In this whitepaper Christoph Möller from openQRM Enterprise describes concepts and strategies for companies and enterprises to build a private cloud.

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Welcome to the private cloud
Use concepts from the public cloud for your own datacenter
openQRM white paper
Release date: 02/07/2013

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Introduction
Cloud computing has, in the recent past, gone from a hype to a viable alternative for companies to
design their IT infrastructures and environments more flexibly, and thus improve their own agility.
Early adopters were preferably start-ups who jumped on the bandwagon in order to take advantage
of the easy way of procuring resources of the public cloud. Thus many, partially well-known, young
enterprises meanwhile number among customers of public cloud services, who would not be able
to implement their business models without such scalable infrastructures.
The public cloud demonstrates weaknesses
Following an evaluation phase, established companies have likewise discovered the movement for
themselves, and are showing interest in infrastructures, platforms and software from the cloud.
Market Research Media[1] is anticipating a growth in the cloud computing market of up to USD 270
billion by 2020.
However, the concerns of CIOs of established companies about using public cloud services within
the scope of using their live systems run high. Besides the uncertain legal situation and the
concerns in regard to data privacy, in particular the fear of losing the company data, as well as
losing control over it, in the public cloud comes to the fore. Over 80 per cent of respondents of a
Mezeo survey[2] expressed their concerns on a scale of one to ten with an eight. Ten, here, stood
for having the greatest concerns.
Current alarming discoveries, such as the "PRISM" program of the US intelligence service NSA,
undermine confidence and the hard-earned trust of larger companies in public cloud services.
Thus, within the scope of the "PRISM" program, US authorities are granted extensive access to
data of customers worldwide who use cloud computing services such as facebook.com, Amazon
AWS or Apple's iCloud - naturally without informing or even obtaining the explicit consent of the
user.
These findings are likewise reflected in a global Gartner survey. It emerged from the latter that 75
per cent of decision makers will, by 2014, choose to develop their strategy on a private cloud,
instead of a public cloud solution. In that respect, as per the survey the main aim consists in
drawing the greatest benefits from the virtualisation for the company. A KPMG survey[3] among 400
German companies supports the outcome of that survey. Accordingly, the experiences of around
60 per cent of respondents with private cloud solutions have been positive. Twenty-one per cent
wish to systematically invest in this field in future. In that respect, nineteen per cent of the entire IT
budget is invested in private cloud solutions, usually in infrastructure-as-a-service (IaaS). In 2013,
one third of decision makers plans to invest 26 to 50 per cent of the budget in the private cloud.
Approx. 90% of German decision makers are, according to the survey, not interested in public
cloud services.

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Data privacy, compliance and data leaks are not everything
Even if only the above-mentioned topics are considered, it becomes clear why established
companies are being more cautious about heading for the cloud. Start-ups, on the other hand,
seem to be more relaxed about it. Their structures are still very flexible. In addition, they first of all
have to find out in which direction the business model is heading, which is why they initially seek
cost-effective options to support their idea.
Data privacy, compliance and data leaks are, however, not the only topics that cause concern
among decision-makers. Server down situations with well-known providers of cloud computing
have led to discussions on data security and the availability of the cloud infrastructures. On
average, a cloud provider guarantees 99.5 per cent availability via its service level agreements.
Converted, this corresponds to down time of 4.38 hours per year or 21.56 minutes per month or
5.04 minutes per week.
However, the last service outages have shown that, with many providers, such quotas cannot be
achieved, and the availability is actually around 99 per cent. That corresponds to down time of 3.65
days per year.
The private cloud combines the best of both worlds
A private cloud is not to be equated with a non-public version of the public cloud. It is up to the
company, and not an external provider, to attend to the operation and administration of the
infrastructure. Due to its private nature, the access to the cloud infrastructure may even be
designed as restrictively as desired. In addition to the company's own employees, partners,
suppliers and customers are given access via a virtual private network or their own public
platforms.
Private clouds combine the best of both worlds. On the one hand, there is the scalability of the IT
resources and their flexible nature, as well as the self-service for the company's own employees
and projects from the public cloud. On the other hand, however, there is also the securing of data
privacy, compliance and data security in the companies' own IT infrastructures in the datacenters.
The private cloud fundamentally changes the internal IT infrastructure. In that respect, self-service
portals and billing systems are only two new approaches by means of which IT resources and IT
services can be better organised, administered and allocated. Thus, a company no longer needs to
be statically limited to functions defined in annual schedules, but gains the opportunity, through
improved resource allocation, to achieve greater flexibility in regard to both existing and new IT
resources. Employees, projects and the entire company, thus acquire greater agility. IT resources,
such as virtual servers and databases, right up to complete applications, can be accessed on
demand. And that is no longer within weeks or months, but in minutes. New business sectors and
ideas can be developed and taken to the marketability stage more rapidly.

