Does This Cloud Have a Silver Lining

by Alex Hankewicz and Leslie Satenstein
September 2009

Introduction

Cloud Computing, although widely touted as an innovative new approach, to visualize computing as a utility has changed the way computing is delivered. Computing can be seen as a utility and as such can makes the acquisition of software as a service(SaaS) and shapes the way IT hardware is designed and purchased. This document is designed to allow the reader to navigate though the concepts of cloud computing and determine how it may benefit your organization.

Cloud Computing refers to both the applications delivered as services over the Internet and the hardware and systems software in the datacenters that provide those services. The services themselves have long been referred to as Software as a Service (SaaS). The datacenter hardware and software is what we will call a Cloud. When a Cloud is made available in a pay-as-you-go manner to the general public, we call it a Public Cloud; the service being sold is Utility Computing. We use the term Private Cloud to refer to internal datacenters of a business or other organization, not made available to the general public. Thus, Cloud Computing is the sum of SaaS and Utility Computing, but does not always include Private Clouds. Private Clouds are herein defined as internal web based applications where access is possible only from within the corporations intranet, but not from outside the corporate network.

People can be users or providers of SaaS, or users or providers of Utility Computing. We focus on SaaS Providers (Cloud Users) and Cloud Providers, which have received less attention than SaaS Users.

What are the fundamental characteristics of cloud computing

From a hardware point of view, three aspects are new in Cloud Computing:

1. The ability to access a wide variety of enterprise applications which provides users solutions in a relative short time interval in a word: Speed
2. The ability to provide users to pay for only applications they need and to scale incrementally as the requirements justify further expenditure of software and IT resources. To summarize: Scalability
3. IT Professionals are permitted a greater degree of flexibility as they pay based on processor time to run the application and for the CPU memory and the amount of storage that is required to manage the application. Conclusion: Agility
4. As your computer apps run via the internet the requirement for internal hard disk space is reduced considerably by exploiting the Cloud’s ability to provide temporary disk storage.

Recent CPU and memory hardware technology developments along with new manufacturing processes has improved computer hardware costs and allow powerful computers (rackmount, blade hardware, desktops, etc) delivered with excess computing capacity. On a dedicated basis of one computer per application, the computer hardware is beyond the needs of current IT applications because only a small percentage of the CPU cycles are actually used every second, with most of the activity being database to disk input/output. With the balance of the time the computer chip is idle. The bulk of the elapsed time is spent waiting for data entry or disk activity. Virtual Systems allow the isolation and sharing of these powerful hardware configurations.

In fact, in the 1960’s, IBM introduced a mainframe system called VM. While VM was mainframe client based, it was the first major commercial implementation of virtual machines and virtual computing. More recently vendors such as Red-Hat, Novell, Ubuntu, VMware and Microsoft offer VM facilities. This avalanche to VM was started by a company called VMware. VM software as other VM systems allows the one physical computer to execute application programs that emulate itself in software. Each of these applications appears to be as a dedicated computer. These emulations allow a many to one scaling of computers to hardware and as a consequence, a many to one set of operating cost reductions. One nice feature of the emulations is that it provides real-time support of your local printer to print from the cloud provider’s application.

Internet speeds

Irrespective of cloud computing, there is a requirement for faster and faster connection speeds. Cloud computing will substantially increase the demand.

Assuming, with overheads, current low cost PC hardware supports 10/100megabit speeds and in some cases, one Gigabit speeds. While faster speeds were available as proprietary offerings, there is a pending standard for 40 and 100 Gigabit Ethernet protocols, with "Pre-standard 40 Gigabit and 100 Gigabit Ethernet products — server network interface cards, routers, switch uplinks and switches are due on the market before year-end. The pent up demand will also show up in the need for new internet cabling, capable of supporting these high speeds.

In a PDF publication, John D’Ambrosia, chair of the 802.3ba task force in the IEEE and a senior research scientist at Force10 Networks, indicates quite strongly that there is pent-up demand for 40 Gigabit and 100 Gigabit Ethernet, . D'Ambrosia says even though 40/100G Ethernet products haven't arrived yet, he's already thinking ahead to terabit Ethernet standards and products by 2015. With the forecasted demand for SaaS and other cloud computing, the general call for a higher speed will be as soon as 2010.

