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Assessing the value Proposition

Lecture. Assessing the value Proposition. CSE 423. The Law of Cloudonomics Specifying SLA, Defining Licensing Models. Cloud Computing. Cloud computing is particularly valuable because it shifts capital expenditures into operating expenditures.

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Assessing the value Proposition

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  1. Lecture Assessing the value Proposition CSE 423 • The Law of Cloudonomics • Specifying SLA, Defining Licensing Models

  2. Cloud Computing • Cloud computing is particularly valuable because it shifts capital expenditures into operating expenditures. • It also shifts risk away from an organization and onto the cloud provider. • Cloud computing presents new opportunities to users and developers because it is based on the paradigm of a shared multitenant utility. • A cloud is an infrastructure that can be partitioned and provisioned, and resources are pooled and virtualized. If the cloud is available to the public on a pay-as-you-go basis, then the cloud is a public cloud, and the service is described as a utility

  3. These are the unique characteristics of an ideal cloud computing model: • Scalability: You have access to unlimited computer resources as needed. • Elasticity: You have the ability to right-size resources as required. • Low barrier to entry: You can gain access to systems for a small investment. • Utility: A pay-as-you-go model matches resources to need on an ongoing basis. .

  4. Companies become cloud computing providers for several reasons: • Profit: The economies of scale can makethis a profitable business. • Optimization: The infrastructure already exists and isn't fully utilized. - Amazon Web Services. • Strategic: A cloud computing platform extends the company's products and defends their franchise. - Microsoft's Windows Azure Platform. • Extension: A branded cloud computing platform can extend customer relationships by offering additional service options. - various IBM cloud services.

  5. • Presence: Establish a presence in a market before a large competitor can emerge. - Google App Engine allows a developer to scale an application immediately. For Google, its office applications can be rolled out quickly and to large audiences. • Platform: A cloud computing provider can become a hub master at the center of many ISV's (Independent Software Vendor) offerings. - The customer relationship management provider SalesForce.com has a development platform called Force.com that is a PaaS offering.

  6. The law of cloudonomics 1. Utility services cost less even though they cost more. Utilities charge a premium for their services, but customers save money by not paying for services that they aren't using. 2. On-demand trumps forecasting. The ability to provision and tear down resources (de-provision) captures revenue and lowers costs. 3. The peak of the sum is never greater than the sum of the peaks. A cloud can deploy less capacity because the peaks of individual tenants in a shared system are averaged over time by the group of tenants. .

  7. The law of cloudonomics 4. Aggregate demand is smoother than individual. Multi-tenancy also tends to average the variability intrinsic in individual demand. With a more predictable demand and less variation, clouds can run at higher utilization rates than captive systems. This allows cloud systems to operate at higher efficiencies and lower costs. 5. Average unit costs are reduced by distributing fixed costs over more units of output. Cloud vendors have a size that allows them to purchase resources at significantly reduced prices. 6. Superiority in numbers is the most important factor in the result of a combat (Clausewitz). Weinman argues that a large cloud's size has the ability to repel botnets and DDoS attacks better than smaller systems do.

  8. The law of cloudonomics 7. Space-time is a continuum (Einstein/Minkowski). The ability of a task to be accomplished in the cloud using parallel processing allows real-time business to respond quicker to business conditions and accelerates decision making providing a measurable advantage. 8. Dispersion is the inverse square of latency. Cutting latency in half requires four times the number of nodes in a system. 9. Don't put all your eggs in one basket. Large cloud providers with geographically dispersed sites worldwide therefore achieve reliability rates that are hard for private systems to achieve.

  9. The law of cloudonomics 10. An object at rest tends to stay at rest (Newton). Private datacenters tend to be located in places where the company or unit was founded or acquired. Cloud providers can site their datacenters in what are called “greenfield sites.” A greenfield siteis one that is environmentally friendly: locations that are on a network backbone, have cheap access to power and cooling, where land is inexpensive, and the environmental impact is low.

  10. Laws of Behavioral Cloudonomics to cloud adoption • 1. People are risk averse and loss averse. • 2. People have a flat-rate bias. • 3. People have the need to control their environment and remain autonomous. • 4. People fear change. • 5. People value what they own more than what they are given. • 6. People favor the status quo and invest accordingly.

  11. 7. People discount future risk and favor instant gratification. • 8. People favor things that are free. • 9. People have the need for status. • 10. People are incapacitated by choice.

