Pioneers of the Private Cloud

Early adopters are embracing cloud computing -- on their home turf.

Private clouds -- where companies use their own infrastructure and provision virtualized services to end users via automated tools -- are gaining ground among IT leaders who want to deliver advanced services at lower costs.

However, as with any new approach to computing, private clouds today fall short on manageability, and some users worry about the risk of vendor lock-in, particularly with virtualization and other tools that make cloud computing possible. Further, the fuzzy nature of just what private cloud computing means could slow the adoption of internal cloud setups.

That lack of definition doesn't bother Geir Ramleth, CIO at San Francisco-based Bechtel Corp., one of the world's largest engineering and construction firms. In fact, he says, the lack of a precise definition is a good thing, because looking at the private cloud too narrowly would "limit what it can do for us. You're talking philosophy here."

Alan Boehme, senior vice president and head of IT strategy at ING Financial Services in San Francisco, adds that a private cloud requires new ways of thinking about systems architecture. "It's not just servers, storage or networks; it's every component," he says.

Meanwhile, Bob Zukis, an IT strategy and operations consultant at PricewaterhouseCoopers LLP (PwC), says, "The private cloud is less about technology than it is a rallying cry for IT."

That rallying cry is producing a real market. According to Gartner Inc., enterprise spending on public and private cloud infrastructure services will total $3.2 billion this year, up 28% from $2.5 billion in 2008. Spending in the public sphere accounts for the vast majority of those dollars. However, the market researcher expects that by 2012, IT shops will spend more than half of their cloud dollars on private cloud services because of improvements in cost and management efficiency.

Going Private

Ramleth has heard the call of cloud computing, and he has seen dramatic results from Bechtel's private cloud platform, a standards-based setup that features virtualization technology and automated provisioning. In 2005, more than 2,000 IT employees staffed approximately 20 data centers, where server utilization reached 2% to 3%. Today, a much leaner Bechtel IT department, numbering 1,100 employees, operates just three data centers, where server utilization averages 60% to 70%.

At Bechtel, 44,000 employees across the globe have access to 230 applications. The IT department has already shifted about 60% of those applications into the company's private cloud. The rest will be moved to the cloud by the beginning of 2010, says Ramleth.

Such a "transformation," as Ramleth calls it, takes years. CIOs need to move carefully, he says, "because you don't want to move the sins of the past into new data centers."

Before 2005, Bechtel had an IT-centric attitude about delivering services to users, Ramleth says. It had no set standards and provisioned resources manually. Now the company embraces a collaborative model of computing, one built on strict standards and guidelines that permit policy-driven access to provisioned resources.

For example, Bechtel standardized on Hewlett-Packard dual- and quad-core BladeSystem servers. And because the services are separated from servers and other infrastructure elements that could change as hardware evolves, existing or future applications and services could easily run on new servers, storage systems and networks.

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