Cloud Computing

Table of Contents Cloud Computing .................................................................................................................................... - 5 Types of Cloud Computing .................................................................................................................... - 5 Characteristics of Cloud Computing ................................................................................................... - 6 Four key Cloud Computing Ingredients .............................................................................................. - 7 A. B. C. D. Application Integration ............................................................................................................ - 7 Security ....................................................................................................................................... - 7 Virtual I/O .................................................................................................................................. - 8 Storage ........................................................................................................................................ - 8 -

Motivations for becoming Cloud Provider. ........................................................................................ - 8 A. Make a lot of money. ................................................................................................................ - 8 -

B. Leverage existing investment. .................................................................................................... - 9 C. Defend a franchise. ...................................................................................................................... - 9 D. Attack an incumbent. ................................................................................................................... - 9 E. Leverage customer relationships. ............................................................................................ - 10 F. Become a platform. .................................................................................................................... - 10 New Application Opportunities .......................................................................................................... - 10 A. B. C. D. Mobile interactive applications. ........................................................................................... - 10 Parallel batch processing. ..................................................................................................... - 11 The rise of analytics. .............................................................................................................. - 11 Extension of compute-intensive desktop applications. .................................................... - 11 -

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E.

Earthbound applications.................................................................................................... - 12 -

Economics of Cloud Computing ......................................................................................................... - 12 A. B. 1. 2. 3. C. 1. 2. 3. 4. 5. 6. 7. 8. Elasticity: Shifting the Risk ................................................................................................... - 12 Comparing Costs: Should I move to the Cloud? ................................................................. - 13 Pay separately per resource. ............................................................................................ - 14 Power, cooling and physical plant costs. ....................................................................... - 14 Operations costs. ................................................................................................................ - 14 Ways to Measure Cloud ROI ................................................................................................... - 15 Faster Adaption ................................................................................................................... - 15 Total cost of ownership optimization ............................................................................. - 15 Rapid provisioning .............................................................................................................. - 16 Increased margin and cost control .................................................................................. - 16 Dynamic usage ..................................................................................................................... - 16 Risk and compliance improvement .................................................................................. - 16 Enhanced capacity utilization .......................................................................................... - 16 Access to business skills and capability improvement ................................................. - 17 -

Cloud Computing Obstacles and Opportunities .............................................................................. - 17 A. General Cloud Computing Misconceptions .............................................................................. - 17 1. 2. 3. 4. 5. 6. B. 1. 2. 3. 4. 5. 6. 7. Cloud computing will put IT pros out of a job............................................................... - 17 The cloud is free or inexpensive ...................................................................................... - 17 Cloud performance is never a problem .......................................................................... - 18 You can replace Microsoft Office with products from Google, or Zoho.................... - 18 The cloud is easy to set up and manage ......................................................................... - 19 Security is less in cloud. .................................................................................................... - 20 Technical Obstacles and Opportunities. ............................................................................. - 20 Availability of Service. ....................................................................................................... - 20 Data Lock-In ......................................................................................................................... - 20 Data Confidentiality and Auditability ............................................................................. - 21 Data Transfer Bottlenecks ................................................................................................. - 21 Performance Unpredictability .......................................................................................... - 21 Scalable Storage.................................................................................................................. - 22 Bugs in Large-Scale Distribution Systems ....................................................................... - 22 -3-

8. 9. 10.

Quick Scaling ....................................................................................................................... - 22 Reputation Fate Sharing .................................................................................................... - 23 Software Licensing ......................................................................................................... - 23 -

Conclusions ............................................................................................................................................ - 23 References............................................................................................................................................. - 24 -

