Cloud Economics 2: Definitions

Like any good mathematician, Joe Weinman in his book Cloudonomics lays out some definitions right up front.  He chooses to define the concept of “cloud” in cloud computing in a way that brings out five essential attributes of cloud economics that are common to other cloud-like systems in business and life in general.  To make it easy to remember he gives his definition as a mnemonic: C L O U D.

Let’s see how these five attributes of any cloud system fit in with our understanding of real-time cloud computing:

C – Common infrastructure – refers to the ability to share resources.  A city park is like a cloud in that it can meet the needs of millions of apartment dwellers for some quality outdoor space—gardens, walkways, playgrounds, and sports fields.  Nobody feels overly crowded because they don’t all use the park at the same time, or in the same way.

As Wienman explains in detail later on in the book, non-cloud computing resources are often underutilized, which becomes a cost.  For example, some industrial applications require their software to run alone, on a separate server.  As the number of this kind of application grows, the waste of resources increases.  Where possible, using virtual machines is one way to share the resources of a single server to reduce this kind of waste.  This approach to sharing infrastructure is often used in cloud systems, as well as private systems.

L – Location independence – means that the service is available pretty much everywhere.  You might not think of a fast-food franchise as a cloud service provider, but in a sense it is similar.  Just as you can get order-in or take-out service from your favorite burger outlet in many places around the country or even the world, so also can you access the cloud from practically any location.

People relaxing in a city park.The value of location independence for real-time systems is just beginning to be realized.  For decades data from industrial systems has been tightly locked down, behind firewalls and physically isolated systems.  But now, perhaps to the dismay of engineers and system integrators who rely on isolation for security reasons, upper management in many companies is waking up to the value of accessing that data from anywhere.

Of course, there is always a need to keep raw process data secure and free from interference, but advanced methods of keeping firewalls closed and permitting read-only access can help bring key real-time performance metrics to analysts and decision makers in the office, at home, or on the road.

At the same time, many embedded systems once lacked the power or connectivity to put their data online.  With the advent of the Internet of Things connecting cars, appliances, remote sensors, and a host of other devices directly to the Internet, we are witnessing a huge growth and interest in accessing live data from all kinds of sources, independent of location.

O – Online accessibility – is the availability of service via a network or the Internet.  Every service needs some form of access.  A restaurant needs an eating area, a movie theater needs seats and a view of the screen, a radio show needs transmitters and receivers.  As Wienman sums it up: “Without networks, there is no cloud.”  Real-time cloud systems can function well on private networks, and in many cases access to the Internet and public clouds will provide additional value.

U – Utility pricing – like the Water Works and Electric Company in the game of Monopoly, utility pricing means you only pay for what you use—be it water, electricity or computing power.  Usually this aspect of cloud computing goes hand-in-hand with on-demand resources.

D – on-Demand resources – the ability to bring in additional resources, or remove extra ones, to cope with variable demand.  For example, your house has plenty of space for your family and an occasional guest, but on special occasions like a big wedding you may need to engage the services of hotels or restaurants.

The flexibility to respond to market fluctuations is a real boon for retail and consumer-oriented companies who may see significant peaks and valleys of seasonal or irregular demand.  In our experience, most industrial and embedded real-time systems don’t undergo such large variations in demand for computing resources.  However, for systems too small or too dispersed to justify a dedicated, in-house SCADA system, (such as mentioned in our SCADA for the Masses discussion), on-demand resources and utility pricing may help make the cloud a viable solution.

Given the above C L O U D definitions, the economic value of any cloud computing system, real-time or not, depends on a number of variables and circumstances.  We need to consider these in their appropriate context to determine how real-time systems can benefit.

Cloud Economics 1: A Vision

For the past few months we’ve been looking at the technical side of real-time cloud computing.  We’ve touched on some of the requirements for supporting real-time data communications on the cloud, looked at how SCADA and embedded systems might benefit from accessing the cloud, and even considered how the term “real time” may be best applied to cloud computing.

Going forward, I thought it might be a good idea to switch gears a bit, and take a deeper look at the business and economic side of cloud computing, and see how the latest thinking about cloud economics may or may not apply to real-time applications.

A new book, Cloudonomics, by Joe Weinman, Senior Vice President of Cloud Services and Strategy at Telx, gives a profound yet accessible overview of the business value of cloud computing—in other words, cloud economics.  Among other things, the book’s cover blurb says, “Weinman drills down past the hype and hysteria, the myths and misconceptions, to uncover the fundamental principles underlying how the cloud works, how it’s used, and how it will evolve in a business context.

