Tag: datacenter

Let the Cloud Wars Begin: Notes from Oracle OpenWorld Europe 2020

Oracle held the European edition of its flagship event, OpenWorld, in London recently. Against the backdrop of cloud wars, leadership changes in the ecosystem (Mark Hurd’s untimely demise and the change of guard at SAP), and blazing growth by hyperscalers (the two boutique firms in Seattle), the market is keenly watching what Oracle has in store.

Here are my take-aways from the event.

1. Cloud FOMO: Oracle is investing heavily in its datacenter footprint and expects to have 36 regions by the end of the year, with a datacenter opening every 23 days. It claims it will have more regions than AWS by the end of 2020.

This is turning out to be a common trend among hyperscalers and cloud vendors, creating an asset bubble. Capital spending is at an all-time high, as the exhibit below shows. Will this create further price wars and overcapacity in the market? Only time will tell.

2. Doubling down on data: Oracle announced a slew of initiatives aimed at infusing data and, to a lesser extent, AI across its offering stack:

    • Expanded DataFox’s data pool across AI and managed data. Oracle acquired DataFox in 2018 because of its sizable data assets covering ~2.8 million public and private businesses to enable predictive decision making. Now, DataFox natively integrates across the Oracle SaaS stack, sourcing over a billion data points annually to improve the data quality of Eloqua and Sales Cloud as well as third-party applications.
    • Launched a new Oracle Cloud Data Science Platform to build and deploy AI and ML models.
    • Expanded its Autonomous Database offering to support the integration of algorithms within databases and added new ML capabilities, with support for Python and automated ML.

3. Ecosystem bets in a multi-cloud world are crucial: Oracle is now sharpening its focus on partnerships and the ecosystem to compete in the multi-cloud environment – this is on the back of its Azure and VMware partnerships. With Microsoft Azure, it announced a new interconnect facility based in Amsterdam. Because Amsterdam is a crucial European datacenter location and hub for Oracle, this facility will help companies in the region share cross-application data and move on-premise workloads to the cloud, according to Oracle.

4. Cloud interoperability – are we there yet?: With Google Anthos and Azure Arc, interoperability is back. While the partnership with Azure did highlight some degree of interoperability progress, I didn’t see enough. This is likely a prickly concern for enterprises as cloud vendors start erecting their own walled fortresses, hindering true interoperability. We have opined on cloud interoperability before, and it’s going to be a key issue for the ecosystem to solve over the next 18-24 months, especially as the cloud-native conversations gather momentum.

5. The dawn of the new CEO mindset: One of the highlights of the event was a client showcase. The CEO of Italian coffee major, illycaffè, Massimiliano Pogliani, spoke to Oracle CEO Safra Catz about a critical aspect of modern business – the changing role of the new CEO. He described it as being the activator of collective intelligence across the organization’s human capital. He also described his company’s mission around three themes: good (product obsession), goodness (sustainability), and beauty (the experience.) We are seeing greater recognition by some forward-looking CEOs of their purpose and impact, including Novartis CEO Vas’ focus on the journey to unboss and Salesforce chief Marc Benioff’s call for a new type of capitalism.

 The cloud landscape is becoming very interesting as all segments attack the opportunity: hyperscalers continue to invest in expanding their datacenter footprint; enterprise platform providers are focusing on verticalization (e.g., ServiceNow under Bill, Salesforce acquiring Vlocity); and system integrators are trying to keep up with the massive implementation opportunity while battling a talent shortage. We are going to see share shifts as these changes gather steam.

From an enterprise perspective, the cloud conversation is now veering toward journey-in-the-cloud versus journey-to-the-cloud, aka lift-and-shift. This shift is bringing total cost of ownership (TCO) back into the picture. We are in for interesting times ahead.

What’s your take on today’s cloud wars? Please share your thoughts with me at [email protected].

DevOps: Disruptive and Changing the Purchase of IT Services | Sherpas in Blue Shirts

Businesses now demand that IT departments dramatically change the velocity of the cycle time it takes to take ideas from concept to production – often from as long as 12-18 months to only four to six weeks. Organizations can’t achieve a change of this magnitude with just a change in methodology. To do this, they must move to DevOps – a disruptive phenomenon with immense implications for the enterprise IT ecosystem and the service providers that support it.

