The Cloud Cat and Mouse Papers – The Primer

Cat and Mouse with Multi-national infrastructure –The Participants to date

There is an ever-changing, game of cat and mouse developing in the world of cloud computing.   Its not a game that you as a consumer might see, but it is there.  An undercurrent that has been there from the beginning.   It pits Technology Companies and multi-national infrastructure against local and national governments.  For some years this game of cat and mouse has been quietly played out in backrooms, development and technology roadmap re-works, across negotiation tables, and only in the rarest of cases – have they come out for industry scrutiny or visibility.  To date the players have been limited to likes of Google, Microsoft, Amazon, and others who have scaled their technology infrastructure across the globe and in large measure those are the players that governments have moved against in an ever intricate chess game.  I myself have played apart in the measure/counter-measure give and take of this delicate dance.

The primary issues in this game have to do with realization of revenue for taxation purposes, Safe Harbor and issues pertaining to personally identifiable information, ownership of Big Data, the nature of what is stored, how it is stored, and where it is stored, the intersection where politics and technology meet.   A place where social issues and technology collide.   You might call them storm clouds, just out of sight, but there is thunder on the horizon that you the consumer and/or potential user of global cloud infrastructure will need to be aware of because eventually the users of cloud infrastructure will become players in the game as well. 

That is not to say that the issues I tease out here are all gloom and doom.  In fact, they are great opportunities for potential business models, additional product features, and even cloud eco-system companies or niche solutions unto themselves.  A way to drive significant value for all sides.   I have been toying with more than a few of these ideas myself here over the last few months.

To date these issues have mostly manifested in the global build up of infrastructure for the big Internet platforms.  The Products and Services the big guys in the space use as their core money-making platforms or primary service delivery platforms.  Rarely if ever do these companies use this same infrastructure for their Infrastructure as a service (IAAS) or Platform as a Services (PAAS) offerings.  However, as you will see, the same challenges will and do apply to these offerings as well.  In some cases they are even more acute and problematic in a situation where there may be a multi-tenancy with the potential to put even more burden on future cloud users.

If I may be blunt about this there is an interesting lifecycle to this food chain whereby the Big Technology companies consistently have the upper hand and governmental forces through the use of their primary tools – regulation and legislation – are constantly playing catch up.  This lifecycle is unlikely to change for at least five reasons.

• The Technology Companies will always have the lens of the big picture of multi-national infrastructure.   Individual countries, states, and locales generally only have jurisdiction or governance over that territory, or population base that is germane to their authority.
• Technology Companies can be of near singular purpose on a very technical depth of capability or bring to bear much more concentrated “brain power” to solve for evolutions in the changing socio-political landscape to continually evolve measures and counter-measures to address these changes.
• By and large Governments rely upon technologies and approaches to become mainstream before there is enough of a base understanding of the developments and impacts before they can act.  This generally places them in a reactionary position. 
• Governmental forces generally rely upon “consultants” or “industry experts” to assist in understanding these technologies, but very few of these industry experts have ever really dealt with multi-national infrastructure and fewer still have had to strategize and evolve plans around these types of changes. The expertise at that level is rare and almost exclusively retained by the big infrastructure providers.
• Technology Companies have the ability to force a complete game-change to the rules and reality by completely changing out the technology used to deliver their products and services, change development and delivery logic and/or methodology to almost affect a complete negation of the previous method of governance, making it obsolete. 

That is not to say that governments are unwilling participants in this process forced into a subservient role in the lifecycle.  In fact they are active participants in attracting, cultivating, and even subsidizing these infrastructural investments in areas of under their authority and jurisdiction.  Using tools like Tax breaks, real estate and investment incentives, and private-public partnerships do have both initial and ongoing benefits for the Governments as well.  In many ways these  are “golden handcuffs” for Technology Companies who enter into this cycle, but like any kind of constraint – positive or negative – the planning and strategy to unfetter themselves begins almost immediately.

Watson, The Game is Afoot

Governments, Social Justice, Privacy, and Environmental forces have already begun to force changes in the Technology landscape for those engaged in multi-national infrastructure.  There are tons of articles freely available on the web which articulate the kinds of impacts these forces have had and will continue to have on the Technology Companies.  The one refrain through all of the stories is the resiliency of those same Technology Companies to persevere and thrive despite what might be crucial setbacks in other industries.

In some cases the technology changes and adapts to meet the new requirements, in some cases, approaches or even vacating “un-friendly” environs across any of these spectrums becomes an option, and in some cases, there is not an insignificant bet that any regulatory or compulsory requirements will be virtually impossible or too technically complex to enforce or even audit.

Lets take a look at a couple of the examples that have been made public that highlight this kind of thing.   Back in 2009, Microsoft migrated substantial portions of their Azure Cloud Services out of Washington State to its facilities located in San Antonio Texas.  While the article specifically talks about certain aspects of tax incentives being held back, there were of course other factors involved.   One doesn’t have to look far to understand that Washington State also has an B&O Tax (Business and Occupation Tax) which is defined as a gross receipts tax. It is measured on the value of products, gross proceeds of sale, or gross income of the business.  As you can imagine, interpreting this kind of tax as it relates to online and cloud income and the like could be very tricky and regardless would be complex and technical problem  to solve.  It could have the undesired impact of placing any kind of online business at an interesting disadvantage,  or at another level place an unknown tax burden on its users.   I am not saying this was a motivating factor in Microsoft’s decision but you can begin to see the potential exposure developing.   In this case, The Technology could rapidly change and move the locale of the hosted environments to minimize the exposure, thus thwarting any governmental action.  At least for the provider, but what of the implications if you were a user of the Microsoft cloud platform and found yourself with an additional or unknown tax burden.  I can almost guarantee that back in 2009 that this level of end user impact (or revenue potential from a state tax perspective) had not even been thought about.   But as with all things, time changes and we are already seeing examples of exposure occurring across the game board that is our planet.

We are already seeing interpretations or laws getting passed in countries around the globe where for example, a server is a taxable entity.   If revenue for a business is derived from a computer or server located in that country it falls under the jurisdiction of that countries tax authority.    Imagine yourself as a company using this wonderful global cloud infrastructure selling your widgets, products or services, and finding yourself with an unknown tax burden and liability in some “far flung” corner of the earth.   The Cloud providers today mostly provide Infrastructure services.  They do not go up the stack far enough to be able to effectively manage your entire system let alone be able to determine your tax liability.  The burden of proof to a large degree today would reside on the individual business running inside that infrastructure.  

In many ways those adopting these technologies are the least capable to deal with these kinds of challenges.  They are small to mid-sized companies who admittedly don’t have the capital, or operational sophistication to build out the kind of infrastructure needed to scale that quickly.   They are unlikely to have technologies such as robust configuration management databases to be able to to track virtual instances of their products and services, to tell what application ran, where it ran, how long it ran, and how much revenue was derived during the length of its life.   And this is just one example (Server as a taxable entity) of a law or legislative effort that could impact global users.  There are literally dozens of these kinds of bills/legislative initiatives/efforts (some well thought out, most not) winding their way through legislative bodies around the world.

You might think that you may be able to circumvent some of this by limiting your product or services deployment to the country closest to home, wherever home is for you.  However there are other efforts winding their way through or in large degree passed that impact the data you store, what you store, whose data are you storing, and the like. In most cases these initiatives are unrelated to the revenue legislations developing, but balanced they can give an interesting one – two punch.   For example many countries are requiring that for Safe Harbor purposes all information for any nationals of ‘Country X’ must be stored in ‘Country X’ to ensure that its citizenry is properly protected and under the jurisdiction of the law for those users.   In a cloud environment, with customers potentially from almost anywhere how do you ensure that this is the case?  How do you ensure you are compliant?   If you balance this requirement with the ‘server as a taxable entity’ example I just gave above there is an interesting exposure and liability for companies prove where and when revenue is derived.     Similarly there are some laws that are enacted as reactions against legislation in other countries.

In the post-911 era within the United States, the US Congress enacted a series of laws called the Patriot Act.   Due to some of the information search and seizure aspects of the law, Canada forbade that Canadian citizens data be stored in the United States in response.   To the best of my knowledge only a small number of companies actually even acknowledge this requirement and have architected solutions to address it, but the fact remains they are not in compliance with Canadian law.  Imagine you are a small business owner, using a cloud environment to grow your business, and suddenly you begin to grow your business significantly in Canada.  Does your lack of knowledge of Canadian law excuse you from your responsibilities there?  No.  Is this something that your infrastructure provider is offering to you? Today, no.  