With the vision of a mathematician, Weinman strips away the non-essential features of the cloud and breaks it down into its basic elements and principles.  At that level, he can demonstrate how “cloudy” ideas and concepts have been used for centuries.  For example, he shows the similarities between cloud computing and the transportation and lodging infrastructure of ancient Rome, complete with multi-protocol wide-area networks, pay-per-use resources, value-added services, regulatory agencies, security tokens, branding, advertising, and more.Coins for the cloud.

Weinman uses lots of real-world examples to show how we find cloud concepts in every facet of life, such as hotels, taxicabs, and movie theaters.  At the same time, he introduces some simple mathematical theories and models that sometimes uphold and sometimes contradict much of the conventional wisdom that has grown up around cloud computing.

Through it all, he strives to adhere to three goals: 1) present a multidisciplinary view from a number of fields of economics, mathematics, natural sciences, and system dynamics; 2) plant seeds of ideas in areas related to cloud computing, which may be cultivated and developed by others; and 3) take an evergreen approach, where the concepts are so fundamental and universal that they will serve to inspire research and application in business for many years to come.

Although I haven’t read it exhaustively, I’ve not yet seen much mention of the application or value or real-time systems in the cloud.  This is not surprising, as this topic is still on the distant horizon for many leaders of thought.  Or, it could be that what applies to cloud computing in general also applies to real-time cloud computing.

This raises an interesting question: Is there any significant difference between the economics of the more familiar cloud systems of business and consumer applications, and the less-well-known real-time cloud systems for industrial and embedded applications?  We know there are some unique technical requirements.  Is there a fundamentally different business model for real-time cloud?

In the weeks to come we’ll take a look at some of the ideas presented by Weinman in Cloudonomics, and see how they may or may not apply to the special case of real-time cloud computing.

SCADA for the Masses?

In a recent Linkedin discussion among the SCADA Professionals group, Manny Romero, Manager of Madison Technologies Industrial IT&C Division in Sydney, Australia suggested that the cloud could provide “SCADA to the masses.”  This idea sounds interesting, so I thought we might take a closer look.

The premise is that the relationship between traditional SCADA and cloud-enhanced services like M2M and others are not necessarily mutually exclusive.  Perhaps it is a false dichotomy.  Suppose you don’t have to choose?  Maybe you can enjoy the benefits of both.

Romero suggests that we can compare the controversy of SCADA vs. the Cloud to the early 80s when the PC begain gaining popularity for business applications.  While PC advocates were eagerly announcing the death of the mainframe, many in the traditional computing world sneered at the lightweight upstarts, saying that nothing as rinky-dink as a PC could possibly replace the mainframe.

As it turns out, the mainframe didn’t get replaced.  Instead, PCs put tools like spreadsheets and relational databases within reach of individual managers and office staff.  And they opened up new application spaces in areas like education, personal publishing, gaming, and home finances.  Then, with the advent of the Internet, personal computing expanded into email, web surfing, online videos, and more.  In this way, the PC opened the door to “computing for the masses”.

SCADA for the massesThis is what cloud computing may do for SCADA, according to Romero.  He believes that the SCADA systems currently in use will probably continue in their current form for many years to come, but at the same time, cloud-enabled systems may become more common.  How so?

The first thing that comes to mind is industrial and commercial applications that can use some SCADA functionality, but do not need or cannot afford a full-blown SCADA implementation.  Some may be getting by with a web portal and email/SMS messaging, and yet many would benefit from a more sophisticated system, as long as staffing and equipment costs were minimal.  Cloud-enabled SCADA could be a way to meet that need.

What about beyond the world of industrial applications?  Just as the PC revolution brought computing to the masses, could cloud computing bring SCADA to the masses of non-industrial users?  What is SCADA, after all?  Supervisory Control and Data Acquisition.  There is nothing in that definition that limits SCADA to factories, pipelines, and wind turbines.

The rapidly-growing Internet of Things is all about data access, and often includes forms of supervisory control.  As the number of connected devices continues to mushroom, there will be more demand for connectivity options from both the public and private sectors.  Home appliances and HVAC systems, cars and trucks, vending machines, security cameras, and many other types of consumer goods will be increasingly sending data and receiving supervisory control from ordinary citizens.  This could eventually be seen as “SCADA for the masses”.

Will these trends continue?  We won’t have to wait too long to find out.  Five or ten years from now people may take these ideas for granted.  Perhaps in another ten years after that someone will need to research to find out where exactly the term “SCADA for the masses” was first used.  As far as I’m concerned, it was from Manny Romero on Linkedin, in August 2012.

SCADA Professionals Weigh In

For the past few weeks there has been a lively discussion on the SCADA Professionals group of LinkedinSalman Ijazi, an oil and gas professional in the Dallas/Fort Worth area posed the question: “When you think of a cloud based SCADA/monitoring system, what issues come to your mind?”