Benefits of VM systems

Pro’s

- Lower TCO has been touted as one of the key factors in moving to a cloud model in the companies in the SMB space as they have resource constraints in both what technologies they can deploy and in IT bring staffing to support an application.
- Cloud computing brings about improvements in Risk Management in that if one of the VM slot application is hit with a virus, that virus cannot be transferred to another VM machine. The fastest cure for the eliminating the virus is to shutdown the infected machine and start a duplicate VM machine and transfer the over the application data. While not quite as simple as doing “Poof”, with the shutdown the virus has disappeared into nowhere and hopefully, with no loss of productivity.
- Cloud Computing provides for another way to have a thin client connected to a host. The comparison with Citrix to VM is as follows: Citrix offers virtual terminals such that all Citrix terminals reside in one name space, and where the crash of one Citrix terminal may bring down all the others. In the VM environment, if a VM crashes, only that one VM crashes, and turn around time to returning it on line can be as short as ten seconds
- Access to the application in the cloud is by logon and password, in an encrypted session (https://...)
All communication between user and cloud is encrypted, and in many cases, only for recognized ranges or URLS and obligatory use of Captcha phrases to accommodate the logon screen. (Captcha phrases are those images, usually at the bottom of a web page, that ask for you to enter the letters appearing visually. Sometimes they are as simple as asking you what is the value of “10 – 3”.

Con’s

- The user may have a dropped session, which may result in an open connection waiting for a response. Generally, sessions do have idle-activity timeouts; but a session timeout may be set long, leaving a potential vulnerability.
- When a user leaves his computer on for long periods without data input. The session timeout may a) drop the transactions in process, or b) save the session for a restart. Either action will impact the database system being driven by the application.
- Of the negative aspects of cloud computing and the concerns of many SMBs is the answer to the question “Where is my data and who owns the data? Is it legal for the data to be stored offshore? Does it make financial sense?” If the internet is down, how do I continue my business? Vendors counter the fears with arguments that data stored in the cloud is inherently safer than data that inevitably ends up on scattered laptops, smart-phones, flash drives and home PCs. Internet access can be made available to the same reliability as the business connected telephone system.
- If the SMB subscribes to a SaaS such as CRM or HR, there is solely an interaction with the application. Most often, the SMB does not have the ability provided to download data. Therefore, while he may own the data, he may not be able to export it.
- Bandwidth concerns may cause difficulties in being able to move large amounts of data to and from cloud environments, given that the bandwidth from a typical corporate environment
- Privacy regulations which affect company data stored in the cloud are vague and as such with compliance and privacy concerns being increasingly vigilant this could limit cloud implementation
- Governments may stipulate that the SaaS application be open to their inspections. This right of inspection must be harmonious with all governments where the distributed application data is stored.
- Software licensing the traditional business model of software designed as a permanent installation based on a fixed number of users will no longer be valid. As in a cloud environment the number of users can change as required, this may mean SLA’s will have to be redrawn to support those issues. Organizations in the SMB space can greatly benefit from adopting the cloud model as resources constraints in terms of both budget and IT staff resources limited. Cloud computing is another way to optimize those issues..

Flexibility Cloud Computing Offers through it’s component layers

To best illustrate the advantages offered within the realm of cloud computing the box below mentions each component layer followed by a brief explanation and some examples currently in use.

The six component layers of cloud computing
- Clients
- Services
- Application
- Platform
- Storage
- Infrastructure

Client

Cloud clients generally refer to either hardware or software which requires cloud computing to run the application. Examples of this can be Mobile Phones which can access multiple on line applications i.e. Google Android, iPhone, etc. Thin client applications can be supported in a PC with Linux gOS for web browsing capabilities. Thick client is by definition: when an app can run independent of the central server.

Service

Service can include products or services that are accessed and delivered in real time over the internet. i.e. PayPal, Google Maps etc. As the licensing or setup costs for an in-house version of these services may not be cost justified, the Cloud (service bureau) type of facility fills the needed gap. There can be a mix and match of in-house and SaaS applications.

