"The current cloud marketplace is kaleidoscopic", writes BroadGroup senior consultant, Marion Howard-Healy, in the executive summary of the company’s latest report, `Competing in the clouds: emerging strategies for enterprise data centres.’ It is a neat, if perhaps understated view of the marketplace, in that it currently does seem different every time you look at it.
The report, a major update of a 2006 report on managed services, sets out to identify the key trends in cloud development and the key issues that need to be address, particularly as they affect enterprise users looking to make a move towards the implementation of cloud-based services.
The fundamental issue, as the report observes early on, is that successful migration to the cloud, particularly for larger, established enterprises, will require a change of both mindset and organisational culture. It will mean they have to adopt different operational policies and procedures that involve new methodologies, increased communications and interaction between the business and the IT department and much higher levels of governance across the board.
Private clouds are currently the fastest growing area for enterprise users, according to the report. The driving factor here is fundamental economic decision of whether to upgrade an existing on-premise installation or move to cloud-based services. The report sees this being a strong trend up to 2014. Cost savings are the obvious key driver, but the increase in business agility is starting to be seen as a long term benefit to users.
“The issue is that many organisations simply can’t move from where they are now to a public cloud because they are geared up to that existing service model,” Howard-Healy said, “so they need to start thinking about how they provide services. And the IT department has got to start thinking about how they are going to support departments as they make the change. There are a lot of policies and procedures they have to grapple with before they can make that move.
“They have to move from an internal datacentre, through virtualisation and on to the first steps of setting up an internal cloud service. That doesn’t give them the scale of a public cloud but it does give them sufficient scale to learn about such issues as charging for the services provided. Many enterprises don’t understand that the costs will have to be charged back.”
Howard-Healy is aware that this current position puts many enterprises in something of a vulnerable position, particularly from the existing mainstream systems vendors with which they have had long standing business relationships. The acknowledged danger is that these vendors are aware that their traditional markets are in a state of significant change and that moves towards the cloud may not be in their immediate interest.
“Everyone is doing this,” she acknowledged. “Even the managed services vendors are doing similar things in their own way, trying to move up the value chain.” In her opinion this is an inevitable reality of the change in the fundamental marketplace as users move slowly towards the cloud. In her view it is an inevitable intermediate step along the way.
Part of that process is, of course, the danger of new forms of user lock-in occurring, with the opportunities for vendors to exploit them being increased? But Howard-Healy sees that problem being diminished by continuing moves towards standardisation.
“There is potential for lock-in,” she said, “and there are always proprietary standards around. But there is work on this being done by the Distributed Management Task Force, which has formed a Virtualisation Management Forum. That will be looking at interoperability, APIs interfaces, billing and things like that. That group has most of the major players in cloud involved, and what they are trying to do is to benchmark best practices and move them into the standards area. There needs to be a lot of work in this area and they are trying to speed it up.”
A sub-plot of the general vendor strategy is to sub-divide the cloud into areas where users can be advised they need to operate, and where the vendors happen to be specialists.
Howard-Healy agreed that, while it may be useful in the short term to sub-divide the cloud this could generate one of the long term dangers for users. They may end considering that the most important decision they need to take is what type of cloud they specify rather than what the cloud is to be use for.
The report itself identifies `private’ clouds and `hybrid’ cloud as sub-divisions that enterprise users will be drawn towards. Its definitions are based on those developed by the Information Technology Lab National Institute of Standards and Technology in the USA. Howard-Healy acknowledged that such divisions are a two-edged sword, creating a potential for obfuscation and digression from what the cloud is primarily offering, which is service. On the other hand they can be helpful stepping stones along the way for enterprise users.
“Yes, the cloud is about the service that can be delivered,” she said. “Looking from a purist view, that is right.”
To press home this point she quoted the view of the private cloud sub-division put forward by Werner Vogels, the CTO of Amazon, as a good outline of the problem. `I often get asked to define "The Cloud," especially because of the many permutations that different vendors use in trying to make their existing businesses look like a cloud offering. I define the cloud by it benefits, as those are very clear. What are called private clouds have little of these benefits and as such, I don't think of them as true clouds.
To achieve true cloud-like elasticity in a private cloud, such that you can rapidly scaleup and down in your own datacentre, will require you to allocate significant hardware capacity. While to your internal customers it may appear that they have increased efficiency, at the company level you still own all the capital expense of the IT infrastructure. Without the diversity and heterogeneity of the large number of AWS cloud customers to drive a high utilization level, it can never be a cost-effective solution.’
But in practice she also accepts that markets don’t always develop like that and existing players will adapt to try and take advantage of the cloud and move up the value chain. She does, however, acknowledge a danger that if the stratification of the cloud is not challenged then what the cloud is really about could be lost, becoming instead just the latest technological debating point for vendors at a time when the technology per se is becoming increasingly irrelevant.
“I totally agree because cloud changes the business and operating model. The established players moving into cloud don’t understand the changes implicit in a providing a consumer model. If you look at Amazon they are highly consumer centric and they have a very lean business operating model aimed at driving the highest value to the customer that they can, but with the economies of scale in their own business. Amazon has managed to transfer this model to its B2B business while many companies miss the customer focus part. For example, I feel that some of the managed service providers will struggle to understand the difference in the consumer model and may struggle to make to a true cloud environment.”
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