This topic elicited a wealth of comments from a wide spectrum of engineers, system integrators, managers, and other leaders of thought.  Brian Chapman, SCADA Software Engineer at Schneider Electric was the first and most frequent responder.  His comments ranged from comparisons of the human brain and SCADA systems to detailed analysis of the layered design in a water chlorination system.  Overall, he doesn’t see many possibilities for SCADA on the cloud.

Several respondents agreed with Brian, and some were quite adamant.  Zane Spencer, Automation & Controls Project Manager at MPE Engineering said, “The thought of a cloud-based SCADA system makes me shudder,”  while Earl Vella, Senior Systems Developer at Water Services Corp. in Malta said simply, “SCADA and cloud must never meet.”

Jake Brodsky, Control Systems Engineer at WSSC emphasized the importance of not putting an entire SCADA system on the cloud, pointing to the primary concerns of security, potential latencies in data throughput, and reliability.  He questions the notion of taking “the same old software you’ve been using,” putting it on a cloud platform, and then expecting that you will magically get better service.

In response, others point out that although we should not consider building a SCADA system on a cloud server, cloud computing may still offer significant value to traditional and future SCADA systems.

Jake Hawkes, a platform manager in Calgary suggested that the current practice of outsourcing SCADA systems might lead to SCADA in the cloud as a next logical step.  Ruslan Fatkhullin, CEO of Tesla in Russia, mentioned the advantages of OPC UA for connecting sensors and field systems to cloud servers.  J-D Bamford, CRM/SCADA Security Engineer at Cimation in Denver, pointed out that the cloud can be useful for rapid development of systems serving distributed facilities, while at the same time, traditional HMI developers are already offering web-based solutions for mobile phone and desktop dashboards.

An important distinction was touched on by John Kontolefa, Professional Engineer at NYPA, and seconded by others: not to confuse SCADA systems with DCS (Distributed Control Systems).  There seems to be a consensus among most group members that DCS functionality like automatic, real-time, closed-loop control of critical processes does not belong on the cloud, whereas open-loop SCADA functionality such as simple monitoring and inputs of non-real-time data like adding recipes or fine tuning a process might do fine on a cloud-based system.

Summing up, Salman Iljazi, who posed the initial question, pointed out the value in the oil and gas industries of performing some SCADA functions in the cloud.  The geographical and other constraints that they operate under bring out certain advantages of using the cloud: ease of deployment, maintenance, and expansion, coupled with low infrastructure requirements.  He mentioned applications such as pipeline monitoring, alarm management, hydrocarbon reporting, and well pad monitoring, and proposed that even high security environments such as banking, e-commerce and health systems management may benefit from SCADA functionality in the cloud.

For me, personally, the most intriguing possibility was mentioned subsequently by Manny Romero, Manager of Madison Technologies Industrial IT&C Division in Sydney.  He suggested that the cloud could provide SCADA to the masses.”  What does that mean?  We’ll talk about it next week.

Getting to Ten in Ten

The other day I saw a video and presentation called Ten in Ten – Ten Technology Trends that Will Change the World in Ten Years by Dave Evans, the Chief Futurist at Cisco.  Standing in a unique position to view in detail what some of us only hear about in bits and pieces, Dave lays out a mind-reeling mural of the future.  The video is almost a year old now, and it may well take us the nine remaining years to ponder and digest its implications.

The names of the trends give a glimpse of what we can expect: The Zettaflood, The Next Dimension, The Power of Power, and more.  Reading through the list (see below), it occurred to me that the first five of these trends all have something in common–they all point in some way to the value of real-time cloud computing:

1. The Internet of Things is Already Here
Electronic devices, sensors, and all kinds of everyday objects with RFID tags connected to the Internet now outnumber people who are connected by 2 to 1.  By 2020 there will be more than 6 connected devices per person.  Real-time data from these devices and sensors flowing through the cloud can serve as a world-wide nervous system.

2. The Zettaflood Is Coming  
Human efforts, combined with an avalanche of incoming data from all of these devices will soon produce zettabytes of information.  One zettabyte = 1 trillion terabytes, or 1021 bytes.  Much of this information will be needed instantaneously, and discarded as quickly, making real-time access that much more important.

3. Wisdom of the Cloud
Cisco’s Cloud CTO, Lew Tucker said, “By 2020 one-third of all data will live in, or pass through, the cloud.”  The expression “pass through” the cloud should not go unnoticed here.  We expect to see distribution of data in real time via the cloud becoming commonplace within the next ten years.

4. The Next Net
The continuing trend towards higher-speed, higher-reliability networking can only enhance today’s technologies for cloud-enabled real-time data connectivity, making them even more robust and reliable than they are today.

