Should Businesses Move to the Cloud?

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with the goal of increasing efficiency. Now, more
than ever, companies are turning to cloud computing
providers like these for their computing resources.
Zynga is a good example of a company using cloud
computing to improve its business in a new way.
loud computing has just begun to take off Zynga is the developer of wildly popular Facebook
applications like FarmVille, Mafia Wars, and many
in the business world. The biggest player others. With over 290 million monthly active users,
in the cloud computing marketplace is one Zynga’s computing demands are already significant.
you might not expect: Amazon. Under its When Zynga releases a new game, however, it
Web Services division (AWS), Amazon has has no way of knowing what amount of computing
streamlined resources to dedicate to the game. The game might
cloud computing and made it an affordable and be a mild success, or a smash hit that adds millions
sensible of new users. The ability to design applications that
option for companies ranging from tiny Internetstart- can scale up in the number of users quickly is one of
ups to established companies like FedEx. Zynga’s competitive advantages.
AWS provides subscribing companies with flexible Because of the uncertainty surrounding resource
computing power and data storage, as well as data usage for new game launches, Zynga uses Amazon’s
management, messaging, payment, and other cloud computing platform to launch new offerings.
services that can be used together or individually That way, it can pay only for the resources it ends up
as the business requires. Anyone with an Internet using, and once game traffic stabilizes and reaches a
connection and a little bit of money can harness steady number of users, Zynga moves the game onto
the same computing systems that Amazon itself its private zCloud, which is structurally similar to
uses to run its now $48 billion a year retail business. Amazon’s cloud, but operates under Zynga’s control
To make the process of harnessing the cloud in data centers on the East and West coasts. Zynga’s
simpler, Amazon added an automated service called own servers handle 80 percent of its games. (Zynga
CloudFormation that helps customers get the right recently started selling extra capacity on zCloud
amount of computing resources. Customers provide to other game-makers.) To streamline the process
the amount of server space, bandwidth, storage, of moving application data from Amazon to the
and any other services they require, and AWS can zCloud, Zynga has automated many computing tasks,
automatically allocate those resources. selected hardware and chip configurations that are
Since its launch in March 2006, AWS has continued very similar to Amazon’s, and makes significant use
to grow in popularity, with $1 billion in business of virtualization.
in 2011 and hundreds of thousands of customers There are a few reasons why Zynga is well- suited
across the globe. In fact, Amazon believes that AWS to use this combination of public and private clouds.
will someday become more valuable than its vaunted The first is its business model, which involves games
retail operation. Amazon’s sales pitch is that you that have a tendency to be boom or bust. Rather
don’t pay a monthly or yearly fee to use their than spending on computing resources of its own
computing before the launch of each game, it’s much more
resources—instead, you pay for exactly what cost-effective to use Amazon’s cloud services until
you use. For many businesses, this is an appealing Zynga can more accurately predict the computing
proposition because it allows Amazon to handle all power it needs. As a recent start-up, Zynga lacks
of the maintenance and upkeep of IT infrastructures, the accumulated legacy systems and infrastructure
leaving businesses to spend more time on highervalue typically found in older companies. The more
work. systems a company has, the tougher it is to integrate
The difference between cloud computing today its applications and data with cloud systems.
and the cloud computing of the past is the scale Although the consequences for server downtime
of today’s clouds and the amount of digital data are not as catastrophic for Zynga as they would
requiring storage. This number has increased be for a financial services firm, Zynga still needs
exponentially in the past few years. Web companies 234 Part Two Information Technology Infrastructure
used to build dozens of data centers, often up to a
half a billion dollars in cost per center. Leading cloud 99.9 percent uptime. On its own financial reports,
companies such as Amazon, Google, and Microsoft
have built software that uses automated methods to Zynga recognized that a significant majority of
spread data across the globe and control thousands its game traffic had been hosted by a single vendor
of servers, and they have refined data center designs and any failure or significant interruption in
Should Businesses Move to the Cloud?