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Cloud Computing

Cloud computing refers to computing resources and software applications that are hosted on the Internet. Cloud computing was named as such because a cloud symbol is usually used in flowcharts and diagrams to represent the Internet. A cloud can be either private or public. Within a public cloud, services can be sold to any user who can access the internet. Private clouds are networks that provide services to a select number of people. Cloud computing is designed to provide easy to use, scalable access to data storage and other computing resources. There are three different types of services provided by cloud computing: Infrastructure-as-a-Service (IaaS), Platform-as-a-Service (PaaS), and Software-asa-Service (SaaS) (techtarget). Types of Cloud Computing Cloud infrastructure as a service provides users access to processing, storage, networking, and other computing resources. Customers use the providers application program interface (API) to start, stop, access and configure their virtual servers and storage (techtarget). This type of service is known as on-demand computing or utility computing where the customer pays only for the amount of actual computing power that was used. Amazon is one of the most popular providers of this type of cloud computing (textbook). Cloud platform as a service allows users to develop their own applications on the providers platform by accessing infrastructure and programming tools that the service provider has available. Some providers of this service will not allow users to take away software that was created on their platform (techtarget). Sun Microsystems and IBM offer this type of cloud computing service. In their clouds, users can develop applications and test them using the providers hardware (textbook). Cloud software as a service can be anything from Web based email to inventory control and database processing. The provider hosts both the application and the data which the user can access from a Web browser (techtarget). Google Apps is the most commonly used provider of this cloud service (textbook) -5-

Characteristics of Cloud Computing According to Dave Malcome, Surgients Chief Technology Officer, cloud computing has five defining characteristics. The first of which is cloud computing has a dynamic computing infrastructure. This dynamic infrastructure is the foundation for the cloud and should include a standardized, scalable, secure, and highly available physical infrastructure. It also must be virtualized with server, storage, and network virtualization. Also the users data will have to be moved from on physical server to another as the users required capacity increases and decreases. The infrastructure must also provide the business with increased value which amounts to more than the original investment (Malcolm) The second characteristic of cloud computing is that it needs to be business service centric not the typical server centric model. In most cases, users of the cloud generally want to run some business service or application for a specific, timely purpose; they dont want to get bogged down in the system and network administration of the environment. They would prefer to quickly and easily access a dedicated instance of an entire business service (Malcolm). This makes it much easier and faster for the end user to perform administrative tasks. Implementing a self service based usage model is the third characteristic of cloud computing. Interacting with the cloud requires a self-service oriented approach. Self-service clouds must be intuitive and easy to use. The capabilities should include the ability to upload, build, deploy, schedule, manage, and report on the users business services, so they can manage the lifecycle of those services (Malcolm) The fourth characteristic of cloud computing is that clouds are minimally or self managed platforms. The best clouds available enable self management via software automation by implementing the following capabilities: Deployment and recovery of business services and their computing resources in the cloud Self-service scheduling and reserving resource capacity Configuration, management, and reporting of resource capacity allocations Access control and policies for usage of resources by users -6-

The fifth and final characteristic of Cloud computing is consumption based billing. This is also known as on-demand computing or utility computing where the customer pays only for the amount of actual computing power that was used (Malcolm).

Four key Cloud Computing Ingredients As per IDCs Cloud Services Overview report, sales of cloud-related technology are growing at 26 percent per yearsix times the rate of IT spending overall. But cloud spending make up only about 5 percent of total IT expenses. The report estimates that global spending of $17.5 billion on cloud technologies in 2009 will grow to $44.2 billion by 2013. The report also predicts that in 2013 public clouds will only comprise 10 percent of that spending, and hybrid or internal clouds will be the rule. In hybrid cloud infrastructure all the pieces are supposed to fit neatly together using Internet-age interoperability standards (Fogarty). While considering cloud implementation we suggest four key items to be considered: A. Application Integration

The most important thing is software integration. Corporations run multiple types of application software to manage their business. And if few of these systems were to move to the cloud the integration with software hosted in house should be kept and not lost. The IT team needs to detail out how integration will take place in such mixed environments, which is going to be the norm in future. At one of the retail chains in our area, there is an initiative going on to move Peoplesoft Financial Management system to cloud. This system is tightly integrated lot of other in house hosted systems such as Retail Pricing, Human Resources, Data Warehouse, Financial Data Mart, BI, etc. The integration needs to be maintained and sustained after the Financial System is moved to cloud. B. Security

