Private Clouds Taking Off

Evidence is accumulating that as public clouds gain strength, enterprises are increasingly interested in building their own clouds in the data center.
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The evidence is still anecdotal, but many companies appear to be building out private clouds as much as test-driving public ones. Or perhaps they've concluded what works in the public cloud will work just fine in the private enterprise data center as well.

In a recent interview with Bryson Koehler, for example, senior VP for InterContinental Hotels Group, said his firm is using Salesforce CRM for customer relationship management. It develops software in Amazon Web Services' EC2 infrastructure; and it is making use of both Savvis and Verizon Business cloud centers to host customer information on the Web.

But the thing that kept him talking about cloud computing was InterContinental's intent to build out of its own private cloud. Koehler hopes one day his private cloud will run the mainframe room reservation system, loyalty club updates, and customer analytics, with which he hopes to deliver a more distinct style of customer service. So one of the early goals of InterContinental's private cloud is to serve as a training ground for the IT staff to understand cloud architecture and how to manage it, whether on premises or off.

"Right now, one-third of our staff is up to speed and understands the details of cloud computing. One-third is dedicated to legacy apps that won't make the migration into the cloud. And one-third needs to go through this learning curve in the first half of 2011," he said.

Likewise, a report produced by Accenture's High Performance Institute concluded that, as cloud computing becomes more familiar in its public forms, it will spawn greater investment in private clouds. "The basic technologies can be utilized by any company. That makes it possible for organizations that possess a very large number of servers to build 'private clouds' for their own use," concluded authors Jeanne Harris and Allan Alter in the November report. They said 60% of the executives that Accenture consultants talked to claim they are already using a private cloud, "often in tandem with public clouds." By the end of 2012, they predict that private cloud use will permeate 77% of enterprises.

Eucalyptus Systems, an early supplier of private cloud software, concluded at the end of the year that 21 members of the Fortune 100 have deployed a private cloud. The figure comes from examining the IP addresses of Eucalyptus Systems deployed for the first time on customer sites. Eucalyptus staffers found 21 addresses recognizable as members of the Fortune 100. Marten Mickos, CEO, said some Fortune 100 companies operate behind a firewall that disguises their actual IP address, so the number could be higher than 21. "It's a conservative figure," he claimed in an interview.

"The public cloud is still bigger than private cloud," and he projects that Amazon's Elastic Compute Cloud remains the fastest-growing supplier of cloud services. "But we are in an expanding universe. After seeing how well it works at Amazon, there's a spill-over effect" among the adopters who decide they want one internally too, he said.

Private clouds are typically large sets of x86 servers being managed as a virtualized pool of resources in the data center. They may or may not allow self-provisioning by end users, the way public clouds do. But they try to minimize access barriers to servers and other resources needed by business users, while providing for an automatic charge-back mechanism. They tend to manage the server pool with load balancing, a change-management database, and other automated procedures.

Eucalyptus patterns its private cloud software on Amazon Web Services operations and builds in an open source version of EC2's APIs, allowing on-premises workloads to be shifted into the cloud.

In another recent report, Goldman Sachs advised its investors that public cloud use continues to expand, but not to be mesmerized by that. "We expect private clouds to remain the largest area of investment in 2011, benefiting server virtualization, storage, and other data center-specific technologies," said the authors of the Jan. 9 report, "U.S. Technology Strategy: Independent Insight Mapping 2011: Secular Overtakes Cyclical."