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IT departments are put in a position to provide the infrastructure necessary, as required, and shut it
down it again. That affects the scalability of the companies' own infrastructure, in that existing
resources can be better utilised. In addition, through a hardware pool that is managed in a load-
dependent manner, the company can make great savings on energy costs and reduce its
investment in cooling and fan systems.
Design the IT infrastructure more cost-effectively
The basis for cloud computing, and thus also the private cloud, is consolidating hardware
resources based on virtualisation. Thus, companies can reduce their overall costs in their own
datacenter by up to 40 per cent. Twenty-five to thirty per cent of these costs alone are attributable
to reduced power consumption and lower investments in cooling systems. As a result, the objective
of "green IT" can also be pursued better. Classic datacenters needed to be laid out on an
exaggerated scale, in order to be able to supply adequate IT resources, even at peak times. In the
annual mean, however, only a maximum of 20 per cent of such capacities are required. The
remaining 80 per cent are unproductive. The virtualisation alone is not, however, sufficient. Only
with a maximum level of automation and standardisation of individual services can the expected
benefits be achieved, and costs reduced.
Due to virtualisation, a datacenter no longer needs to be designed in such a way as to be geared
towards expected maximum load. Through the scalability of the private cloud, the necessary
resources are provided to the corresponding divisions in an automated and flexible way.
Subsequently, any resources not required for the moment are shut down again. In that regard, the
possibility of the scalability of physical machines should also be taken into account, by servers that
are not needed being on standby in the off state if they are not required. Solely through the latter,
in practice up to 30 or more in cost savings is often achieved. This operational efficiency increases
with the size of the private cloud.
In short, with a private cloud economies of scale can be optimised, the capacity utilisation of the
entire IT infrastructure improved, and costs saved on a grand scale.
Improving the agility of the entire company
The private cloud has the potential to optimise, link and speed up all the technological and
operational processes. Even greater efficiency can be achieved if all sub-systems involved, such
as the provision of virtual machines, DNS, the network, IP, monitoring, high availability, back-
ups/restores and compliance documentation is fully automated. In addition, there is the fact that the
private cloud makes access to resources possible based on self-service portals, and thus
enhances the company's capacity to come up with innovations. That way, employees can access
information and applications quicker, whereby they are put in a position to swiftly analyse

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information and take immediate decisions. With access to the data that is independent of location,
the productivity of every single employee is, moreover, increased.
The private cloud ensures that the IT infrastructure can be operated in an optimised way, whereby
the system load can conveniently and promptly be adjusted at peak times. Thus, successful
advertising efforts can be implemented, monthly and annual financial statements prepared on time
or seasonal highs in the workload confronted, and the hardware necessary for the job can be fired
up as required. The scalability of the private cloud ensures that the resources required are
automatically adjusted, whether it be computing power, storage space or applications running.
It works exactly the same way with the company's ability to produce innovations. Every new
initiative requires resources, staff as well as the supporting IT in the background. Here, the private
cloud shortens the process of evaluating new ideas or the time-to-market period, by the necessary
IT resources being available on demand.
The private cloud furthermore promotes better collaboration on the part of employees, and
optimises the co-ordination with customers and partners. Within the company, the private cloud
ensures close interlocking of processes and systems, and directly involves employees. That
ensures more efficient collaboration. In the external communication with customers and partners,
the private cloud is a platform through which seamless collaboration is enabled.
A further benefit of the private cloud in comparison to a classic IT infrastructure consists in the
internal cost allocation. Usually it is not easy to define exactly which project, which department or
even which employee has used which resources, and for how long. Private cloud solutions already
come with this functionality, often directly. Via integrated monitoring and accounting systems, it can
be determined exactly how the IT costs are distributed throughout the company.
In summary, the private cloud improves the company's agility, leads to a greater capacity for
innovation, and ensures seamless communication between the employees, partners and
customers.
Your very own private cloud
Once the first steps have been taken into the private cloud, first of all it is necessary to optimise,
standardise and automate everything. The technological basis for a cloud is virtualisation. In that
way, the resources and services are provided dynamically and on demand. The first tasks
therefore consist in virtualising the datacenters and optimising the infrastructure at the same time.
In order to ensure that it is possible to subsequently make the private cloud scalable, the physical
resources, i.e. the server and storage space, need to be unified the smart way. Should certain
virtualisation technologies already be in use, the compatibility with cloud management solutions
should be verified, for a changeover to other hypervisor-based virtualisation platforms is not always
either possible or desired.