I am only highlighting certain cases here to make the point that there is a world of complexity coming to the cloud space.  Thankfully these impacts have not been completely explored or investigated by most countries of the world, but its not hard to see a day/time where this becomes a very real thing where companies and the cloud eco-system in general will have to address.  At its most base level these are areas of potential revenue streams for governments and as such increase the likelihood of their eventual day in the sun.    I am currently personally tracking over 30 different legislative initiatives around the world (read as pre-de-facto laws) that will likely shape this Technology landscape for the big providers and potential cloud adopters some time in the future.

What is to come?

This first article was really just to bring out the basic premise of the conversation and topics I will be discussing and to lay the groundwork to a very real degree.  I have not even begun to touch on the extra-governmental impacts of social and environmental impacts that will likely change the shape even further.  This interaction of Technology, “The Cloud”, Political and Social Issues, exists today and although largely masked by the fact that eco-system of the cloud is not fully developed or matured, is no less a reality.   Any predictions that are made are extensions of existing patterns I see in the market already and do not necessarily represent a forgone conclusion, but rather the most likely developments based upon my interactions in this space.  As this Technology space continues to mature, the only certainty is uncertainty modulated against the backdrop of a world where increasingly geo-political forces will continue to shape the Technology of tomorrow.

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Cloud Détente – The Cloud Cat and Mouse Papers

Over the last decade or so I have been lucky enough to be placed into a fairly unique position to work internationally deploying global infrastructure for cloud environments.  This work has spanned across some very large companies with a very dedicated focus on building out global infrastructure and managing through those unique challenges.   Strategies may have varied but the challenges faced by them all had some very common themes.   One of the more complex interactions when going through this process is what I call the rolling Cat and Mouse interactions between governments at all levels and these global companies.  

Having been a primary player in these negotiations and the development of measures and counter measures as a result of these interactions, I have come to believe there are some interesting potential outcomes that cloud adopters should think about and understand.   The coming struggle and complexity for managing regulating and policing multi-national infrastructure will not solely impact the large global players, but in a very real way begin to shape how their users will need to think through these socio-political  and geo-political realities. The potential impacts on their business, their adoption of cloud technologies, their resulting responsibilities and measure just how aggressively they look to the cloud for the growth of their businesses.

These observations and predictions are based upon my personal experiences.  So for whatever its worth (good or bad)  this is not the perspective of an academic writing from some ivory tower, rather they are  the observations of someone who has been there and done it.  I probably have enough material to write an entire book on my personal experiences and observations, but I have committed myself to writing a series of articles highlighting what I consider the big things that are being missed in the modern conversation of cloud adoption.  

The articles will highlight (with some personal experiences mixed in) the ongoing battle between Technocrats versus Bureaucrats.  I will try to cover a different angle on many of the big topics out there today such as :

• Big Data versus Big Government
• Rise of Nationalism as a factor in Technology and infrastructure distribution
• The long struggle ahead for managing, regulating, and policing clouds
• The Business, end-users, regulation and the cloud
• Where does the data live? How long does it live? Why Does it Matter?
• Logic versus Reality – The real difference between Governments and Technology companies.
• The Responsibilities of data ownership
• … regarding taxation exposure
• … regarding PII impacts
• … Safe Harbor

My hope is that this series and the topics I raise, while maybe a bit raw and direct, will cause you to think a bit more about the coming impacts on Technology industry at large, the potential coming impacts to small and medium size businesses looking to adopt these technologies, and the developing friction and complexity at the intersection of technology and government.

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ATC Ribbon Cutting

In my previous post I had mentioned how extremely proud I was of the Technology teams here at AOL in delivering a truly state of the art Data Center facility with some incredible ground breaking technology.  As I mentioned the facility was actually in production use faster than we could get the ribbon cutting ceremony scheduled.  I thought I would share a small slice of the pictures of the internal Ribbon Cutting Event.

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Alex Gounares, former fellow Microsoft alum and AOL CTO and I presided over the celebration.   In this photo, Alex and I talk over some of the technologies used in our cloud with one our cloud engineers.  As the facility is based upon pre-racked technologies and modular facility and network build components it allows for significant cost and capital optimization. this allows us to build only when demand and growth dictates the need. All machines in the background are live and have been live for a few weeks.

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After receiving two very large scissors which were remarkably sharp and precise for their size we were ready to go.   A few short words about the phenomenal job our teams performed and it was time for some ribbon to kiss raised floor.

 

 

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At the end of the day the real reason why this project was such a success really breaks down to the team responsible for this incredible win.   An effort like this took incredibly smart people from different organizations working together to make this a reality.    The achievement is even more impressive in my mind when you think about the fact that in many cases our 90 day to live timeframe included design and execution on the go!   My guess is our next one may be significantly faster without all that design time. The true heroes of ATC are below!

 

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(Special thanks goes out to Krysta Scharlach for the permission and use of her pictures in this post)

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Private Clouds – Not just a Cost and Technology issue, Its all about trust, the family jewels, corporate value, and identity

I recently read a post by my good friend James Hamilton at Amazon regarding Private Clouds.   James and I worked closely together at Microsoft and he was always a good source for out of the box thinking and challenging the status quo.    While James post found here, speaks to the Private Cloud initiative being what amounts to be an evolutionary dead end, I would have to respectfully disagree.

James’ post starts out by correctly pointing out that at scale the large cloud players have the resources and incentive to achieve some pretty incredible cost savings.  From an infrastructure perspective he is dead on.  But I don’t necessarily agree that this innovation will never reach the little guy.  In my role at Digital Realty Trust I think I might have a pretty unique perspective on the infrastructure developments both at the “big” guys along with what most corporate enterprises have available to them from a leasing or commercial perspective.  

Companies like Digital Realty Trust,  Equinix, Terramark, Dupont Fabros, and a host of others in the commercial data center space are making huge advancements in this space as well.   The free market economy has now placed an importance on low PUE highly efficient buildings.   You are starting to see these firms commission buildings with Commission PUEs Sub 1.4.   Compared to most existing data center facilities this is a huge improvement.  Likewise these firms are incented to hire mechanical and electrical experts.  This means that this same expertise is available to the enterprise through leasing arrangements.  Where James is potentially correct is at that next layer of IT specific equipment.

This is an area where there is an amazing amount of innovation happening by Amazon, Google, and Microsoft.   But even here in this space there are firms stepping up to provide solutions to bring extensive virtualization and cloud-like capabilities to bear.    Companies like Hexagrid have software solutions offerings that are being marketed to typical co-location and hosting firms to do the same thing.  Hexagrid and others are focusing on the software and hardware combinations to deliver full service solutions for those companies in this space.    In fact (as some comments on James’ blog mention) there is a lack of standards and a fear of vendor lock-in by choosing one of the big firms.  Its an interesting thought to ponder if a software+hardware solution offered to the hundreds of co-location players and hosting firms might be more of a universal solution without fear of lockdown.  Time will tell.

But this brings up one of the key criticisms that this is not just about cost and technology.   I believe what is really at stake here is much more than that.   James makes great points on greater resource utilization of the big cloud players and how much more efficient they are at utilizing their infrastructure.   To which i will snarkly (and somewhat tongue-in-cheek) say to that, “SO WHAT!”     Do enterprises really care about this?  Do they really optimize for this?  I mean if you pull back that fine veneer of politically correct answers  and “green-suitable” responses is that what their behavior in REAL LIFE is indicative of?    NO.

This was a huge revelation for me when I moved into my role at Digital.  When I was at Microsoft, I optimized for all of the things that James mentions because it made sense to do when you owned the whole pie.   In my role at Digital I have visibility into tens of data centers, across hundreds of customers that span just about every industry.  There is not, nor has there been a massive move (or any move for that matter) to become more efficient in the utilization of their resources.   We have had years of people bantering about how wonderful, cool, and how revolutionary a lot of this stuff is, but world wide Data center utilization levels have remained abysmally low.   Some providers bank on this.  Over subscription of their facilities is part of their business plan.  They know companies will lease and take down what they think they need, and never take it down in REALITY.   

So if this technology issue is not a motivating factor what is?  Well cost is always part of the equation.   The big cloud providers will definitely deliver cost savings, but private clouds could also deliver cost savings as well.   More importantly however, Private clouds will allow companies to retain their identity and uniqueness, and keep what makes them competitively them –Them.