Application

A SaaS application in the cloud is a service bureau application with extra accessibility rules and connectivity. A cloud application uses the cloud in the software architecture. Generally the application does not have to be installed on the users computer as it is accessed only through the internet i.e. SaaS. Many applications are only needed for a few hours per day. On a VM machine, that application can be started and available within minutes or seconds. Typical part time SaaS applications are used for Human Capital Management (HR). Other applications such as Business Intelligence (BI), Customer Relationship Management (CRM). Applications with similar characteristics fall into this category.

Platform

Unlike service bureau applications, where the hardware was an important criteria, by utilizing a cloud platform we don’t care about the platform, we care about the functionality. The Cloud platform is a virtual machine and enhances the ability to deploy applications without the cost of managing hardware and software layers. The offerings can include an integrated solution to enable workflow design, application testing and versioning. Examples .NET, Web Application Framework, Ruby on Rails.

Storage

Cloud computing is the migration of applications, storage, and other IT resources from desktops and company data centers to massive, often scattered server farms. These server farms, operated by third-party providers, are accessible to users over the “Internet Cloud”, thus giving rise to the name.

Cloud computing Storage and archiving is a new IT service and consists of the provisioning of multiple gigabytes of disk storage. Storage will be provided in a networking "cloud" for digital content providers. Thus, a hosting service setup somewhere with a new set of SaaS applications (BI, HR, Payroll and other) will exist, available via the internet. Some of these applications rely on large quantities of storage for statistical analysis or for archival data. Other applications require smaller amounts of storage, for the company that has preferred to not to host this application. In many cases, that data will not likely to be returned to the origin business.

The plus side of cloud computing is that the “cloud” vendor can provide either or both the Virtual Machine environment and the data storage. Storage that is highly scalable and managed with newer file systems designs (LVM, Z64, Tru64) allows file sizes in petabytes (one quadrillion bytes, or 1000 terabytes (a million gigabytes)). Besides scalability, these new file system designs permit rapid recovery if ever there was a system crash. The managing of archives, restoring and performance tuning for rapid access are the responsibility of the cloud vendors. ISPs currently are the majority of the cloud computing clients but this rapidly changing as more apps are developed strictly for the cloud. This coupled with the VM machine appliance, responsibility for the management of backups, database recovery, etc, is transferred to the third party of whom the bigger players are EMC2, AMAZON, and NETAPPS. Cloud storage will continue to grow as more apps are being directed to the cloud and storage will be billed as a utility based on usage per gigabyte. Some additional players in this storage space arena for Database include (Amazon SimpleDB, Google App Engine's Big Table datastore) Network attached storage (MobileMe iDisk, Nirvanix CloudNAS) (Live Mesh Live Desktop component, MobileMe push functions) Web service (Amazon Simple Storage Service, Nirvanix SDN) Backup (Backup Direct, Iron Mountain Inc services)

Infrastructure

Cloud computing infrastructure includes:

* Virtualization and automation
* Interchangeable resources such as servers, storage and network
* Management of these resources as a single fabric
* Elastic capacity (scale up or down) to respond to business demands
* Applications (and the tools to develop them) that can truly scale up or down
* Resources delivered as a service including servers, network equipment, memory, CPU, diskspace, data center facilities,
* Dynamic scaling of infrastructure which scales up and down based on application resource needs
* Variable cost service using fixed prices per resource component
* Multiple tenants typically coexist on the same infrastructure resources
* Enterprise grade infrastructure allows mid-size companies to benefit from the aggregate compute resource pools

For the SMB office business office, generally, the infrastructure required to support cloud computing is relatively simple. It consists of a telecommunication line, modem and routers capable of supporting the number of concurrent users that will need to access the SaaS application. In most SMBs, the telecom architecture is already in place due to other business requirements. In terms of servers and software to backup and restore the data, there is no infrastructure requirement. All that data and application is in the cloud, and is the responsibility of the SaaS vendor for backup management.

A final word

The key vendors have entered the domain of cloud computing in a big way, each touting their unique approaches to this growing market. The advantages of cloud computing are widely known

- No large capital investment required
- Scalable to enterprise growth requirements
- Minimal IT in-house infrastructure required.

