What’s with all the private cloud haters? They’re popping up
like mushrooms after a spring rain – analysts, consultants, even an occasional
peer on this site. In my opinion private
has a critical role to play. As with everything, it’s just a question
of selecting the right tools for the job. 

Private cloud skeptics, like ZDNet’s Phil Wainewright,
rightfully question the role and impact of private cloud. However, type-casting
private cloud’s “dreadful fragility and brittleness” shortchanges the transformational
role private cloud can play in addition to its ability to drive real-time–to-market
and efficiency benefits. 

Instead of “either/or,” I believe it’s a question of knowing
where and when to use the right mix of public
AND private cloud technologies to deliver the services your enterprise needs. 

Phil, like many pundits, cites the Netflix case study as a
great example of an organization that’s successfully “burnt the boats” and
moved wholesale to the public cloud. And it is! 

The Netflix example is compelling but I don’t believe it reflects
reality for most of today’s Fortune 500 IT professionals. These enterprises consistently
tell me the same thing; that their future is neither exclusively cloudy or
cloudless, but rather a hybrid
of service delivery
models – services that still need to be managed
for availability, performance and against disasters across the entire
end-to-end value chain. 

So, instead of getting all wrapped up around what type of
cloud, I believe we should focus on the real transformation – the
transformation to delivering flexible, secure, shared services with transparent
chargeback (or “show back” or “metering”) on consumption – not technology for
technology’s sake. 

Here’s a secret –
your users don’t care…

One of the best places to get started with the shift in
thinking to hybrid
is with services that are readily “consumerized” like smart phones
and email. One of our Enterprise CIO forum members, Clorox, recently moved from
mandating the device and service (in this case Blackberry smart phones and
servers) to an open model, where the end-user selects their own device and
simply connects to the Clorox email service (or “private cloud” if you will). 

It’s similar here at HP too. Access to email services is all
managed through a self-service portal and automated policy enforcement. I
believe it offers a glimpse into how IT and end-users will interact in a hybrid
delivery model. No matter what device, wherever I am, I get my messages. Is my
HP email powered by a private or public cloud? I don’t know. All I know is that
IT bills me monthly and it works. I love it. 

Fixed vs. variable
costs – FIGHT!

So if private clouds work so well for some, why all the heated
debate? The technology’s essentially the same. The end-user’s experience is
identical. So what’s the real difference? My take is that it’s a question of true
variable vs. fixed costs. 

At their core, the two flavors of cloud differ in that most
private cloud implementations are provided with a high proportion of fixed
costs.  In the above example my mailbox
is a variable cost for my business unit. (My business unit is only charged for
each user.) But for IT and therefore our balance sheet, it’s ultimately a fixed
cost. That is, IT and HP overall bears the real costs of licenses, hardware and
data center space whether or not anyone uses the service. 

According to industry estimates, 30-40 percent of a typical IT
shop’s expenses are variable. If you’re a start-up or subject to large swings
in IT utilization (say you’re running an online movie rental company that’s
essentially idle outside of your peak load between 7PM and 11PM), then that’s
way too low. The figure should be at least 60 percent.  In fact, the higher percentage of your costs
that are variable, the more control you have over peaks and troughs in demand. 

For me, that’s the real difference between a private cloud
and a public cloud. A private cloud represents predictable fixed costs. A public cloud represents variable costs. In the case of public cloud, when the service isn’t
in use, the only person stuck with over-provisioned infrastructure is the service
provider – and that’s a great topic for a different post. 

So private cloud makes sense for frequently used services,
or services where the peaks of consumption of one service coincide with the
troughs of another to create a predictable “base load” of demand.
Development/test workloads are one of the best candidates for this type of
service and one of the reasons we developed our Private
Cloud for Test software solution

What about less-common services? The challenge from an IT perspective
is when the users stop using the service. That’s where variable costs become important
and where the public cloud makes the most sense. 

Virtual insanity

Still, IT executives are wary. Frankly, I don’t blame them,
for two reasons. First, there are a lot of vendors engaging in what I refer to
as “cloud-washing,” in which suddenly everything they offer has been splashed
with a cloud veneer. It’s tough to know when you’re looking at a truly
transformative approach or legacy technology masquerading as a something new when
it’s really not – you need to know what questions to ask your vendors to ensure
you’re really getting what you need. 

The second reason is a lot harder, the soft stuff. 

forces you to make one of the biggest mental transitions since we
moved from mainframe to client-server and client-server to the Web. It forces the
shift from thinking about infrastructure and applications to thinking about
processes and services. 

These processes and services provide the foundation for a
highly transparent cost structures, letting you run what you want where it
makes the most sense economically. But true workload portability requires you
to transform the way you build applications and the way your structure your
operations to support them. It’s here that I think private cloud provides a
great stepping-stone. 

Private cloud,

Closing out, while I think that private cloud is wrongly
cast as a poor-man’s cloud by the haters, there is one area where I agree the
difference is material – the economics: maximizing utilization and value-added
is more involved than simply virtualizing servers. We as an industry still have
a long way to go in reshaping infrastructure and software licensing to enable variable
cost structures. (Before you ask why we’re not there yet, I know from
experience, it’s far more complicated than you can imagine!) 

So, while you can’t yet wave a magic wand and move to a
completely variable cost model for private services, you can use private
cloud to enable time to market, efficiency and compliance improvements while
preparing your people and your applications for the brave new world of hybrid

What’s more important to you – getting your people and
processes ready with private cloud or having the truly variable cost structures
of public?