April 28, 2010, 2:07 PM — Cloud computing is making it easier for start-ups to develop new technology, but once companies grow beyond a certain size they may find current cloud technologies do not meet their requirements, tech investors said during Interop in Las Vegas this week.
The ability to spin up multiple virtual machines on a hosted cloud computing service like Amazon EC2 makes testing new software products much simpler than in the days when companies were forced to provision their own servers, venture capitalists said during a panel discussion on cloud computing.
"You can iterate a lot and get feedback faster," said Ping Li, an investor at Accel Partners. "You're able to experiment in the wild, as opposed to experimenting in the labs or in your head."
But the cloud is designed for the lowest common denominator, Li said. Eventually, a company's technology becomes so complex that it must be customized to fit the needs of specific applications, and those levels of complexity are not yet available in the cloud. And at certain economies of scale, it may not be cheaper to rent storage or server space from Amazon than it is to host it internally, investors said.
"The higher levels of complexity in the cloud stack isn't there yet to do the things a highly tuned application like Facebook and Twitter needs to do," Li said. "That's not to say the cloud won't get there, but the cloud gap exists."
That's one of the reasons enterprises are interested in building so-called private cloud networks, which are managed internally but use a similar architecture as public cloud services.
"The gap between what IT does behind the firewall and what is done in the cloud is pretty wide," said Guy Horowitz, a principal investor at Gemini Israel Funds. Horowitz also notes that cloud providers are typically not offering service-level agreements worthy of the enterprise, a problem that panelists said is unlikely to be solved anytime soon.
"There's a reason these SLAs have no teeth," Horowitz says. "If they were able to guarantee uptime and performance they would be selling it. ... It's not in the best interests [of cloud vendors] to provide specific SLAs that can be enforced."