Cloud computing: fundamentals of application in the field of Internet startups

    Hello everyone :)
    This is my first post on Habré - a report to the conference “Electronic Business and Internet Project Management” , which was held at the Higher School of Economics –– HSE on May 19–20.
    I will be glad to any of your comments and comments.
    UPD Unfortunately, there is no way to transfer to a thematic blog :( Let it hang here :)
    UPD2 Thanks for the karma, transferred to this blog (I didn’t find the Cloud Computing blog, was it looking bad?)
    UPD3 Did I really get on the main page , or am I dreaming? o_O
    cautious: much bukof! :)

    Abstract:In this work, we consider a new technology called cloud computing, the basics of its application, the advantages of its use in general compared with other technologies and in the field of Internet startups in particular, as well as the problems that arise when providing and using clouds.

    History knows many examples of how a certain product gradually turned into a certain public service. It is enough to recall only the transition from gas burners and gas cylinders to a public gas service. Such examples provide us with an understanding of how the uniqueness of technology is gradually gaining in popularity, turning into a service.
    More recently, literally 20 years ago, the share of the use of information technology in business was less than 5-10%. Now it’s almost 100%. The transition from uniqueness to scale allows us to perceive computing power no longer as a separate computer server in the organization’s building, but as a service that is provided by some distant data center.

    That is precisely why cloud computing is called a new trend in the development of information technology. That is why many companies are beginning to understand the importance and necessity of "going to the cloud." And that is why it is now necessary to carry out research projects in this area. This work is the first steps in the analysis of cloud computing, their applicability in the Internet business in the current realities. What is cloud computing? What advantages do they represent compared to other similar technologies? Why are “clouds” of particular importance when applied to Internet startups? I will try to answer these questions in this paper.

    1. Basic concepts of cloud computing technology

    1.1. What is a cloud?
    First, how should the term “cloud computing” be understood? What does it mean by “cloud”? Correctly understand the “cloud” as a metaphor for a remote computing data center, which is provided access on the basis of pay-as-you-go payment (payment for the actual use of the calculation service). Thus, the software is actually provided to the user as a service. The user of cloud computing does not need to care about either the infrastructure or the actual software, the cloud successfully hides all the technical and software details.
    I would like to note that in this report, cloud technologies are considered only in relation to the b2b model. Analysis of the possibility of applying their application to end users in this paper is not carried out.

    1.2. History reference
    The first ideas about using computing as a public service were proposed back in the 1960s by a well-known scientist in the field of information technology, the inventor of the Lisp language, professor of MIT and Stanford University, John McCarthy. The appearance of the first technology close to the modern understanding of the term “cloud computing” is attributed to, founded in 1999. It was then that the first proposal of a new type of b2b product “Software as a Service” (“Software as a Service”, “SaaS”) appeared. Salesforce's certain success in this area has aroused interest among IT industry giants, who have hastily reported on their research in the cloud. And now the first business solution called “Amazon Web Services” was launched in 2005 by, which, since the dot-com crisis, has been actively modernizing its data centers. Google gradually introduced its technology, starting in 2006 with b2b offering SaaS services called “Google Apps”, and then a platform-as-a-service (PaaS) model called “Google App Engine”. And, finally, Microsoft announced its offer, presenting it at the PDC 2008 conference called "Azure Services Platform".
    The fact of high interest of the largest players in the IT market demonstrates a certain status of cloud computing as a trend of 2009-2010. In addition, with the release of the Microsoft Azure Service Platform, many experts associate a new round of web technology development and take the entire cloud computing industry to a new level.
    1.3. Technological aspects of the functioning of the “cloud”
    At the moment, most cloud infrastructures are deployed on the servers of data centers using virtualization technologies, which in fact allows any user application to use computing power without thinking about the technological aspects. Then you can understand the "cloud" as a single access to computing by the user.
    The concept of cloud computing is often associated with such service-providing technologies (Everything as a service), such as “Software as a Service” (“Software as a Service” or “SaaS”), “Infrastructure as a Service” or “IaaS”) and “Platform as a Service” (“Plaatform as a Service”, “PaaS”). Consider each of these technologies in more detail.
    SaaS is an application deployment model that involves delivering an application to an end user as an on demand service. Access to such an application is carried out through the network, and most often through an Internet browser.
    IaaS - a model for providing computer infrastructure as a service. Instead of buying servers, software, special network equipment, the user can get these resources in the form of outsourcing. In fact, as many experts note, this is just some evolution of hosting services.
    PaaS is a model of network provision of a computing platform as a service, which offers the deployment and support of web applications and services without the need to purchase and manage hardware and software layers.
    Thus, these technologies, when used together, allow cloud computing users to take advantage of the computing power and data storages that are provided to them as services through certain virtualization technologies and a high level of abstraction.

