Challenging The Cloud Business Model

By Susan Nunziata  |  Posted 07-21-2010

Dow Jones CIO on Cloud Rights

If you are exploring - or already deeply entrenched in -- cloud computing initiatives at your organization, then you have probably seen the recent manifesto from the Gartner Global IT Council for Cloud Computing: Six Cloud Computing Rights (+ One Responsibility).  If you haven't checked it out, you'll want to do so right away. It is a much-needed resource for enterprises looking to make sense of the "scattered clouds" in today's computing forecast.

We had the chance to speak with Dean Del Vecchio, SVP CIO/CAO at Dow Jones and a member of the Gartner Global IT Council for Cloud Computing, to get further insight into why cloud computing guidelines are sorely needed. "Hopefully, it is a wake-up call to some providers that in order to grow their cloud offerings for companies like ourselves they will have to make some changes," says Del Vecchio. "They will have to commit to [service level agreements], for example."

Del Vecchio adds that the guidelines send a strong message to cloud vendors "that these are the issues holding back companies like ours from putting our trust and our data in their hands. What has been holding us up is the fact that we don't feel comfortable that security, policy, redundancy and recovery features are in place and that we will be able to deliver the same level of security and reliability [in the cloud] that we can achieve in-house."

Challenging The Cloud Business Model

Del Vecchio acknowledges that an enterprise-friendly approach to cloud computing will affect the business model for many vendors. "The model currently offered has a lot of economies of scale for the vendors. If they have to tailor and customize they lose economies of scale, and then what is difference between the cloud and a dedicated hosted provider environment?"

Dow Jones is already a customer and also offloads 50% of its b2c Web traffic to Akamai. "We started looking at where else we can take advantage of cloud services, and started getting concerned about lack of SLAs and commitment in terms of where our data would reside," says Del Vecchio. "We are a global organization and we started getting a little uncomfortable about not even knowing where our data is."

In fact, Del Vecchio says Dow Jones has already implemented an internal cloud that the company is looking to leverage across the enterprise for its parent News Corporation. "We see it as an opportunity to get a common set of resources," he says. There are several business drivers behind this strategy:

  • Reducing all the human resources associated with supporting different platforms across various divisions
  • Reducing CapEx across the company
  • Minimizing time to deployment for business applications
  • Decreasing time-to-market for consumer-facing initiatives
  • Supporting green practices

Elasticity Plus Green Progress

A major benefit, says Del Vecchio, is "the elasticity of being able to grow or shrink on demand. Provisioning is much more dynamic [in the cloud]. We are able to allocate resources from one place to another."

In addition, Del Vecchio emphasizes the "green" benefits. "In the past year and a half we have been able to reduce our output carbon by almost 180 metric tons of per year," he says. "We are also saving a large portion of kilowatt power we would have had to add to put in the same amount of resources internally."

Eventually, external cloud solutions may meet the needs of global enterprises, says Del Vecchio. But there is a long way to go. "I think we're one to two years off," he says. "As cloud environments become more mature, where they can dynamically allocate data and put boundaries and paramaters about where data can be moved, that is where offerings will start maturing. We are just at the cusp of having them be able to allow companies to view exactly where their data resides."