The Private Cloud Is The Fake Cloud [CRACKED]

The reason that "private cloud" is not the best term is because the core definition of 'cloud' is that it must be elastic and scalable without the obligation to buy more hardware. So, by definition, an internal 'private cloud' should really just be referred to as 'internal infrastructure.'

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But buyers beware: Not all hosted software offerings marketed as "cloud" are true cloud solutions. Recognizing a lucrative chance to create an additional revenue stream, many on-premise vendors are trying to pull the cloud over your eyes by "cloud-washing" their applications.

True cloud vendors design their solutions from the ground up for the cloud. They code their software to perform better as a fully hosted solution and build talent and expertise around hosting, maintaining, and managing the software across hundreds of servers and across multiple levels of data redundancy in their own multi-tenant cloud environments.

Despite what fake cloud vendors will tell you, multi-tenancy matters. For example, with a true cloud provider, all customers typically access the same solution from the same cloud. This gives customers continuous and instantaneous access to the latest product upgrades.

The best cloud vendors also provide a customization platform that allows you to not only customize your application on their platform, but ensure that all of your customizations continue to work when a new product enhancement is rolled out by the vendor. This ensures that you not only get to use the latest functionality without delay, but that you do not need to constantly re-implement customizations and integrations you previously had in place every time a new product version comes out.

Now take a look at how fake cloud vendors work. Many ERP systems that are billed as running in the "cloud" were designed to run on-premise. These vendors typically do not host, manage, or maintain these "cloud" ERP solutions. Instead, they turn responsibility over to a local value-added reseller (VAR) or other service provider. This is very similar to how application service providers (ASPs) operated more than 20 years ago, and there's a good reason most of them went out of business.

True cloud vendors are almost always better funded, more financially secure, more scalable, and more reliable than VARs, many of which are operating on outdated business models. Look for a true cloud provider that is profitable, transparent, and demonstrates longevity and stability.

Fake cloud providers are trying to blur the lines between true cloud systems and hosted offerings. Yet the advantages they cite for their own systems are those touted by on-premise vendors. When it comes to speed of upgrades and deployment, performance, value, customization, and service, it is simply not much of a comparison.

Your computer desktop is now hosted in the private cloud sharing spaces with other companies windows desktops. Every picked up a sick baby from the Nursery? Your baby was hanging out with a whole bunch of other babies, one who happened to be sick. That sick baby infected all the other babies. When you picked up your kid and brought him home, they infected the rest of your family.

NetDocuments is explicitly built for the cloud and has only one version, NetDocuments. Their smallest customer is using the same software, their largest customer. All of their resources are going into one product.

The widespread adoption of the cloud has led to the emergence of hybrids, multi-clouds, and other cloud computing strategies. Still, confusion remains regarding the Virtual Private Cloud (VPC), especially with some hardware vendors masquerading as a true cloud provider. So before we delve into what makes a VPC a VPC, here's a recap of other clouds and cloud strategies.

Wall Street loves a hot trend and had essentially decided four years ago that the cloud was next. With corporations needing all of the cost savings/productivity benefits the cloud offered, the timing was perfect. Oracle (ORCL -0.05%) was one of the first blue chip enterprise companies to realize this opportunity. But recently, the database giant has come under severe criticism about the "authenticity" of its cloud services. It's being called fake.

However, David Linthicum of InfoWorld thinks they're idiots (I'm paraphrasing that a bit), which doesn't make sense. CIOs are spending billions annually with Oracle. But in Linthicum's recent article, he insists they don't know what they're buying: "Oracle is continuing its faux cloud strategy, adding to its private-cloud infrastructure offering the ability to rent for a monthly fee preconfigured application servers to be deployed in customer data centers. The available application servers -- what Oracle calls 'engineered systems'"

Still, Linthicum doesn't stop there: "The notion is they provide specialized capacity beyond what you deployed using Oracle's private cloud systems, which Oracle labels "infrastructure as a service" but is not actually a cloud IaaS offering -- it's the usual Oracle data center gear. Just as Oracle IaaS is not a true cloud offering, neither is Oracle's new "Iaas On Demand" selection of rental application servers."