    2. Advantages of the “cloud”
    As mentioned above, many IT experts believe that in the near future, cloud computing will be included in the top list of technological trends. In any case, for such a bold statement, there must be certain reasons why exactly cloud computing will soon choose a lot of Internet businesses. Thus, we will try to analyze the benefits of cloud technology.
    The first is a high level of virtualization. As mentioned above, the user, having deployed his application, does not think about such problems as hardware, their support, specific software installed on the machine. He does not even think about which, or even which machines, his application is running on.
    The ability to run multiple copies of an application on many virtual machines presents scalability benefits: the number of application instances can grow almost instantly on demand, depending on the load.
    And, finally, data centers are managed by professional specialists who provide round-the-clock support for the functioning of virtual machines. And even if the physical machine crashes, due to the distribution of the application to many copies, it will continue to work anyway. This creates a certain high level of reliability and fault tolerance of the system.
    However, it should be noted that in the eyes of consumers of the service, the main advantage of cloud computing is, perhaps, the lack of the need to purchase all the appropriate equipment and software, and then support their work. We will consider this aspect a bit later in conjunction with the analysis of applications in the field of Internet startups.
    Thus, all these advantages determine the choice of cloud computing compared to other similar technologies. It is they who “push” the largest IT corporations for further development, which also see increased interest among users of the system. Most likely, in the near future we will see, if not a surge in scientific and practical activity in the field of cloud computing, then certainly a gradual increase in certain interest.
    3. Cloud technology issues
    It would seem that the advantages of cloud computing are so obvious that in the near future all companies will massively switch to using this type of technology. However, there are some problems that both cloud computing vendors and business users face.
    Firstly, as mentioned in the article “Counter Plan” by Dmitry Petrov [6], there is practically no certain culture of consumption of outsourcing services, business is somewhat wary of such services. “There can be several reasons for the mistrustful attitude of small and medium-sized businesses towards data centers. Most likely, this is a fear of losing control over IT resources, fears about guaranteeing the safety and protection of transmitted information, and presenting the data center only as a platform for placing equipment. ”
    Thus, vendors of cloud computing services should understand the importance of creating customer awareness of the service, as well as a sense of security of their own data.
    Secondly, some experts, such as G. Macleod (Hugh Macleod) in the article "The Best Protected Secret of the Clouds" [8], argue that cloud computing leads to the creation of a huge, unprecedented monopoly. Is it possible? Of course, in the cloud computing market to place any information in the cloud for which there are information security rules, companies will rather use such vendors whose name is “well known” and to whom they trust. Thus, there is a certain danger that all calculations and data will be aggregated in the hands of one supermonopoly. However, at the moment there are already several companies on the market with approximately the same high level of customer confidence (Microsoft, Google, Amazon), and there are no facts. which would indicate the possibility of domination by one company of all the others. Therefore, in the near future the emergence of a global supercompany that will coordinate and control all the calculations in the world is very unlikely, although the mere possibility of such an event discourages some customers.
    Thirdly, the state in whose territory the data center is located can gain access to any information that is stored in it. For example, according to the laws of the United States, where the largest number of data centers are located, in this case, the provider company does not even have the right to disclose the fact of transferring confidential information to anyone other than its lawyers [12].
    This problem is probably one of the most significant in the issue of sending confidential information to the cloud. There can be several ways to solve it. First, you can encrypt all the information that is placed on the cloud. Secondly, you can simply not put it there. However, in any case, for companies using cloud computing, this should be a certain item in the list of information security issues. In addition, providers themselves must improve their technology by providing some encryption services.
    Thus, certain problems exist, but almost all of them are concentrated in the field of incorrect or inadequate understanding of technology and the possibilities of its use. And only the problem of unlimited state access to information stored in the data center, in my opinion, is currently the most difficult and most limiting circle of users cloud computing technology.