Put another way, many IT firms batch or create software releases once or twice a year in which they bring out updates to their enterprise platforms. Businesses now demand a cycle time of one to two times a month for updates. What they want and need is a continuous-release construct.

Methodology alone cannot create the conditions in which organizations can form ideas, build requirements, develop code, change a system and do integration testing in the new timeframes. Hence the DevOps revolution.

DevOps is the completion of the Agile methodology. It builds the enabling development tools, integrates test conditions, and integrates the IT stack so that when developers make code changes, they also configure the hardware environment and network environment at the same time.

To do this, an organization must have software-defined data centers and software-defined networks, and all of this must be available to be tested with automated test capabilities. By defining coding changes with network and system changes all at the same time and then testing them in one integrated environment, organizations can understand the implications and allocate work as desired. The net result is the ability to make the kind of cycle time shifts that businesses now demand.

DevOps implications

DevOps enables IT departments to meet the cycle time requirements. But the implications for how organizations buy services and how providers sell services are profound. Basically the old ways don’t work as well because of the new mandate for velocity and time. This causes organizations to rethink the technology, test beds, and service providers; and then manage the environment on a more vertical basis that cuts across development, maintenance, and testing, and allows the full benefit of a software-defined environment.

Let’s examine pricing, for example. Historically, coding and testing are provided on a time-and-materials basis. The productivity unleashed in a DevOps environment enables achieving approximately a 50 percent improvement in efficiency or productivity. Therefore, it is as cannibalistic or as disruptive to the development and maintenance space as cloud is to the infrastructure environment.

Furthermore, organizations can only operate a DevOps environment if they have a software-defined hardware environment – aka a private or cloud environment. This forces production into ensuring they perform all future development in elastic cloud frames.

Enterprises today are reevaluating where they locate their talent. Having technical talent in a remote location with difficult time zone challenges complicates and slows down the process, working against the need for speed.

So DevOps is a truly disruptive phenomenon that will disrupt both the existing vendor ecosystem and also the software coding and tool frames. Testing, for example, has been a growth area for the services industry, but DevOps environment largely automate testing services.

Another disruption is that DevOps takes a vertical view of the IT life cycle. It starts to integrate the different functional layers, creating further disruption in how organizations purchase IT services.

DevOps offerings are a new development among service providers, but the services industry to date has been slow to adopt the movement. DevOps is an internal threat to their existing business and requires providers to rethink how they go to market.

Virtustream Acquisition – EMC Spreads Its Hybrid Cloud Wings | Sherpas in Blue Shirts

EMC has taken a significant step forward in its hybrid cloud journey with the announcement of its acquisition of Virtustream in an all-cash transaction of US$1.2 billion. Founded in 2009, Virtustream is estimated to have clocked ~US$ 100 million in revenues last year through its cloud hosting services and management software (xStream) offerings – while cloud IaaS accounted for 60% of this revenue, the remaining 40% came from management software licenses.

The U.S.-based company will eventually become the managed cloud services division within the EMC Federation business. The transaction is expected to close by the third quarter of 2015 and be additive to EMC’s revenues starting 2016.

EMC is well known for its deep pockets. With about 70 acquisitions since 2003, the inorganic route is clearly not new to EMC (to put it mildly). The company has not shied away from flexing its muscles from time-to-time to build capabilities for its mainstay storage business and beyond.

EMC’s “Shift” to Cloud

The emergence of cloud has had a strong impact on EMC’s core storage business, which has been witnessing a sluggish demand over the past few years (the overall Information Storage division of EMC has witnessed a CAGR of ~3% over 2012-14). While EMC has rejigged its focus to cover new storage products, this “strategic tweak” in itself is not expected to arrest EMC’s plummeting revenue growth. Therefore, EMC has put its bet on the “next big thing” in the IT industry – hybrid cloud.

EMC’s association with VMWare and Pivotal has ensured that EMC is no newbie to the cloud; however, the real sign of intent from EMC came with the launch of its Enterprise Hybrid Cloud Solution last year. The launch also coincided with a triplet of cloud acquisitions – Cloudscaling (an OpenStack IaaS solution developer), Maginatics (a cloud-enabled storage provider), and Spanning (a cloud-based application data security provider).