Since more hybrid systems are predicted, the IT departments will need to federate securely connect without completely mergingtwo networks. Such mash up requires layers of -7-

security, including multifactor authentication, identity brokers, access management and, in some cases, an external service provider who can provide that high a level of administrative control. Right now there is no single technology which is able to span all the platforms necessary to provide real control. C. Virtual I/O

The Cloud computing infrastructure is built on virtual machines. And to support the massive amount of shared input/output Virtual I/O servers, such as the Xsigo I/O Director servers will be required. Such storage servers can run 20Gbit/sec through a single cord and as many as 64 cords to a single server, connecting to a backplane providing a total of 1,560Gbit/sec of bandwidth. This way, I/O gets concentrated in one device which saves space, power and cabling. D. Storage

Storage continues to be sore point in IT in general. Corporations and cloud provider continue to pour money in storage to match up with the storage requirements. The virtual machines, the key components of the cloud computing, need to be stored in some physical media, somewhere. The recent trend of deduplication of data is saving lot of actual storage disks.

Motivations for becoming Cloud Provider. A variety of factors might influence these companies to become Cloud Computing providers (Armbrust): A. Make a lot of money.

Although 10 cents per server-hour seems low, very large datacenters can purchase hardware, network bandwidth, and power for 1=5 to 1=7 the prices offered to a medium-sized datacenter. Further, the fixed costs of software development and deployment can be amortized over many more machines. Others estimate the price advantage as a factor of 3 to -8-

5. Thus, a sufficiently large company could leverage these economies of scale to offer a service well below the costs of a medium-sized company and still make a tidy profit. Table: Economies of scale in 2006 for medium-sized datacenter (~1000 servers) vs. very large datacenter (~50,000 servers). Technology Network Storage Administration Cost in Medium-sized DC $95 per Mbit/sec/month $2.20 per GByte / month 140 Servers/Administrator Cost in Very Large DC Ratio $13 per Mbit/sec/month $0.40 per GByte / month >1000 Servers / Administrator Ratio 7:1 5:1 7:1

B. Leverage existing investment. Adding Cloud Computing services on top of existing infrastructure provides a new revenue stream at (ideally) low incremental cost, helping to amortize the large investments of datacenters.

C. Defend a franchise.

As conventional server and enterprise applications embrace Cloud Computing, vendors with an established franchise in those applications would be motivated to provide a cloud option of their own.

D. Attack an incumbent.

A company with the requisite datacenter and software resources might want to establish a beachhead in this space before a single 800 pound gorilla emerges. Google AppEngine provides an alternative path to cloud deployment whose appeal lies in its -9-

automation of many of the scalability and load balancing features that developers might otherwise have to build for themselves.

E. Leverage customer relationships.

IT service organizations such as IBM Global Services have extensive customer relationships through their service offerings. Providing a branded Cloud Computing offering gives those customers an anxiety-free migration path that preserves both parties investments in the customer relationship. F. Become a platform.

Facebooks initiative to enable plug-in applications is a great fit for cloud computing, as we will see, and indeed one infrastructure provider for Facebook plug-in applications is Joyent, a cloud provider. Yet Facebooks motivation was to make their social-networking application a new development platform.

New Application Opportunities While we have yet to see fundamentally new types of applications enabled by Cloud Computing, we believe that several important classes of existing applications will become even more compelling with Cloud Computing and contribute further to its momentum. Economic necessity mandates putting the data near the application, since the cost of widearea networking has fallen more slowly (and remains relatively higher) than all other IT hardware costs (Armbrust). A. Mobile interactive applications.

The future belongs to services that respond in real time to information provided either by their users or by nonhuman sensors. Such services will be attracted to the cloud not only because they must be highly available, but also because these services generally rely on large

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data sets that are most conveniently hosted in large datacenters. This is especially the case for services that combine two or more data sources or other services, e.g., mashups. B. Parallel batch processing.