I don’t so much see it as a Private cloud or Public cloud kind of thing but more of a Private Cloud AND Public cloud kind of thing.   To me it looks more an exercise of data abstraction.   The Public offerings will clearly offer infrastructure benefits in terms of cost, but will undoubtedly lock a company into that single solution.  The IT world has been bit before by putting all their eggs in a single basket and the need for flexibility will remain more key.    Therefore you might begin to see Systems Integrators, Co-location and hosting firms, and others build their own platforms, or much more likely, build platforms that umbrella over the big cloud players to give enterprises the best of both worlds. 

Additionally we must keep in mind that  the biggest resistance to the adoption of the cloud is not technology or cost but RISK and TRUST.  Do you, Mr. CIO, trust Google to run all of your infrastructure? your applications?  Do you Mrs. CIO, Trust Microsoft or Amazon to do the same for you?    The answer is not a blind yes or no.   Its a complicated set of minor yes responses and no responses.   They might feel comfortable outsourcing mail operations, but not the data warehouse manifesting decades of customer information.     The Private cloud approach will allow you to spread your risk.   It will allow you to maintain those aspects of the business that are core to the company. 

The cloud is an interesting place, today.  It is dominated by technologists.  Extremely smart engineering people who like to optimize and solve for technological challenges.  The actual business adoption of this technology set has yet to be fully explored.   Just wait until the “Business” side of the companies get their hooks into this technology set and start placing other artificial constraints, or optimizations around other factors.  There are thousands of different motivators out in the world.  Once they starts to happen earnest.  I think what you will find is a solution that looks more like a hybrid solution than the pure plays we dream about today.

Even if you think my ideas and thoughts on this topic is complete BS, I would remind you of something that I have told my teams for a very long time.  “There is no such thing as a temporary data center.”  This same mantra will hold true for the cloud.  If you believe that the Private Cloud will be a passing and temporary thing, just keep in mind that there will be systems and solutions build to this technology approach thus imbuing it with a very very long life.  

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Panel at Data Center Dynamics – London

On November 10th and 11th I will be speaking on two panels at the Data Center Dynamics event in London.  The theme for the two day event is Carbon: Risk or Opportunity.   In the morning, On Day One, I am speaking  in a panel entitled The Data Center Efficiency Schism …New Realities in Design with Ed Ansett from HP/EYP and my old friend Lex Coors from Interxion.   The afternoon has me on another panel with Liam Newcombe with the British Computer Society entitled ‘The Shape of the Cloud to Come’ moderated by Data Center Dynamics CTO, Stephen Worn.  Liam and I have passion for this space and our past conversations on this topic in particular and other related topics have been quite entertaining (or so I have been told).  To top it off, this panel is moderated by Stephen who is not known for being timid either, so I am really looking forward to the discussion there.

The entire event should be quite super-charged especially given the recent Carbon Reduction Commitment legislation in the UK.  For those of you keeping a close eye on the emerging impact of carbon legislation across the world this event is likely to source a number of lightning rods and thought leadership to watch out for.  

If you have not signed up and will be in London, I would strongly encourage you to do so.   As always if you happen to see me wandering about, please feel free to stop and chat awhile. 

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Changing An Industry of Cottage Industries

If you happen to be following the news around Digital Realty Trust you may have seen the recent announcement of our Pod Architecture Services (PAS) offering.   Although the response has been deafening  there seems to be a lot of questions and confusion around what it is, what it is not, and what this ultimately means for Digital Realty Trust and our place in the industry.

First a simple observation – the Data Center Industry as it stands today is in actuality an industry of cottage industries.   Its an industry dominated by boutique firms in specialized niches all in support of the building out of these large technically complex facilities.  For the initiated its a world full of religious arguments like battery versus rotary, air-side economization versus water-side economization, raised floor versus no raised floor.  To the uninitiated its an industry categorized by mysterious wizards of calculus and fluid dynamics and magical electrical energies.  Its an illusion the wizards of the collective cottage industries are well paid and incented to keep up.   They ply their trade in ensuring that each facility’s creation is a one-off event, and likewise, so is the next one.  Its a world of competing General Contractors, architecture firms, competing electrical and mechanical firms, of specialists in all sizes, shapes and colors.   Ultimately – in my mind there is absolutely nothing wrong with this.  Everyone has the right to earn a buck no matter how inefficient the process. 

After all, there is a real science to most of the technologies and application of design involved in data centers and the magical mysteries they control are real.   They are are all highly trained professionals educated in some very technical areas.   But if we are honest,  each generally looks at the data center world from their own corner of the eco-system and while they solve their own issues and challenges quite handily, they stumble when having to get out of their comfort zone.  When they need to cooperate with other partners in the eco-system and solve more far reaching issues  it almost universally results in those solutions being applied in a one-off or per-job perspective.  I can tell you that leveraging consistency across a large construction program is difficult at best even with multiple projects underway, let alone a single project. 

The challenge of course is that in reality the end-user/owner/purchaser does not view the data center as an assembly of different components but rather as a single data center facility.   The complexity in design and construction are must-have headaches for the business manager who ultimately just wants to sate his need to have capacity for some application or business solution.  

Now into that background enter our POD Architecture Services offering.  In a nutshell it allows those customers who do not necessarily want to lease (or cannot due to regulatory or statutory reasons) a facility to use their own capital in building a facility without all the complexity associated with these buildings.

Our PAS offering is ultimately a way for a company to purchase a data center product.   Leveraging Digital’s Data Center product approach a company can simply select the size and configuration of their facility using the same “SKU’s”  we use internally in building out of our own facilities.   In effect we license the use of our design to these customers so that they enjoy the same benefits as our the customers of our turn-key data center facilities.

This means that customers of our PAS product can leverage our specific designs which are optimized across the four most crucial aspects of the data center lifecycle.   Our facility design is optimized around cost, mission, long term simplicity in operability and efficiency.  This is anchored around a belief that a design is comprised of both upfront first time costs along with the lifetime costs of the facility.    This is an “owners” perspective, which is the only perspective we have.  As the world’s largest data center REIT and wholesaler, we need to take the full picture into account.  We will own these facilities for a very long time. 

Many designs like to optimize around the technology, or around the upfront facility costs, or drive significant complexity in design to ensure that every possible corner case is covered in the facility.  But the fact is if you cut corners up front, you potentially  pay for it over the life of the asset, if you look for the most technologically advanced gear or provide for lots of levers, knobs, and buttons for the ultimate flexibility you open yourself up for more human error or drive more costs in the ongoing operation of the facility.   The owners perspective is incredibly important.    Many times companies allow these decisions to be made by their partner firms (the cottage industries) and this view gets clouded.  Given the complexity of these buildings and the fact that they are not built often by the customers in the first time its hard to maintain that owners perspective without dedicated and vigilant attention.  PAS changes all that as the designs have already been optimized and companies can simply purchase the product they most desire with the guarantee of what they receive on the other end of the process, is what they expected.

Moreover, PAS includes the watchful eye, experience and oversight of our veteran data center construction management.   These are highly qualified program managers who have built tens of data centers and act as highly experienced owners representatives.  The additional benefit being that they have built this product multiples of times and have become very good at the delivery of these types of facilities based upon our standardized product.   In addition, our customers can leverage our significant supply chain of construction partners, parts and equipment which allows for incredible benefits in the speed of delivery of these buildings along with reductions in upfront costs due to our volume purchasing.

This does not mean that Digital is going to become an Architectural or engineering firm and stamp drawings.  This does not mean we will become the general contractor.  This simply means that we will leverage our supply chain to deliver our designs and facilities based upon our best practices on behalf of the customers in a process that is completely managed and delivered by experienced professionals.  We will still have general contractors, and A&E firms, and the like that have experience in building our standardized product.  We are driving towards standardization.   If you believe there is value in having each facility as a one off design, the more power to you. We have a service there too, its call Build to Suit.  PAS is just another step in the formal definition of standard data center product.  Its a key element in modularization of capacity.    It is through standardization by which we can begin to have a larger impact on efficiency, and other key “Green” initiatives.   

I have often referred to my belief that data centers are simply the sub-stations of the Information Utility.   This service allows for commercial companies to start benefitting from the same standardization and efficiency gains that we are making in the wholesale space and enjoy the same cost factors.

Hope that makes things a bit clearer!