So what does Virtustream bring to the table?

As EMC looks to make a mark in the enterprise cloud market, the Virtustream acquisition offers multiple benefits to EMC:

    1. Expansion of the Enterprise Hybrid Cloud Solution portfolio: EMC’s Enterprise Hybrid Cloud Solution is currently an on-premise private cloud offering that provides cloud-bursting options to VMware vCloud Air and other public cloud services. The addition of Virtustream’s xStream platform provides EMC with capabilities to manage both on-premise and off-premise deployments, thereby offering a truly hybrid cloud setup

      The xStream platform will be leveraged by EMC Federation service provider partners to deliver independent services based upon it

    2. Credible cloud managed services capabilities: Virtustream has witnessed credible success in serving large enterprises with complex cloud deployments and managed services requirements, through partnerships with industry-leading vendors such as SAP (which made a US$40 million investment in Virtustream in 2013), Oracle, and Microsoft. Virtustream has been certified by SAP to offer SAP HANA as-a-service. EMC can leverage Virtustream’s managed service capabilities/experience to serve its own existing clientele as well as prospects

    3. Datacenter footprint: Virtustream brings a credible revenue stream based on its datacenter footprint spanning locations such as the U.S., UK and the Netherlands (catering to key demand markets such as North America and Europe)

    4. Meaningful clientele: Virtustream brings a credible roster of clients including Coca-Cola, Domino Sugar, Heinz, Hess Corporation, and Kawasaki, which will get added to EMC’s kitty (to cross-sell its broader hybrid cloud and storage offerings).

The move to acquire Virtustream seems to be a logical one for EMC (although the revenue multiple of ~12X indicates some level of desperation on EMC’s part, given the ongoing stakeholder unrest). Also, given EMC’s traditional modus operandi of allowing its acquired entities to operate autonomously, we do not expect the acquisition to grossly impact Virtustream’s innovation capabilities (barring potential integration and cultural challenges)

Virtustream’s rationale for being acquired?

The development may have come across as a surprise for many market observers, given that the company was grappling with the idea of going public barely six months ago. While Virtustream was going great guns, the brand recognition of a cloud provider typically plays a huge role when it comes to large enterprises looking for sourcing options. Consequently, hitting the “next level” of growth trajectory potentially becomes a significant challenge for players such as Virtustream (especially with a large enterprise focus).

Therefore, it comes as no surprise that Virtustream’s CEO, Rodney Rogers, claims to have considered multiple suitors over a period of time, before choosing EMC (based on terms offered and a chance to become a part of the EMC Federation).

Does this point to more consolidation in the cloud IaaS market?

The EMC-Virtustream deal has been preceded by multiple notable acquisitions in the cloud market over the past few years (Terremark by Verizon, Savvis by CenturyLink, SoftLayer by IBM, Metacloud by Cisco, and GoGrid by Datapipe). As various players in the enterprise cloud market, be it global IT service providers, telecom providers, or public cloud providers look to gain a stronger foothold, it is hard to bet against other similar acquisitions happening in the near future. The question is which company will be the next one to get gobbled up? CloudSigma? DigitalOcean? Joyent? ProfitBricks? Or even Rackspace? That only time will tell.


Photo credit: EMC

Remedying IT Overcapacity | Sherpas in Blue Shirts

Too much. That’s an accurate assessment of IT environments in most, if not all, enterprises. They have more data center space than they need and more servers than they can use at any point in time. They have more software operating systems, middleware, and enterprise licenses than necessary. They also have more of the wrong resources and never enough of the right resources in application development and maintenance. The as-a-service movement seeks to address this, but the journey to get there isn’t as simple as it appears.

So how much overcapacity is present in enterprises? At every level there seems to be a 25-50 percent overcapacity in IT. Since IT varies from 1-7 percent of revenues, the 25-50 percent overcapacity is in the range of 40 percent overcapacity overall.

As we at Everest Group look at applying as-a-service principles into IT environments, we see an opportunity to remove 40 percent of the IT cost by eliminating the wastage in service capacity. But the journey to achieve this as-a-service cost benefit is neither quick nor easy.

