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Concerns about cloud computing security and how fast cloud providers will respond in the event technical troubles should arise is making companies hesitant to embrace cloud computing — at least within the next 12 months. An 85% majority of the IT Performance Trends survey subjects say they will not implement a public or private cloud between June 2009 and June 2010. However, of that 85%, 31% say they are studying the issue but have made no decision yet and another 7% are “Unsure.”

Security topped the list of concerns and guarantees that companies would demand from a cloud services provider, if their firms were to implement a cloud model. An overwhelming 83% of respondents said they would need specific guarantees to safeguard their sensitive mission critical data before committing to a cloud. Additionally, almost three-quarters or 73% of respondents would require guaranteed fast response time for technical service and support. Nearly two thirds (63%) of respondents want minimum acceptable latency/response times and a nearly equal number (62%) say they would need multiple access paths to and from the cloud infrastructure.

It was clear from the customer interviews and essay responses that IT managers, especially those companies with fewer than 1,000 end users, will keep their corporate data and applications firmly planted behind the corporate firewall until they have ironclad assurances regarding the security of their data and their ability to access it.

“The idea that I would trust my email, financial transactions, or other day to day business operations to cloud computing is just asking for trouble,” observed an IT manager at a midsized corporation with 500 employees in the Midwest. “I do not even want to imagine my all my users being dead in the water because my link to the Internet was down,” he adds. Another manager at a retail firm with 250 employees expressed reservations about the ability of a cloud services vendor to deliver top notch service and support should the need arise.

“Downtime is the bane of an IT professional’s life,” says the network administrator at a retail firm with 250 employees. He noted that when an onsite and locally managed system fails, he and his IT team can take immediate action to replace parts, rebuild the operating system, restore data from tape backup or perform any other action required to restore services and applications. “Compare that to a failure in a cloud computing scenario, when all you can do is report the problem and hurry up and wait,” he says. “Most IT people are action oriented and they won’t respond well to being at the mercy of a cloud provider while listening to complaints and queries from users and management of ‘When will the system be back up?’ or ‘When can I get access to my data?'”

The director of IT at another midsized company with 400 users opined that he does not yet have confidence in the still-emerging cloud computing model. “We own our data, not the cloud provider, and we need to know it is movable if we need to leave the provider.”

Finally, the survey respondents indicated during first person customer interviews that they will continue to chart a conservative course that includes a very low tolerance for risk until the economy recovers and their companies can once again bolster IT staffs and provide more resources.

Analysis

Cloud computing is still in its nascent stages. It’s common for the hype among vendors, the press and analyst community to outpace current realities in IT, especially in the small and midsized businesses who have smaller budgets and are generally more conservative and risk averse than their enterprise counterparts.

The survey results also showed that there was much more of willingness on the part of larger enterprises to explore, test and deploy a cloud infrastructure. Among corporations with over 3,000 end users, a more convincing 57% percentage said they will either deploy or are considering a public or private cloud implementation over the next 12 to 18 months. Even this group though, is rightfully concerned about the uncertainties of trusting their sensitive data to a public cloud whose provider may be located in a foreign country.

Therefore, it is imperative that cloud computing vendors provide customers and prospective customers with transparency and full accountability with respect to crucial issues like: security, technical service and support, equipment and capacity of their data centers; an overview of the technology used (e.g. specific server equipment, virtualization, management, etc.). The vendors should also provide specific SLA levels and guarantees in the event those levels are not met.

Corporations should also perform due diligence. Get informed. Thoroughly investigate and compare the services and options of the various cloud providers. Know where and how your data will be stored, secured and managed. Ask for customer references. Consult with your in-house attorneys or obtain outside counsel to review proposed contracts. Don’t be afraid to insert out clauses and penalties in the event your cloud provider fails to meet SLAs. Also, at this early stage of development, don’t be afraid to ask for discounts and caps on prices hikes for the duration of your contract.

An overwhelming 85% majority of corporate customers will not implement a private or public cloud computing infrastructure in 2009 because of fears that cloud providers may not be able to adequately secure sensitive corporate data. That is a key result of the latest ITIC survey which polled C-level executives and IT managers at 300 corporations worldwide on IT Performance Trends.

The survey yielded several other surprising results on pivotal issues that can have a direct impact on daily network operations as well as long term strategic goals like lowering total cost of ownership (TCO), managing risk and achieving tangible return on investment (ROI). For example, initial responses and subsequent first person customer interviews indicated that IT managers are finding it difficult and challenging to track basic IT performance metrics. Among the most stunning revelations was that 48% of IT departments – nearly half — do not track security performance metrics. Only 43% of businesses have SLA metrics with clients that are discussed and updated yearly and 51% of organizations are unable to quantify the cost of an hour of unplanned downtime.

