to grow at a rapid pace for the next several decades. With major technology companies and startups seriously embracing IoT strategies, now is the perfect time to attend @ThingsExpo, June 9-11, 2015, at the Javits Center in New York City. Learn what is going on, contribute to the discussions, and ensure that your enterprise is as "IoT-Ready" as it can be
Container frameworks, such as Docker, provide a variety of benefits, including density of deployment across infrastructure, convenience for application developers to push updates with low operational hand-holding, and a fairly well-defined deployment workflow that can be orchestrated. Container frameworks also enable a DevOps approach to application development by cleanly separating concerns between operations and development teams. But running multi-container, multi-server apps with containers is very hard. You have to learn five new and different technologies and best practices (libswarm, sy...
SYS-CON Events announced today that DragonGlass, an enterprise search platform, will exhibit at SYS-CON's 16th International Cloud Expo®, which will take place on June 9-11, 2015, at the Javits Center in New York City, NY. After eleven years of designing and building custom applications, OpenCrowd has launched DragonGlass, a cloud-based platform that enables the development of search-based applications. These are a new breed of applications that utilize a search index as their backbone for data retrieval. They can easily adapt to new data sets and provide access to both structured and unstruc...
As the Internet of Things unfolds, mobile and wearable devices are blurring the line between physical and digital, integrating ever more closely with our interests, our routines, our daily lives. Contextual computing and smart, sensor-equipped spaces bring the potential to walk through a world that recognizes us and responds accordingly. We become continuous transmitters and receivers of data. In his session at @ThingsExpo, Andrew Bolwell, Director of Innovation for HP's Printing and Personal Systems Group, discussed how key attributes of mobile technology – touch input, sensors, social, and ...
WebRTC defines no default signaling protocol, causing fragmentation between WebRTC silos. SIP and XMPP provide possibilities, but come with considerable complexity and are not designed for use in a web environment. In his session at @ThingsExpo, Matthew Hodgson, technical co-founder of the Matrix.org, discussed how Matrix is a new non-profit Open Source Project that defines both a new HTTP-based standard for VoIP & IM signaling and provides reference implementations.
SYS-CON Events announced today that the "First Containers & Microservices Conference" will take place June 9-11, 2015, at the Javits Center in New York City. The “Second Containers & Microservices Conference” will take place November 3-5, 2015, at Santa Clara Convention Center, Santa Clara, CA. Containers and microservices have become topics of intense interest throughout the cloud developer and enterprise IT communities.
Buzzword alert: Microservices and IoT at a DevOps conference? What could possibly go wrong? In this Power Panel at DevOps Summit, moderated by Jason Bloomberg, the leading expert on architecting agility for the enterprise and president of Intellyx, panelists will peel away the buzz and discuss the important architectural principles behind implementing IoT solutions for the enterprise. As remote IoT devices and sensors become increasingly intelligent, they become part of our distributed cloud environment, and we must architect and code accordingly. At the very least, you'll have no problem fil...
Almost everyone sees the potential of Internet of Things but how can businesses truly unlock that potential. The key will be in the ability to discover business insight in the midst of an ocean of Big Data generated from billions of embedded devices via Systems of Discover. Businesses will also need to ensure that they can sustain that insight by leveraging the cloud for global reach, scale and elasticity.
The 4th International Internet of @ThingsExpo, co-located with the 17th International Cloud Expo - to be held November 3-5, 2015, at the Santa Clara Convention Center in Santa Clara, CA - announces that its Call for Papers is open. The Internet of Things (IoT) is the biggest idea since the creation of the Worldwide Web more than 20 years ago.
"People are a lot more knowledgeable about APIs now. There are two types of people who work with APIs - IT people who want to use APIs for something internal and the product managers who want to do something outside APIs for people to connect to them," explained Roberto Medrano, Executive Vice President at SOA Software, in this SYS-CON.tv interview at Cloud Expo, held Nov 4–6, 2014, at the Santa Clara Convention Center in Santa Clara, CA.
In their session at @ThingsExpo, Shyam Varan Nath, Principal Architect at GE, and Ibrahim Gokcen, who leads GE's advanced IoT analytics, focused on the Internet of Things / Industrial Internet and how to make it operational for business end-users. Learn about the challenges posed by machine and sensor data and how to marry it with enterprise data. They also discussed the tips and tricks to provide the Industrial Internet as an end-user consumable service using Big Data Analytics and Industrial Cloud.
Sensor-enabled things are becoming more commonplace, precursors to a larger and more complex framework that most consider the ultimate promise of the IoT: things connecting, interacting, sharing, storing, and over time perhaps learning and predicting based on habits, behaviors, location, preferences, purchases and more. In his session at @ThingsExpo, Tom Wesselman, Director of Communications Ecosystem Architecture at Plantronics, will examine the still nascent IoT as it is coalescing, including what it is today, what it might ultimately be, the role of wearable tech, and technology gaps stil...
The explosion of connected devices / sensors is creating an ever-expanding set of new and valuable data. In parallel the emerging capability of Big Data technologies to store, access, analyze, and react to this data is producing changes in business models under the umbrella of the Internet of Things (IoT). In particular within the Insurance industry, IoT appears positioned to enable deep changes by altering relationships between insurers, distributors, and the insured. In his session at @ThingsExpo, Michael Sick, a Senior Manager and Big Data Architect within Ernst and Young's Financial Servi...
The Workspace-as-a-Service (WaaS) market will grow to $6.4B by 2018. In his session at 16th Cloud Expo, Seth Bostock, CEO of IndependenceIT, will begin by walking the audience through the evolution of Workspace as-a-Service, where it is now vs. where it going. To look beyond the desktop we must understand exactly what WaaS is, who the users are, and where it is going in the future. IT departments, ISVs and service providers must look to workflow and automation capabilities to adapt to growing demand and the rapidly changing workspace model.
Since 2008 and for the first time in history, more than half of humans live in urban areas, urging cities to become “smart.” Today, cities can leverage the wide availability of smartphones combined with new technologies such as Beacons or NFC to connect their urban furniture and environment to create citizen-first services that improve transportation, way-finding and information delivery. In her session at @ThingsExpo, Laetitia Gazel-Anthoine, CEO of Connecthings, will focus on successful use cases.