    4. Features of the functioning of an Internet startup

    4.1. Features of a startup company
    Oddly enough, in some circles, sometimes even professional ones, the term “startup” is perceived quite ambiguously. Therefore, for further consideration, this term should be defined. So, a startup is a newly created company, perhaps not even officially registered, which builds its business on the basis of innovation. Such a company is just entering the market and is at the stage of development and marketing research.
    A start-up company is often called a garage company, and that's why. Traditionally, startups were created under rather difficult circumstances, in conditions of extremely limited resources. Therefore, often such companies are limited to minimal investments: primitive offices in the form of garages, possibly free software, and so on.
    There is a basic rule for the existence of a startup, which contains the empirical result of the functioning of such companies: “Scale fast or fail fast”. A startup can either instantly “soar” upwards, or just as quickly “fail”. This rule should be remembered both by novice start-ups and investors who understand not only the high risks of invested investments, but also a possible ultra-high return. As we find out a little later, it is also useful for choosing the technological model used.

    4.2. Startups in an economic crisis
    In my opinion, in the modern economic environment, during the World Economic and Financial Crisis, the role of startups is greater than ever. Firstly, they are highly consumer-oriented, in contrast to the "slow" industry giants, busy cutting costs and "squeezing" projects. In the new economic situation, it is startups that are able to find their niche with superprofits.
    Secondly, the rise in price of money has led to a sufficiently strong decrease in investments, which will now be directed to those who can use them as efficiently as possible. Therefore, I believe that soon after the crisis, the economy, including the Russian one, will experience a noticeable boom in startups, for example, in the Internet industry. Such companies will be interested in technologies that are able to demonstrate maximum return on investment. That is why I am predicting a massive increase in the role of cloud technology for Internet startups.

    5. Internet startup in the cloud

    5.1. The Benefits of Internet Startups in the Cloud
    As mentioned above, startups are interested in maximizing the benefits of the technologies used. That is why an Internet startup, launched in the cloud, acquires completely new competitive advantages. But which ones?
    Firstly, paying for the use of cloud technology using the “pay as you go” system allows start-up companies to significantly reduce their fixed or capital costs.
    Figure 1 shows the costs that startups incur in the case of using traditional technologies and in the case of "moving to the cloud." In the first option, a company needs a certain amount of investments to start up, which will be used to pay off fixed costs (Fixed Costs, FC on the chart): purchase of servers and software, their support and maintenance. As the number of users increases, the variables (Variable Costs, VC in the graph) are proportionally added to the fixed costs.
    A completely different situation is observed when using cloud computing. When starting a startup, you do not need to invest in the purchase of hardware and software, just in the future, with an increase in the number of users, you pay a little more according to your agreement on the provision of cloud computing services.
    Fig. one
    (idea by Sam Johnston, : Cloud_computing_economics.svg)

