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hybrid cloud

Journey Migrating to Hybrid Cloud has Three Issues Crucial to Success | Blog

By | Blog, Cloud & Infrastructure

When companies undertake digital transformation, it’s crucial that they keep executive and organizational support throughout the multi-year journey. An effective strategy for getting and sustaining that support is to focus on the “moments that matter” to the executives and/or users. Those are the moments (or events, decisions, actions) that comprise the most important issues to decide and evolve on the journey – things that the company must get right.

Leaders must not only communicate effectively about those moments but also deal with the related challenges along the way. Otherwise, progress on the digital transformation journey will slow or the journey will be derailed and likely will fail. To avoid either of these outcomes, let’s consider three moments that matter in a common digital initiative – migrating to a hybrid cloud environment.

Read more in my blog on Forbes

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

By | Blog

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

Video: Cloud Connect Silicon Valley 2013: Private, Public, Hybrid Clouds – Neal Sample | Gaining Altitude in the Cloud

By | Gaining Altitude in the Cloud

Neal Sample, CIO, Enterprise Growth, for American Express. Prior to American Express, Neal served as the CTO of X.commerce, eBay’s open development and commerce platform, and he also served as Vice President of Architecture and Platform Products at eBay. Prior to eBay, Neal was a senior executive at Yahoo! where he led the Open, Social, and Participation platforms. In this video, Neal chats with Scott Bils, Everest Group’s Next Generation IT Practice Leader, about his experience implementing private, public, and hybrid clouds at three very different companies.

Cloud Continues to Disrupt – VMware Announced Public IaaS Cloud | Gaining Altitude in the Cloud

By | Gaining Altitude in the Cloud

After months of rumor and anticipation, VMware, the hypervisor and virtualization giant, finally made public its intent to later this year launch its vCloud® Hybrid Service, a public infrastructure-as–a-service (IaaS) cloud. To date, discussions around this expected announcement have focused on alleged competition from Amazon Web Services (AWS), the anticipated impact on VMware’s relationship with service providers such as Savvis and Terremark, and the company’s rationale behind this move, e.g., turf and client protection, stagnated growth thrust, declining market valuation, and dissatisfaction with its partner network.

Here, Everest Group is broadening the view, looking at how this move is furthering the disruption in the cloud provider landscape, and highlighting the dynamic nature of this space.

The line of demarcation between types of technology providers is increasingly blurring, and in the cloud arena at a dizzying pace. Amazon, the world’s largest online retailer, historically focused on catering to individuals and small and medium businesses, has become one of the biggest challengers to the enterprise infrastructure stalwarts such as IBM and HP. Oracle, the enterprise software and database giant, launched its acquisitions-enabled IaaS offering earlier this year. Although its primary competitor used to be SAP, its move into the cloud space places it in competition with companies such as Salesforce.com, Workday, and NetSuite. Now VMware, traditionally considered a virtualization software provider, is entering the cloud domain in an effort to protect its market share, despite the risk of antagonizing and competing with its own partners.

This rapidly evolving and “foggy” provider landscape leaves buyers confused as their options are constantly changing. In addition to cloud-related concerns such as security and compliance, existing clients must now also worry about whether they should stick with the current provider or switch to a new one. They have to evaluate their key parameters for selecting a cloud service provider, and assess the benefits and pitfalls of making a provider switch.

For example, consider the options facing current VMware plus cloud services clients:

  1. Shift to VMware’s new cloud offering: In this scenario, the buyer will shift to VMware’s new public cloud offering, leaving its old service provider. This option gives the buyer a compelling value proposition – the entire cloud value chain is managed by one provider, and there’s full compatibility between VMware’s public and private clouds. Yet, although VMware becomes the one-stop-shop for all the buyer’s cloud-based needs, it becomes locked in with one single technology and reliance on one single provider. The buyer must also consider whether VMware will be as innovative as other IaaS providers in terms of pricing, service level agreements, termination clauses, technology advancements, etc.
  2. Continue with the existing VMware partner provider: In this option, the buyers continue to procure cloud services from their existing VMware-based cloud partner provider. However, as different cloud service providers (especially AWS, Rackspace, and Terremark) penetrate enterprises and aggressively market their innovations, these clients are increasingly finding it difficult to defend their strategy of continuing with their existing VMware-based cloud partner, as they are perceived as a mere extension of the traditional datacenter model.
  3. Shift to other providers/cloud technologies: VMware’s presence in client’s datacenter is undeniable. However, many buyers are adopting cloud solutions that are different than VMware, and this is threatening VMware’s broad dominance. We believe this trend will continue, as, despite significant investments in VMware for their datacenters, buyers are more than willing to deploy solutions from other cloud providers.

Everest Group nearly a year ago called out this cloud provider choice conundrum, noting that attempts to help the buyer community is actually creating greater confusion. Buyers of cloud services need to be on their highest guard to ensure that, unlike traditional datacenters, they do not end up in a complex labyrinth of technologies that make their environment even worse than what it is today.

Don’t Fret the Cloud “Name Game” | Gaining Altitude in the Cloud

By | Gaining Altitude in the Cloud

There’s a lot of noise in the industry today about whether or not infrastructure appliances, engineered systems, datacenter-in-a-box, and other similar solutions can be labeled “cloud.”

The basis for this debate is rooted in assertions that the public cloud model, or more aptly Amazon’s, is the only cloud model. There’s no doubt that Amazon is the poster child for the cloud industry, and was around when the cloud buzz was making inroads; and therefore subsequent “definitions” of cloud have become inspired by Amazon’s delivery model. Moreover, the idealistic pursuit of converting IT into a pure utility, as well as addressing overarching pain points of enterprise IT, are also driving some of the arguments. But does doing so restrict the benefits an enterprise can derive from cloud principles?

Private cloud providers make their business case based on security, lower total cost of ownership (TCO), manageability, tight integration, and some other “public cloud-like” benefits. But while they do not always possess the scalability, payment options, and other aspects of public cloud services, is it fair to limit the cloud ecosystem to a particular definition, and term other solutions “cloud washing”? Similarly, various SaaS providers that believe they are the “true cloud application providers” have defined the criteria for a “true SaaS application”, in turn expecting other cloud applications to satisfy their self-anointed criteria to become a SaaS provider. Does this add value to cloud discussions?

Unfortunately, the public cloud provider-driven “definition debates” – that revolve around the pay-per-use aspect of public cloud vis-à-vis a minimum capacity commitment required in a private cloud, the virtually infinite capacity of infrastructure public cloud vis-à-vis requirements to buy “infrastructure boxes” that impact the scalability and flexibility in a private cloud, the minimum capex in public infrastructure cloud vis-à-vis expensive hardware procurement in a private cloud, etc., are doing more harm than good. In retaliation, private cloud providers have also started poking holes into public cloud providers’ security, financial stability, commitment, quality of service delivery, and other seemingly relevant aspects. These assertions are also futile.

The fact is, the name or definition assigned to a given cloud-type solution is moot. The real issue is whether the customer sees value in and gains benefit from a cloud offering. Does it improve IT management? Does it save money? Does it improve IT delivery? Does it help the business become more agile?

Failing to take this client-centric view and instead utilizing the prescriptive, self-created definitions of cloud services can significantly inhibit cloud uptake and the potential benefits from its usage. Just because a cloud solution does not satisfy an “industry definition” should not prevent an enterprise buyer from evaluating it, as long as it offers cloud-related benefits and serves the intended purpose.

Our discussions with a wide range of enterprises show a growing propensity to embrace the hybrid cloud model. And our recent research, in which we analyzed the cost of operations under various infrastructure set-ups such as legacy, virtualized, private cloud, and hybrid cloud), found that the hybrid cloud model is definitely more cost effective and flexible as compared to other cloud models.