5. The World Is Flat and So Is Your Technology     
As concerned citizens in Japan were able to tweet out earthquake reports several minutes ahead of the US Geologial Survey, Evans predicts that we can expect the convergence of broadband, smart phones, and Internet TV to reach a point where everyone becomes a reporter.  He says, “You’ll be broadcasting to people’s televisions, in their homes, in real time.”

Exactly how these trends might shape our world in the coming ten years remains to be seen.  In 2021 we’ll be able to sift through the archives and dig up the presentation—if it hasn’t gotten completely lost in the zettaflood or been made inaccessible by ever-more-efficient data storage hardware—and see if these predictions came true.  Meanwhile, to start moving in that direction, we’ll keep our focus on real-time applications for cloud computing.

Trends Implications
1. The Internet of Things is Already Here Things used as data sources
2. The Zettaflood Is Coming are contributing staggering amounts of information,
3. Wisdom of the Cloud increasingly available on the cloud
4. The Next Net over a high-speed network,
5. The World Is Flat and So Is Your Technology moving from near time to real time
6. The Power of Power and enabled by low power consumption,
7. It’s All About You which can enhance our lives through innovations like brain-machine interfaces,
8. The Next Dimension products on demand,
9. Another Family Tree advanced robotics,
10. You…Only Better and a high-tech leap in the evolution of the species.
Source: Ten in Ten on CiscoLive, July 12, 2011

CEO Perspectives 4: Leading the Transformation

Is cloud computing inevitable?  Some people seem to think so.  Try typing the words “cloud,” “computing,” and “inevitable” into Google and you’ll get millions of hits.  Last year cloud computing reached a peak on the Gartner Hype Cycle.  While the more conservative players are willing to sit back and take a wait-and-see approach, a growing number of companies are diving in, and leading the transformation.

According to Andrew McAfee in his article What Every CEO Needs to Know About the Cloud, there is a gradual but inevitable shift toward the cloud.  He expects those who get in early to be in an increasingly better position as time passes, while those who linger to be put at a greater and greater disadvantage, until they either join or get lost in the dust.  McAfee gives some general guidelines for starting a move into the cloud, which can be used by anyone interested in putting real-time data on the cloud.

Know Your Responsibilities
To start with, McAfee suggests becoming aware of legal implications.  Clouds in the sky have no respect for man-made concepts like country borders, but your data does not have the same luxury.  Some countries limit what kinds of data can be moved or stored outside their borders.  For example, the EU Data Protection Directive restricts data on personal status from passing through countries that do not provide an “adequate level of protection” for the data.  Other countries have  strict privacy laws for any data transmitted on a public network or stored in a cloud server.  You will need to verify that your system meets the legal requirements of all countries in which you expect it to function.

Understand the Risks
We talked about security risks last week, pointing out that they may be different than common wisdom would suggest.  Questions about cost and reliability were addressed in an earlier blog.  McAfee advises executives to become informed of the risks and limitations of cloud computing, involving their general counsels and compliance departments early on.  There are a few areas, such as data subject to export regulations or related to personal health information, that may warrant a conservative approach, but in general he advocates boldly moving forward.  Plant managers and engineers will of course need to take a close look at their specific circumstances to decide what parts of their data sets can be made available in a cloud application.

Evaluate Attitudes
As with any new undertaking, there will be different levels of interest and willingness to change, both within the organization and outside.  Those most eager to implement a real-time cloud system will need to gauge its appeal among key decision makers and managers who are expected to implement it.  McAfee says, “a CIO’s lack of enthusiasm about the cloud these days is about as red a flag as a factory manager’s disinterest in electrification would have been a century ago.”

At the same time, consider software vendors.  What is their attitude toward cloud computing?  What plans do SCADA suppliers and other providers of software for real-time applications have in place to support a move to the cloud?  Some may add the word “cloud” to their networked process control software, but does it really meet the core requirements for a real-time cloud system?

Experiment
Having done your homework, you are ready to try it.  McAfee suggests starting small.  Experiment.  He talks about non-real-time business systems, but the principle is the same.  Don’t expect to immediately move a whole SCADA system onto the cloud.  Maybe you can implement a web-based HMI to present a limited data set to selected customers.  Or possibly connect remote field devices to a cloud server for monitoring in a web browser.  As you gain experience, you may want to set up a private or a hybrid cloud.  Then, as time passes and cloud computing goes even more mainstream, you’ll be in a position to consider expanding further.

It is still too early in the history of cloud computing to know with absolute certainty that this is indeed the way of the future.  But things have reached a point where it would probably be wise to consider it seriously.  As consumer and business applications increasingly move into the cloud, real-time solutions won’t be far behind.  Somewhere between head-in-the-sand and off-the-deep-end, McAfee suggests a cautious, realistic, small-scale, try-and-see attitude to gain experience and build capabilities that may prove valuable in the near future.