Cash in the Cloud

Next time your local hot spot advertises live music, or your favorite DJ spins a new tune on the radio, it's likely that their contracts to license those songs will be stored in the cloud. That's because last year, the American Society of Composers, Authors and Publishers, which has been licensing artists' and publishers' rights since 1914, moved 91GB of scanned images of signed paperwork into Amazon.com Inc.'s cloud-based Simple Storage Service (S3).

John Johnson, vice president of licensing at ASCAP, says the organization had hoped to use Salesforce.com Inc.'s hosted service to manage and store digitized documents, but it offered very little storage. However, through a service from Appirio Inc. in San Mateo, Calif., he can now use Salesforce.com to manage documents stored in S3. This saves ASCAP thousands of dollars in labor costs, since the old method required manually digging through paper files to find contracts.

Developing cloud storage strategies can be complicated, and there's the nagging issue of security. But according to early adopters, the real silver lining of cloud storage is the savings. Analysts say that moving to cloud-based services can save IT money, because cloud computing involves the use of a shared infrastructure and allows certain costs to shift from capital expenses to operating expenses.

And competition is pushing costs lower, especially for large users. For example, Amazon cut its price for storage of more than 50TB to as low as 12 cents per gigabyte per month, down from 15 cents. And through June, it cut data transfer costs to 3 cents per gigabyte.

One early user, Peter Hedlund, a programmer at Encyclopedia Virginia in Charlottesville, Va., says he's interested in cloud storage because he likes the predictable prices he can get from Zetta Inc., a cloud storage service provider in Sunnyvale, Calif.

Through an affiliation with its parent organization, the Virginia Foundation for the Humanities, Encyclopedia Virginia has been storing primary data on systems in the University of Virginia's main data center, where, as Hedlund puts it, “we're a small fish in a big pond.” Ramping up storage quickly was difficult, and he couldn't even get solid quotes on how much the university would charge for storage. Zetta's pricing structure of 25 cents per gigabyte per month “seems reasonable,” says Hedlund, noting that now he can not only count on capacity on demand, but he can also accurately budget for it.

However, he adds, “at this point, we can't look to Zetta as primary storage.” He says the clear value of cloud storage is as a low-cost archive for Encyclopedia Virginia's countless images and audio and video files. “I like knowing that we have another place [to store] this stuff,” Hedlund says.

Cloudize Inc., a collaboration service, uses cloud storage from Nirvanix Inc. in San Diego. The San Francisco-based start-up pays the same rate as Encyclopedia Virginia — 25 cents per gigabyte per month, which Cloudize CEO Edwin Fu says is ideal for planning and budgeting. But he also likes the fact that Nirvanix applies that price to his entire company's online storage use, instead of charging on a per-user basis.

Fu says Cloudize couldn't afford a traditional service from a company like Rackspace Hosting Inc.

Keeping data close to home

Nick Bali, a senior software engineer at Sony Pictures Imageworks Inc. in Culver City, Calif., is looking into the possibility of building a private cloud using software from ParaScale Inc. His plan is to create a setup that could handle a production environment that requires up to 3,000 servers to process the 50TB to 100TB of data necessary for a single production.

Latency issues make it impossible to put the data into the public cloud, but the advantages of cloud technology — especially low-cost components, virtualization, and the ease of expanding or contracting resources on demand — make the private cloud approach a good fit for Sony, Bali says.

Another user, Iowa Health System in Des Moines, stores “mission-critical” image data on a private cloud managed by software from Bycast Inc., according to CIO Joy Grosser. She says more than 10,000 users are pulling files off of cloud storage systems connected by private networks.

Choice is good. But the dizzying array of cloud storage options and pricing can be daunting. For example, users can snag Amazon's basic S3 storage with a credit card for 15 cents per gigabyte per month or, for applications in the cloud, they can get S3 capacity through third-party services that offer more granular data management tools for about 25 cents per gigabyte per month.

Deals for on-demand storage can also be negotiated directly from cloud storage providers. Or, using proprietary software, users can implement private clouds behind their firewalls; the cost is about the same as for a standard SAN, because the customer's own hardware and software are being used. Another option: Users can adopt hybrid setups, with some data lodged on public clouds and the rest housed in their data centers. That way, the costs are dependent on how the distribution of storage is configured.