Do Clouds Compute? A Framework for Estimating the Value of Cloud Computing (WeB 2008 – The Seventh Workshop on e-Business)...
<ul><li>Observations </li></ul><ul><ul><li>“ Cloud Computing” very popular in 2007 and 2008 </li></ul></ul><ul><ul><li>Ric...
A Short History of Cloud Computing Amazon EC2 (August 2006) Google App Engine (April 2008) Microsoft Azure (Oct 2008) Face...
<ul><li>The classical problem </li></ul><ul><ul><li>Under-utilized server resources waste computing power (and energy) </l...
<ul><li>We propose a basic framework for estimating value and determine benefits from Cloud Computing as an alternative to...
Qualitative Analysis 1. Business Scenario Create a list of Cloud Computing providers and their services and evaluate the s...
Example: Animoto* *http://aws.typepad.com/aws/2008/04/animoto---scali.html 1.1 Business Case <ul><ul><li>Animoto Videos Fa...
Quantitative Analysis 2. Cost Comparison ** e.g. Amazon EC2 and S3, FlexiScale, Mosso (Rackspace), Joyent, etc. * e.g. on-...
Quantitative Analysis: Example 2. Cost Comparison ** e.g. Amazon EC2 and S3, FlexiScale, Mosso (Rackspace), Joyent, etc. *...
<ul><li>Conclusion </li></ul><ul><ul><li>Clouds provide scalable, abstracted IT infrastructure as Services </li></ul></ul>...
Thank you! Questions & Discussion
 
The Beauty of Simplicity <ul><li>Web Development </li></ul><ul><li>Infrastructure </li></ul>complex, error-prone, hideous ...
<ul><li>End-user applications, Software-as-a-Service (SaaS) </li></ul><ul><li>Platform-as-a-Service (PaaS) </li></ul><ul><...
Grid vs. Cloud Grid Cloud Underlying concept Utility Computing Utility Computing Main benefit Solve computationally comple...
Animoto Use Case http://www.animoto.com
Simple Cost Calculation (1) Amazon EC2 Extra-large standard instance 1 ECU / instance 8 ECU 8 * http://aws.amazon.com/ec2/...
Simple Cost Calculation (2) * plus additional infrastructure, power, networking and IT staff; keep 20% empty space buffer ...
Simple Cost Calculation (3) Time (month) Demand (predicted) Cloud Cloud costs Cum Cloud costs Cloud infrastructure / deman...
(Fictional) Example: Large-Scale Enterprise 1.1 Business Case <ul><ul><li>Internet-scale testing environment </li></ul></u...
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Do Clouds Compute? A Framework for Estimating the Value of Cloud Computing.

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My slides of the WeB 2008 workshop on e-Business in Paris. The framework that I describe in the presentation assists decision makers to understand the value proposition of Cloud Computing technology.

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  • can you provide a copy of the extended slide? retawa@37.com
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  • Hi,
    I would like to say thank you very much for this useful study that you have done. One small remark, the following link does not work http://amt.gartner.com/TCO/index.htm. And the question, do you still continue to work in this direction.
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  • There is a typo on page 19 in the second column, rows 6-8: it should be 400.00 instead of 4000.00. The demand spike only lasts for 1 week.
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  • Do Clouds Compute? A Framework for Estimating the Value of Cloud Computing.