its network could negatively impact operations. steering their customers toward virtualization
Amazon Web Services had an outage for several software, which allows them to run many more
hours in April 2011 that made it impossible for applications on each individual server that they buy.
users to log into some of Zynga’s games. There are also many companies that simply have too
However, owning data centers also comes with much legacy technology to use the cloud effectively.
risks. If the demand for Zynga’s games were to For example, Credit Suisse has 7,000 software
drop dramatically, Zynga would have too much IT applications running on its systems that have been
infrastructure on its hands and losses could result. developed over the past 20 years. Ensuring that all of
The most likely scenario has Zynga owning part of these applications would work the same way in the
its data centers and relying on external services such cloud would be more trouble than it’s worth.
as Amazon for the rest. Many other companies share Zynga’s concern
Not all companies use cloud computing in the about cloud reliability and security, and this
same way that Zynga does, but many do. Outback remains a major barrier to widespread cloud
Steakhouse wasn’t sure how popular an upcoming adoption.
coupon promotion would be, so the company used Amazon’s cloud experienced significant outages
Microsoft’s Azure cloud to launch the promotion. in April and August 2011 and again on June
Outback ended up selling an unexpectedly large 14 and 29, 2012. Normally, cloud networks are
670,000 coupons. Using the cloud, it was able to very reliable, often more so than private networks
avoid taxing in-house systems unnecessarily. operated by individual companies. But when a cloud
InterContinental Hotels has revamped its of significant size like Amazon’s goes down, it sends
infrastructure to include both private and public ripples across the entire Web.
cloud usage. To improve response time for According to Amazon, a simple network
customers, configuration error caused a major multiday service
InterContinental moved its core room reservation outage in Amazon’s East Coast region from April
transaction system onto a private cloud within 21–24, 2011. Amazingly, the error was most likely
its own data center, but it moved room availability a simple error made by a human being during a
and pricing Web site applications onto public cloud routine network adjustment. Sites affected included
data centers on the East and West coasts. In fact, Reddit, Foursquare, Engine Yard, HootSuite, Quora,
InterContinental hopes to put all of its publicly Zynga, and many more. On June 14 and June 29,
accessible information in these public clouds so 2012, AWS suffered outages due to power failures in
that customers receive faster results to site queries. its primary East Coast data center in North Virginia.
Customers receive data faster if the data are located Many popular Web sites, including Netflix, Heroku,
on a server that is physically close to them, and Quora, and Pinterest, as well as Web sites of smaller
cloud computing helps InterContinental to take companies, were knocked offline for hours.
advantage of this. The outages were proof that the vision of a cloud
Start-up companies and smaller companies are with 100 percent uptime is still far from reality.
finding that they no longer need to build a data Experts have conflicting opinions of how serious
center. With cloud infrastructures like Amazon’s this is. A June 2012 report issued by the Paris-based
readily available, they have access to technical International Working Group on Cloud Computing
capability that was formerly only available to much Resiliency estimated that the major cloud computing
larger businesses. For example, online crafts services were down about 10 hours per year or
marketplace more, with average availability at 99.9 percent or
Etsy uses Amazon computers to analyze data less.
from the 1 billion monthly views of its Web site. Etsy Even this small amount of downtime can lead to large
can then use its findings to create product revenue losses for firms that need 24/7 availability.
recommendation Nevertheless, some large cloud users such as Netflix
systems that allow customers to rank believe that overall cloud service availability has
which products they like best and to generate a list of steadily improved. Neil Hunt, Netflix’s chief product
100 products they might enjoy. Etsy’s engineers and officer, believes the cloud is becoming more reliable,
managers are excited about their ability to handle and that AWS gives Netflix much larger scale and
these types of issues on someone else’s computer technical expertise than it would have otherwise. A
systems.
IBM, Cisco, and other traditional data center number of experts recommend that companies for
giants realize that cloud computing is a threat whom an outage would be a major risk consider
to their technology infrastructure business. As a using
solution to rising computing costs, they have been another computing service as a backup.
Should Businesses Move to the Cloud?

Still, cloud computing has finally gone these concepts both to Amazon and to subscribers
mainstream, and the major cloud providers have of its services.
the sales numbers to prove it. Amazon, Microsoft, 4. What kinds of businesses are most likely to benefit
Google, and other cloud providers will have to from using cloud computing? Why?
continue to work to avoid outages, while other
companies must decide whether the cloud is right
for them, and if so, how to most effectively use the
cloud to enhance their businesses.
Sources: Charles Babcock, “How Game-Maker Zynga Became a
Cloud Vendor,” Information Week, May 14, 2012; Charles
Babcock,
“Cloud’s Thorniest Question: Does It Pay Off?” Information Week,
June 4, 2012; Zack Whittaker, “Amazon Explains Latest Cloud
Outage:
Blame the Power,” ZDNet, June 18, 2012; Stuart J. Johnston,
“Cloud
Outage of 13 Providers Reveals Downtime Costs,”
searchcloudcomputing.
com, June 22, 2012; Charles Babcock, “4 Companies
Getting Real Results from Cloud Computing,” Information
Week, January 15, 2011; Charles Babcock, “Amazon Launches
CloudFormation to Simplify App Development,” Information
Week,
February 28, 2011; Ashlee Vance, “The Cloud: Battle of the Tech
Titans.” Bloomberg Businessweek (March 3, 2011); Peter
Svensson;
Steve Lohr, “Amazon’s Trouble Raises Cloud Computing
Doubts,”
The New York Times, April 22, 2011; Charles Babcock. “Post
Mortem:
When Amazon’s Cloud Turned on Itself,” Information Week, April
29, 2011; Patrick Thibodeau, “Amazon Cloud Outage Was
Triggered
by Configuration Error, “Computerworld, April 29, 2011; and
Charles
Babcock, “Zynga’s Unusual Cloud Strategy is Key To Success,”
Information Week, July 1, 2011.

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