Unlike with a true cloud on-demand service, your monthly fee -- which requires a three-year contract -- covers just the hardware, its maintenance, and some degree of usage. You pay extra for the Oracle software licenses and for "peak" usage (no definition or price given). It's not the standard cloud model, in which the entire service is included with the fee.

Yes, and no. Oracle's strategy does not focus solely on these assertions. In fact, it's quite the opposite. Oracle innovates at the technology layer, thereby giving customers more leverage and independence from consulting fees. Not everyone can be Cisco (CSCO -0.49%), which is in its fourth year of converting its own cloud infrastructure, which started 2009. Cisco hopes to be completed by the second half of this year. And this is an IT company that sells cloud services. Interestingly, it was in 2009 when Cisco started its decline. Had Cisco contracted out its cloud services to Oracle, it could have remained focus on growing its business. Therein lies the value.

Even if Linthicum's pricing claims were correct, then it means Microsoft's (MSFT -1.17%) Azure, which has a pay-as-you-go model, is also fake. But Microsoft has been reducing its prices because it can't compete. Conversely, there are twenty-five million users on Oracle's "fake" cloud, including National Australia Bank, which has paid Oracle more than $1 billion. I don't think Dell would be going private if it had a fake cloud like that. Besides, if customers can be so easily fooled, IBM's Smarter Solutions seems like the perfect alternative.

Likewise, Microsoft's Windows/Office franchises, which are still strong in the enterprise, have not helped propel Azure. Why? It's because the cloud concept itself, aka "software as a service" or "on-demand computing" is still evolving. Companies like Oracle do well servicing this transition. To that end, Linthicum owes Oracle and every CIO in America and those 42 other countries an apology.

On the business side of the Cloud, most companies today have policies to only procure Cloud-based Software as a Service (SaaS) products and plan to decline their usage of On-Premise software. According to Forbes, 83% of enterprise workloads will be in the cloud in 2020. This is because Cloud-based SaaS provides a much better experience for both users and administrators, such as fast loading times, no complicated installations, and no risky update or patch processes.

Even more insidious than the perils of Amateur Cloud (which I covered in my last post) is the allure of a phenomenon I'm calling Fool's Cloud. The more familiar name by which this is known to many enterprises and IT vendors is 'private cloud.' It's what happens when people look at the phenomenon of cloud computing, latch on to a few of its features, and implement something within their IT infrastructure that appears identical in their eyes, even though it omits some of the most crucial elements of cloud computing.

What's really insidious is the way that Fool's Cloud deteriorates so rapidly in comparison to true cloud computing. It starts off all shiny and new, sparkling with state-of-the-art capabilities and value. But because it's cut off from the cloud that it attempts to emulate, it quickly falls behind, tarnishing the competitiveness of your IT infrastructure and becoming as resistant to decommissioning as a lump of radioactive waste.

Although I said earlier that privately-hosted implementations have their uses, they should only ever be considered as a transitional platform and enterprises should make sure they fully understand what they're missing out on when they opt for private hosting as opposed to public cloud alternatives. John Treadway at CloudBzz yesterday published a very helpful blog post about private cloud and the benefits it can deliver if implemented effectively. Done well, it really does produce a huge step forward in enterprise IT modernization, automating many of the provisioning and management processes and eliminating a lot of duplication and wasted resource in the IT infrastructure. But he also points out a salient proviso: "this is bloody difficult to pull off."

[Disclosure: I'd like to acknowledge funding by vendors of recent work that helped to develop the above concepts, in particular a white paper for OpSource, Enterprise Meet Cloud. Companies contract my services not to influence my opinion but because they know I'm already on their wavelength. Regular readers of this blog will be aware of my incipient bias in favor of cloud services.] 2b1af7f3a8