    In fact, this graph looks a bit different. When you buy your own server and install the appropriate software on it, an increase in the number of users increases costs at a slower rate than when paying for the consumption of a computing service (Fig. 2). However, you should not forget that there are certain scalability problems that do not allow you to adapt to new needs with a rapid increase in load (Fig. 3). Then, when reaching a critical point of users (the dotted line on the graph), scalability work will be required, which will take a certain time, during which the number of users will not increase, but may decrease.
    Fig. 2
    Fig. 3
    Thus, the advantage of cloud technologies in the form of a lack of capital expenditures is of particular importance for Internet startups, which are in dire need of seed capital and investments. When using cloud computing services, startups start their business, as a rule, with a minimum level of investment, which usually easily covers low barriers to entry.
    Secondly, recall the startup rule, fail fast or scale fast. If the startup has not received fame, has not gained a critical mass of users to start self-sufficiency, when using cloud technologies, closing it does not present any problems: you simply stop paying for the subscription. In the case of traditional technologies, you would have to sell the server and just throw out the purchased software. If a startup finds its niche and begins to grow rapidly, you as a user will not encounter scalability problems, whereas usually you had to carry out a large number of various works.
    Thirdly, there is no need to take care of technological support and maintenance, all these problems are undertaken by the cloud provider company. And, as mentioned above, there are no problems with fault tolerance, the remote server that has gone out of work in the data center is very quickly replaced by another.
    Thus, the benefits of using cloud technologies in the field of Internet startups are obvious. Therefore, in my opinion, it is precisely this sphere that will make it possible in the near future to take startups to a new level, capture new markets and open previously unexplored niches.

    6. Major providers of cloud computing services
    There are currently several cloud service providers. For our analysis, a brief and superficial consideration is sufficient, we take only the largest and most representative b2b services that can be used by Internet startups in their activities.
    Azure Services Platform- a development service for providing a remote cloud platform, which allows you to store data and run web applications on a remote cloud. Above the platform is the so-called “operating system in the cloud” called Windows Azure, which manages the launch of applications on many virtual machines of the Microsoft data center. An official Visual Studio SDK has been developed, which presents developers with fairly low barriers to entry. ASP.NET technology, C # and VB.Net languages ​​are officially supported, SDK development for Java and Ruby is underway.
    Amazon Web Services
    - services for executing highly scalable applications, storing information on Amazon's remote servers, providing all SaaS, IaaS and PaaS models.
    Google Apps Engine
    - Google’s service, still undergoing public beta testing, providing a platform for creating and deploying applications on the infrastructure of Google’s data centers. An application in the cloud runs on multiple virtual servers. At the moment, 5 million views per month are initially provided free of charge, and then a corresponding proportional fee is charged for each excess. Officially supported languages: Python and Java. The system also uses a non-relational structure to store databases with its own SQL-like query language, called GQL. is one of the largest providers that primarily provides SaaS and PaaS. By providing a monthly subscription, the company positions itself as a provider of new types of Customer Relationship Management. Translated into 16 languages, the service already has more than 1.5 million subscribers, including Siemens, Dell, Starbucks Coffee and others. Applications on the platform can be created using a special Java-like language Apex, as well as Visualforce for working with HTML, AJAX and Flex.

    Thus, in this paper, we described the main aspects of cloud computing technology, their advantages in general and in the field of Internet startups. The main paths for the development of cloud technologies, some problems facing the provider and user, as well as the future of Internet startups were predicted. And finally, the main cloud service vendors have been described.
    This work is aimed not only at a specific educational program in the field of cloud technologies, but also at an analysis of their application in real business, which is of high utility for both startup businessmen and investors.
    In addition, the author hopes to increase a certain interest in Russian academic and business circles, since ignoring new trends in the IT industry is quite dangerous.

    1. by Tim the O'Reilly «the Web 2.0 We do and Cloud Computing»
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    6. Dmitry Petrov “A counter plan”
    7. Ekaterina Baranova, “Cloud computing concept”
    8. G. Macleod “The best kept secret of the clouds”
    12. Bill Thompson «Storm warning for cloud computing ”
    13.“ Cloud computing Journal ”
    15. / Cloud_Computing

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