 

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The Cloud Politic – How Regulation, Taxes, and National Borders are shaping the infrastructure of the cloud

Most people think of ‘the cloud’ as a technical place defined by technology, the innovation of software leveraged across a scale of immense proportions and ultimately a belief that its decisions are guided by some kind of altruistic technical meritocracy.  At some levels that is true on others one needs to remember that the ‘cloud’ is ultimately a business.  Whether you are talking about the Google cloud, the Microsoft cloud, Amazon Cloud, or Tom and Harry’s Cloud Emporium, each is a business that ultimately wants to make money.   It never ceases to amaze me that in a perfectly solid technical or business conversation around the cloud people will begin to wax romantic and lose sight of common sense.  These are very smart technical or business savvy people but for some reason the concept of the cloud has been romanticized into something almost philosophical, a belief system,  something that actually takes on the wispy characteristics that the term actually conjures up.  

When you try to bring them down to the reality the cloud is essentially large industrial buildings full of computers, running applications that have achieved regional or even global geo-diversity and redundancy you place yourself in a tricky place that at best labels you a kill-joy and at worst a Blasphemer.

I have been reminded of late of a topic that I have been meaning to write about. As defined by my introduction above, some may find it profane, others will choose to ignore it as it will cause them to come crashing to the ground.   I am talking about the unseemly and terribly disjointed intersection of Government regulation, Taxes, and the Cloud.   This also loops in “the privacy debate” which is a separate conversation almost all to itself.   I hope to touch on privacy but only as it touches these other aspects.

As many of you know my roles past and present have focused around the actual technical delivery and execution of the cloud.    The place where pure software developers fear to tread.  The world of large scale design, construction and operations specifically targeted at a global infrastructure deployment and its continued existence into perpetuity.   Perpetuity you say?  That sounds a bit to grandiose doesn’t it?  My take is that once you have this kind of infrastructure deployed it will become an integral part of how we as a species will continue to evolve in our communications and our technological advances.  Something this cool is powerful.  Something this cool is a game changer.  Something this cool will never escape the watchful eyes of the world governments and in fact it hasn’t. 

There was a recent article at Data Center Knowledge regarding Microsoft’s decision remove its Azure Cloud platform out of the State of Washington and relocate them (whether virtually or physically) to be run in the state of Texas.  Other articles have highlighted similar conversations with Yahoo and the state of Washington, or Google and the state of  North Carolina.   These decisions all have to do with state level taxes and their potential impact on the upfront capital costs or long term operating costs of the cloud.   You are essentially seeing the beginning of a cat and mouse game that will last for some time on a global basis.  States and governments are currently using their blunt, imprecise instruments of rule (regulations and taxes) to try and regulate something they do not yet understand but know they need to play apart of.   Its no secret that technology is advancing faster than our society can gauge its overall impact or its potential effects and the cloud is no different.

In my career I have been responsible for the creation of at least 3 different site selection programs.  Upon these programs were based the criteria and decisions of where to place cloud and data center infrastructure would reside.  Through example and practice,  I have been able to deconstruct other competitors criteria and their relative weightings at least in comparison to my own and a couple of things jump out very quickly at anyone truly studying this space.   While most people can guess the need for adequate power and communications infrastructure, many are surprised that tax and regulation play such a significant role in even the initial sighting of a facility.   The reason is pure economics over the total lifetime of an installation. 

I cannot tell you how often I have economic development councils or business development firms come to me to tell me about the next ‘great’ data center location.  Rich in both power infrastructure and telecommunications, its proximities to institutions of higher learning, etc.   Indeed there are some really great places that would seem ideal for data centers if one allowed them to dwell in the “romanticized cloud”.   What they fail to note, or understand is that there may be legislation or regulation already on the books, or perhaps legislation currently winding its way through the system that could make it an inhospitable place or at least slightly less welcoming to a data center.    As someone responsible for tens of millions or hundreds of millions, or even billions of dollars worth of investment you find yourself in a role where you are reading and researching legislation often.  Many have noted my commentary on the Carbon Reduction Commitment in the UK, or my most recent talks about the current progress and data center impacts of the Waxman-Markey bill in the US House of Representatives.  You pay attention because you have to pay attention.   Your initial site selection is supremely important because you not only need to look for the “easy stuff” like power and fiber, but you need to look longer term, you need to look at the overall commitment of a region or an area to support this kind of infrastructure.   Very large business decisions are being made against these “bets” so you better get them right.  

To be fair the management infrastructure in many of these cloud companies are learning as they go as well.   Most of these firms are software companies who have now been presented with the dilemma of managing large scale capital assets.  Its no longer about Intellectual Property, its about physical property and there are some significant learning curves associated with that.   Add to the mix that this is whole cloud thing is something entirely new.    

One must also keep in mind that even with the best site selection program and the most robust up front due diligence, people change, governments change, rules change and when that happens it can and will have very large impacts on the cloud.   This is not something cloud providers are ignoring either.  Whether its through their software, through infrastructure, through a more modular approach they are trying to solve for the eventuality that things will change.   Think about the potential impacts from a business perspective.

Lets pretend you own a cloud and have just sunk 100M dollars into a facility to house part of your cloud infrastructure.   You spent lots of money in your site selection and up front due diligence to find the very best place to put a data center.   Everything is going great, after 5 years you have a healthy population of servers in that facility, you have found a model to monetize your service, so things are going great, but then the locale where your data center lives changes the game a bit.   They pass a law that states that servers engaged in the delivery of a service are a taxable entity.  Suddenly that place becomes very inhospitable to your business model.   You now have to worry about what that does to your business.   It could be quite disastrous.   Additionally if you rule that such a law would instantly impact your business negatively, you have the small matter of a 100M asset sitting in a region where you cannot use it.   Again a very bad situation.  So how do you architect around this?  Its a challenge that many people are trying to solve.   Whether you want to face it or not, the ‘Cloud’ will ultimately need to be mobile in its design.  Just like its vapory cousins in the sky, the cloud will need to be on the move, even if its a slow move.  Because just as there are forces looking to regulate and control the cloud, there are also forces in play where locales are interested in attracting and cultivating the cloud.  It will be a cycle that repeats itself over and over again.

So far we have looked at this mostly from a taxation perspective.   But there are other regulatory forces in play.    I will use the example of Canada. The friendly frosty neighbors to the great white north of the United States.  Its safe to say that Canada and US have had historically wonderful relations with one another.   However when one looks through the ‘Cloud’ colored looking glass there are some things that jump out to the fore. 

In response to the Patriot Act legislation after 9-11, the Canadian government became concerned with the rights given to the US government with regards to the seizure of online information.  They in turn passed a series of Safe-Harbor-like laws that stated that no personally identifiable information of Canadian citizens could be housed outside of the Canadian borders.    Other countries have done, or are in process with similar laws.   This means that at least some aspects of the cloud will need to be anchored regionally or within specific countries.    A boat can drift even if its anchored and so must components of the cloud, its infrastructure and design will need to accommodate for this.  This touches on the privacy issue I talked about before.   I don’t want to get into the more esoteric conversations of Information and where its allowed to live and not live, I try to stay grounded in the fact that whether my romantic friends like it or not, this type of thing is going to happen and the cloud will need to adapt.

Its important to note that none of the legislation focuses on ‘the cloud’ or ‘data centers’ just yet.   Just as the Waxman-Markey bill or CRC in the UK doesn’t specifically call out data centers, those laws will have significant impacts on the infrastructure and shape of the cloud itself. 

There is an interesting chess board developing between technology versus regulation.   They are inexorably intertwined with one another and each will shape the form of the other in many ways.   A giant cat an mouse game on a global level.   Almost certainly, this evolution wont be  the most “technically superior” solution.  In fact, these complications will make the cloud a confusing place at times.   If you desired to build your own application using only cloud technology, would you subscribe to a service to allow the cloud providers to handle these complications?  Would you and your application  be liable for regulatory failures in the storage of  Azerbaijani-nationals?  Its going to be an interesting time for the cloud moving forward. 

One can easily imagine personally identifiable information housed in countries of origin, but the technology evolving so that their actions on the web are held elsewhere, perhaps even regionally where the actions take place.  You would see new legislation emerging to potentially combat even that strategy and so the cycle will continue.  Likewise you might see certain types of load compute or transaction work moving around the planet to align with more technically savvy or advantageous locales.  Just as the concept of Follow the Moon has emerged for a potential energy savings strategy to move load around based on the lowest cost energy, it might someday be followed with a program similarly move information or work to more “friendly” locales.     The modularity movement of data center design will likely grow as well trying to reduce the overall exposure the cloud firms have in any given market or region.   