But, a word of caution: buyers must differentiate between a silo collection of different private and public cloud solutions and a hybrid cloud. A true hybrid implies the coordinated orchestration of private and public cloud to manage workloads.

So, where should buyers begin? Move beyond the futile “name game” and evaluate serious private and public cloud offerings to create a hybrid cloud environment that can transform their IT organization.

Economic Forecast Calls for More Clouds | Gaining Altitude in the Cloud

By | Gaining Altitude in the Cloud

Have you ever stopped to think why cloud computing is at the center of any IT-related discussion? In our conversations with clients, from the boardroom to the line manager, cloud is sure to enter into the discussion. Today, many of those conversations are around understanding, and to a lesser degree, implementation. But once the discussion crosses the threshold of understanding, the topic immediately goes to, “How can I get into the cloud?”

Everest Group recently held a webinar on the economics of cloud computing. There were two objectives: 1) Help clarify just how disruptive, in a good way, cloud computing is and can be; and 2) Demonstrate the economic benefits that exist in the cloud economy, and that there are those striving for this competitive advantage today.

The Hole in the Water That You Throw Money Into

One of the key economic drivers that hampers today’s data center environment is the relatively low utilization rate across its resources. Think about it like this: You’ve probably heard the old adage that owning a boat is like having a hole in the water that you throw money into. That is because the majority of boats are seldom used. (Trust me, I know, I used to own one.) The per use cost of a $25,000 (and quickly depreciating) boat that you actually use three or four times a year is quite high, and the reality is you could have rented a boat often for a fraction of the cost. The same thing is happening in your data center. If your utilization is 20 percent, or even 30 percent, you have essentially wasted 70-80 percent of your spend. That is an expensive data center.

Cloud computing is like that little boat rental shop tucked away in a nice cove on your favorite lake. What if you could get rid of excess capacity, better manage resource peaks and valleys, and rent public capacity when you need it, and not pay for it when you don’t?

The Economics

As you can see in the graphic below, the economics related to cloud are dramatic, and the key lies in leveraging the public cloud to pay only for what you use, eliminating the issue of excess capacity.

There is a variety of point examples in which this is done today, with the above economics reaped. For instance, Ticket Master leverages the public cloud for large events, loading an environment to the cloud, specifically sized for each given event. The specific event may only last several hours or days, and once complete, Ticket Master takes down the environment and loads the data in its dedicated systems.

There are also enterprises and suppliers working to enable peak bursting more seamlessly. For example, eBay recently showed where they are working with Rackspace and Microsoft Azure to enable hybrid cloud bursting, allowing eBay to reduce its steady state environment (think hole in the water) from 1,900 to 800 servers, saving it $1.1 million per month.

 The Steps to Getting Started

Dedicate yourself to getting rid of your boat (or should I say boat anchor?) Begin a portfolio assessment. Understand what you have, and what is driving utilization. Consolidate applications, offload non-critical usage to the valleys, and look for ways to leverage the public/private cloud. When I unloaded my boat, I freed up capital for the more important things in life, without sacrificing my enjoyment. Doing so in your data center will allow you to take on strategic initiatives that will make you even more competitive.

Cloud’s Impact on the CIO | Gaining Altitude in the Cloud

By | Gaining Altitude in the Cloud

Disclosure: I’ve never been a CIO. However, I’ve worked with and advised them on many engagements, so I have an understanding of how they think and the challenges they face in today’s business environment.

Much has already been written about the technology revolution emerging from cloud-delivered services, I wanted to turn the tables slightly and ponder how these technologies influence the role and skills of IT management and the office of the CIO.

Macro Trends CIOs Face

1: Strategy Replacing Operations
CIOs are facing tremendous pressure to think strategically about how IT can better align itself with business needs. An operations-focused “we’re just here keeping the lights on” approach to IT management is, at best, the minimum expectations of the job. As organizations demand more technological enablement in all parts of the business model, CIOs must fully integrate into strategy setting and change enablement within their company.