Renegotiating enterprise licenses takes time and often requires waiting until they expire. Reconceptualizing the infrastructure and application support is also complicated and requires a resolute effort and substantial patience.

It can take a year to three years to complete the journey. But the benefits are very substantial, starting with a 40 percent cost reduction in IT — a heady prize for the journey. In a future blog I’ll discuss other benefits.

Cloud Moves | Sherpas in Blue Shirts

Moving work from an enterprise data center to the cloud is not a lift-and-shift transaction. Cloud moves involve reengineering processes. The good news is that providers are emerging with innovative solutions for deploying to the cloud. We’re watching their progress, as we believe they will disrupt the traditional players in the services market.

I blogged before about CSS Corp Cloud Services’ solution for cloud migration. Redwood Software and its RunMyJobs platform is another proven automated cloud migration solution. Redwood’s solution includes automation consultants who are skilled in reengineering high-value processes and packaging them for cloud migration through Redwood’s RunMyJobs platform. The solution is especially effective for problematic legacy applications.

Meeting enterprise needs

Both of these specialist firms provide interesting capabilities for moving production opportunities to the cloud with ease. They have a demonstrated and growing track record of successfully deploying applications into the cloud in a way that meets the robust security compliance, performance and resilience requirements of sophisticated large enterprises.

The impending disruptive nature of RunMyJobs and other such automated cloud migration technologies raises some hard questions about traditional service providers’ capabilities.

CSS Corp Cloud Services Making an Impact | Gaining Altitude in the Cloud

For several years we’ve predicted that the cloud would disrupt data centers. But it’s not as simple as lift and shift; it requires an understanding of how to deploy in the cloud and also requires some reengineering. Now some innovators are succeeding in deployment solutions and achieving momentum. One that caught our eye: the explosive growth of CSS Corp Cloud Services.

CSS is off and running. Need evidence? Among other clients, they’re currently working with:

  • 12 Fortune 100 companies
  • 12% of the top 50 U.S. companies
  • 16% of the world’s 25 largest banks
  • 5 of the world’s largest Fortune 350 manufacturing companies

The issue around using any public cloud — especially the lowest-cost cloud, AWS — is that it requires re-architecting applications in such a way to get enterprise performance. This has been a significant constraint in the migration of workloads to public clouds.

But we’re now seeing real use cases emerging where companies systematically take production workloads, reengineer them and deploy them into the public cloud in a way that gives them production-quality outcomes — that is, high performance and high resilience.

CSS Corp Cloud Services was an early AWS adopter. The firm invested in toolsets around AWS cloud services and developed a capability for consistently re-architecting and deploying into the AWS public cloud. The company’s public-cloud use cases already span a wide area of processes including Big Data analytics, digital marketing, e-commerce, backup and storage, disaster recovery, application and Web hosting, development and test environments and media/entertainment.

Data centers are not yet an endangered species. But as firms such as CSS master cloud deployment in large corporate enterprises, we believe the rate of disruption will quickly pick up.

Offshore Providers and the Cloud – No Datacenter Is Not a Choice! | Gaining Altitude in the Cloud

As large IT services buyers increasingly embrace cloud-based delivery, offshore IT services providers are being forced to innovate beyond their traditional strengths of labor arbitrage, process excellence, and delivery maturity. Indeed, as these providers witness their application services reaching wallet share saturation in the large buyer market, there is growing perception in the industry that if they do not offer “next generation” services they risk losing even their traditional business.

Granted, these providers are not sitting idle. They have created “cloud advisory” teams and executed multiple application migration/porting engagements as part of their global services contracts. But the crux of cloud opportunity lies in the transformational nature of these engagements, which invariably involves owning IT infrastructure.

Our discussions with enterprise IT services buyers point to three types of roles for offshore providers, which extend beyond typical SaaS implementation and integration. These roles will also require services related to consulting, architecture, application migration, etc.

Cloud Offshore Providers

Offshore providers possess varying degrees of competence for these roles, but to remain relevant, they must continue to invest in newer capabilities. Today, a select few are investing in areas such as cloud management platforms, consulting services, readiness assessments, and migration services to move beyond simplistic cloud engagements. However, most lack a comprehensive datacenter-driven cloud infrastructure service, which is needed to drive transformational engagements.