    1. Do Clouds Compute? A Framework for Estimating the Value of Cloud Computing (WeB 2008 – The Seventh Workshop on e-Business) Markus Klems , Jens Nimis, Stefan Tai Forschungszentrum Informatik, Karlsruhe (Germany)
    2. <ul><li>Observations </li></ul><ul><ul><li>“ Cloud Computing” very popular in 2007 and 2008 </li></ul></ul><ul><ul><li>Rich ecosystem of Cloud providers, enablers and users </li></ul></ul><ul><ul><li>Our understanding: Cloud != Grid </li></ul></ul><ul><li>Research questions </li></ul><ul><ul><li>What is Cloud Computing? </li></ul></ul><ul><ul><li>What is the value proposition of Cloud Computing? </li></ul></ul><ul><li>Our approach & contribution </li></ul><ul><ul><li>Collect real-world use cases where Cloud Computing is applied </li></ul></ul><ul><ul><li>Develop a structured, systematic framework to assist decision makers in valuating benefits specific to Cloud Computing technology </li></ul></ul>Introduction <ul><ul><li>Since Cloud Computing addresses different usage scenarios than Grid Computing we need a new way to valuate this technology. </li></ul></ul>
    3. A Short History of Cloud Computing Amazon EC2 (August 2006) Google App Engine (April 2008) Microsoft Azure (Oct 2008) Facebook Platform (May 2007) Amazon S3 (March 2006) Salesforce AppExchange (March 2006) Our Definition Building on compute and storage virtualization technologies, and leveraging the modern Web, Cloud Computing provides scalable and affordable compute utilities as on-demand services with variable pricing schemes, enabling a new consumer mass market.
    4. <ul><li>The classical problem </li></ul><ul><ul><li>Under-utilized server resources waste computing power (and energy) </li></ul></ul><ul><ul><li>Over-utilized servers cause interruption or degradation of service levels </li></ul></ul><ul><li>The promise: </li></ul><ul><ul><li>Server resources are delivered on-demand as usage-metered compute utilities </li></ul></ul><ul><ul><li>Cloud-user does not need to forecast demand </li></ul></ul><ul><ul><li>Turn fixed costs into variable costs </li></ul></ul>Promises of Cloud Computing <ul><li>The emerging problems </li></ul><ul><ul><li>Highly dynamic scalability demands </li></ul></ul><ul><ul><li>Time to market </li></ul></ul><ul><li>Leveraging the modern Web </li></ul><ul><ul><li>Evolution of Desktop apps to Software-as-a-Service </li></ul></ul><ul><ul><li>Programmable Web </li></ul></ul><ul><li>The promise: </li></ul><ul><ul><li>Reduced provision lead times </li></ul></ul><ul><ul><li>Scalability </li></ul></ul><ul><ul><li>Sophisticated infrastructure is available as Services </li></ul></ul><ul><li>The promise: </li></ul><ul><ul><li>A stable, reliable platform to develop, test and deploy network-centric end-user applications </li></ul></ul>
    5. <ul><li>We propose a basic framework for estimating value and determine benefits from Cloud Computing as an alternative to conventional IT infrastructure, such as on-premise infrastructure. </li></ul>Our Framework: Overview 1. Business Scenario 2. Cost Comparison Value of Cloud Computing Service in opportunity costs
    6. Qualitative Analysis 1. Business Scenario Create a list of Cloud Computing providers and their services and evaluate the services that meet your business scenario requirements according to the following criteria. 1.1 Business Case 1.2 Organization 1.3 Compliance 1.4 Business Objectives 1.5 Strategy 1.6 Demand 1.7 Application 1.8 Non-Functional Requirements 1.9 Finance
    7. Example: Animoto* *http://aws.typepad.com/aws/2008/04/animoto---scali.html 1.1 Business Case <ul><ul><li>Animoto Videos Facebook application </li></ul></ul>1.2 Organization <ul><ul><li>Start-up company </li></ul></ul>1.3 Compliance <ul><ul><li>(data ownership and privacy regulations) </li></ul></ul>1.4 Business Objectives Drastically increase user base 1.5 Strategy Viral marketing 1.6 Demand <ul><li>Linear growth in the first month up to 25,000 users </li></ul><ul><li>After a feature change: increase to 250,000 users within three days (1000%) </li></ul>1.7 Application <ul><ul><li>Generate personalized music videos from users’ images and music files </li></ul></ul>1.8 Non-Functional Requirements <ul><li>Scalability </li></ul><ul><li>High availability </li></ul>1.9 Finance Low liquidity, tie costs to growth