On this last note, I am reminded of one of my previous posts. I am firm in my belief that Data Centers will ultimately become the Sub-Stations of the information utility.  In that evolution they will become more industrial, more commoditized, with more intelligence at the software layer to account for all these complexities.  As my own thoughts and views evolve around this I have come to my own strange epiphany.  

Ultimately the large cloud providers should care less and less about the data centers they live in.  These will be software layer attributes to program against.  Business level modifiers on code distribution.   Data Centers should be immaterial components for the Cloud providers.  Nothing more than containers or folders in which to drop their operational code.  Today they are burning through tremendous amounts of capital believing that these facilities will ultimately give them strategic advantage.   Ultimately these advantages will be fleeting and short-lived.  They will soon find themselves in a place where these facilities themselves will become a drag on their balance sheets or cause them to invest more in these aging assets. 

Please don’t get me wrong, the cloud providers have been instrumental in pushing this lethargic industry into thinking differently and evolving.   For that you need give them appropriate accolades.  At some point however, this is bound to turn into a losing proposition for them.  

How’s that for Blasphemy?

\Mm

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Forecast Cloudy with Continued Enterprise

This post is a portion of my previous post that I broke into two.   It more clearly defines where I think the market is evolving to and why companies like Digital Trust Realty will be at the heart of the change in our industry.

 

The Birth of Utilities and why a Century ago will matter today and forward…

I normally kick off my vision of the future talk with a mention first to history (my former Microsoft folks are probably groaning at this moment if they are reading this).   I am a huge history buff.  In December of 1879, Thomas Edison harnessed the power of electricity for the first time to light a light bulb.  What’s not apparent is that this “invention” was in itself not complete.  To get this invention from this point to large scale, commercial application required a host of other things to be invented as well.   While much ado is made about the successful kind of filament used to ensure a consistent light source, there were no less than at least seven other inventions to make electric light (and ultimately the electric utility) practical for everyone.  Invention of things like the parallel circuit, an actual durable light bulb, an improved dynamo, underground conductor networks, devices to maintain constant voltage, insulting materials and safety fuses, the light socket, the on/off switch, and a bunch of other minor things.   Once all these things were solved, the creation of the first public electricity utility was created.  On September of 1882, the first commercial power station, located on Pearl Street in lower Manhattan opened its doors and began providing light and electrical power to all customers within the “massive” area of one square mile.   This substation was a marvel of technology staffed with 10s of technicians, maintaining the complex machinery to exacting standards.   The ensuing battle between Direct Current and Alternating Current was then created and in some areas still continues today. More on this in a bit.

A few years earlier a host of people were working on what would eventually become known as the telephone.   In the United States this work is attributed to Alexander Graham Bell and its that story I will focus on here for a second.  Through trial and error Bell and his compatriot Watson, accidently stumbled across a system to transfer sound in June of 1875.  After considerable work on refinement the product launched (There is an incredibly interesting history of this at SCRIBD), and after ever more additional trial and error the first telephonic public utility was created with the very first central office coming online in January of 1878 in New Haven, Connecticut.  This first central office was a marvel to behold.  Again the extremely high tech equipment with a host of people ensuring that telephonic utility was always available and calls were transferred appropriately.  Interestingly by 1881 only 9 cities with populations above 10,000 were without access to the telephone utility and only 1 above 15,000!  That is an adoption rate that remains boggling even by today’s standards.  

These are significant moments in time that truly changed the world in the way we live every day.   Today we are the birth of another such utility.  The Information Utility.   Many people I have spoken to claim this “Information Utility” is something different. It’s more of a product, because it uses existing utility services. Some maintain that its truly not revolutionary because its not leveraging new concepts.   But the same can be said of those utilities as well.   The communications infrastructure we use today whether telephone or data has its very roots in the telegraph.  The power utilities have a lot to thank the gas-lamp utilities of the past for solving early issues as well.  Everything old is new again and everything gets refined into something newer and better.  Some call this new Information Utility the “cloud”, others the Information-sphere, others just call it the Internet.  Regardless what you call it, access to information is going to be at your finger tips more today and tomorrow than it has ever been before. 

Even though this utility is built upon existing services, this utility too will have its infrastructure.  Just as the electric utility has its sub-stations and distribution yards, and the communication utilities have central offices, so too will data centers become the distribution mechanism for the the Information Utility.   We still have a lot of progress to make as well.   Not everything is invented or understood yet.  Just as Edison had to invent a host of other items to make electricity practical, and Bell and Watson have to develop the telephone, the telephone ringer (or more correctly, thumper or buzzer), so to does our information Utility have a long way to go.  In some respects its even more complicated than its predecessors as their was not burdened with legislation and government involvement that would affect its early development.  The “Cloud” does.

And that innovation does not always come from a select few.  Westinghouse and his alternating current eventually won out over direct current because it found its killer app and business case.   Alternating current was clearly the technically superior and better for distribution. They had even demonstrated generating power at Niagara Falls and successfully transferred that power all the way to Buffalo, New York! Something direct current was unable to do.  In the end, Westinghouse worked with appliance manufacturers to create devices that used alternating current.  By driving his killer app (things like refrigerators), Edison eventually lost out.  So too will the cloud have its killer apps.  The pending software and services battle will be interesting to note.  However what is interesting to me is that it was the business case that drove adoption and evolution here.  This also modified how the utility was used and designed.   DC substations gave way to AC substations, what used to take scores of people to support has dwindled to occasional visitations and pre-scheduled preventative maintenance.   At the data center level, we cannot afford to think that these killer applications will not change our world.    Our killers applications are coming and it will forever change how our world does business.  Data Centers and their evolution are at the heart of our future. 

On Fogs, Mist, and the Clouds Ahead . . .

After living in Seattle for close to 10 years, you learn you become an expert in three things.  Clouds, rain, and more clouds.   Unlike the utilities of the past, this new Information Utility is going to be made up of lots of independent cloudlets full of services.  The Microsoft’s, Google’s and Amazon’s of the world will certainly play a large part of the common platforms used by everyone, but the applications, products, content, customer information, and key development components will continue to have a life in facilities and infrastructure owned or controlled by companies providing those services.    In addition, external factors are already beginning to have a huge influence on cloud infrastructure.  Despite the growing political trend of trans-nationalism where countries are giving up some of their sovereign rights to participate in more regionally-aware economics and like-minded political agendas, that same effect does not seem to be taking place in the area of taxation and regulation of cloud and information infrastructure.  Specifically as it relates to electronic or intellectual property entities that derive revenue from infrastructure housed in those particular countries or do so (drive revenue) off of online activity of citizens of those nations.

There are numerous countries today that have, or are, seriously engaged in establishing and managing their national boundaries digitally online.  What do I mean by that?  There is a host of legislation across the globe that is the beginning to govern the protection and online management of their their citizens through legislation and mandates in accordance with their own laws.   This is having (and will continue to have) a dramatic impact on how infrastructure and electronic products and services will be deployed, where that data is stored,  and how revenue from that activity can and will be taxed by the local country.  This level of state exercised control can be economically, politically, or socially motivated and cloud services providers need to pay attention to it.   A great example of this is Canada which has passed legislation in response to the U.S. Patriot Act.   This legislation forbids personally identifiable information (PII) of Canadian citizens to be housed outside of the boundaries of Canada or perhaps more correctly, forbids its storage in the United States.    There are numerous laws and legislation making their way across Europe and Asia as well.   That puts an interesting kink in the idea of a world wide federated cloud user-base where information will be stored “in the cloud”.  From an infrastructure perspective it will mandate that there are facilities in each country to house that data.  While the data storage and retention challenge is an interesting software problem to solve the physical fact that the data will need to remain in a local geography will require data centers and components of cloud infrastructure to be present.  I expect this to continue as governments become more technically savvy and understand the impact of the rate of change being caused by this technology evolution. Given the fact that data centers are extremely capital intensive only a few players will be able to deploy private global infrastructures.  This means that the “information sub-station” providers will have an even more significant role in driving the future standards of this new Information Utility. One might think that this could be a service that is ultimately provided by the large cloud providers as a service.   That could be a valid assumption however, there is an interesting wrinkle developing around taxation or more correctly exposure to double taxation or multiple-country taxation that those large providers will face.   In my opinion the federation of “information substation” providers will provide the best balance of off-setting taxation issues and still providing a very granular and regionally acceptable way to service customers. That is where companies like Digital Realty Trust are going to come in and drive significant value and business protection.