  12. Measuring cloud computing costs • The cost of a cloud computing deployment is roughly estimated to be CostCLOUD = Σ(UnitCostCLOUD x (Revenue – CostCLOUD)) • where the unit cost is usually defined as the cost of a machine instance per hour or another resource.

  13. To compare your cost benefit with a private cloud, you will want to compare the value you determine in the previous equation with the same calculation: • CostDATACENTER = Σ(UnitCostDATACENTER x (Revenue –(CostDATACENTER/Utilization))

  14. The CostDATACENTER consists of the summation of the cost of each of the individual systems with all the associated resources, as follows: • CostDATACENTER = 1nΣ(UnitCostDATACENTER x (Revenue – (CostDATACENTER/Utilization))SYSTEMn, • where the sum includes terms for System 1, System 2, System 3, and so on.

  15. The costs associated with the cloud model are calculated rather differently. Each resource has its own specific cost and many resources can be provisioned independently of one another. In theory, therefore, • the CostCLOUD is better represented by the equation: CostCLOUD = 1nΣ(UnitCostCLOUD x (Revenue – CostCLOUD))INSTANCEn + 1nΣ(UnitCostCLOUD x (Revenue – CostCLOUD))STORAGE_UNITn +. 1nΣ(UnitCostCLOUD x (Revenue – CostCLOUD))NETWORK_UNITn + …

  16. Defining Licensing Models When you purchase shrink-wrapped software, you are using that software based on a licensing agreement called a EULA or End User License Agreement. The EULA may specify that the software meets the following criteria: • • It is yours to own. • • It can be installed on a single or multiple machines. • • It allows for one or more connections. • • It has whatever limit the ISV(independent software vendor) has placed on its software. In most instances, the purchase price of the software is directly tied to the EULA.

  17. Chapter 3: UnderstandingCloud Architecture • IN THIS CHAPTER • Using the cloud computing stack to describe different models • Understanding how platforms and virtual appliances are used • Learning how cloud communications work • Discovering the new world of the cloud client

  18. One property that differentiates cloud computing is referred to as composability, which is the ability to build applications from component parts. A platform is a cloud computing service that is both hardware and software. Platforms are used to create more complex software. Virtual appliances are an important example of a platform, and they are becoming a very important standard cloud computing deployment object.

  19. Cloud computing requires some standard protocols with which different layers of hardware, software and clients can communicate with one another. Many of these protocols are standard Internet protocols. Cloud computing relies on a set of protocols needed to manage inter process communications that have been developed over the years. The most commonly used set of protocols uses XML as the messaging format, the Simple Object Access Protocol (SOAP) protocol as the object model, and a set of discovery and description protocols based on the Web Services Description Language (WSDL) to manage transactions. Some completely new clients are under development that are specifically meant to connect to the cloud. These clients have as their focus cloud applications and services, and are often hardened and more securely connected. Two examples presented are Jolicloud and Google Chrome OS. They represent a new client model that is likely to have considerable impact.

  20. Exploring the Cloud Computing Stack • Composability • Infrastructure • Platforms • Virtual Appliances • Communication Protocols • Applications

  21. Composability • A composable component must be: • Modular: It is a self-contained and independent unit that is cooperative, reusable, and replaceable. • Stateless: A transaction is executed without regard to other transactions or requests.

  22. The essence of a service oriented design is that services are constructed from a set of modules using standard communications and service interfaces. • An example of a set of widely used standards describes the services themselves in terms of the Web Services Description Language (WSDL), data exchange between services using some form of XML, and the communications between the services using the SOAP protocol.

  23. Infrastructure Most large Infrastructure as a Service (IaaS) providers rely on virtual machine technology to deliver servers that can run applications. Virtual servers described in terms of a machine image or instance have characteristics that often can be described in terms of real servers delivering a certain number of microprocessor (CPU) cycles, memory access, and network bandwidth to customers. Virtual machines are containers that are assigned specific resources. The software that runs in the virtual machines is what defines the utility of the cloud computing system.

  24. Arch dig illustrates the Portion of cloud computing stack that is designated as the server

  25. Platforms • Platform in the cloud is a software layer that is used to create higher levels of service. • • Salesforce.com's Force.com Platform • • Windows Azure Platform • • Google Apps and the Google AppEngine

  26. A virtual appliance is software that installs as middleware onto a virtual machine.

  27. Virtual Appliances • Virtual appliances are software installed on virtual servers—application modules that are meant to run a particular machine instance or image type. • A virtual appliance is a platform instance. Therefore, virtual appliances occupy the middle of the cloud computing stack

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