CloudSwitch Details Plans to Bridge Corporate Data Centers, Cloud Resources

2/11/10Follow @wroush

Doing your business computing on cloud systems owned by companies like Amazon sounds like a great idea, on the surface of it. Who wouldn’t want to rent computing resources just for the time they’re needed, rather than shelling out for expensive on-premises equipment that might sit idle half of the time? The problem is that most big companies have already invested millions in their data centers, and have painstakingly assembled the right set of operating systems, enterprise applications, and virtualization technologies to support their businesses.

CloudSwitch, a venture-funded startup in Burlington, MA, has built software that gives companies a way around this dilemma, allowing them to try cloud services without having to abandon their legacy systems. In a nutshell, the software erases the boundaries between on-premises and off-premises computing systems, at least from the user’s point of view, making cloud systems into nothing more than a temporary extension of existing resources. It’s like adding a room on to your house just for the weekend, when you’re having guests over.

When we first profiled CloudSwitch back in June 2009, its executives weren’t saying much about how the software does this, or exactly why it’s a money-saving proposition. But recently the company has been testing its software with beta customers and talking more openly about the product. And last month I got a briefing from John McEleney, CloudSwitch’s CEO, and Ellen Rubin, its co-founder and vice president of products, on the company’s progress since the summer—which already “feels like a decade ago,” McEleney says.

While the 2008-2009 recession hit business hard, McEleney says, it was good news in a way for CloudSwitch, since the ongoing pressure to reduce costs is forcing many companies to look harder at cloud computing. “The reality is that hardware costs are pretty fixed, so it was a lot people who got decimated,” McEleney says. “The people who remain—the IT guys who keep things running—are the ones hurt the most. They have to do more with less. So we see 2010 as the year when many organizations will be testing out [cloud] applications.”

Most of CloudSwitch’s potential customers are already using virtualization software from companies like VMware to make the most of their existing hardware, by yoking together separate machines and letting them run multiple operating systems. So Cloudswitch’s tool is designed to run inside those virtualized environments. Its job is to create a temporary work space on a cloud service such as Amazon’s EC2—an “instance,” in cloud lingo—where users can run virtualized applications just as if they were still running on the company’s home infrastructure, no fiddling around required.

“That is where the core IP of the company resides,” says Rubin. “Behind the scenes, we are managing the resources in the cloud for the customer, but mapping it so that it looks to the enterprise like their applications are still sitting locally. Customers don’t have to change anything.” At the same time, the data processed by the cloud instance is encrypted and separated from all the other data being handled by the same machines. CloudSwitch calls the patent-pending method “Cloud Isolation Technology.” (See the video demo at the end of this article.)

In its beta tests, CloudSwitch has focused on connecting customers to EC2, which is still seen as the leading cloud service. But Rubin says the software is cloud-agnostic, meaning it could just as easily extend a company’s computing environment onto a cloud from Rackspace or another provider. In fact, says McEleney, “The other cloud developers are interested because they see us as on-ramping more customers and helping them to catch up to Amazon. So they’ve been aggressively recruiting us.”

CloudSwitch’s relationship to Amazon is an interesting one: as an on-ramp, to use McEleney’s phrase, it can guide customers Amazon’s way—but it can just as easily send them somewhere else. Meanwhile, Amazon is upgrading its own services in ways that mimic some of the technology CloudSwitch has developed. Its “virtual private cloud” service, for example, is intended to allow customers to use Amazon’s system “as if these assets were running within their existing IT infrastructure,” to quote an August announcement.

Rubin says Amazon’s efforts to make it easier for enterprises to use EC2 still don’t help IT administrators who might want to use other cloud services. “It’s very hard for any cloud provider to do that because their perspective is focused on their service and making people buy from them and potentially locking them in,” she says. “We are coming from the other perspective. The enterprise customer doesn’t want to be locked in.”

Rubin says the 20-employee startup is just finishing private beta tests with companies in the healthcare, pharmaceuticals, telecommunications, software, and cleantech areas. “That was a tremendous learning opportunity in every possible dimension,” she says. “We had a chance to see some of the things that needed streamlining in terms of ease of use and simplicity of the product, which is really critical for us, particularly because we want this to be a downloadable, self-service thing. We’ve made a lot of changes based on what would be the most comfortable.”

Discussions with beta customers also helped CloudSwitch settle on a pricing model, according to McEleney. “We tested a few flavors, but the way it netted out, people wanted a level of predictability in terms of their spend,” he says. “So they will buy our product as an annual subscription that comes with [a license for] a certain number of servers.” For $25,000 per year, CloudSwitch customers will be able to project up to 20 server instances into the cloud.

In the short run, spending an extra $25,000 per year for CloudSwitch’s software might not save companies any money, since they’ll still be paying for their on-premises infrastructure, not to mention the per-minute charges from Amazon or other cloud providers. But in the longer term, the software will allow companies to cut back on new hardware purchase, McEleney says. “Customers are saying they have this ongoing, never-ending expansion because of all the stuff that gets used once in a blue moon but still takes up very expensive infrastructure,” he says. “If they knew they could offload that, they wouldn’t have to keep growing their footprint.”

McEleney says CloudSwitch is expanding its beta testing program this quarter, and plans to make the full enterprise version of its product generally available by the end of the next. It will provide limited-time free trial version of the enterprise product—and, interestingly, a downsized edition called CloudSwitch Explorer that will be permanently free.

“The only difference between the enterprise version and Explorer is that Explorer is for one user, up to five servers, and one cloud,” says Rubin. “It’s meant for people who are want to try the cloud and understand how it might work for them. We’re going to make it incredibly easy, secure, comfortable, and familiar for them to take their first application and move it into the cloud. Hopefully that will let us have a conversation about taking the enterprise app to a true IT deployment.”

CloudSwitch raised $8 million last summer from Commonwealth Capital Ventures, Matrix Partners, and Atlas Venture, bringing its total funding to just over $15 million. The company won’t have to raise new funds anytime soon, McEleney says: “We are fine well into 2011, depending on what happens business-wise.” The technological and economic winds seem to be in the company’s favor; now the question is how adventurous its potential customers are feeling about taking to the clouds.

CloudSwitch Video Demo

Wade Roush is Chief Correspondent and Editor At Large at Xconomy. You can subscribe to his Google Group or e-mail him at wroush@xconomy.com. Follow @wroush

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