I watch a lot of these geo-political and economic developments pretty closely as it relates to Data Center and infrastructure legislation and will continue to do so.  But even outside of these issues, the “cloud” or whatever term you like will continue to evolve and the “channels” created by this paradigm will continue to drive innovation at the products and services level.  Its at this level where the data center story will continue to evolve as well.   To start we need to think about the business version of the IT “server-hugging” phenomena. For the uninitiated, “Server Huggers” are those folks in an IT department who believe that the servers have to be geographically close  in order to work on them. In some cases its the right mentality, in others, where the server is located truly doesn’t matter.   It’s as much a psychological experiment as a technical one.   At a business level, there is a general reluctance to house the company jewels outside of corporate controlled space.  Sometimes this is regulated (like banks and financial institutions), most often its because those resources (proprietary applications, data sets, information stores, etc) are crucial to the success of the company, and in many instances ARE the company. Not something you necessarily want to outsource to others for control.  Therefore wholesale adoption of cloud resources is still a very very long way off.  That is not to say that this infrastructure wont get adopted into solutions that companies ultimately use to grow their own businesses.  This is going to drive tons of innovation where businesses evolve their applications , create new business models, and join together in mutually beneficial alliances that will change the shape, color, and feel of the cloud.  In fact, the cloud or “Information Utility” becomes the ultimate channel distribution mechanism.

The first grouping I can see evolving is fraternal operating groups or FOGs.  This is essentially a conglomeration of like minded or related industry players coming together to build shared electronic compute exchanges or product and service exchanges.  These applications and services will be highly customized to that particular industry. They will never be sated by the solutions that the big players will be putting into play, they are too specialized.  This infrastructure will likely not sit within individual company data centers but are likely to be located in common ground facilities or leased facilities with some structure for joint ownership.   Whether large or small, business to business, or business to consumer, I see this as an evolving sector.  There will be definitely companies looking to do this on their behalf, but given the general capital requirements to get into this type of business these FOG Agreements may be just the answer to find a great trade off between capital investment and return on the compute/service.

The next grouping builds off of the “company jewels” mindset and how it could blend with cloud infrastructure.  To continue the overly used metaphor of clouds,I will call them Managed Instances Stationed Territorially or MISTs.   There will likely be a host of companies that want to take advantage of the potential savings of cloud managed infrastructure, but want the warm and fuzzy feeling knowing its literally right in their backyard.  Imagine servers and infrastructure deployed at each customer data center, but centrally managed from cloud service providers.   Perhaps its owned by the cloud provider, perhaps the infrastructure has been purchased by the end-user company.   One can imagine the container-based server solutions being dropped into container-ready facilities or jury-rigged in the parking lot of a corporate owned or leased facility.  This gives companies the ability to structure their use of cloud technologies and map them into their own use case scenarios.  What makes the most sense for them.  The recent McKinsey paper talked about how certain elements of the cloud are more expensive than managing the resources through traditional means.  This is potentially a great hybrid scenario where companies can integrate as they need to using those services.  One could even see Misty FOGs or Foggy Mists.  I know the analogy is getting old at this point, but hopefully you can see that the future isn’t as static as some would have you believe.  This ability to channelize the technologies of the cloud will have a huge impact on business costs, operations, and technology.   It also suggests that mission critical infrastructure is not going to go away but become even more important and potentially more varied.  This is why I think that the biggest infrastructure impact will occur in the “information substation provider” level.  Data Centers aren’t going away, they might actually be growing in terms of demand, and the one thing definitely for sure is that they are evolving today and will continue to evolve as this space matures.  Does your current facility allow for this level of interconnectivity?  Do you have the ability to have a mixed solution management providers in your facility?  Lots of questions lots of opportunities to develop answers.

The last grouping is potentially an evolution of modern content delivery infrastructure or edge computing capabilities.  I will quit with the cutesy cloud names and call this generically Near Cloud Content Objects.   Given that products, services, and data will become the domain of those entities owning them, and a general reluctance to wholesale store them in someone else’s infrastructure, one could see that this proprietary content could leverage the global cloud infrastructures through regional gateways where they will be able to maintain ownership and control of their asset.  This becomes even more important when you balance into this the economic and geo-political aspects emerging in cloud compute.

In the end the cloud approach is going to significantly drive data center demand and cause it to evolve even further.  It will  not as some would like to project end the need for corporate data centers.  Then there is that not so little issue of the IT Applications and internal company services we use everyday.  This leads me into my next point . . .

The Continued and Increasing Importance of Enterprise Data Centers

This post has concentrated a lot on the future of cloud computing, so I will probably tick off a bunch of cloud-fan-folk with this next bit, but the need for the corporate data centers is not going away.  They may change in size, shape, efficiency, and the like, but there is a need to continue to maintain a home for those company jewels and to serve internal business communities.  The value of any company is the information and intellectual property developed, maintained, and driven by their employees.   Concepts like FOGs and MISTs and such still require ultimate homes or locations for that work to be terminated into or results sent to.  Additionally look at the suite of software each company may have in its facilities today supporting their business.  We are at least a decade or more away before those could be migrated to a distributed cloud based infrastructure.  Think about the migration costs of any particular application you have, then compound that with having the complexity of having your data stored in those cloud environments as well.  Are you then locked into a single cloud provider forever? It obviously requires cloud interoperability, which doesn’t exist today with exception of half-hearted non-binding efforts that don’t actually include any of the existing cloud providers.   If you believe as I do that the “cloud”  will actually be many little and large channelized solution cloudlets, you have to believe that the corporate data center is here to stay.  The mix of applications and products in your facilities may differ in the future, but you will still have them.  That’s not to say the facilities themselves will not have to evolve.  They will.  With changing requirements around energy efficiency and green reporting, along with the geo-political and other regulations coming through the pipeline, the enterprise data center will still be an area full of innovation as well.  

/Mm

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Starting something new….

This post was an interesting struggle for me.  What should my first post since my departure from Microsoft be about?  I have a great amount of topics that I definitely want to talk about regarding the distance and gap from the executive suite, to Information Technology to the data center floor and why there continues to be challenge in this space across the industry.  In fact I probably have a whole series of them.  I am thinking of calling them “Chiller-side Chats” aimed at priming both sides in conversations with the other.   There are some industry-wide metric related topics that I want to take on, interesting trends I see developing, and literally a host of other things ranging from technology to virtualization.  While at Microsoft I maintained Loosebolts and an internal Microsoft blog which as it turns out was quite a bit of work.   I now have time to focus my energies in one place here at Loosebolts and unfortunately I may subject everyone reading this to even more of my wild ramblings.  But to talk to any of these technical issues, business issues, or industry issues would be ignoring the gigantic, purple spotted, white elephant in the room.   In fact, by the time I finished the original version of this post it was 6 pages long, and ran far afield on what I think is fundamentally changing in the data center space.  Instead of subjecting you to one giant blog, I was counseled by close friends to cut it down a bit into different sections.  So I will chop it up into two seperate posts.  The first question of course is – Why did I leave Microsoft for Digital Realty Trust?

I accomplished a great deal at Microsoft and I am extremely proud of my work there.  I have an immense amount of pride in the team that I developed there and the knowledge that it continues to drive that vision within the company.  Rest assured Microsoft has a great vision for where things are going in that space and the program is on rails as they say.  My final goodbye post talks more about my feelings there.  Within it, however, are some of the seeds (to continue that farming analogy even farther!)  of my departure.  First we need to pull our heads out of the tactical world of data centers and look at the larger emerging landscape in which data centers sit.  Microsoft, along with Google, Amazon and a few others are taking aim at Cloud Computing and are designing, building, and operating a different kind of infrastructure with different kinds of requirements. Specifically building ubiquitous services around the globe.  In my previous role, I was tasked with thinking about and building this unique infrastructure in concert with hundreds of development groups taking aim at building a core set of services for the cloud.   A wonderful blend of application and infrastructure.  Its a great thing.  But as my personal thought processes matured and deepened on this topic flavored with what I was seeing as emerging trends in business, technology and data center requirements I had a personal epiphany.  The concept of large monolithic clouds ruling the Information-sphere was not really complete.  Don’t get me wrong, they will play a large and significant role in how we compute tomorrow, but instead of an oligarchy of the few, I realized that enterprise data centers are here to stay and additionally we are likely to see an explosion of different cloud types are on the horizon.