Cloud Computing presents a unique opportunity for batch-processing and analytics jobs that analyze terabytes of data and can take hours to finish. If there is enough data parallelism in the application, users can take advantage of the clouds new cost associativity: using hundreds of computers for a short time costs the same as using a few computers for a long time. C. The rise of analytics.

A special case of compute-intensive batch processing is business analytics. While the large database industry was originally dominated by transaction processing, that demand is leveling off. A growing share of computing resources is now spent on understanding customers, supply chains, buying habits, ranking, and so on. Hence, while online transaction volumes will continue to grow slowly, decision support is growing rapidly, shifting the resource balance in database processing from transactions to business analytics. D. Extension of compute-intensive desktop applications.

The latest versions of the mathematics software packages Matlab and Mathematica are capable of using Cloud Computing to perform expensive evaluations. Other desktop applications might similarly benefit from seamless extension into the cloud. Symbolic mathematics involves a great deal of computing per unit of data, making it a domain worth investigating. An interesting alternative model might be to keep the data in the cloud and rely on having sufficient bandwidth to enable suitable visualization and a responsive GUI back to the human user. Offline image rendering or 3D animation might be a similar example: given a compact description of the objects in a 3D scene and the characteristics of the lighting sources, rendering the image is an embarrassingly parallel task with a high computation-tobytes ratio.

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E. Earthbound applications.

Some applications that would otherwise be good candidates for the clouds elasticity and parallelism may be thwarted by data movement costs, the fundamental latency limits of getting into and out of the cloud, or both. For example, while the analytics associated with making long-term financial decisions are appropriate for the Cloud, stock trading that requires microsecond precision is not. Until the cost (and possibly latency) of wide area data transfer decrease such applications may be less obvious candidates for the cloud.

Economics of Cloud Computing Cloud computing provides fine grained economic model; basically customers just pay for the computing resources being used. The elasticity offered by the clouds serves to transfer risk. Cloud computing charges are directly tied to the cost of infrastructure. As storage and server costs go down, the cloud vendors are able to offer either better offerings at same price or same offerings at lower price. This is not possible with in house data center. The corporation is stuck with the fixed charges associated with a data center. As pointed earlier, if a corporation plans for higher usage, the corporation will be stuck with underutilized computing resources. Here we present some observations about Cloud Computing economic models (Armbrust).

A. Elasticity: Shifting the Risk

Although the economic appeal of Cloud Computing is often described as converting capital expenses to operating expenses (Armbrust) but the phrase pay as you go more directly captures the economic benefit to the buyer. Hours purchased via Cloud Computing can be distributed non-uniformly in time (e.g., use 100 server-hours today and no serverhours tomorrow, and still pay only for what you use); in the networking community, this way of selling bandwidth is already known as usage-based pricing. In addition, the absence of upfront capital expense allows capital to be redirected to core business investment.

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Therefore, even though Amazons pay-as-you-go pricing (for example) could be more expensive than buying and depreciating a comparable server over the same period, we argue that the cost is outweighed by the extremely important Cloud Computing economic benefits of elasticity and transference of risk, especially the risks of over provisioning (underutilization) and under provisioning (saturation).

The key observation is that Cloud Computings ability to add or remove resources at a fine grain (one server at a time with EC2) and with a lead time of minutes rather than weeks allows matching resources to workload much more closely. Real world estimates of server utilization in datacenters range from 5% to 20%. This may sound shockingly low, but it is consistent with the observation that for many services the peak workload exceeds the average by factors of 2 to 10. Few users deliberately provision for less than the expected peak, and therefore they must provision for the peak and allow the resources to remain idle at non-peak times. The more pronounced the variation, the more the waste.

Elasticity is valuable to established companies as well as startups. For example, Target, the nations second largest retailer, uses AWS for the Target.com website. While other retailers had severe performance problems and intermittent unavailability on Black Friday, Targets and Amazons sites were just slower by about 50%. Similarly, Salesforce.com hosts customers ranging from 2 seats to 40,000+ seat customers.