ITIC partnered with Stratus Technologies in Maynard, MA, a vendor specializing in high availability and fault tolerant hardware and software solutions, to compose the Web-based survey. ITIC conducted this blind, non-vendor and non-product specific survey which polled businesses on a wide range of IT performance-related trends. Besides cloud computing deployment trends and timetables, the survey also queried users on such topics as IT accountability for network performance metrics; the frequency of moderate and severe network outages; SLA agreements; how IT tracks performance metrics; how well IT and upper management collaborate and whether or not IT departments are able to quantify the hourly cost of downtime.

The Web-based survey consisted of multiple choice and essay questions. ITIC analysts also conducted two dozen first person customer interviews to obtain detailed anecdotal data. Respondents ranged from SMBs with 100 users to very large enterprises with over 100,000 end users. Industries represented: academic, advertising, aerospace, banking, communications, consumer products, defense, energy, finance, government, healthcare, insurance, IT services, legal, manufacturing, media and entertainment, telecommunications, transportation, and utilities. The respondents hailed from 19 countries; 85% were based in North America. None of the survey respondents received any remuneration for their participation.

Survey Highlights

The responses across a wide range of survey topics indicate that IT departments are overwhelming pragmatic; their chief focus is on keeping their networks up and running in the face of budget cuts and diminished staff and resources.

Among the other survey highlights:

  • Over four out of 10 organizations — 44% — indicate that management holds IT responsible for meeting defined performance metrics; 31% say that upper management only holds them accountable or voices displeasure when something goes awry and 19% of respondents say their companies do not have formally defined performance metrics.
  • On the subject of how businesses track performance, 28% of respondents indicated they do so by the amount of planned and unplanned downtime experienced by IT; another 24% measure performance according to a specific subset of IT operations and systems; 11% are reactive and monitor performance by the time it takes to recover following a service outage; an additional 11% are proactive, monitoring performance in a continuous, programmed fashion throughout the enterprise. Most alarming however is that more than a fifth of the firms represented – 21% – revealed that they don’t keep track of performance.
  • In another somewhat surprising disclosure, 46% of survey respondents do not have service level agreements (SLAs) in place compared to 43% who do; 11% of respondents were unsure. However, the ITIC survey responses showed that an overwhelming 84% majority of large enterprises with over 3,000 end users do have SLAs in place. However even in those businesses, collaboration and communication among C-level executives and IT departments is poor. Only 16% of survey respondents noted any regular, proactive communications between IT and upper management.

The long awaited successor to Windows XP and Windows Vista, will ship several months earlier than planned. Expectations are high industry-wide.

Windows 7 is crucial to Microsoft’s over-arching software business and technology strategy for the next two years. Although it is an incremental upgrade and not a major overhaul of the underlying Vista kernel, Windows 7 represents a crucial upgrade for both consumer and corporate customers.

Practically speaking, Windows 7 must do what Vista didn’t: deliver near seamless, plug and play integration and interoperability with the overwhelming majority of Microsoft and third party applications, device drivers, utilities and hardware peripherals. As a standalone operating system (OS) Vista was fine. Unfortunately, there’s no such thing as a standalone OS. The lack of backwards compatibility between Vista and third party software and even incompatibilities in the file formats between Vista and Office 2007 and other Microsoft products was a nightmare for corporations and consumers alike.

As a result, there is no margin for error. Windows 7 must fulfill users’ expectations, business and technology needs from the first day it ships. Microsoft will not get a second chance to make a good first impression. Failure to do so could send customers running to rival desktop platforms like Apple’s Mac OS X 10.x and Linux distributions, or even online options such as those being pitched by Google. . And if Windows 7 does not deliver the features, integration, interoperability and reliability Microsoft is promising, it may well create a domino effect that adversely impacts the upcoming releases of related solutions like Exchange Server and the Office platform.

Integration and interoperability are the most important criteria, besting even cost, when it comes to choosing a new technology. The results of ITIC’s May 2009 Application Availability survey of 300 businesses worldwide found that 60% of business said integration and interoperability with existing and legacy applications tops the list of “must have” items in new software application and operating system purchases. Cost came in a close second with 56% of the respondents followed by ease of use and installation (55%).