In my opinion it is here in this new emerging space where the Information Utility will ultimately be born, defined, and true innovation in our industry (data center-wise) will take place.   This may seem rather unintuitive given the significant investments being made by the big cloud players but it is really not.   We have to remember that today, any technology must sate basic key requirements.  First and foremost amongst these is that it must solve the particular business problems.  Technology for technology sake will never result in significant adoption and the big players are working to perfect platforms that will work across a predominance of applications being specifically developed for their infrastructure.   In effect they are solving for their issues.  Issues that most of those looking to leverage cloud or shared compute will not necessarily match in either scale or standardization of server and IT environments.    There will definitely be great advances in technology, process, and a host of other areas, as a result of this work, but their leveragability is ultimately minimized as their environments, while they look like each other’s, will not easily map into the enterprise, near-enterprise, or near-cloud space.   The NASA space program has had thousands of great solutions, and some of them have been commercialized for the greater good.  I see similar things happening in the data center space.  Not everyone can get sub 1.3 Average PUE numbers, but they can definitely use those learnings to better their own efficiency in some  way.  While these large platforms in conjunction with enterprise data centers will provide key and required services, the innovation and primary requirement drivers in the future will come from the channel. 

So Why Digital Realty Trust?

Innovation can happen everywhere in any situation but it is most often born under the pressure of constraints.  While there are definitely some constraints that the big players have in evolving their programs, the real focus and attention in the industry will be at the Enterprise and Information Sub Station provider layer.   This is the part of the industry that is going to feel the biggest pinch as the requirements evolve.  Whether they be political, economical, social, or otherwise this layer will define how most of the data center industry looks like.   It is here at this layer in which a majority of companies around the world will be.  It is here at this layer that will be the most exciting for me personally.  The Moon Missions were great but they were not about bringing space travel to the masses.  Definitely some great learnings there that can be leveraged, but the commercialization and solution to the masses problem is different, perhaps bigger, and in my opinion more challenging.   At the end of the day it has to be economical and worthwhile.  We have to solve that basic business need and use case or it will remain an interesting scientific curiosity much like electricity was viewed before the light bulb. 

In Digital Realty Trust I found the great qualities I was looking for in any company.   First, they are positioned to provide either “information substation” or “enterprise” solutions and will need to solve for both.  They are effectively right in the middle of solving these issues and they are big enough to have a dramatic impact on the industry.  Secondly, and perhaps more importantly, they have a passionate, forward looking management team whom I have interacted with in the Industry for quite some time.  Let me reiterate that passionate point a moment, this is not some real estate company looking to make a quick buck on mission critical space.  I have seen enough of those in my career.  This is a firm focused on educating the market, driving innovation in application of technology, and near zealot commitment on driving efficiencies for their customers.  Whether its their frequent webinars, their industry speaking engagements, or personal conversations they are dedicated to this space, and dedicated on informing their customers.  Even when we have disagreed on topics or issues in the past, its always a great respectful conversation.  In a nutshell, they GET IT.  Another key piece that probably needs some addressing is that bit about application of technology.  We are living in some interesting times with data center technologies in a wonderful and terrible time of evolution.   The challenge for any enterprise is making heads and tails of which technologies will be great for them, what works, what doesn’t, what’s vaporware versus what is truly going to drive value.   The understanding and application of that technology is an area that Digital knows very well and the scale of their deployments allow them to learn the hard lessons before their clients have to.   Moreover they are implementing these technologies and building solutions that will fit for everyone, today! 

Another area where there is significant alignment in terms of my own personal beliefs and those of Digital Realty Trust is around speed of execution and bringing capacity online just in time.   Its no secret that I have been an active advocate of moving from big build and construction to a just in time production model.  These beliefs have long been espoused by Chris Crosby, Jim Smith, and the rest of the Digital team for some time and is very clearly articulated in the POD ARCHITECTURE approach that they have been developing for quite a few years.  Digital has done a great job of bringing this approach to the market for enterprise users and wants to drive it even faster!  One of my primary missions will be to develop the ability to deliver data center capacity start to finish in 16 weeks.   You cannot get there without a move to standardizing the supply chain and driving your program to production rather than pure construction.   Data Center planning and capacity planning is the single largest challenge in this industry.  The typical business realizes to late that they are in need to add data center capacity and these efforts typically result in significant impacts to their own business needs through project delays or cost.  As we all know, data center capacity is not ubiquitous and getting capacity just in time is either very expensive or impossible in most markets.  You can solve this problem by trying to force companies to do a better job of IT and capacity planning (i.e. boiling the ocean) or you can change how that capacity is developed, procured, and delivered.   This is one of my major goals and something I am looking forward to delivering.

In the end, my belief is that it will be companies like Digital Realty Trust at the spearhead of driving the design, physical technology application and requirements for the global Information Utility infrastructure.  They will clearly be situated the closest to those changing requirements for the largest amount of affected groups.  It is going to be a huge challenge. A challenge, I for one am extremely excited about and can’t wait to dig in and get started.

\Mm

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Our Vision for Generation 4 Modular Data Centers – One way of Getting it just right . . .

 

Data Centers are a hot topic these days. No matter where you look, this once obscure aspect of infrastructure is getting a lot of attention. For years, there have been cost pressures on IT operations and this, when the need for modern capacity is greater than ever, has thrust data centers into the spotlight. Server and rack density continues to rise, placing DC professionals and businesses in tighter and tougher situations while they struggle to manage their IT environments. And now hyper-scale cloud infrastructure is taking traditional technologies to limits never explored before and focusing the imagination of the IT industry on new possibilities.

At Microsoft, we have focused a lot of thought and research around how to best operate and maintain our global infrastructure and we want to share those learnings. While obviously there are some aspects that we keep to ourselves, we have shared how we operate facilities daily, our technologies and methodologies, and, most importantly, how we monitor and manage our facilities. Whether it’s speaking at industry events, inviting customers to our “Microsoft data center conferences” held in our data centers, or through other media like blogging and white papers, we believe sharing best practices is paramount and will drive the industry forward.  So in that vein, we have some interesting news to share.

Today we are sharing our Generation 4 Modular Data Center plan. This is our vision and will be the foundation of our cloud data center infrastructure in the next five years. We believe it is one of the most revolutionary changes to happen to data centers in the last 30 years. Joining me, in writing this blog are Daniel Costello, my director of Data Center Research and Engineering and Christian Belady, principal power and cooling architect. I feel their voices will add significant value to driving understanding around the many benefits included in this new design paradigm.

Our “Gen 4” modular data centers will take the flexibility of containerized servers—like those in our Chicago data center—and apply it across the entire facility. So what do we mean by modular? Think of it like “building blocks”, where the data center will be composed of modular units of prefabricated mechanical, electrical, security components, etc., in addition to containerized servers.

Was there a key driver for the Generation 4 Data Center?

If we were to summarize the promise of our Gen 4 design into a single sentence it would be something like this: “A highly modular, scalable, efficient, just-in-time data center capacity program that can be delivered anywhere in the world very quickly and cheaply, while allowing for continued growth as required.”  Sounds too good to be true, doesn’t it?  Well, keep in mind that these concepts have been in initial development and prototyping for over a year and are based on cumulative knowledge of previous facility generations and the advances we have made since we began our investments in earnest on this new design.

One of the biggest challenges we’ve had at Microsoft is something Mike likes to call the ‘Goldilock’s Problem’.  In a nutshell, the problem can be stated as:

The worst thing we can do in delivering facilities for the business is not have enough capacity online, thus limiting the growth of our products and services.

The second worst thing we can do in delivering facilities for the business is to have too much capacity online.

This has led to a focus on smart, intelligent growth for the business — refining our overall demand picture. It can’t be too hot. It can’t be too cold. It has to be ‘Just Right!’ The capital dollars of investment are too large to make without long term planning. As we struggled to master these interesting challenges, we had to ensure that our technological plan also included solutions for the business and operational challenges we faced as well. 

So let’s take a high level look at our Generation 4 design

Are you ready for some great visuals? Check out this video at Soapbox. Click here for the Microsoft 4th Gen Video.  It’s a concept video that came out of my Data Center Research and Engineering team, under Daniel Costello, that will give you a view into what we think is the future.

From a configuration, construct-ability and time to market perspective, our primary goals and objectives are to modularize the whole data center. Not just the server side (like the Chicago facility), but the mechanical and electrical space as well. This means using the same kind of parts in pre-manufactured modules, the ability to use containers, skids, or rack-based deployments and the ability to tailor the Redundancy and Reliability requirements to the application at a very specific level.

