When can cloud computing really cut costs?

"You can pay with a credit card, and only pay for what you use," noted Forrester Research analyst James Staten, as he outlined a number of ways in which clouds are being implemented already, during a presentation about implementing cloud applications across international borders.

Clouds allow companies to rent applications for short-term use, without investing in servers, software, or other infrastructure. Businesses can also pay for temporary access to computing resources -- such as data centers in other countries, for example -- without inking long-term contracts, according to Staten, speaking in a webcast sponsored by 3Tera, a competitor to cloud providers ranging from Amazon's EC2 to GoGrid and GridLayer.

Clouds can also come in handy when your company is trying to build a new application or business process. You can get started right away on a new project, without needing to wait for servers to become available on the existing corporate network. And clouds can be implemented either privately -- behind company firewalls -- or publicly, as well as in conjunction with existing networks in a vast range of "hybrid" configurations, as webcast participants told the CIOs and other IT pros tuning in for the online session.

What about reaching customers and business partners in other countries? If a company simply wants to solve the issue of "latency" -- which shows up as delayed data transmission across long distances -- then it might make the most economic sense to combine an existing corporate network with CDN (content delivery network) services from Akamai or Lightspeed, according to Staten.

CDNs provide "some acceleration to the [network] end points," the analyst observed.

But in some nations, governments are implementing "protections" involving policies around computing protocols or standards, address space sharing, and what kinds of data can enter and leave international borders, Staten said.

"[And] that's not always from governments. [This could be] from companies themselves. Do I really want my financial data to leave the bounds of my country, [and to be] stored in another country?" he asked rhetorically. "If you need application logic to run locally, CDNs don't do that," he added.

Although setting up dedicated servers in other nations is one option,
it's often better to use a cloud computing provider to gain temporary access to existing data centers in international locations. "The cloud computing vendors understand the geographic constraints," according to the Forrester analyst.

Generally speaking, clouds tend to be most cost effective in situations involving "bursty" -- or short-term -- computing needs or variable workloads, where taking the other approach of investing in additional infrastructure could be wasteful, Staten suggested.

However, to get a more specific idea of potential savings, a business needs to perform a relative cost analysis, comparing various strategies to accomplishing the computing goals at hand.

Barry Lynn, 3Tera's chairman, and Bert Armijo, the company's senior VP for sales and marketing, said that 3Tera's cloud plays host to customers ranging from small computers to Fortune 100 corporations via 3Tera's virtualization software and its partnerships with third-party data centers worldwide.

"To save some money" is an important part of customers' interest in cloud computing, according to Armijo.

Using Amazon's cloud might costs only "10 cents an hour," whereas 3Tera charges several hundred dollars a month. But 3Tera's infrastructure is "built for things that need to be bullet-proof," according to Lynn.

Participants in the cloud webcast also talked about applications of cloud computing in vertical markets. Some global trading firms would be better off to reduce the size of their own infrastructures, turning instead to cloud computing for extra capacity when needed. At many financial firms today, 25 percent or more of network servers go totally unused.

Meanwhile, oil and gas companies are already using cloud computing for oil exploration, an application which is critical to their businesses, the audience was told.

3Tera's infrastructure is built on AppLogic, a grid operating system from 3Tera which is aimed at using virtualization to eliminate the binding of software to hardware. AppLogic uses self-contained software components called virtual appliances to assemble applications.

Most customer applications require little or no tweaking to work with AppLogic, Armijo contended. When the virtual appliance is run, it operates in a virtualized execution space consisting of a virtual machine and virtualized access to storage and networks.

3Tera also provides training to customers in how to manage applications hosted on AppLogic in the cloud. Most customers can learn what they needed to know in just a few hours, Armijo said.

In a live demo, Armijo showed how an IT manager can use 3Tera's cloud infrastructure to migrate a CRM application from a third-party data center in Texas, and remotely reassemble it at a data center in the Netherlands in only a few minutes. Conversely, under traditional methods, application migration between data centers typically takes days or even weeks, he pointed out.

Previously limited to Linux and Sun Solaris, 3Tera's AppLogic recently added support for Microsoft Windows. Support for other operating systems is now under way, including NetBSD.