I was reading the posts over on Wikibon today and noticed Dave Vellante (my Cube co-host on #theCube) posted a detailed analysis titled “The Truth About Enterprise Cloud Adoption”. My angle on this is about the hype of cloud moving to reality. Can the Cloud cross the chasm to mainstream production environments?

Is Cloud Disruptive or is it a Fad?

According to Dave Vellante: “If you believe cloud is disruptive and will completely alter business technology models than guess what? Business/IT alignment is such an important concept; if the CEO expects true cloud and IT delivers “half-assed cloud” then there could be trouble ahead. The key for CIOs, in my view, is to set expectations and be realists. Don’t hang on to an outdated model for the wrong reasons. Figure out which parts of the business can be made truely cloud-like and go for it.”

“Having said that I agree with Stu Miniman in his recent piece on hybrid clouds where he says: The reality for cloud environments is that they will need to coexist with all of the legacy environments.

… and therein lays the problem.

The heterogeneous mess that is today’s IT makes it next to impossible for the CEO to get true cloud across the board anytime soon. But the fact is there are major portions of IT that can be outsourced and we’re seeing evidence of that today.”

We’ve been covering the cloud companies making big moves from startups getting funding to the big players expanding their capability. Recently, EMC with their big mega launch talking about Cloud intersecting with Big Data (aka private or hybrid clouds) to Nasuni and Cirtas who just each received large funding. Finally, Nirvanix who expanded their senior management team by bringing in Scott Genereux as the new CEO. According to Dave Vellante of Wikibon “the main theme is that cloud will become a new storage tier this year”.

The Storage Cloud Angle

There has been over $100M invested in cloud gateways over the past few months, including $31M at Cirtas, $21M at Storsimple, $23M at Nasuni, $8M at Twinstrata and $15M at Panzura. Investors are eager to pump money into virtually anything cloud-related lately, and these companies have positioned their products as simple, easy-to-use “on-ramps to the cloud.” However, while VCs are eager to invest in cloud gateway providers, we noted that Chris Mellor at the Register brought up a valid point in a recent story—that cloud gateways can’t do it alone:

Here’s the rub in the cloud market. The cloud gateway controller can only do so much to help, minimizing the number of bits sent up the link and caching data – but after that it must simply hand the data over to the network and pray. The number one criteria for cloud and applications is performance. For primary data, access speed is vital. However as good as the gateway is, the network is the key; it must be affordable or primary data cloud storage fails. It is as simple as that.

A Cloud OnRamp

This is analogous to investing in the development of a freeway on-ramp without investing in the freeway itself; you’ll be able to get on the freeway really fast, but you’ll have absolutely no idea how the freeway layout looks or what’s going on once you get there. In other words, cloud gateway providers really can’t see both ends of the network. They can’t monitor what’s going on at the other end—where the actual cloud data resides. This prevents them from offering a guaranteed quality of service that spans both ends of the network. On top of that, some of the cloud gateway vendors charge you twice—upwards of $25K for the gateway and then for storage capacity usage as well.

Nirvanix Getting Traction

In recent weeks Nirvanix has been stepping up its game and bringing its cloud solutions to light, shedding some much needed visibility on what it calls its CloudComplete portfolio—which includes end to end cloud storage options from a fully featured cloud gateway to a global cloud storage network of 7 data centers to both hybrid and private cloud deployment options.

These guys at Nirvanix has optimized its cloud gateway specifically for its Storage Delivery Network (SDN), meaning they have insight into your data every step of the way—from your desktop to the disks it’s sitting on in the cloud. To me they are almost like an Akamai for cloud storage.

This networked cloud storage or storage cloud translates to faster upload speeds for large unstructured data files and faster disaster recovery. Unlike other cloud gateway providers, Nirvanix doesn’t charge for its gateway, as it’s included in its pay-as-you-grow storage as a service offering, which starts at .25 per GB list. The end game here is that cloud gateway providers that are only providing you with the wheels to the car but not the tires or the chassis will only get so far in the long run.

Battle for Definition of Private Cloud and Storage Cloud

Another topic that is piquing investors’ minds these days is the growth or hype (depending on who you talk to) surrounding the concept of a “private cloud.” In many ways, a private cloud is the straight forward sale of IT equipment—storage systems, network equipment, servers, software —placed on the data center floor in a customer site. Now some vendors are calling this private cloud, but in the past these offerings were referred to as “ecommerce” or web solutions .

The notion of a cloud is that customers are obtaining their IT resources on a usage basis and no longer facing massive up-front capital expenditures. However, some vendors are not offering “usage based” or outsourced SaaS models. Large cap-x investment with little to no outsourcing is not a true cloud service.

The changing definition of private cloud is a way for vendors to keep their customers buying more physical equipment just as they have been doing for the past 20 years. By selling you a private cloud “kit” for your data center floor, large IT vendors collects their fees up front and can then come back later to charge maintenance fees and eventually force you into a tech refresh. Vendors of these private cloud kits want to give you everything you need to charge your customers on a usage basis—but again; they want their money up front. This isn’t true cloud storage services.

Cloud is about pay as you go.

Whereas if a company was to leverage a cloud storage service, no charges would be incurred until capacity actually started to get utilized. There would never be any maintenance fees—the cloud storage service provider handles that—and there’s no tech refresh—ever.

The push for public cloud providers like Amazon S3, Microsoft Azure, Nirvanix and Google to offer production grade quality of service that looks like private cloud is the core requirement for success. If the public cloud vendors continue to make traction with their usage based services (not cap-x centric) they will pose a looming threat to established vendors.

My opinion is that big enterprise IT shops start moving from test and dev ops to more production oriented solutions. Here companies like Nirvanix who can provide that scale and reliability will capture huge share in customer wins. That being said I don’t see the big enterprises giving up the IT equipment and services control to cloud in the short run. Therefore the private cloud with equipment on premise will be the norm with growing portions of production moving to public cloud.

This notion of a Storage Cloud is very hot. We’ll keep on this trend.