B. Comparing Costs: Should I move to the Cloud?

Is it more economical to move my existing datacenter-hosted service to the cloud, or to keep it in a datacenter? The following simple analysis glosses over several important factors to answer that question (Armbrust).

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1. Pay separately per resource. Most applications do not make equal use of computation, storage, and network bandwidth; some are CPU-bound, others network-bound, and so on, and may saturate one resource while underutilizing others. Pay-as-you-go Cloud computing can charge the application separately for each type of resource, reducing the waste of underutilization. While the exact savings depends on the application, suppose the CPU is only 50% utilized while the network is at capacity; then in a datacenter you are effectively paying for double the number of CPU cycles actually being used. So rather than saying it costs $2.56 to rent only $1 worth of CPU, it would be more accurate to say it costs $2.56 to rent $2 worth of CPU. As a side note, AWSs prices for wide-area networking are actually more competitive than what a medium-sized company would pay for the same bandwidth.

2. Power, cooling and physical plant costs.

The costs of power, cooling, and the amortized cost of the building are missing from our simple analyses so far. Hamilton estimates that the costs of CPU, storage and bandwidth roughly double when those costs are amortized over the buildings lifetime [23, 26]. Using this estimate, buying 128 hours of CPU in 2008 really costs $2 rather than $1, compared to $2.56 on EC2. Similarly, 10 GB of disk space costs $2 rather than $1, compared to $1.20$1.50 per month on S3. Lastly, S3 actually replicates the data at least 3 times for durability and performance, ensure durability, and will replicate it further for performance is there is high demand for the data. That means the costs are $6.00 when purchasing vs. $1.20 to $1.50 per month on S3.

3. Operations costs.

Today, hardware operations costs are very lowrebooting servers is easy (e.g., IP addressable power strips, separate out of band controllers, and so on) and minimally trained staff can replace broken components at the rack or server level. On one hand, since Utility Computing uses virtual machines instead of physical machines, from the cloud - 14 -

users point of view these tasks are shifted to the cloud provider. On the other hand, depending on the level of virtualization, much of the software management costs may remainupgrades, applying patches, and so on. Returning to the managed vs. unmanaged discussion of Section 5, we believe these costs will be lower for managed environments (e.g. Microsoft Azure, Google AppEngine, Force.com) than for hardwarelevel utility computing (e.g. Amazon EC2), but it seems hard to quantify these benefits in a way that many would agree with. C. Ways to Measure Cloud ROI

Like any other projects and services corporations sign up for, a ROI analysis is always imperative. We will use set of key considerations developed by The Open Group to build and measure returns on investment (ROI) for cloud computing initiatives from a business perspective. Such analyses provide metrics to campaign cloud initiatives with the executive team. The model provides set of business metrics that build on the cloud computing model. We found following are business metrics that can help translate the indicators from the capacity-utilization curve to direct and indirect benefits to the business (Skilton). 1. Faster Adaption Cloud computing provides a means to implement software systems quickly at less cost. Hence cloud computing creates additional cost transformation benefits by reducing delays in decision costs by adopting pre-built services and a faster rate of transition to new capabilities (Skilton). The time sensitive business initiatives, which lack resources and skills, benefits most with cloud computing. 2. Total cost of ownership optimization In cloud computing environment it is the business user who has more say in selecting infrastructure and application features which meet their needs. In traditional IT setups very often the user requirements gets decoupled when IT starts implementing the business systems. But in clouds these two will be coupled.

