If cloud computing companies form ecosystems, users will benefit

A partner network hosted by one provider, like Amazon's EC2, can mean cost and performance advantages for customers of those services. Here's how.

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Is Amazon Elastic Compute Cloud (EC2) a portent of the model that the seemingly endless cloud computing companies will eventually decide to follow?

An ecosystem of third-party cloud computing companies has cropped up around Amazon EC2, a model that harkens to the path that software behemoth Microsoft followed with its partner network. This cloud community gives customers the ability to tap into other cloud services -- from Software as a Service (SaaS)-based analytics and application development to open source ERP and real-time stock quotes -- all on the same network.

Amazon EC2 customers say the appeal is not just shared capacity at lower costs, but also having their servers housed close to their own customers' and partners' data. That means good performance and low network costs.

Xignite Inc., a financial services on-demand provider to such companies as Forbes and Citi, houses its application servers on Amazon. In turn, its customer KaChing Group Inc., a community for would-be investors and portfolio experts, also has its portfolio computation engine on Amazon servers.

"Customers want their data close to the applications [we provide] in the cloud to minimize network costs," said Leo Chan, chief technology officer at San Mateo, Calif.-based Xignite. "It also translates into faster speeds [for us] because what we have is hosted right next to customers' or partners' applications and not at another facility. A credit card payment doesn't have to go across the Internet to another cloud or service to be processed, and that's just one example."

This model pretty much eliminates the network costs associated with services provided on separate networks: Your SaaS vendor's application server resides on the same network as your database, for example, and you are charged for server capacity and not network bandwidth usage.

There are also discussions popping up about condominium clouds and condominium fiber for members of a given community -- say universities, researchers or associations not able to build private clouds. By building a cloud community, or essentially a private public cloud, members share resources provided by the cloud computing companies and can scale to limits that wouldn't be possible as independent entities.

A credit card payment doesn't have to go across the Internet to another cloud or service to be processed, and that's just one example.

Leo Chan, chief technology officer, Xignite Inc.

Christopher Steffen, principal technical architect at Kroll Factual Data Inc., the Loveland, Colo.-based credit report processing arm of risk consultancy Kroll Inc., has a vision for sharing resources and costs with companies that have similar platforms as Kroll.

Kroll Factual Data is evaluating its applications, including proprietary production applications and Oracle financial systems, to see which ones will work in a cloud environment.

In an ideal world, Steffen wants to partner with other Oracle customers to build an external cloud that would serve all their interests.

"We would like to do resource sharing in an Oracle world, take part in a big Oracle cluster in the cloud where we could share administration, hardware and maybe even licensing costs across three or more companies with shared interests, or a sister company," Steffen said.

But that cloud community is still a far-off vision with potential regulatory compliance and security complications that would need to be worked out. For now, Kroll has laid the groundwork for cloud adoption -- 650 of its 1,700 servers have been reduced to 22 boxes through virtualization. The next step is evaluating Microsoft's Windows Azure cloud computing service, which is set to be released this fall.

Let us know what you think about the story; email Christina Torode, Senior News Writer.

This was first published in July 2009

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