CloudBzz

The enterprise market is a bit like a a riddle wrapped in a mystery inside an enigma. On the one hand, the investment by service providers in “enterprise class” cloud services continues to accelerate. On the other hand, pretty much all I hear from enterprise customers is how they are primarily interested in private clouds. What to make of this, I wonder?

At “The State of the Cloud” conference in Boston today, most of the users talked about their concerns over public clouds and their plans for (or experience with) private clouds.  There was some openness to low-value applications, and for specific cases such as cloud analytics.  We do hear about “a lot” of enterprise cloud usage these days, but most of that is dev/test or unified communications, and not strategic business applications.  So where’s the disconnect?

One of the speakers said it best — “we’re just at the beginning stages here and the comfort level will grow.”  So enterprise IT is getting comfortable with the operational models of clouds while the technologies and providers mature to the point that “we can trust them.”  It’s understandable that this would be the case.  If enterprises fully adopt cloud automation models and cost optimization techniques internally, any scale benefits for external cloud providers will take longer to become meaningful.  IT can be far more efficient than it is today in most companies, and if the private cloud model gets the job done, it will delay what is likely the inevitable shift to public cloud utilities.

Stated another way, the more successful we are at selling private clouds to the enterprise, the longer it will take for the transition to public clouds to occur. 

As you see in the chart above, it is likely that the TCO gap between traditional IT and the public cloud will narrow as enterprises implement private clouds.  Some enterprises are already at or below the TCO of many public cloud providers – especially the old-line traditional hosting companies who don’t have the scale of an Amazon or Google.  Over time, the survivors in the public cloud space, including those with enterprise class capabilties, will gain the scale to increase their TCO advantage over in-house IT. 

It may take a long time to see this out, and this is a general model.  Individual companies and cloud providers won’t fit this chart, but it’s likely that the overal market will trend this way.  TCO is not the only factor – but where costs matter the public cloud model will eventually win out.

Here is a little story I tweeted last night…

ONCE Upon a Cloud, there was a big river that ran wide and deep. And it was called Amazon.com

And this great river Amazon grew fast upon great Infrastructure that it built, so that it was a marvel to behold in all the land.

And the Mighty Amazon said to the People “I will share my great Infrastructure with you because you are worthy.”

And the People rejoiced to have such Infra Structure to use, and they showered praise and gold on Mighty Amazon.

Such praise and gold did Mighty Amazon receive that other providers of Infra Structure saw this and were jealous.

Much gnashing of teeth and pounding of fists did these Titans of Tech Knowledge do that the Earth shook.

Did Might Amazon quake with fear? Nay! Instead they said to the people, “You like? We make more.” And the People rejoiced.

Many of these Titans came to understand the truth, and they were scared. Then they all fought back.

Some Titans fought well, with sharp blades and strong battle formations such that they began to advance into this thing called Cloud

Other Titans, however, lacked such weapons or strategies, and convened great gatherings of their leaders to think on this new Cloud.

The wise old leaders of these Titans, never having seen a Cloud up close, drew cloud pictures on their cave walls.

These pictures the Titans drew looked cloudy from a distance, but to those who had used the Amazon Infra Structure it was not cloud.

Then these Titans said to the people, “Behold, I give you Cloud!” But the people did not rejoice. Instead, they said…

“We want a cloud like a thoroughbred but you have given us a mule instead.” You see, the Titans had committees, not vision.

The Titans, though not all, had succumbed to the Great Clayton’s “innovator’s dilemma.” T’was not too late, for the Cloud was young.

Would these Titans learn? Some would, for sure. Others, predictably, would not. As with all such stories, there is a moral.

If you want to compete with Mighty Amazon, you must listen to the People, for they are the Cloud. Blind Old Gartner cannot help you.

Gartner are not the People. They do not use the Infra Structure. Nor do the Titan’s wise old men. Look to the People. And listen.

Only then will you see the path. Only the People can show you the Cloud. Open your ears, Titans, for the People are speaking.

The End.

I often get asked about where cloud tools and technologies are being sold/implemented today.  Note that cloud tools is different from “clouds” in that you use the tools to build/automate your cloud.  Things like infrastructure stack software, orchestration, configuration management, etc. fall into the category of cloud tools.  There are three primary markets I am seeing today.

1. Enterprise Private Clouds – This is that most people think of when sizing the market for cloud tools.  Large corporate users taking their existing data center automation tools or a new cloud stack like Eucalyptus or CloudBurst (which is just the old tools in a new package),  and standing up their own clouds.  This market is still VERY early stages with a lot of poking and prodding, and some specific use cases such as development/test getting traction
2. Provider Clouds – The big land rush today is to get your cloud service going.  As I have previously written, there are going to be a lot of new entrants in the cloud service provider (CSP) market.  Many will fail, and few will become huge, but that’s not stopping people from jumping in.  These tend to be far more automated than their enterprise counterparts, and have different requirements in support of multi-tenant isolation and security. 
3. Government Community Clouds - A community cloud is like an invitation-only club.  If you meet the criteria, you can join my cloud.  In a government community cloud, this can be other agencies, other governments, etc.  For example, the State of Michigan has talked about providing cloud services for municipalities and colleges inside the state.  As a general rule government community clouds tend to combine the requirements of both enterprise and provider clouds.  Enterprise because the government is actually using the cloud for their own workloads.  Provider because they are “selling” cloud hosting to other entities.

Today, the market with the most active purchases/implementations is for cloud service providers.  There’s a strong and realistic sense that the market is leaving them behind and catching up is critical for survival.