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3. Rapid provisioning In traditional IT infrastructure it is very difficult to scale up and scale down as business activity goes up and down. Very often corporations are stuck with infrastructure build for peak processing times but often underused. Cloud computing solves this problem and also it makes provisioning time from weeks to hours. 4. Increased margin and cost control Revenue growth and cost control opportunities allow companies to pursue new customers and markets for business growth and service improvement. A company investing in new service or product has good estimate of how profitable the new product line will be. With cloud computing it is easier to buy only those software features which will match the profitability of the product. This is not true in conventional computing where the entire technology stack needs to be purchased and implemented in one single stroke. 5. Dynamic usage Elastic provisioning and service management targets real end users and their business needs for functionality as the scope of users and services evolve seeking new solutions. 6. Risk and compliance improvement Cloud computing abstracts the disparate physical layer into uniform virtual layers. This allows risk and compliance to be controlled by one single layer. If any government rules and regulations change it is just easy to make change in one place in the virtual machine than to change in physical servers in a typical data center. If some bug or threat is discovered then also it is lot easier to find the solution and to fix in the virtual servers then the typical setup. 7. Enhanced capacity utilization With cloud computing IT departments can buy only those services they really need and also free up computing resources when the utilization is low. Hence IT is able to prevent over or under provisioning of IT services.

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8. Access to business skills and capability improvement One thing is for sure with cloud computing, it frees up IT departments resources from mundane tasks of managing physical infrastructure at their data center. The IT can then focus on aligning IT services with business goals. The IT can then use IT services to enhance business goals, thus improving the organization skills and capability. Cloud Computing Obstacles and Opportunities In general, cloud computing faces a preconceived mindset among business and IT executives (Brodkin). We tried to address those first. Later we looked at the obstacles from a technical view point (Armbrust). A. General Cloud Computing Misconceptions In IT departments and in the businesses around the country, there are some misconceptions about cloud computing. And we wanted to address them here. 1. Cloud computing will put IT pros out of a job Most experts believe that the mundane tasks of administering IT infrastructure will move towards the cloud, however internal IT personnel resources will be needed to mange and integrate the services provided by the cloud. There will still be need for someone to make sure that the cloud services adhere to the corporate application frameworks and security policies. The presence of IT personnel will be required to make sure that the employees have means to access cloud to do their jobs. It is foreseeable that some jobs will move from IT departments to cloud vendor data centers, after some IT experts will be required to manage the vast IT infrastructure at the cloud vendors. 2. The cloud is free or inexpensive There is a feeling that cloud is cheap or free. If the prices are the only criteria, then cloud services are certainly lot cheaper than running a data center. But cloud service licensing fees are just a small part of using a cloud service. Lot of cloud customers have upgraded their Internet bandwidth to fully utilize the cloud services they signed up for. There are hidden legal costs to do cloud computing. The customers risk profile increases when the customer moves software application and its data to the cloud. A potential cloud customer needs to perform due diligence to make sure the service being bought is - 17 -

suitable for their application, and that the contract with a cloud provider is not harmful to the customer. A particular attention should be paid to those service contracts which state that the terms can be changed by the provider at will or with little or no notice 3. Cloud performance is never a problem As volume of work done at cloud increases the Internet bandwidth at cloud customer premises become bottle neck. The application users experience lag in data processing as more application volume is channeled to cloud. The remedy to this situation is to add more internet bandwidth. Typically this problem do not occur when processing is done locally at customers own premises. We also feel that the cloud service providers utilization ratio could be play role in the performance. The provider could be tempted to keep their infrastructure utilization ratios close to 90% to 100% in order to maximize revenues. But studies have shown that utilization ratios of 60% to 80% are able to perform optimally. When utilization ratio is 100%, system response time approaches infinity. If the cloud provider oversells, performance problems will manifest. Cloud vendors like to make it seem as if cloud platforms offer infinite scalability, but that may not be the case for power users. (Armbrust). A study, has found that as the number of connections to a cloud service goes up, response times also go up. An alarming fact was that some of the response times lagged to as much as three to five seconds. 4. You can replace Microsoft Office with products from Google, or Zoho Microsofts Office suite is one of most productivity tool used in businesses. Microsoft has spent 20 years in research and development of its Office suite. And most of cloud providers which offer competing products are not there yet and it might take more than 2 years for them to catch up with the features Microsofts office provide. The cloud vendors argue that most of the users do not require all the Office features. However in the studies done by IDC shows that nearly 97% were using Microsoft Office, and 77% were using Microsoft to the exclusion of all other platforms. Google Docs was being used extensively by nearly 20% of businesses, but mainly as a complement to Microsoft Office rather than as a replacement.