    8. Quantitative Analysis 2. Cost Comparison ** e.g. Amazon EC2 and S3, FlexiScale, Mosso (Rackspace), Joyent, etc. * e.g. on-premise IT infrastructure Infrastructure #1* (world without Cloud Computing) Infrastructure #2** (world with Cloud Computing) Define a cost metric for each attribute Calculate a cost estimate for #1 for each attribute Define a cost metric for each attribute Identify comparable infrastructure attributes Calculate a cost estimate for #2 for each attribute Aggregate the cost estimates Aggregate the cost estimates Value of Cloud Computing Services in terms of opportunity costs
    9. Quantitative Analysis: Example 2. Cost Comparison ** e.g. Amazon EC2 and S3, FlexiScale, Mosso (Rackspace), Joyent, etc. * e.g. on-premise IT infrastructure Infrastructure #1* (world without Cloud Computing) Infrastructure #2** (world with Cloud Computing) Define a cost metric for each attribute Calculate a cost estimate for #1 for each attribute Define a cost metric for each attribute Identify comparable infrastructure attributes Calculate a cost estimate for #2 for each attribute Aggregate the cost estimates Aggregate the cost estimates Value of Cloud Computing Services in terms of opportunity costs e.g. processing power (ECU), storage capacity, … On-premise infrastructure Amazon EC2 Cumulative costs for attribute “processing power” Cumulative costs for attribute “processing power” Weigh costs for “processing power” with 100% Weigh costs for “processing power” with 100% Compare costs
    10. <ul><li>Conclusion </li></ul><ul><ul><li>Clouds provide scalable, abstracted IT infrastructure as Services </li></ul></ul><ul><ul><li>We propose a structured, systematic framework to value benefits from using Cloud Computing technology </li></ul></ul><ul><li>Future Work </li></ul><ul><ul><li>Further categorize use cases and apply our framework </li></ul></ul><ul><ul><li>Identify more valuation methods to extend the framework </li></ul></ul><ul><ul><li>Develop tools to compare different Cloud offerings and provide decision support </li></ul></ul><ul><li>More information </li></ul><ul><ul><li>http://cloudwiki.fzi.de </li></ul></ul><ul><ul><li>http://www.eOrganization.de (powered by Google App Engine) </li></ul></ul><ul><ul><li>http://www.cloudytimes.com (my blog) </li></ul></ul>Conclusion & Future Work
    11. Thank you! Questions & Discussion
    12.  
    13. The Beauty of Simplicity <ul><li>Web Development </li></ul><ul><li>Infrastructure </li></ul>complex, error-prone, hideous spaghetti code simple, test-driven, elegant, stable, agile Web development framework complex, error-prone, fragile IT infrastructure simple, elegant, stable, scalable, pay-per-use IT infrastructure (as a Service)
    14. <ul><li>End-user applications, Software-as-a-Service (SaaS) </li></ul><ul><li>Platform-as-a-Service (PaaS) </li></ul><ul><li>Infrastructure-as-a-Service (IaaS) </li></ul>Cloud Ecosystem Google App Engine Platform as a Service (PaaS) End-User Applications Salesforce AppExchange Facebook Platform Facebook Apps Live Mesh AppExchange Apps OpenSocial Apps Amazon Web Services Rackspace 3tera Joyent Infrastructure as a Service (IaaS) Brokers, Tools and Frameworks End-User Applications flexiscale NASDAQ Market Replay Jungle Disk Powerset Mosso cohesiveFT RightScale MLB zimory enomaly Aptana cloud
    15. Grid vs. Cloud Grid Cloud Underlying concept Utility Computing Utility Computing Main benefit Solve computationally complex problems Provide a scalable standard environment for network-centric application development, testing and deployment Resource distribution / allocation Negotiate and manage resource sharing; schedulers Simple user <-> provider model; pay-per-use Domains Multiple domains Single domain Character / history Non-commercial, publicly funded Commercial