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Subsequently, the processes and services need to be standardised. The latter serves as a basis
for enhancing the quality, and especially always delivering exactly the same quality. Only with
standardised processes can resources foreseeably be provided to the user on demand.
Finally, the processes and services need to be automated. A self-service portal should be made
available to the user, via which the user can access and manage the necessary resources, such as
virtual machines, complete software stacks and applications, independently and as required, and
also disable them again. During the entire life cycle of the systems requested in that way there
should be no necessity to have to take up contact with the IT department. Such automation leads
to optimum capacity utilisation of all resources. In addition, special accounting systems or
integrations into ERP systems can, moreover, assist in correctly allocating the costs incurred
during use, and providing and explaining them transparently to the end user.
The hybrid cloud links both worlds
It should be considered, in connection with the private cloud, that going with this form of cloud is
not a dead-end street. On the contrary, private and public clouds blend in very well with one
another. They can be established alongside one another, and, ideally, even perfectly aligned with
one another and optimally integrated.
Thus, the company's own private cloud resources can, for example, if necessary, be extended by
public cloud resources within the shortest period of time, without the company even having to
invest in any additional physical machines and software. Assuming a suitable cloud management
system is available, resources such as virtual machines or applications can be migrated to public
clouds or scaled during live operation. Payment is made directly to the public cloud provider, based
on usage.
Companies gain access to a worldwide, virtually unlimited public cloud infrastructure of global
providers, designed for a decentralised setup, and can thus make use of many times the capacity
of their own hardware, at any time, on demand.
Control the private cloud
The theoretical promises of a private cloud solution always sound tempting. However, a solution for
developing a cloud-enabled infrastructure always has to be able to live up to expectations. In that
respect, besides the "must have" functions, part of the package consists in extremely important
properties that may not be lacking and which ensure the success of the private cloud.
A very significant point is the area of automation. The provision of the required resources via a
well-designed self-service portal marked by appropriate usability for the end user cannot be
managed manually. The same applies in regard to backing up or restoring data. Only based on

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automated processes, which either respond to events entirely autonomously or are initiated
manually via a portal, can modern IT infrastructures be controlled today.
The monitoring within a private cloud infrastructure, the complex documentation of the company IT
or an automated network and DNS management system belong to the challenges of daily
operation. An accounting system automatically calculating the consumption of resources and
allocating it to the corresponding cost centers should never be forgotten.
When it comes to the topic of extreme availability, things get very delicate. The latter can usually
only be implemented in a very intricate way, and it is very expensive in the case of private clouds.
Also in this case, the focus has to be on automation. Should a lot of requests have to be attended
to unexpectedly, the private cloud infrastructure software needs to be in a position to fully use up
the available resources. Besides upscaling and downscaling the virtual resources, providing the
necessary physical servers with the help of automated power management by means of Wakeup-
On-Lan and IPMI forms part of the package. Thus, physical machines not required should be
turned off and only fired up when required by the cloud infrastructure software. It should be
mentioned at this point that even the private cloud relies on physical machines, the number of
which is finite. In order to ensure that such a limitation is ready to cope with high peak loads, the
cloud software should be compatible with other public and/or private clouds, in order to be able to
supply one's own cloud with external resources at short notice.
A much discussed topic is the vendor lock-in, i.e. the dependence upon a provider that it proves
tricky or very expensive to get away from. The problem is not even reduced by the emergence of
private clouds. On the contrary, the complexity increases, depending upon the provider. One way
out is private cloud solutions based on open source software, consistently using open standards,
and the availability of documented APIs or interfaces in the cloud management software.
Plan your private cloud from A-Z
Automation, scalability and reliability are the main characteristics of cloud computing. The mere
virtualisation of a given infrastructure by no means makes it a private cloud. Be sure to identify all
processes and systems involved, and ensure simplification and a reduction in the complexity. In
that way you will be laying a foundation for smooth operation of your private cloud and benefit from
the associated subsidiary aspects when it comes to standardisation of resources and services.
Finally, give your employees access to the IT resources via a self-service portal, and thus increase
the productivity, satisfaction and flexibility throughout your company.
Sources
1. http://www.bloomberg.com/news/2012-02-10/kleiner-perkins-considering-new-fund-for-cloud-computing-services-
startups.html
2. http://www.mezeo.com/css-2012-cloud-survey
3. http://www.cio.de/was_ist_cloud_computing/2884077/

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Contact
OpenQRM Enterprise GmbH
Berrenrather Straße 188c
50937 Cologne
Tel. +49 (0) 221 995589-10
Fax: +49 (0) 221 995589-20
E-mail: info@openqrm-enterprise.com
Web: http://www.openqrm-enterprise.com
Author
Christoph Möller is co-founder
of openQRM Enterprise GmbH,
manufacturer of the datacenter
management und cloud
computing suite of the same
name. He looks back on more
than 15 years' experience in the
fields of web hosting, system
architecture and UNIX administration.