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5. The cloud is easy to set up and manage The cloud vendors information brochures will make customers feel that switching to cloud as easy as flipping a light switch. But the customers who have used cloud services say that it is not that simple. The customers face management responsibilities in terms of managing the service providers. These responsibilities also include integrating tools from multiple vendors, and provisioning new cloud services whenever user requirements change. The prevailing view is that it is easy to do customer or end user set up, since the user will need only an Internet browser to access the cloud. But from IT departments view point it is uphill battle to move to cloud. The most challenging part is to make sure that the IT department maintains control over the data, which is single most valuable resource for a corporation. The control is also required for both practical and legal reasons. If data has been moved to a cloud provider, then in future it might be quite impossible to move data to another provider or to in house. And if data is in the cloud there is a possibility that any government entity could seize employees or customers related sensitive information in course of a lawsuit. When a corporation signs up to move an existing system to cloud, the problem is how to move existing data to the cloud. Transferring through internet takes time and it costs money for the bandwidth used. Recently Fedex announced availability of a service where Fedex will move disks containing data from client to cloud provider data centers. Then there is another problem of how to move live systems with minimum amount of down time. The solution is here to send a snapshot of data to the cloud vendor, then synch the data up between snapshot and live system in certain amount of time. Once the live and cloud system are in synch, the system on the cloud could be made live and available to users. Taking snapshot and synching across the Internet could be a big hurdle to overcome. Another possibility exist with the clouds is that the data from various customers are inter mingled; hence there could be remote possibility of data exposure to unintended entities. The IT departments could not exercise same control over their data in cloud versus if the data was hosted in house. As Government keep passing laws for stricter control over data the onus is on the IT departments to make sure that the cloud

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computing contracts are crafted according to data control requirements as laid by the law. 6. Security is less in cloud. We feel data hosted in cloud is more secure than stored in house. There are cloud vendors who have larger security teams than a typical company like ours could have. Some of these vendors regularly hire hackers to test their cloud security periodically. As data gets moved to cloud the security policies needs to be enforced just like when data was in house. There has been some cloud security breaches due to lack of sufficient passwords.

B. Technical Obstacles and Opportunities. 1. Availability of Service. Cloud computing creates a single point of failure. A cloud provider typically has geographically spread out multiple data centers but possibly use same common software infrastructure and accounting systems creating single point of failure. Other possibility is that the company could go out of business which could be catastrophic for a company to lose its data. To address this problem, there needs to be business continuity strategy just like with any other software systems IT departments typically implement. There is another danger Cloud computing faces. It is distributed denial of service (DDoS) attacks. These days most of the cloud vendors have DDoS protection as their core competency. 2. Data Lock-In The cloud vendors propriety APIs are not standard, hence customer cannot easily move their data and programs from one vendor to another. In one way cloud vendors, are targeting customer lock-in. But this exposes cloud users to price increases, reliability problems and 100% inaccessibility if the cloud vendor goes out of business. The situation demands standardization of APIs so that business systems could access data hosted at multiple vendors and there is no single point of failure. If such APIs come into existence,

