Professional Documents
Culture Documents
Joe Weinman
SVP, Cloud Services and Strategy, Telx jweinman@telx.com @joeweinman
2013 Telx. All Rights Reserved.
Cloudonomics
Questionable Notions
The cloud is a revolutionary new technology and business model Cloud services are computing resources delivered over the Internet The primary benefit is cost reduction; the other is business agility Economies of scale are the key to cloud benefits Another unique benefit is the ability to replace CapEx with OpEx Rational decision makers will select the lowest cost option Scale economies consolidation to a handful of providers Big Switch commoditization, all IT moving to the cloud IT Doesnt Matter cost optimization is key to provider selection Cloud reduces computing costs reduced IT spend However, data center electricity consumption is too high data centers dont create jobs and security is an issue
Source: Joe Weinman, Cloudonomics
Great pizza!
Great online pizza ordering! My compliments to the cloud and network service providers.
Order Now
Does IT Matter?
IT Spend as % of Revenues
7 6 5 4 3 2 1 0 5 7 9 11 13 15 17 19 21 23
Banking & Financial Education Healthcare Electronics Pro Services Telecom Insurance Transportation Mfg. Chem Retail / Wholesale Utilities Media & Entertainment Pharmaceuticals & Medical
Operating Margin
Source: McKinsey, based on Gartner IT Metrics: IT Spending and Staffing Report, 2012; McKinsey Business Support Function (BSF) proprietary database
Relative Computerization
6 5 4 3 2 1 0 5 7 9 11 13 15 17 19 21
Banking & Financial Education Healthcare Electronics Pro Services Telecom Insurance Transportation Mfg. Chem Retail / Wholesale Utilities Media & Entertainment Pharmaceuticals & Medical
Five Forces +
Source: McKinsey, based on Gartner IT Metrics: IT Spending and Staffing Report, 2012; McKinsey Business Support Function (BSF) proprietary database
10
Range of IT Value
Existential
Increasing Value
Strategic
Operational
Tactical
Source: Joe Weinman, Cloudonomics
12
Microsoft Sites
Yahoo! Sites Ask Network AOL
12.0%
16.0% 3.5% 1.9%
15.1%
14.5% 2.9% 1.6%
16.3%
12.2% 3.0% 1.8%
Re-Imagination
Creative Destruction
Destruction
Edited Print Encyclopedia Text Messaging
Creation
Crowdsourced Wikipedia Over the Top WhatsApp
Circuit-Switched Voice
Matchmakers Film Photography Books CDs Waving Down Cabs Cash Registers
Based in Part on Mary Meeker/KPCB, Internet Trends, D10 Conference, May 30, 2012
Decision Making
Data driven decision making correlates with higher productivity, market value, ROE, and asset utilization.
Source: Brynjolfsson, Hitt, and Kim, Strength in Numbers: How Does Data-Driven Decisionmaking Affect Firm Performance?, 2011
16
Firm Profitability
OPEX
Advertising R&D R2 (overall) Observations Number of Firms 0.155 1.001 0.49
0.137
0.142 0.993 0.51 276 86
Source: Sunil Mithas, Ali Tafti, Indranil Bardhan, Jie Mein Goh, Information Technology and Firm Profitability, MIS Quarterly, March 2012. Used by Permission (*includes intercept, year, industry average Tobins q, Herfindahl index, and industry capital intensity)
17
Value
Complexity
Extending Pine & Gilmore, The Experience Economy
Value Disciplines
20
Value Disciplines
Operational Excellence
Product Leadership
Customer Intimacy
Accelerated Innovation
21
Source: Michael Treacy & Fred Wiersema, The Discipline of Market Leaders;Joe Weinman, Cloudonomics
Operational Excellence
Positions
Routes
Traffic
22
Product Leadership
23
Product Leadership
Product Leadership
Customer Intimacy
Transactions
Recommendations
Accelerated Innovation
Challenge
Solution Solutions
27
Consolidation
Cash Flow Capacity Continuity Checkpoints Chokepoints Context Celerity Customer Experience
Communications
Conversations, Connections, and Communities Congregations, Commons, and Collections Collaboration, Competition, and Crowdsourcing Commerce and Clearing Collaborative Consumption Coordination, Currency, Consistency, and Control
29
Custom
Classic Close Coupling Content Capture, Creation, and Consumption Cryptography Compression Caching
Covert
Continuity (of Local Services and Data)
30
Revenue
Time
2013 Telx. All Rights Reserved.
Industry Rivals
Introduction Growth Maturity Decline
Industry Rivals
Time
2013 Telx. All Rights Reserved.
Industry Profit
Introduction Growth Maturity Decline
Industry Profit
Time
2013 Telx. All Rights Reserved.
Industry Profit
Introduction
Time Value Of Money
Growth
Higher Profit
Maturity
Decline
Industry Profit
Time
2013 Telx. All Rights Reserved.
Source: James Glanz, Power, Pollution, and the Internet, New York Times, September 22, 2012
Source: Jonathan Koomey, Growth in Data Center Electricity Use 2005 to 2010, August 1, 2011
Substitution
Energy Used
39
Optimization
Energy Used
40
Jobs
Indirect Jobs
Source: Joe Weinman, Why data centers have a big impact on the economy, GigaOM
42
Cloud computing is a model for enabling convenient, on-demand network access to a shared pool of configurable computing resources (e.g., networks, servers, storage, applications, and services) that can be rapidly provisioned and released with minimal management effort or service provider nteraction.
On-demand self-service: A consumer can unilaterally provision computing capabilities, such as server time and network storage, as needed automatically without requiring human interaction with each services provider.
Broad network access: Capabilities are available over the network and accessed through standard mechanisms that promote use by heterogeneous thin or thick client platforms (e.g., mobile phones, laptops, and PDAs).