The stakes for Windows 7 are also high because of intensified competition. Rumors abound that Microsoft pushed up the release date by at least three months so that Windows 7 hits the streets in advance of the low cost netbook version of Google’s Android. Microsoft also faces increased competition in its decades-old rival Apple. During the past two years Apple’s Mac OS X 10.x running on Apple’s Intel-based proprietary hardware has been making a comeback in corporate enterprises. Apple products do not represent a significant threat to Microsoft’s corporate desktop dominance, but they can nibble at the fringes, potentially dilute momentum [for Windows 7] and take some market share. In this ongoing global economic downturn, no vendor wants to concede any revenue or even a percentage point of market share.

Microsoft of course is acutely aware of these issues. In recent months, company CEO Steve Ballmer and Senior Vice President Bill Veghte have publicly stated that users were stymied by the incompatibility issues they encountered with Vista. They intend to avoid those problems with Windows 7.

Fortuitously, for Microsoft, there are many factors in Windows 7’s favor. They include:

  • Pent-up Demand. To date, only 10% of the 700 survey respondents in ITIC’s 2009 Global IT and Technology Trends Global Deployment Survey have deployed Vista as their company’s primary desktop operating system. The results indicated that Windows XP remains the primary desktop OS for 89% of the respondents. Nearly half—45%—of the survey respondents indicated they would skip Vista and migrate from XP to Windows 7. The main reasons for this were cost constraints associated with the bearish economy, and reluctance to undertake a complex OS upgrade with manpower constraints.

    The prevailing sentiment among businesses is that they can afford to wait because Windows XP adequate met their business and technology needs over the last two years. ITIC believes this bodes well for Windows 7 deployments in the short and intermediate term. If 20% of the installed base of legacy Windows XP users migrate or indicate their intention to upgrade to Windows 7 within the first three or four months of shipment, Microsoft will be well-positioned. There is a reasonable likelihood of this, providing Windows 7 delivers the goods. And the advance word from customers interviewed by ITIC is generally positive.

  • New feature set. Windows 7 will have six different versions, but to minimize the confusion that accompanied the Vista launch, only the Home Premium and Professional editions will be widely sold in retail outlets. Specific versions that are designed for enterprise use or developing nations will be aggressively marketed to those specific accounts and geographic regions, thus taking the guesswork out of purchasing. Most importantly: Microsoft says that every one of the versions will include all of the capabilities and features of the edition below it which will help to minimize upgrade woes. Corporations and consumers that want to move to a more feature rich version of Windows 7 can use Windows Anytime Upgrade to purchase the upgrade online and unlock the features of those editions from their desktops.

    ITIC interviewed several dozen Windows 7 beta users over the last several months and an overwhelming 9 out of 10 respondents expressed their satisfaction with improvements in many Windows 7’s core capabilities when compared to both Windows XP and Vista. This includes faster boot sequence, better reliability, improved security, a much faster and more comprehensive search engine, and more flexible configuration options. Additionally, Microsoft bolstered the inherent security of Windows 7 with DirectAccess and BitLocker To Go features. The DirectAccess capability is designed to provide remote, traveling and telecommuting workers with the same secure connectivity as though they were local by establishing a VPN “tunnel” to their corporate networks. BitLocker To Go extends the data encryption features introduced in Vista to include removable storage devices such as USB thumb drives support in Windows 7. Users can employ a password or a smart card with a digital certificate to unlock and access their data. And the devices can be used on any other Windows 7-based machine with the correct password. Users can also read, but not modify data on older Windows XP and Vista systems.

  • Economical and feature rich Licensing contracts. Finally, the terms and conditions of Windows 7 licensing contracts promise to make upgrades easier on corporate IT budgets. In February, Microsoft said it would provide a license that will allow customers to directly upgrade from Windows XP to Windows 7. There is a caveat, though: users will have to wipe their hard drives and perform a clean install – so technically, it’s not an upgrade. Microsoft has not yet released pricing details for Windows 7 but ITIC believes the upgrade license will most likely cost 20% to 40% less than a new license.

    Additionally, corporations that purchased Microsoft’s Software Assurance Maintenance and upgrade plan as a standalone product or received it as part of their Enterprise Agreement (EA) licenses, are entitled to free upgrades to Windows 7 since it is an incremental release. Additionally, in order to make life easier for users (and to engender goodwill) Microsoft is letting the Release Candidate (RC) free trial license for Windows 7 last a full year until June 2010! And users looking for a discounted version of Windows 7 to run on low cost, minis or netbooks take note: Microsoft and Intel have agreed that in order for a device to be considered a netbook, the screen must not exceed 10.2” Prior to this, Microsoft allowed customers to get the Windows XP or Vista discount for or devices as large as a 12.1” screen.

In summary, all indications are that Microsoft has learned from its Vista mistakes. As a result, businesses and consumers stand ready to reap significant benefits in compatibility, features, pricing and licensing with Windows 7.