As our current economic picture remains challenged, more and more “C-level” executives will quickly encourage an optimization of their IT investments through the migration to the cloud computing model.

Figure 1.- Below Illustrates economic advantages of cloud computing.(Click to zoom-in)



Figure 2.- Some Vendors deeply involved in Cloud Services (Click to zoom-in)



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Copyright itBMS.biz September 2009

Supply Chain Management and Industry Best Practices

Leslie Satenstein / August 2009

What is a supply chain?

If your company builds a product for customers using parts purchased from suppliers, then in simplest terms you have a supply chain. A supply chain is the management of the links or nodes from various suppliers (vendors) to your customers. A supply chain therefore includes activities of CRM purchasing, logistics, warehouse management, finance, e-commerce and depending upon the industry, a lot more.

Before the advent of global communications and the internet, management best practices Supply chain was in it’s infancy and consisted mainly of knowing the lead times for delivery of products. Order management was by fax, delivery schedules uncertain, necessitating extra safety supplies to eliminate stock-outs. Today technology with high speed communication and globalization places greater importance on supply chain management. Supply chain management addresses the management of all the links/nodes and business concerns from the small manufacturer or reseller to the behemoth sized company with its multiple global distribution centers.

What is considered Best Practices

“To reduce costs and maintain customer satisfaction, most companies institute optimization exercises that lead to the best way to manage the links. Most of the time optimization activities deliver results within that enterprise. Too often, the activities of vendors and customers are not included in the optimization exercise. If a process is common across businesses generally, it would seem there is an opportunity for Best Practices” where all participants profit from optimization.

What are the elements that make up “Best Practices.”

Best Practices are the activities to ensure that the supply chain is operating as efficiently as possible and generating the highest level of customer satisfaction at the lowest cost. Best practices dictate that “Supply Chain Management” attacks three universal generalized business activities consisting of: strategic; operational; and tactical.

Strategic: This common business activity looks for opportunities to reduce costs while optimizing supplier and customer transportation delivery costs and lead-times. The strategic decisions take into account factors such as the size and location of manufacturing sites, long term supplier agreements, products to be sold and sales markets.

Operational: Every day decisions are made that affect how the products move along the supply chain links. Currently the weakest links in the supply chain process are vendors. Schedule changes to production are made due to vendor’s late deliveries, or parts problems, misunderstanding of purchasing agreements with suppliers, order changes or additions from customers and not the least, warehouse product movements. Delays are cumulative.

Tactical: Decisions focus on implementing measures that will reduce costs. Examples include best manufacturing practices, developing a purchasing strategy with favored suppliers, working with logistics companies to develop cost effective transportation and implementing warehouse strategies to reduce the cost of storing and handling inventory. Newer technologies that complement bar coding include RFID tags for pallets, boxes and items, tight links to website e-commerce systems, employing Business Intelligence (BI) software for in-depth analysis of the nodes in the supply chain activities.

What are some of the concerns?

In every industry, a “Best Practice” is developed by a group of experts who share their knowledge and experience. They work to define the best method of operating a common process. For example, the consumer goods to retail industry pulled together under ECR. ECR or “Efficient Consumer Response” is a joint trade and industry body working towards making the grocery sector as a whole more responsive to consumer demand and promote the removal of unnecessary costs from the supply chain. The Global Commerce Initiative is there to develop and publish Industry Best Practices for common processes.

If a company expects to achieve benefits from their supply chain management process, they will require some level of investment in technology.

In the Best Practices area, two flaws that cause less then optimal “Best Practice” results are shrinkage and fraud. These two elements require due diligence and close scrutiny of new and even long term vendors to detect reasons for causing cost overruns and reducing “Best Practices” benefits.

ITMBS – How can we help?

ITBMS consultants have distribution and manufacturing experience in the field of supply chain and business practice optimization. ITBMS can work with you to improve existing business practices with your ERP system or to help you select a new ERP system that responds to your business requirements. Our skills include helping you adopt Internet technologies such RFID, warehouse layout and e-commerce web software.

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