When it comes to cloud, a vast number of commercial and technology elements need to be taken into account before  deciding whether to build or buy, says BT’s John Gillam

There is no denying the efficiency gains, cost and performance of virtualising infrastructure. Like all things, when they become commonplace the next bell or whistle gets developed to maintain the competitive edge and offer another way to “do more for less”.

The virtualisation layer, commonly referred to as a “hypervisor” and provided by vendors such as VMware and Citrix (XEN), is commonplace in our data-centres today. But with the exception of a minority, 100% datacentre virtualisation does not constitute the perfect way to run all the applications needed for the enterprise. Many companies still haven’t “virtualised” and many more have partial virtualisation, which they implement only when it makes operational and financial sense. What is certain is that all applications are slowly being virtualised at source or in-house, and there is a new “whistle” making a noise – “orchestration”.

Like all things, what was once “custom code” has emerged as “off the shelf” in rapid time: a mini explosion of software that tackles the orchestration of the mostly dumb collection of virtual resources. In a nutshell, adding orchestration to your virtual datacentre can further streamline building, starting and operating a “virtual” computer to make it as easy as dragging a file from one folder to another.

This is all good: more choice for you! So what are the options? Option one is to create a privately delivered and operated “computing utility” service in-house. Option two is to choose to co-locate in a third-party datacentre. You can get a service provider to do option two for you. Option three is to buy the whole lot “as a service” from one of the many established or emerging service providers.

This is all very well, but there are some “gotchas” waiting down the road. Because of this, we think it’s first worthwhile recognising that these environments differ in two major ways. In options one and two they are your assets, but they are disguised financially. In option three they are the provider’s assets. The second difference is exclusivity: in options one and two everything is exclusive to you; in option three you are sharing, to varying degrees, the physical resources with others. I am not looking to start a debate on which one is the “public cloud” and which is the “private cloud”: call them what you prefer. The important point is choosing which option is right for you and understanding which is the right solution for your business.

We believe choice is paramount, as most organisations with an existing IT deployment will have a mix of these environments at some or even all of the time. IT is a constant transformation. Just migrating one application suite from physical to virtual resources and then from virtual to virtual (that is, another platform) is a complex process. The notion of “just moving it to the cloud” is easily said, but requires a vast number of commercial and technology elements to come together perfectly to ensure success.

So which way is the right way? It all nets down to the “money and management” equation. There has to be a cost benefit, of course, but there is also a decision on how you want to pay: with capital, a finance lease or pay as you go. There is a lot of talk about PAYG, but most organisations still have annual budgets and they can be uncomfortable bedfellows. Option three is the only simple and clear cut “off balance-sheet” option.

So this leaves the variable of how much management or control of the solution you need or want. Don’t forget the decisions made here affect the money side of the equation too. Some combinations just won’t work.

There are a number of factors associated with management and control: it’s about people, process and data privacy to name a few. One common mistake is thinking that using cloud services is the same as “outsourcing”: not true, you still own “the system”. All you are doing is trusting more of the build and operation to a third party; it rests on the trust you have with the service provider and how much risk is backed off by the service level you have jointly agreed. Data privacy and the whole area of IT governance is a complex area for some, but it’s equally shrouded with a lot of misconceptions and as a result is generally cited as one of the main barriers to the move to a cloud service.

So do you want to build or buy? If the answer is build, just be careful as you are taking on all the risk; it requires your capital or a finance lease; you have to manage growth and take the financial hit for any “peak demand’; and you have to manage the end of life/technology refresh. If you don’t need IT agility this is not a bad option, but make sure your competition does not out-manoeuvre you. Also beware of “vendor lock-ins”; many of the solutions today are propriety and with a general lack of standards in place the ability for your self-build to successfully interoperate with future cloud services is a high-risk strategy. Whatever your strategy, interoperability should be firmly on your roadmap.

Is the answer to buy? This scenario would certainly devolve responsibility for many of the risky items above and also achieve business agility. If you are happy to share resources, and you are satisfied that the level of “sharing” allows you to comply with data privacy and other IT governance issues, you can achieve significant benefits all round.

Do make sure when you compare and contrast the options that you include all the costs: paying for 100 virtual computers over three years may appear more expensive “as a service” compared to a one-off capital purchase, but don’t forget the power, cooling, lighting and building maintenance. You can also de-risk your technology strategy: the IT developments are coming thick and fast but consolidation is still some way off, so finding a service provider that can take you beyond the initial hurdles of migration and stay the course is good way to hedge your bets. One last thing: don’t forget you need to size and configure the network too. Intelligent IT works best with intelligent networks.

John Gillam is programme director, cloud services, at BT Global Services