Four years later and after the first mover cloud announcements it’s time to step back and see where Fujitsu and the industry is at today.
Analysts, suppliers, industry bodies and customers over the last few years have been sharing and learning about the many dimensions of cloud computing. As a result, new markets have been identified each with their own dynamic forces and associated risks. Standards and definitions of the services and functionality supporting these platforms are also becoming more unambiguous.. From a platform perspective, there is a much stronger push ‘up the stack’ however at the base level of IaaS we have many variants including: Public, Private, Private Hosted Cloud, local, local trusted Cloud, Hybrid Cloud, Clouds enabled by managed services plus emerging personal and community clouds and no doubt many more variations to come.
Consumers understand today that cloud is not always about the lowest price, it’s also about outcomes, functionality, value and risk. Organisations want uninterrupted access to their applications and don’t want to have to worry about the underlying infrastructure.
In cloud there is no such thing as ‘one size fits all’ any more, as there is a Cloud platform to suit almost every business need depending on what the desired outcome is. Speed; high availability, back up, recovery, security, risk management and governance are all important considerations when investigating enterprise cloud platforms. Consequently, different clouds will have different price points to suit the risk profiles and business requirements. Cheapest is not always the best and customers are starting to realise this.
The Paradigm Shift for Software & Hardware Vendors
The tech industry has been forced to change the way its technology is licensed and consumed, architected and solutioned. This is one of the most disruptive periods in our industries history. This is true for suppliers and customers alike, as cloud has fundamentally shifted behaviour and expectations, to the point of no return.
Traditional software and hardware companies are scrambling to change their commercial models to suit the new ‘as-a-service’ purchasing habits of the consumer.
There are many inhibitors to this change. Firstly, traditional ‘on-premise’ revenue streams are cannibalised by the monthly ‘as-a-service’ commercial models that consumers now wish to purchase via. This means that vendors have to change their Sales compensation plans to suit the new way revenue is received. Corporate financial reporting has also changed as a result of the ‘drip feed’ of revenue instead of the lump sum payments received previously. Cloud consumption models also require one of the providers in the delivery value chain to take on risk. Whether it is the Hardware or software provider, the Systems Integrator or the reseller, someone has to take the responsibility of ’build it and they will come’. The participants in the Cloud value chain are getting cleverer with respect to how to build their service to be part of this chain but this part of the industry will take time to mature
…The shift to cloud has some hurdles!
Despite the above learnings we are finding organisations are still experiencing angst with respect to their move to the cloud. This is partly related to the complex interplay of hardware, software investments and services, not forgetting the business processes that overlay this. Therefore traditional infrastructure can not be simply ‘ripped and replaced’ by cloud platforms, (private cloud especially). It requires a degree of organisational change management including change in processes, practices and policies.
The changing role of infrastructure in the cloud decision
One thing is clear, that is IaaS has matured to a point where customers can choose their IaaS platform based on geographical location, security risk profile, level of management, etc, however for the most part, customers are looking to manage their Service Provider through a SLA. Organisations are becoming less concerned about their Cloud providers’ underlying platform (because they don’t care where their data resides) and more about the level of service they are going to receive.
Cloud consumers are looking for a functionally rich platform at a competitive price point. Which is why the Service provider must take advantage of the latest hardware and software innovations that are being brought to market. This will be the key to their differentiation and ability to secure new business in the future. The service provider must be constantly innovating on their Cloud platform offerings by investing in the new technology innovations being brought to market. Some examples of these innovations can be seen in the form of cheaper & faster storage platforms; functionality rich management platforms; dynamic orchestration tools and powerful reporting engines.
Onshore V Offshore data
Cloud data sovereignty is one topic that has had more than its fair share of discussion. When Fujitsu first began its cloud journey several years ago, data sovereignty was one of the first things to address when having a conversation with an organisation about Cloud. Typically enterprise and government organisations would not even enter into a cloud discussion without first establishing where the ‘cloud’ and in particular their data, was located. Fortunately for Fujitsu we were one of the first to run an enterprise cloud platform from Australian data centres – a quality that played a key role in our engagements with financial institutions and Government departments.
For Government organisations this is still a very important consideration, but for commercial organisations, the location of their data is becoming less of an issue. The main point associated with data sovereignty is still related to security of data. This debate is still raging and like every argument, you will never satisfy everyone. The reality is that the more ‘public’ in nature the platform is, typically the less security features it will be able to offer. Conversely the more dedicated the platform, the greater the level of security able to be offered. This increase in security comes with a consequential increase in cost, which the provider usually has to pass onto the end customer somehow.
The next steps…
On their journey to the cloud, organisations desire a hybrid IT environment under management. This means both physical (albeit virtualised) and cloud environments are managed by the same service provider – the best of both worlds, ultimately being able to migrate virtualised workloads to their cloud environment when required & where appropriate.
This raises the interesting question of cloud management platforms and the ability to seamlessly migrate workloads with minimal touch from the cloud provider. The providers that have this functionality in their cloud offerings have positioned themselves well for future revenue growth. Nirvana is being able to build a Hybrid cloud platform geographically close to a target market with all of the functionality listed above.
Typically, once an organisation has made the decision to purchase services from a hybrid cloud platform provider, they are making a decision that was similar to one that was made years ago – typically called a managed infrastructure outsource agreement. These decisions are relatively ‘sticky’ for service providers, as long as customers are receiving value and their SLAs are being met. Like other Managed Services style agreements, this opens the door to a raft of other cloud-related conversations and the incumbent vendor has the upper hand in leading the customer on their journey to the cloud.