Cloud computing: Winners and losers

Some providers stand to lose as information moves to the cloud

The information technology companies most likely to win business as government agencies begin to adopt cloud computing strategies will be those who can creatively adapt their licensing, pricing and revenue models to on-demand computing needs.

While a wide range of IT suppliers and consulting firms now claim to offer cloud computing solutions, one of the stumbling blocks for agencies and software suppliers alike is how to price shared computing services by the gulp.

“Software enterprise agreements may not be so relevant in the future,” said Henry J. Sienkiewicz, technical program director, Defense Information Systems Agency Computing Services, Companies that understand that dynamic and those that figure out how to deliver virtual desktop systems will likely emerge as the winners, he said.

Sienkiewicz spoke about the DISA’s experience developing cloud computing capabilities during a panel discussion at the 2009 American Council of Technology and Industry Advisory Council’s Executive Leadership Conference on Monday.

Another potential group of winners will be those companies which can capably broker cloud computing services, said Tom Soderstrom, IT Chief Technology Officer at NASA’s Jet Propulsion Laboratory. “There’s a real opportunity for industry,” he said.

‘We will also need auditors who can learn that it’s no longer about auditing a server, but a service,” he added.

Soderstrom echoed concerns that a key challenge to adopting cloud computing strategies isn’t so much security--“We solved that pretty quickly,” he said--but rather, is “how to set up commodity license agreements and avoid vendor lock-in.”

“One of our key goals is to replace the procurement screen (on a Web page) with a provision screen,” he said.

Another part of the cloud computing debate revolves around determining the true costs of moving to a cloud computing model and the total cost of ownership and operations.

Pieter Poll, chief technology officer at Qwest, said that cloud providers have nearly the same equipment and operating costs as smaller data center operators, but still must charge for managing their services, bringing into question what kind of savings agencies can expect.

Susie Adams, chief technology officer for Microsoft’s Federal civilian business, argued that only a handful of players can deliver the scale needed to the lower operating costs cloud computing promises. “We believe people are moving to the cloud, but it’s still about infrastructure optimization. Some workloads just aren’t suitable for cloud computing,” she said.

Sienkiewicz countered that at DISA, the cost of operating was secondary compared to service delivery. “Speed (of service delivery) is actually the most important thing we’re looking for--and improving quality in a more secure environment,” he said.

“The big, big business win is virtualization,” in lowering operating costs, Sonderstrom said, acknowledging that virtualization was not the same as cloud computing.

Sienkiewicz concurred that moving to virtual servers was an important part of the equation, noting that DISA has virtualized almost 30 percent of its 6,100 servers.

About the Author

Wyatt Kash served as chief editor of GCN (October 2004 to August 2010) and also of Defense Systems (January 2009 to August 2010). He currently serves as Content Director and Editor at Large of 1105 Media.

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