Resource pooling: The providers computing resources are pooled to serve multiple consumers using a multi-tenant model, with different physical and virtual resources dynamically assigned and reassigned according to consumer demand. There is a sense of location independence in that the customer generally has no control or knowledge over the exact location of the provided resources but may be able to specify location at a higher level of abstraction (e.g., country, state, or datacenter). Examples of resources include storage, processing, memory, network bandwidth, and virtual machines.
Rapid elasticity: Capabilities can be rapidly and elastically provisioned, in some cases automatically, to quickly scale out and rapidly released to quickly scale in. To the consumer, the capabilities available for provisioning often appear to be unlimited and can be purchased in any quantity at any time.
Measured Service: Cloud systems automatically control and optimize resource use by leveraging a metering capability at some level of abstraction appropriate to the type of service (e.g., storage, processing, bandwidth, and active user accounts). Resource usage can be monitored, controlled, and reported providing ransparency for both the provider and consumer of the utilized service.
Source: Peter Mell, Tim Grance, National Institute of Standards and Technology
Cloud = C.L.O.U.D.
Common
Penalty Cost Reduction to
1
Location-independent
Latency to
1
1cos(2) 1cos()
Online
Hub vs. P2P Benefit of Connections; Latency Penalty of Smart networks improvement on paths +
1 2 1 (+1) 1 4 3
45 128
Utility
on-Demand
Linear Benefit for = ; Exponential for = ;
Source: Joe Weinman, Cloudonomics
1
A transition mapping : , An initial state , = ( ) ; Satisfying five axioms: commonality, location independence, online (connectedness), utility (linear pricing), on demand
Source: Joe Weinman, Axiomatic Cloud Theory
46
Consumer
Mid-Size Cloud SP
Largest Cloud SP
48
The Math
1. U < 1 A * U * C * T <= P * U * C * T < P * 1 * C * T = P * C * T 2. U = 1 & A=P A * U * C * T = P * U * C * T = P * 1 * C * T = P * C * T 3. U = 1 & A < P A * U * C * T < P * U * C * T = P * 1 * C * T = P * C * T 4. 1 < U < ( P / A ) A * U * C * T < A * (P / A) * C * T = P * C * T 5. U > 1, & (Tp / T) < (1 / U) [(P - ) * T * C] + [ * Tp * C * U] < [(P - ) * T * C] + [ * T * C] 6. (TNZ / T) > (1 / U) & U > 1 * T * C < * TNZ * U * C 7. D uniform, U > 1 TotalCost = [F * T * C] + [ V * (V / P) * T * U * C] Min(TotalCost) when 0 = [T * C] * [0 1 + V * U / P] V / P = 1 / U
A = Average, P = Peak, C = Baseline Resource Cost, U = Utility Premium, T = Time, Tp = Peak Duration, TNZ = Non-Zero Baseline Duration, F = Fixed Capacity, V = Variable Capacity, D = Demand over Time
49
The English
All other things being equal:
50
Hybrids
Users
Enterprise
Source: Joe Weinman, Cloudonomics
Cloud
51
Four Hybrids
Stateless Elasticity
BC/DR
Content/Service Delivery
Data Integration
54
Statistical Multiplexing
55
Statistical Multiplexing
1 0.8 1 0.8
25
100
56
0.1 1
0.3
0.4
0.5
0.6
0.8
0.9
0.2
0.7
1 6 11 16 21 26 31 36 41 46 51 56 61 66 71 76 81 86 91 96 101 106 111 116 121 126 131 136 141 146 151 156 161 166 171 176 181 186 191 196 201
57
Speed Revenue
Users really respond to speed Marissa Mayer Book and Merchandise: 100 ms = substantial revenue
Search: 10 30 results per page 400 ms 900 ms 20% drop in traffic 20% drop in revenue
59
Application Evolution
Bandwidth Intensity
Latency Sensitivity
2013 Telx. All Rights Reserved. 60
Amdahls Law
61
62
T=F+N+P
Single Entities
( )
T = F + __ N + __ P n p
Multiplicity of Nodes and Processors
Priority of Dispersion
63
Unserved Demand u
Resources R(t)
Provisioning Time tp
t1
Time
Source: Joe Weinman, Cloudonomics
t2
65
Exponential Demand
tp Demand D(t) = et
Unserved Demand
Resources R(t)=e(t-tp)
tp
t1
t2
Time
66
Demand
Time
2013 Telx. All Rights Reserved.
Capacity
Fine-Grained Billing
Capacity
Smart Networks
Software-Defined Networks / OpenFlow Network as a Service / Quantum Application-Aware Networking Programmability and Orchestration Internet Route Optimization Optically-Aware OpenFlow Extensions IRSCP, MPLS, Etc.
Visibility & Programmability
71
Path 4
Server 4
Source: Joe Weinman, Better Together: Quantifying the Benefits of Smart Networks
72
Questions
Which approach yields the lowest response times?
Random Server-Based Load Balancing Joint Optimization
Are more options better? If so, how much better? What are the implications for distributed architectures and network intelligence?
73
Source: Nick McKeown, How SDN Will Shape Networking, YouTube.com, Nikhil Handigol
74
Source: Joe Weinman, Better Together: Quantifying the Benefits of Smart Networks; Grateful Acknowledgement to Prof. H. N. Nagaraja, Ohio State University
75
Simulation Results
10
11
12
13
14
15
16
17
18
19
20
Source: Joe Weinman, Better Together: Quantifying the Benefits of Smart Networks, ComplexModels.com
Insights
More information is better than less More options are better than fewer Server-based load balancing trumps random
77
Thank You
Questions?
Welcome