Our goals from a cost perspective were simple in concept but tough to deliver. First and foremost, we had to reduce the capital cost per critical Mega Watt by the class of use.  Some applications can run with N-level redundancy in the infrastructure, others require a little more infrastructure for support. These different classes of infrastructure requirements meant that optimizing for all cost classes was paramount.  At Microsoft, we are not a one trick pony and have many Online products and services (240+) that require different levels of operational support. We understand that and ensured that we addressed it in our design which will allow us to reduce capital costs by 20%-40% or greater depending upon class. 

For example, non-critical or geo redundant applications have low hardware reliability requirements on a location basis. As a result, Gen 4 can be configured to provide stripped down, low-cost infrastructure with little or no redundancy and/or temperature control.  Let’s say an Online service team decides that due to the dramatically lower cost, they will simply use uncontrolled outside air with temperatures ranging 10-35 C and 20-80% RH. The reality is we are already spec-ing this for all of our servers today and working with server vendors to broaden that range even further as Gen 4 becomes a reality.  For this class of infrastructure, we eliminate generators, chillers, UPSs, and possibly lower costs relative to traditional infrastructure.

Applications that demand higher level of redundancy or temperature control will use configurations of Gen 4 to meet those needs, however, they will also cost more (but still less than traditional data centers). We see this cost difference driving engineering behavioral change in that we predict more applications will drive towards Geo redundancy to lower costs.

Another cool thing about Gen 4 is that it allows us to deploy capacity when our demand dictates it.  Once finalized, we will no longer need to make large upfront investments. Imagine driving capital costs more closely in-line with actual demand, thus greatly reducing time-to-market and adding the capacity Online inherent in the design.  Also reduced is the amount of construction labor required to put these “building blocks” together. Since the entire platform requires pre-manufacture of its core components, on-site construction costs are lowered. This allows us to maximize our return on invested capital.

 

In our design process, we questioned everything. You may notice there is no roof and some might be uncomfortable with this. We explored the need of one and throughout our research we got some surprising (positive) results that showed one wasn’t needed.

In short, we are striving to bring Henry Ford’s Model T factory to the data center. http://en.wikipedia.org/wiki/Henry_Ford#Model_T.  Gen 4 will move data centers from a custom design and build model to a commoditized manufacturing approach. We intend to have our components built in factories and then assemble them in one location (the data center site) very quickly. Think about how a computer, car or plane is built today. Components are manufactured by different companies all over the world to a predefined spec and then integrated in one location based on demands and feature requirements.  And just like Henry Ford’s assembly line drove the cost of building and the time-to-market down dramatically for the automobile industry, we expect Gen 4 to do the same for data centers. Everything will be pre-manufactured and assembled on the pad.

And did we mention that this platform will be, overall, incredibly energy efficient? From a total energy perspective not only will we have remarkable PUE values, but the total cost of energy going into the facility will be greatly reduced as well.  How much energy goes into making concrete?  Will we need as much of it?  How much energy goes into the fuel of the construction vehicles?  This will also be greatly reduced! A key driver is our goal to achieve an average PUE at or below 1.125 by 2012 across our data centers.  More than that, we are on a mission to reduce the overall amount of copper and water used in these facilities. We believe these will be the next areas of industry attention when and if the energy problem is solved. So we are asking today…“how can we build a data center with less building”?

We have talked openly and publicly about building chiller-less data centers and running our facilities using aggressive outside economization. Our sincerest hope is that Gen 4 will completely eliminate the use of water. Today’s data centers use massive amounts of water and we see water as the next scarce resource and have decided to take a proactive stance on making water conservation part of our plan. 

By sharing this with the industry, we believe everyone can benefit from our methodology.  While this concept and approach may be intimidating (or downright frightening) to some in the industry, disclosure ultimately is better for all of us. 

Gen 4 design (even more than just containers), could reduce the ‘religious’ debates in our industry. With the central spine infrastructure in place, containers or pre-manufactured server halls can be either AC or DC, air-side economized or water-side economized, or not economized at all (though the sanity of that might be questioned).  Gen 4 will allow us to decommission, repair and upgrade quickly because everything is modular. No longer will we be governed by the initial decisions made when constructing the facility. We will have almost unlimited use and re-use of the facility and site. We will also be able to use power in an ultra-fluid fashion moving load from critical to non-critical as use and capacity requirements dictate. 

Finally, we believe this is a big game changer. Gen 4 will provide a standard platform that our industry can innovate around. For example, all modules in our Gen 4 will have common interfaces clearly defined by our specs and any vendor that meets these specifications will be able to plug into our infrastructure.  Whether you are a computer vendor, UPS vendor, generator vendor, etc., you will be able to plug and play into our infrastructure. This means we can also source anyone, anywhere on the globe to minimize costs and maximize performance.  We want to help motivate the industry to further innovate—with innovations from which everyone can reap the benefits. 

To summarize, the key characteristics of our Generation 4 data centers are:

• Scalable
• Plug-and-play spine infrastructure
• Factory pre-assembled: Pre-Assembled Containers (PACs) & Pre-Manufactured Buildings (PMBs)
• Rapid deployment
• De-mountable
• Reduce TTM
• Reduced construction
• Sustainable measures
• Map applications to DC Class

We hope you join us on this incredible journey of change and innovation!

Long hours of research and engineering time are invested into this process. There are still some long days and nights ahead, but the vision is clear. Rest assured however, that we as refine Generation 4, the team will soon be looking to Generation 5 (even if it is a bit farther out).  There is always room to get better. 

So if you happen to come across Goldilocks in the forest, and you are curious as to why she is smiling you will know that she feels very good about getting very close to ‘JUST RIGHT’.   

Generations of Evolution – some background on our data center designs

We thought you might be interested in understanding what happened in the first three generations of our data center designs. When Ray Ozzie wrote his Software plus Services memo it posed a very interesting challenge to us. The winds of change were at ‘tornado’ proportions.   That “plus Services” tag had some significant (and unstated) challenges inherent to it.  The first was that Microsoft was going to evolve even further into an operations company.  While we had been running large scale Internet services since 1995, this development lead us to an entirely new level.  Additionally, these “services” would span across both Internet and Enterprise businesses. To those of you who have to operate “stuff”, you know that these are two very different worlds in operational models and challenges. It also meant that, to achieve the same level of reliability and performance required our infrastructure was going to have to scale globally and in a significant way.

It was that intense atmosphere of change that we first started re-evaluating data center technology and processes in general and our ideas began to reach farther than what was accepted by the industry at large. This was the era of Generation 1.  As we look at where most of the world’s data centers are today (and where our facilities were), it represented all the known learning and design requirements that had been in place since IBM built the first purpose-built computer room. These facilities focused more around uptime, reliability and redundancy. Big infrastructure was held accountable to solve all potential environmental shortfalls. This is where the majority of infrastructure in the industry still is today.

We soon realized that traditional data centers were quickly becoming outdated. They were not keeping up with the demands of what was happening technologically and environmentally.  That’s when we kicked off our Generation 2 design. Gen 2 facilities started taking into account sustainability, energy efficiency, and really looking at the total cost of energy and operations. No longer did we view data centers just for the upfront capital costs, but we took a hard look at the facility over the course of its life.  Our Quincy, Washington and San Antonio, Texas facilities are examples of our Gen 2 data centers where we explored and implemented new ways to lessen the impact on the environment. These facilities are considered two leading industry examples, based on their energy efficiency and ability to run and operate at new levels of scale and performance by leveraging clean hydro power (Quincy) and recycled waste water (San Antonio) to cool the facility during peak cooling months.

As we were delivering our Gen 2 facilities into steel and concrete, our Generation 3 facilities were rapidly driving the evolution of the program. The key concepts for our Gen 3 design are increased modularity and greater concentration around energy efficiency and scale.  The Gen 3 facility will be best represented by the Chicago, Illinois facility currently under construction.  This facility will seem very foreign compared to the traditional data center concepts most of the industry is comfortable with. In fact, if you ever sit around in our container hanger in Chicago it will look incredibly different from a traditional raised-floor data center. We anticipate this modularization will drive huge efficiencies in terms of cost and operations for our business. We will also introduce significant changes in the environmental systems used to run our facilities.  These concepts and processes (where applicable) will help us gain even greater efficiencies in our existing footprint, allowing us to further maximize infrastructure investments.

This is definitely a journey, not a destination industry. In fact, our Generation 4 design has been under heavy engineering for viability and cost for over a year.  While the demand of our commercial growth required us to make investments as we grew, we treated each step in the learning as a process for further innovation in data centers.  The design for our future Gen 4 facilities enabled us to make visionary advances that addressed the challenges of building, running, and operating facilities all in one concerted effort.

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