2: Era of Big Data
A study conducted by the University of California, San Diego, estimated that the volume of enterprise data produced per year (2008) topped out at 9.57 zettabytes (1 zettabyte =1 million petabytes), which translates to an average of 63.4 terabytes per company per year or 12 gigabytes per worker per day.

Although it’s a gross oversimplification, CIOs are continually asked to do more with less. They need to support their company’s desire to take advantage of big data to make better business decisions and more data-rich transactions, yet simultaneously are burdened with the liabilities of processing capacity limitations, storing and retrieving requirements, and data protection, all while capital budgets are under tighter scrutiny.

3: Speed and Agility
Almost every new technology comes attached with a promise of saving time. But to the adopter, the outcome isn’t more free time; rather, it’s a shortened expectation of the time it takes to complete a workload. In the enterprise, this is manifested in the demand of increasingly greater organizational agility and nimbleness. And as a CIO’s performance is measured by the rate at which he or she pushes initiatives that enable faster achievement the organization’s goals, one perceived as creating more bottlenecks than accelerators will not last long in the role.

Cloud to the Rescue

CIOs are challenged with consistently meeting (and hopefully exceeding) their stakeholders needs, despite the mounting pressure caused by these macro trends. Thus, even in cloud technology’s relative infancy, CIOs need to at least consider evaluating cloud solutions because of their ability to address common pain points.

Cloud technologies have the potential to help CIOs focus more on the business and less on the underlying infrastructure. While traditional ITO promised this, anecdotal and empirical evidence suggests that the reality was more often than not “your mess for less.” The subtext here is CIOs are spending too much time managing their outsourcing providers to solve technological, rather than business, problems. But fundamental to cloud architecture design is delivery of a service to the end user, which ultimately will disaggregate the supporting infrastructure from the service, and enable the CIO to focus more on solving business problems.

Cloud technologies can also address the do more with less issue. IT departments are starting to realize that the traditional one application per server approach to running enterprise infrastructure is unsustainable in a big data world. CIOs can yield benefits from cloud (and virtualization) technologies from two major drivers:

1) Increasing utilization per server – meaning either requiring fewer servers to do the same data processing volume, or squeezing more data processing out of the same volume of servers. Either way, cloud delivers more for less.

2) Thinking strategically about load balancing – an enterprise’s requirement on its IT department is neither predictable nor equal in terms of business priorities. But cloud technology enables evaluation of the trade-offs presented by flexible, on-demand data management.

Cloud technology is already having a seismic effect on expectations around business agility. For example, when the time required to procure a server goes from weeks to minutes, there is a quantifiable shift in productivity gains. And as cloud technology evolves, these gains will be further amplified.

How does the CIO’s role change?

So what does this all mean for next generation CIOs? In the short term, they will have to become informed, poke at the promises coming from suppliers, and manage the cloud hype curve on behalf of their organization.

Beyond the short term, they will need to address and manage – via a robust and sensitive change management program –the impact of the cloud’s technological transformation on a much broader set of stakeholders, including the internal IT team.

Another subtle but significant shift will be from the role of service manager to one akin to an air traffic controller for workloads. For example, with a workload that requires 240 CPU hours and you have procured a cloud that gives you 10 virtual machines, a CIO can choose to turn on one virtual machine and leave the nine others to run other workloads, but the process will take 10 days. Or, the CIO can turn on 10 virtual machines to process the same workload in one day, but the organization will be out of capacity for that day. Managing that trade off will be a new to many CIOs, and a regular situation for all.

What other concerns should CIOs have, and how should they prepare themselves?

For information on what CIOs want from the cloud: http://cloud.savvis.com/information-center and download the CIO LinkedIn Market Pulse Survey

For how roles are changing because of the cloud: http://www.pcworld.com/businesscenter/article/227238/panel_the_cloud_requires_fresh_it_skills.html

For an introduction to the economics of cloud enterprise computing that CIOs should consider, register and attend the May 24 Everest Group webinar on the topic.