Cloud Services to Face Critical Test in 2013

Ed. note: On December 18th Wikibon Chief Analyst Dave Vellante, EMC Global Marketing CTO Chuck Hollis, and EMC SVP of Global Services Tom Roloff, spent 40 minutes in The Cube in Marlborough, Mass., discussing the trends and events they expect in the coming year. The following is the second is a four-part series examining what they predicted. The first part focused on overarching trends for 2013. This part picks up where the first one left off, discussing the consolidation of the industry.

DV: If you want to consolidate vendors, one way to do that is to look to a service provider. What are you guys seeing in the service provider space?

CH: A year or two ago the attitude was, ‘There won’t be anything out there, and if there is, we wouldn’t want it.’ Now we’re seeing more behaviors around, ‘Before we just assume we’re going to do this ourselves, as part of the project analysis let’s go look at external options.’ Whether it would be a SaaS app or infrastructure or something else, people are purposely going out and looking to see what options are out there before they commit to an internal project.

TR: A year ago I saw a lot of fear, FUD, in the enterprise market about SaaS and other services. I think what’s happened in the last year is people have moved workloads to Cloud services without really asking themselves the security question. So those workloads have been moved to public Cloud service providers much faster than they did in the 2011 time-frame.

I think this is the year of reckoning on that, actually. I think the robustness, availability, and trustworthiness of the platform is going to get tested. And I think CIOs are going to step back halfway through the year and say, ‘Can I really afford to set critical workloads out to these guys, or should I create trusted relationships with a few service providers and sort of double-down on that, the same way that they are doubling down on oligopoly group [of vendors] you were talking about.

CH: Back to your point, I think service providers are your frenamies. They’d love to work with IT, but if they can’t, they certainly know who’s consuming IT, like the CMO and folks like that. So you either have to broker the relationship and manage the discussion or buyers and sellers will find each other.

TR: I think CIOs in the enterprise have been hearing the idea that Amazon or Public Cloud has become a shadow IT. I think they’re starting to ask … ‘What’s actually out there in the service providers that my employees are leveraging, & can I broker that and make sure I’m comfortable with that?’ because of the anecdotes of getting companies getting burned….

DV: So my prediction here is that Amazon’s going to get a lot more aggressive in the business marketplace. Things like Glacier get a lot of attention. A penny per Gbyte per month, that’s going to catch a lot of CFOs’ eyes & ears. But I think there’s going to be another high profile outage, and because of Amazon’s big marketing push I think people will become more in tune with the risks associated with Amazon’s cloud. And I think that the enterprise guys – you guys, your customers, VMware’s customers – are going to respond, and specifically I think the response is going to be successful in areas of vertical markets.Certain service providers – for exampleNYS in financial services, Cerner in healthcare, USC in archives & other media & entertainment verticals – will emerge. That’s where they’re going to succeed against Amazon.

CH: This is the basis of the debate we’re having internally. We agree with you about vertically oriented communities in the Cloud. We can make a long list of models where that would work. The coin toss, at least in my mind, is will that go to the Amazon model, or will it go to a purpose-built set of Cloud technologies. You mentioned NYS. They’re not using an Amazon-style model, they’re using enterprise-class IT. So I agree with you on the community Cloud side. Whether it all goes to a public commodity Cloud or not, I think that’s a separate discussion.

TR: I think large-scale IT organizations see IaaS as a stepping stone & a temporary thing. To the extent that the public Cloud is betting on cheaper infrastructure-as-a-service as a value prop, I think that’s pretty ephemeral.


CH: I had a CIO kind of nail it for me. He said, ‘I look at Amazon and those guys as temp agencies. It’s nice to call them up when I’m short a few bodies and need a little help. I wouldn’t want to build my whole workforce on temps. I think we have to realize those things are just part of the mix, they aren’t a substitute for a strategy, but they’re an enhancement to a strategy….

TR: It’s a spot market for IT. You can go out there and get it when you need it, but ask yourself, is that really worth what you’re taking on?

Ed. note: The next article in the series will cover trends in Big Data.