First in a series of articles analyzing the strategies the largest public cloud vendors are using to court enterprise customers. 

So much praise has been showered on Amazon Web Services (AWS) this year, particularly in the afterglow of its recent re:Invent conference, that there’s no longer any question AWS is the default cloud provider for a company of any size that’s installing or moving entire applications to the public cloud. The question for enterprises is whether AWS has turned the corner to become the custom partner they need to manage a complex hybrid existence.

“AWS is a thought leader; it is extraordinarily innovative, exceptionally agile, and very responsive to the market,” wrote Gartner in a Magic Quadrant analysis last spring that positioned Amazon as far and away the leader for cloud infrastructure as a service. “Although it will not be the ideal fit for every need, it has become the ‘safe choice’ in this market, appealing to customers who desire the broadest range of capabilities and long-term market leadership.”

Few people would argue that Amazon has the broadest range of cloud services and the largest partner marketplace, both of which are benefits of its early start in 2006. AWS’s historic strength has been in what Gartner calls “mode 2” computing, or that which focuses on deploying new applications and agile development projects.

Bid for the enterprise

However, Amazon’s big strategic shift during the last year has been to make the case that it can support full-blown enterprise-class infrastructures while also helping corporate customers migrate to the Amazon cloud on a large scale. It has pointed to deals like its $600 million contract with the Central Intelligence Agency as proof that AWS is truly enterprise-ready.

This year’s re:Invent was all about corporate customers. Among a cavalcade of announcements were two that are noteworthy in that area. One was a far-reaching joint venture with Accenture PLC to form a business group to help enterprise customers move to the Amazon cloud. In aligning with the world’s largest consulting firm – and one that has served global enterprises as a primary outsourcing partner for more than 20 years – Amazon made a powerful statement about its commitment to the corporate market.

“Enterprise companies are more committed to bringing their entire estate or large parts of the estate into the cloud,” said Terry Wise, vice president, worldwide partner ecosystem for AWS, in a joint interview on theCUBE with Jeff Radack, North America cloud lead for Accenture. The pivot occurred early this year, Wise said, when enterprises decided that public cloud security was finally up to snuff.

Gartner praised AWS’s security profile in a research report published last month, stating that the company “can meet almost all common audits and common compliance requirements.”

On the new product front at re:Invent, Amazon announced Snowball, a storage device that can be used to move massive amounts of information from an on-premise data center to the Amazon cloud. The product is intended to address one of the nagging concerns enterprises have about cloud migration, which is the safety of data in transit.

Amazon has also committed to making its support services more accessible and to providing the roadmaps that enterprise customers crave in choosing enterprise partners. “AWS is taking steps to be a supportive partner and provide transparency and comfort that investments today will not be squashed tomorrow, “wrote Trinity Ventures General Partner Dan Scholnick on TechCrunch last week.

And the company used this year’s Re:Invent to showcase customer partnerships like the one with General Electric Co., whose CIO, Jim Fowler, keynoted the event (above). Commenting on the lineup of blue-chip partners that graced the re:invent Expo floor in August, Mike Dauber of venture capital fund Amplify Partners told John Furrier on theCUBE, “Every single company that does anything enterprise realizes this is the place to be. If the CIA and Fortune 5 banks are using AWS, what’s the excuse for not being on Amazon anymore?”

Gaps in the strategy

But the enterprise initiatives are still in the early stages, and Amazon faces unprecedented new public-cloud competition from the likes of Microsoft, IBM, Oracle and the newly empowered Virtustream Inc. All are essentially singing from the same sheet of music: Amazon is a pure public-cloud play with a proprietary toolset and an overarching ambition to lock in its customers.

Among the proof points rivals cite are Amazon’s lack of native support for the open-source OpenStack and Cloud Foundry platforms, its lack of bare-metal deployment options and its immaturity at supporting enterprise customers. They also note that AWS has little experience integrating legacy systems with its own cloud and that Amazon has failed to provide a compelling story about how it will support the hybrid clouds that are expected to be the backbone of enterprise IT structure for the foreseeable future.

The technology objections are the easiest for Amazon to dismiss. While it favors its own cloud and platform-as-a-service offerings ahead of open-source alternatives, Amazon permits customers to install and use those platforms on its infrastructure if they wish. Also, claims that such platforms permit easy interoperability are oversold. “The use of the same underlying CMP or API compatibility does not indicate that two services are interoperable,” wrote Gartner’s Lydia Leong last month. “Specifically, OpenStack-based clouds differ significantly from one another, limiting portability; the marketing hype of ‘no vendor lock-in’ is, practically speaking, untrue.”

Where legacy vendors do have a stronger story to tell is in the value of the long-term relationships many of them enjoy with the same customers Amazon is now targeting. The diverse nature of these engagements makes them harder to measure than the simple IaaS revenue metric, and that means the footprint of these legacy vendors is understated.

For example, Wikibon expects the IaaS market to be dwarfed in size by the software-as-a-service market (SaaS) for the next decade. Amazon has also no SaaS revenues. That prompted Wikibon Analyst Brian Gracely to assert recently that Amazon’s dominance is overrated. “We’ve published research that says if you add up all the cloud revenues, Microsoft is actually ahead of AWS at this point, though that includes a lot of diverse services,” he said.

AWS pros and cons

Amazon is strongest when a customer is deploying new applications or employing a “lift and shift” strategy of moving entire discrete functions to the cloud. It also has an edge among enterprises that see the shift to cloud as an opportunity to reevaluate their entire IT environment, including vendor relationships.

But for enterprises that want to go the hybrid route, embedded vendors are an attractive option. Complex hybrid deployments are trickier than straight migrations. “If the future was single-sided and entirely predicated on success in the public cloud, I would suggest that [last month’s Gartner report] signals game over,” wrote Ben Kepes in a Computerworld commentary  earlier this month. “The future is far more complex than this, however, and smart money should still be placed on the success of the more hybrid-focused vendors.” AWS is clearly hoping that the Accenture partnership will assuage many concerns in this area, but the alliance is too new to have borne much fruit.

For enterprise customers considering a move to the cloud, AWS “offers the richest suite of public cloud IaaS capabilities, along with deep and broad PaaS-layer capabilities,” wrote Gartner’s Leong last month. Tools like its Lambda service for flexibly provisioning resources on the fly have reportedly saved us some customers a percent on infrastructure costs.

But for complex operations that require extensive migration times and that must optimize existing infrastructure for years, the service providers that understand customer operations – and that have stood with them for years – still merit careful consideration. The cloud computing contest is far from over.

Photo courtesy Amazon re:Invent