Amazon demystifies cloud computing

With all the buzz surrounding cloud computing today, enterprises large and small may still be grappling with what the term really means for their business.

Amazon Web Services (AWS) senior vice president Andy Jassy took the opportunity to demystify some misconceptions about cloud computing and its benefits to enterprises as part of the IDA Distinguished Speaker Series on Thursday. AWS also announced its first Asia-Pacific Region in Singapore.

Myth: The cloud is not reliable
Jassy: It’s just not true. One of the key reasons why AWS has grown so fast in the last four years is the operation and performance of our services has been very good. Amazon EC2 has a service level agreement of 99.95% and last year we didn’t pay out once on these SLAs. We spend about three hours every week looking at thousands of metrics to find any part of our service that’s not operating well. Many of  our customers have told us that their operational performance has improved since getting on the cloud relative to what they’ve achieved on their own.

Myth: Losing control over your data
Lassy: The fact is you don’t lose control over your data. Companies decide which region to place their data. That data doesn’t move until companies decide to move it. You can encrypt that data and if you need to get the data out really quickly for whatever reason, we have an import/export service which allows us to put the data on a physical disk and ship it back to customers. We don’t own customers’ data and we don’t look at that data. It just looks like a big object block to us. Also, each time someone places an object on Amazon S3, we replicate the object multiple times. We put multiple copies of those objects in different data centers. That means our services are designed to sustain concurrent loss of data.

Myth: The cloud isn’t secure
Jassy: For any cloud provider, security is always going to be the top priority. The cloud uses all the same security tactics and strategies that enterprise data centers have used for the last 30 years.  We have very tight physical access to our data centers. We do network and packet level security. We take great pains to make sure the data on hard disks are wiped clean if someone replicates an instance and we run constant tests to make sure the wiping process was successful. Enterprises have found that when they put their infrastructure on our platform, security actually improves.

We have a bunch of people where all they do is spend time looking at security and companies don’t have that luxury of resources to just focus on security. CIOs are also worried that over time, services are propagated all over the company but they don’t know where those services are. In the cloud, the CIO can just make one API call and see every one of those instances and who provisioned it. That’s great visibility.

Myth: We can run an infrastructure just as cost effectively as any external cloud
Jassy: A lot of companies don’t know what their infrastructure costs are on a per unit basis. And that’s because those companies measure infrastructure costs as one big expense in their income statements. It took us a while to understand the per unit cost of our infrastructure and when you do that research, you realize it’s really difficult for you to have a cost as low as our cloud on a per unit scale. If you look at the size of our cloud, we’re able to buy all the infrastructure components and get price advantages. We have hundreds of thousands of customers all over the world and we’re aggregating all those customers together. What that means is we’re able to utilize our infrastructure at a higher level than other people. A really good enterprise would find get somewhere between 20% to 30% infrastructure utilization. AWS is able utilize our infrastructure several times higher, so what that means is that we are able to monetize more per unit of infrastructure, our costs are lower and we’re able to pass them down in the form of lower prices to customers.

Myth: Cost is the only advantage
Jassy: There are two advantages that I think are even more important than cost in the long term. The first is the ability to move forward quickly. If you ask a software engineer how long it takes to get a new server for a new experiment or extend a project, you’ll get answers ranging from 4 weeks to 3 months. That is frustrating for an engineer. It also stifles innovation – people actually stop trying to do new things because it just takes so long to get those servers. With the cloud, you’re able to get thousands of instances in minutes – that’s a huge advantage to any company that wants to experiment, fail fast and start new experiments to unleash innovation. The second important additional benefit is that software development engineers spend a lot of time maintaining infrastructure. One of our key aims on our AWS platform is to allow companies to spend more time on innovation than on infrastructure and focus on what moves the business forward.

Myth: I should move everything to the cloud in one fell swoop
Jassy: If you are a start up, that is what you should do. If you are an enterprise with new developments, it’s also a no-brainer to build on top of the cloud to take advantage of those benefits. If your enterprise has been around for a while and has a lot of legacy applications, it’s ill-advised to try to move everything to the cloud. What enterprises are doing is to take an initial set of applications to try some proofs-of-concepts in the cloud. They run it for a few weeks or months to see how the cloud is different. They’re usually excited with the results and they start to figure if they can peel off more of their applications into our cloud and build a 12 to 36 month migration plan.

Myth: I’m getting all these benefits in a private cloud
Jassy: This is a funny one for us and doesn’t quite resonate with the way we think about the world. If you really dig into the details about what these private clouds are, they usually [incur] very high fixed cost and lack the benefits of the cloud. Companies still own all the capital expenditure, data centers, servers; it’s not pay as you go and it’s not truly elastic on the company level because you still own and manage all the infrastructure by yourself. You should think carefully when people start talking about the private cloud because it’s a term that has cloud in it, but lacks almost all the key benefits of the cloud.

Myth: The cloud looks like it’s going to be very pervasive
Jassy: You have to ask yourself if the status quo technology industry wants to move toward this cloud computing model. If you think about how large and pervasive cloud computing is becoming, it’s not hard to imagine that it’s going to be very high volume, relatively low margin business. Now, it’s really different to run a high volume, low margin business from a 70-80% growth margin business – you will think about the world, cost, innovation and pricing differently. People were very amazed by our pay-by-the drink pricing of AWS – it’s really just the thinking of a company used to a high volume, low margin business. When you think about the cost savings from your infrastructure, will you pocket those savings or give it back to customers in the form of lower prices? They are radically different mindsets. Now, Amazon has the DNA of a high volume, low margin business since we started 15 years ago when we applied our technology to a low margin retail business, so we’re quite comfortable with that environment. It will be interesting to see companies used to the 70-80% growth margins try to move into cloud computing.

Salesforce + VMWare = VMforce
In other cloud computing news this week, Salesforce.com announced its partnership with virtualisation bigwig VMWare in a service known as VMforce that allow developers to build Java-based apps in the Force.com cloud. Developers simply create their Java apps with the SpringSource IDE and VMforce will then do the necessary plumbing behind the scenes like configuring the runtime environment, setting up database connections and synchronizing data models with the Java app. Load balancing and scaling are also managed automatically.

From a larger perspective, VMforce signals Salesforce.com’s intentions to scale up against the likes of AWS to win mindshare among developers and companies familiar with Java, even at the risk of sidelining its proprietary Apex programming language. For VMWare, the partnership is a good opportunity to inch deeper into application development in the cloud, an area that is likely to receive increased focus by cloud computing players.

In response to the VMforce announcement, Jassy noted: “What you’re seeing is a rapid shift in moving application development to the cloud and you’re going to see that on every level in the stack. I don’t believe there are certain areas of development that are somehow going to be held up from moving to the cloud.

“The announcement is an example, and the annoucement of us being here in Asia-Pacific is another example of that expansion. You can expect the dizzying pace of growth to continue,” he added.