Cloud Hosting

Opinion Imagine a business where the product keeps getting better and better, like storage space and video quality, but the prices keep falling steadily as the product continues to improve. Its happening in cloud computing and this race to zero has people in the industry deeply worried.

The current leader, Amazon Web Services (AWS), slashed their prices an astounding 44 times in the past six years. Amazons strategy, it seems, is more of a low cost, high volume model. This strategy seems to be working according to research company Gartner, who reported that AWS stores twice as much customer data as the next seven leading public cloud companies. AWS profits in 2016 grew over 120% and sales grew over 60%, extinguishing any assumptions that AWS was a loss leader product for Amazon as a whole.

Amazon is betting at such a low cost, enterprise businesses will treat cloud services like you treat products at Walmart. With such low prices on products, youll keep adding more to your cart. The other leading cloud providers, like Microsoft and Google, are willing to keep up and match Amazons prices, with Gartner analyst Raj Bala describing it as aggressive, even punitive.

Aaron Levie, CEO of Box, has predicted that storage will be free and unlimited in the future. If the current race to lower prices continues, it looks as if Levies prediction will soon come to pass. This means, however, that cloud companies have to build in other functionality besides storage alone. From security improvements to converged storage where data storage is combined with data computing, cloud companies are looking for related and integrated services they can charge for.

In the race to differentiate, Microsoft rolled out a hybrid cloud which integrates into its subscription based Office 365 program in April 2016. Satya Nadella, Microsofts CEO, explained how this integration works. If a certain calculation needs massive resources, the transaction can be handed off to its cloud products to provide a sort of turbo charge, he said. This strategy might be very successful, since many people already use Office at work and the ease of integration might be the incentive for companies to choose Azure over AWS.

Googles Cloud Platform has strengths with its big data analytics capability, but also has some restraints as it is unable to integrate with existing data platforms, making it more difficult for late adopters to convert to the service. As Kurt Marko explains, it can be a poor choice for cloud laggards and organisations looking for a place to offload legacy virtual infrastructure and applications.

In March this year, IBM announced it was rolling out more cloud offerings in an effort to compete with AWS and to make the point that storage is not the aspect of the cloud which enterprises really need. One study predicts 85% of enterprise businesses will move to multi-cloud architectures by 2018. IBMs new products utilise Watson to help clients manage and leverage data stored between multiple clouds.

One analyst, Rodney Nelson at Morningstar Inc., questioned how effective IBMs rollout would be, noting the major cloud vendors are flooding the market with new features on a consistent basisall have moderate to major leads on IBM in that regard. IBMs most competitive idea may be moving focus away from offering cloud services and moving towards offering services that will integrate with all cloud providers.

The intensely competitive cloud computing environment is volatile, with new companies throwing their proverbial hat in the ring, such as the Chinese company Alibaba. Its also pushing out current competitors, with telecom companies like Verizon and AT&T losing market share due to lack of expensive yet impactful infrastructure investment and innovations.

There are so many facets which will affect the final outcome of the cloud computing industry. From the businesses who are quickly trying to implement and then harness the clouds potential, there are CIOs who are actually choosing the cloud provider, business people who are learning how to use big data and cloud computing for business intelligence, to companies who are fighting for the biggest piece of the pie and are investing millions to stay competitive. Its impossible to predict what the final outcome will be.

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How the cloud wars are beginning to enter a new phase - Cloud Tech

Banks looking to take their cloud plans to the next level are likely to have returned to the drawing board following the latest Amazon Web Services outage, which disrupted the online activities of major organizations from Apple to the US Securities and Exchange Commission. One estimate suggests US financial services companies alone lost $160 million in just four hours. Its been a timely reminder that any downtime is too much in an always-on digital economy, certainly for financial services.

The sobering point is that AWS was still delivering within the terms of its service-level agreement (SLA). This promises 99.99% service and data availability (otherwise known as four nines availability). This may be good enough for a lot of things, but it wont do for banking.

Over a year that 0.01% scope for unavailability equates to almost nine hours of unplanned outage and thats on top of any planned downtime for maintenance or updates. Combine the two and youre looking at more than a days worth of service loss across a 12-month period. Its hardly a recommendation for banks to move critical, live data into the cloud however compelling the business drivers.

Banks need five nines (99.999%) service and data availability the levels aimed for on their own premises. Thats a downtime tolerance of between 0.32 and three seconds per year. And public cloud services are not set up to match that. It would be uneconomical.

Moving real-time transactions into the cloud is the final frontier for traditional regulated financial institutions. And theres no question that they need, and want, to do this. Its vastly more cost-efficient, and its the only way they can hope to compete with nimble financial upstarts, whose agility owes everything to being able to crunch huge numbers at high-speed using someone elses top-of-the-range server farms.

Financial authorities such as the UKs Financial Conduct Authority have already accepted the cloud, which on the face of it gives banks the green light to be more ambitious. But not really, because the issued guidance doesnt bridge the reality gap traditional banks need to get across in other words, the inadequate service level for scenarios other than data archiving or disaster recovery.

In data archiving and backup applications, the clouds appeal hinges on its cost-efficiency, scalability and durability. But durability should not be confused with availability. Even if data is tightly safeguarded, and can be brought back online efficiently after a system crash or other crisis, this adds no value in a live-data scenario. If there is any chance that at some point access may be interrupted, the other merits of cloud dont matter in this context.

And thats why banks havent made the final leap to using cloud in a production environment because these otherwise very viable on-demand data centres cant offer them the very high availability assurances they need.

So banks are stuck. The inability to move core systems and live data into the cloud is costing them competitively in lost market opportunity.

If they could make the leap, it would pave the way foradvanced customer analytics, intelligent service automation, complex stock correlations, and predictive fraud detection: data-intensive applications that demand massive computer power at a scale that their proprietary data centres simply cant deliver.

But AWS and other mainstream cloud infrastructure providers have designed their services and service level agreements to meet the needs of the majority: where the risk of interrupting a mornings business, social feeds or even hedge fund activity, though costly, is at least partly offset by huge infrastructure savings.

Banks absolutely need to be more ambitious and creative in their use of the cloud. Their future differentiation depends on having access to the same computer power, speed and flexible resource as their more nimble, less risk-averse competitors. But they are not going to make the transition until the service levels they rely on for core systems can be delivered.

Inadequate service levels are a significant stumbling block, but lessons will be learnt each time a high-profile cloud service is compromised. In the meantime, barriers to what banks need to do can be overcome. Solving the data availability issue comes down to the way data is synchronized between sites (e.g. primary servers and secondary data centres), so that live data is always available in more than one place at the same time. It sounds impossible, but it isnt.

Achieve this (and at WANdisco we have) and the nines will take care of themselves.

Originally posted here:
Four nines and failure rates: Will the cloud ever cut it for transactional banking? - Cloud Tech