Can the Cloud Handle Enterprise IT?

Up to now, enterprises have been cautious about putting data- and transaction-intensive applications such as stock trading on the cloud because managing them has been difficult. Solutions are beginning to appear, however.

It’s faster to set up a Web site on the cloud than to go through corporate IT. All users need is a credit card. It’s also cheaper because companies pay only for the resources they actually consume.’s Elastic Compute Cloud (EC2) service, for example, with 1.7 gigabytes (GB) of memory, one EC2 compute unit, 160GB of storage and a 32-bit platform, costs 10 cents per hour.

Most enterprises, however, use the cloud for relatively minor tasks because they believe no tools let them manage applications such as trading or data streaming applications, which are heavy on transactions.

Solutions to that problem do exist, from computer behemoth IBM (NYSE: IBM) and smaller players such as Red Hat (NYSE: RHT) as well as new companies like 3Tera, RightScale and GigaSpaces.

Cloud computing at IBM

IBM has proven that cloud computing can meet the demands of an enterprise with 255,000 employees. Launched two and a half years ago, the IBM Innovation Portal runs many applications on a platform that’s flexible and similar to that of Amazon (NASDAQ: AMZN), Dennis Quan, IBM’s software group director of Tivoli development, told

Developers go to a self-service Web 2.0 portal and request the computing infrastructure they need and get it rapidly. About 100 projects ranging from developer tools to productivity tools to a game project are running on this cloud, and “about 20 percent of them” turn into products IBM ships to customers.

This portal is managed by a cloud management stack based on IBM’s Tivoli products, which are also applied to clouds it built for its partnership with Google (NASDAQ: GOOG), Quan said.

IBM sees enterprises using cloud computing both internally, like it does, and externally. “Cloud computing isn’t just about virtual machines and acquiring resources over the Web from Amazon with a credit card; it’s about how you can get those efficiencies within the corporate walls and outside,” Quan explained.

Right now, IBM is working on the New Enterprise Data Center platform, which will evolve from its Blue Cloud initiative.

The New Enterprise Data Center platform is a fusion of two concepts: the Webcentric cloud approach used by Google (NASDAQ: GOOG) and MySpace, in which companies scale and manage large infrastructures and support large user volumes, and the IT enterprise datacenter approach, incorporating mission-critical transaction processing systems as well as high levels of uptime, security and data integrity.

IBM is developing products in the Tivoli suite and in the IBM Global Services Portfolio that will provide cloud computing-based services and products, Quan said.

Next page: Red Hat’s JBoss on EC2

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Red Hat’s JBoss on EC2

Though nowhere near IBM in size, Red Hat is also a player in cloud computing. It launched Red Hat Linux on EC2 last year to “help customers looking at extending the datacenter into the cloud better leverage external resources,” Michael Ferris, Red Hat’s director of product strategy, management and security, told

The service, which charges users by the hour, is still in beta mode.

Last month, Red Hat took another step into cloud computing, making its JBoss Enterprise Platform available on EC2. This solution lets users build, deploy and host enterprise Java applications and services and is built on open standards.

JBoss is aimed at Red Hat’s enterprise customers, and, for Red Hat, the cloud is “just another location, and managing systems, whether they’re physical or virtual or cloud-based is a core capability of what we’re doing,” Aaron Darcy, manager of the JBoss Enterprise Application Platform line, told

Meanwhile, RightScale and GigaSpaces have teamed up to let enterprises deploy and scale data- and transaction-intensive applications on Amazon’s EC2 service.

RightScale offers an automated cloud computing management system consisting of a Web dashboard and automated management, load balancing and monitoring tools with prebuilt installation templates for common clusters.

Meanwhile GigaSpaces offers the eXtreme Application Platform (XAP) for the Java, .NET and C++ environments. This server consists of middleware that handles data, business logic and messaging using industry-standard application programming interfaces, or APIs (define), and an open source stack.

Together, the products from RightScale and GigaSpaces enable creation of EC2 clusters with one click.

One issue with running applications in distributed environments such as the cloud is application development. You need to code in load-balancing requirements and parallelization and to ensure everything is in place in the distributed environment, Geva Perry, chief marketing officer for GigaSpaces, told

Another problem is the actual deployment and management, because “you need to configure each server in a cluster and configure the cluster itself,” he said.

GigaSpace handles the development aspect, and RightSpaces the management.

“The key to cloud computing is having a software infrastructure that takes care of operating the Web infrastructure,” RightScale CEO Michael Crandell told

His company’s key service is Animoto, which converts consumers’ digital pictures into movies with sound. It launched last year on Amazon with six servers and went up to about 50 servers by February. Then the consumer rush began, and “they launched more than 4,000 servers in one day with our service,” Crandell said.

“We’re going to start enabling the types of applications that many people today don’t think can run on the cloud, such as high-performance, transactional, real-time streaming applications,” Perry said.

These can range from simple, event-driven applications such as the Twitter messaging system to a market trading system in which complex trading based on algorithms is conducted in reaction to market events.

According to Perry of GigaSpaces, some applications, such as banking, which have strict requirements for data protection and compliance, cannot be run on the cloud yet.

That’s because cloud providers don’t guarantee the level of service these applications require to remain in compliance, though they do provide such services, he explained.

The reluctance of enterprise IT managers to try cloud computing comes as no surprise to Barry X. Lynn, chairman and CEO of 3Tera, which offers AppLogic, a full platform for cloud computing used by about 200 small to large companies.

“As with any new technology, there are the early adopters, then the rest get on board once they see they’re getting beaten to the market and the new technology lets the competition do things faster and cheaper,” said Lynn, who has been in IT for 36 years and was last CIO of the bank Wells Fargo & Company (NYSE: WFC).

“The question is not whether cloud computing is ready for the enterprise; it’s whether the enterprise is ready for cloud computing,” he said. “We have one big enterprise customer running 200 applications on our platform.”

Lynn’s opinion isn’t shared by Current Analysis principal analyst Bradley F. Shimmin, who said cloud computing is still “relatively immature” in terms of application platforms that can house applications both on premise and in the cloud.

Amazon declined comment for this story.

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