    16. Animoto Use Case http://www.animoto.com
    17. Simple Cost Calculation (1) Amazon EC2 Extra-large standard instance 1 ECU / instance 8 ECU 8 * http://aws.amazon.com/ec2/#instance Price 0.8 $ / (extra-large standard instance * hour) Additional services 0.2 * assumed to be additional 25% of the ECU price Total costs 0.125 $ / (ECU * hour) On-Premise Servers 1 dell.com: Quad Core Intel Xeon 5405 ECUs / server 8 dell.com: Quad Core Intel Xeon 5405 ECU 8 Price / server 1700 dell.com: Quad Core Intel Xeon 5405 Additional infrastructure 850 * assumption: 50% of server costs CapEx 850 $ / year (straight line depreciateion over 3 years, no discounting) CapEx / hour 0.10 $ / hour Power 213 * assumption: 25% of infrastructure costs / year IT management 85 * assumption: 10% of infrastructure costs / year Network fees 85 * assumption: 10% of infrastructure costs / year OpEx 383 $ / year OpEx / hour 0.04 $ / hour Total costs 0.018 $ / (ECU * hour)
    18. Simple Cost Calculation (2) * plus additional infrastructure, power, networking and IT staff; keep 20% empty space buffer to max. predicted demand Cost Comparison: IT infrastructure #1 IT infrastructure #2 Description Quad-core servers* Amazon EC2 Scenario Starting with 400 ECU in the first month; 1000% instant traffic increase in the second month; then back to 400 Metric: USD / (ECU * h) 0.02 0.125 Cum. costs of 1 st month 56,729 USD 33,600USD Cum. costs of first 6 months 340,373 USD 277,200 USD
    19. Simple Cost Calculation (3) Time (month) Demand (predicted) Cloud Cloud costs Cum Cloud costs Cloud infrastructure / demand On-premise infrastructure On-premise infrastructure costs Cum on-premise costs On-premise infrastructure / demand 1 400.00 400 8400 8400 100% 4800 14182 14182 1200% 400.00 400 8400 16800 100% 4800 14182 28364 1200% 400.00 400 8400 25200 100% 4800 14182 42547 1200% 400.00 400 8400 33600 100% 4800 14182 56729 1200% 2 4000.00 4000 84000 117600 100% 4800 14182 70911 120% 4000.00 400 8400 126000 10% 4800 14182 85093 120% 4000.00 400 8400 134400 10% 4800 14182 99275 120% 4000.00 400 8400 142800 10% 4800 14182 113458 120% 3 400.00 400 8400 151200 100% 4800 14182 127640 1200% 400.00 400 8400 159600 100% 4800 14182 141822 1200% 400.00 400 8400 168000 100% 4800 14182 156004 1200% 400.00 400 8400 176400 100% 4800 14182 170186 1200% 4 400.00 400 8400 184800 100% 4800 14182 184368 1200% 400.00 400 8400 193200 100% 4800 14182 198551 1200% 400.00 400 8400 201600 100% 4800 14182 212733 1200% 400.00 400 8400 210000 100% 4800 14182 226915 1200% 5 400.00 400 8400 218400 100% 4800 14182 241097 1200% 400.00 400 8400 226800 100% 4800 14182 255279 1200% 400.00 400 8400 235200 100% 4800 14182 269462 1200% 400.00 400 8400 243600 100% 4800 14182 283644 1200% 6 400.00 400 8400 252000 100% 4800 14182 297826 1200% 400.00 400 8400 260400 100% 4800 14182 312008 1200% 400.00 400 8400 268800 100% 4800 14182 326190 1200% 400.00 400 8400 277200 100% 4800 14182 340373 1200% Sum 24000.00 13200 277200     115200 340373    
    20. (Fictional) Example: Large-Scale Enterprise 1.1 Business Case <ul><ul><li>Internet-scale testing environment </li></ul></ul>1.2 Organization <ul><ul><li>Complex and heterogeneous IT infrastructure </li></ul></ul>1.3 Compliance <ul><ul><li>Industry-dependent, e.g. </li></ul></ul><ul><ul><li>Financial / accounting: SOX, Basel II </li></ul></ul><ul><ul><li>Health care: HIPAA compliance </li></ul></ul><ul><ul><li>… </li></ul></ul>1.4 Business Objectives Reduce time to market by shortening innovation cycles 1.5 Strategy Private or public Cloud? 1.6 Demand Predictable, expected demand 1.7 Application <ul><ul><li>Java EE + JBoss + Oracle DB + … </li></ul></ul>1.8 Non-Functional Requirements Security 1.9 Finance Taxation

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