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it will allow for Surge Computing in which work load surge beyond the capacity of data center could easily be moved to the cloud. 3. Data Confidentiality and Auditability Since most of the clouds are public, in general the systems on clouds are exposed to more attacks. The Sarbanes-Oxley and Health and HIPAA regulations makes imperative for corporations to have auditability on their data. These obstacles could be easily overcome by use of existing features such as encrypted storage, Virtual LANs, and network middle boxes. Also additional layer on virtual cloud Operating System could be able to provide auditability. Many countries make it illegal to store some customer data outside national borders. Few cloud vendors like Amazon allow data to be stored either in US or Europe as per customers legal needs. 4. Data Transfer Bottlenecks This point discussed earlier is a significant road block in moving towards cloud. It typically costs $100 to $150 per terabyte to transfer 1 terabyte. Thus if the system on the cloud and application requires lot of data transfer to work then with multiple users accessing the system the cloud computing costs will quickly escalate to unmanageable proportions. Thus placement of web servers, application servers are very critical in cloud computing and should be done so intelligently to minimize traffic. The same problem persists in the initial setup, where shipping companies such as Fedex can transfer disk filled with data to the cloud vendor. The shipping option is faster when data sizing terabytes needs to be transferred to the cloud vendor facilities. 5. Performance Unpredictability Cloud vendors use virtual machines to provide their offerings. Bench marks have shown that as more virtual machines gets hosted on same storage infrastructure, the disk storage input output response time deviates a lot, thus slowing the applications in unpredictable way. Lot of these could be mitigated using techniques learned in 1980s with IBM mainframes, which functioned in lot similar. In next two to four years use of flash memory - 21 -

devices could also alleviate the problem. Flash memory does not have moveable parts, so it does not suffer from random seek time which mechanical disk suffers from. 6. Scalable Storage Cloud vendors need to support application loads with different I/O demand characteristics. There is lot of opportunity still open, to create storage systems which meet such unwieldy demands. Another challenge cloud vendors have in their hands is variable work load. If they are able to sign customers with varied load then this problem is subdued. For example if a cloud vendor has significant number of retailers, then all those retail customers might saturated the vendors infrastructure capacity during Christmas holiday season. 7. Bugs in Large-Scale Distribution Systems Since cloud computing is build on hundreds of commodity servers, when there is a bug it is difficult to find the source of the bug. Many times the debugging is done in live production systems as it is difficult to replicate the bug in small test environments. This problem is exasperated among cloud providers who have precluded virtual machines. As more vendors are moving towards virtual machines, it will be easier to debug. Virtual Machines are built on same image and functionally could be added to capture debugging information as a standard in all virtual machines deployed. 8. Quick Scaling Some cloud vendors like Amazon still charge their clients for machine hours even when the machines are idle. Thus opportunity exists to automatically scale quickly up and down in response to load saving customers money. In addition to saving money, such setup will also save resources if machines are powered down during periods of inactivity. Since most of the cloud vendors charge per hour and per byte, the cost mechanics will force programmers to write programs and applications more efficiently.

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9. Reputation Fate Sharing The customers of cloud computing share resources, thus a bad customer might look all bad. If one of the customers IP addresses gets blacklisted in a spam prevention services, then other customers reach will also be curtailed by the spam blocker. Reputation guarding services which work similar to trusted email services will help. The cloud vendors also want that liability of customer actions remains with customers. And they should not be held responsible for berserk customer. 10. Software Licensing Currently the licensee model offered by commercial software vendors such as Microsoft, Oracle, Sap, etc does not support cloud based utility model. Customers of these companies pay upfront to buy the software and then pay annual maintenance fee. This is totally opposite of cloud computing model, where customers pay small fee every month based on usage. Because of this, many cloud vendors offer open source software which is not restrained in this manner. This impasse can be overcome if the big software houses offer prepaid plans for bulk use that cloud vendor can sell at discount. Conclusions In this paper we tried to understand and define the nascent field of cloud computing. We felt that there the cloud computing is still in forming stage and there are lot of misunderstandings about cloud computing. Cloud Computing promises a lot. Scalability on demand, utility like on demand pricing, and easy setup, are some of the dreams computing industry always dreamed of. Now that vision is getting to reality. There are few shortcomings, as discussed, which will be removed in next few years. If used judiciously in conjugation with in house computing assets, cloud computing will help corporations to fill the internal gaps quickly. Cloud computing also allows implement new ideas quickly in less riskier ways. We feel cloud computing will allow many innovative companies to bloom since start up costs are so less with cloud computing. The subject of cloud computing is enormous and we tried to cover critical technical and managerial issues. We hope that this paper will be helpful for executives to understand cloud computing and pursue cloud computing if it meets their goals.

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