One of the key findings in Everest Group’s recently released Cloud Vista research study was that more than 50 percent of large cloud-related engagements – and even most application transformation deals – contain a significant amount of infrastructure transformation, but offshore providers have scant presence in these engagements.

Cloud Adoption Drivers

It is becoming abundantly clear that offshore providers need to swiftly tackle the area of cloud infrastructure services. One of the biggest challenges they must overcome is their lack of willingness to invest in owning datacenters, instead opting to relegate core datacenter operations to the partners. Many buyers convey their disappointment with this type of partnership model, believing it can at best support running IT operations, but that it is not appropriate for enterprise class cloud infrastructure services that can assist them to variabilize their costs and access self-service, consumption-linked infrastructure.

Given their general reluctance to own large scale datacenters, offshore providers may at least evaluate “white labeling” hosting providers’ datacenters so that they can offer cloud infrastructure services which will allow them to calibrate their investments while simultaneously serving their buyers. Given that white labeling of datacenters is an accepted practice and even large scale datacenter service providers white label datacenters from other core datacenter operators (e.g., Equinix), this model will find acceptance with the buyers.

Offshore providers need to understand that for a game changing paradigm such as cloud, there always will be a risk associated with investments. The days of cherry picking attractive contracts are over, and they can no longer walk away from complex deals that do not meet their sweet spot. Therefore, they must inculcate a culture of risk taking, and invest in areas outside their comfort zone, especially in cloud infrastructure services. The cloud is changing buyers’ sourcing strategies, and offshore providers that fail to change accordingly risk losing their relevance and even their traditional business.

Energy Efficiency in the Cloud | Gaining Altitude in the Cloud

The advent of cloud computing has brought many exciting changes to companies’ IT strategies. One aspect of the cloud that is frequently overlooked, however, is energy efficiency. On the face of it, one might expect cloud computing to be more energy efficient than the alternative. But is it really?

Let’s take a quick look at the three drivers behind increased energy efficiency in cloud environments.

First and most obvious is economies of scale. It’s not rocket science to understand that fixed costs are best allocated among a greater quantity to bring down per-unit cost. Similarly, conducting a benchmarking exercise to measure Power Usage Effectiveness entails significant fixed costs in devoting resources to counting equipment and measuring individual devices’ power consumption. There are certainly economies of scale to be gained in doing this for a larger datacenter than for a smaller one.

The second driver of energy efficiency in cloud environments results from the abstraction of the physical and virtual layers in the cloud. A single physical server running multiple server images will obviate the additional power load from purchasing additional physical servers. Also, if a virtualized environment incorporates redundant server images on different physical boxes, then individual boxes do not need multiple power supplies. The failure of one machine becomes a non-issue when redundancy is built in.

Finally, a datacenter serving cloud clients will have more users from more disparate places, each with different needs. This means that system loads will be more evenly spread throughout each day (and night), which enables the datacenter to average higher system loads and thus more efficient utilization of equipment. Everest Group research shows that individual servers in a cloud datacenter experience three to four times the average load of those in an in-house datacenter.

By now it should be clear that a large cloud datacenter has distinct energy efficiency advantages over a smaller, in-house datacenter. But there are corresponding energy drawbacks to cloud migration that may not be immediately apparent. First, as processing and storage shift to the cloud, energy usage increases. This is primarily from the routers transporting the data over the public Internet; their power use increases with throughput and frequency of accessing remotely stored data.

Also, in a SaaS, PaaS, or simple cloud storage scenario, frequent data access can cause data transport alone to account for around 60 percent of the overall power used in storing, retrieving, processing, and displaying information. At this point, the efficiency advantages gained by the three drivers cited above may be lost due to the extra power required to move the data between the user and the cloud datacenter in which it is stored or processed.

It is true that migration to the cloud can yield significant gains in energy efficiency for certain applications. However, for applications involving high transaction volumes, an in-house data center can provide better energy efficiency.

As power prices become increasingly important in determining data center operating costs, energy efficiency will play a greater role in companies’ cloud strategies.

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