Cloud crosses a Chasm

What are your thoughts on the way the whole Cloud/Managed Services market has developed to date, with particular reference to engaging end users?

The cloud / managed services market really crossed a chasm in the last two years becoming a main stream option for clients of any size, but especially in the Small & Medium Business segment. Recent research demonstrates that 40% of Enterprises will spend more than one-third of their IT budget on Managed Services and Cloud in 2013. This tidal shift in how IT is consumed is reshaping the entire IT-industry as we know it.

More specifically, how would you characterise the Public Cloud market to date?

The public cloud market is extremely fast developing, driven both by new entrant solutions and by established software vendors making their solution available on the public cloud. On the client side we have seen a growing acceptance of public cloud solutions over the last two years, resulting in an increasing supply of and interest in vendor solutions.

What about Private Cloud – is this a helpful term for end users?

Clients need to be able to assess the comparative strengths and advantages of a private cloud deployment, public cloud deployment, or a hybrid combination. In doing so, concerns about control and security make a lot of companies consider opting for private cloud deployments. However the fact is that each model has its benefits.

That said, at IBM we see cloud as a ‘how’, not a ‘what’; deciding on which cloud option to go for requires a flexible approach. Where the customer starts its Cloud journey and how it deploys Cloud depends on what its business needs are, not on the model – public, private or hybrid. IBM works with clients to determine the business need as well as to achieve better, more agile IT, applying the transformative power of cloud computing to reinvent the way clients do business.

All too often the industry conversation focuses on the distinctions between and among public, private and hybrid clouds. We believe that this starts the conversation in the wrong place. It would be much better to consider the following topics instead:
 Whether cloud resources are dedicated to serving the needs of a
single client or are shared among multiple tenants
 Whether the cloud resources are on-premise or off-premise

We believe that these distinctions lead to far better thinking about the growing use of cloud computing.

Dedicated or Shared
Cloud computing can be hosted on systems assigned to a single client or shared among many tenants. The proper selection of how computing, networking and storage resources are assigned makes it possible to achieve necessary levels of performance, reliability and management control.

On-premise or off-premise
Many of the principles, and technology, behind cloud computing can be utilized for both on-premise, in-our-own-data-center workloads and for workloads hosted in the data center of a cloud services provider. Companies needing to get the best utilization of their own systems, software, networks and storage would be wise to start by breaking through their internal silos and starting to use their assets as on-premise clouds.

This approach should allow resources to be used more efficiently, allow less IT resources to sit idle and, in all likelihood, should reduce the need to add new systems, software licenses or storage to a company’s portfolio.

If a workload requires more computing resources than are currently available, it could then be wise to consider using the resources offered by an external cloud services provider. Only if this need persists would it be necessary to go through the process of purchasing more systems, software licenses, storage and hire additional staff.

The Hybrid Cloud seems to be everyone’s favourite choice. Why is this so, and are there any downside’s to this approach?

Hybrid cloud solutions are popular due to fact that they are a flexible way of maximizing the utilization of existing assets while leveraging Cloud technologies to meet ongoing needs best. Many organizations have heritage IT that they need to be integrated and full cloudifcation is not possible (yet). Secondly many companies prefer to migrate to the Cloud in a managed and controlled manner rather than risk attempting to shift their full workload to the Cloud in one go. And last but not least many IT departments want to retain some control.
However as stated earlier, we maintain that the most important factor is the business need and that hybrid which is currently deployed in a lot of cases is the best and indeed most flexible way to meet this. Besides, for most companies not all their workloads are suitable for Public Cloud or indeed ready for it either. As some workloads do move to Public Cloud, Hybrid Cloud becomes the natural outcome with integration between Public Cloud and Private Cloud or on premise being the consequent requirement. The evolution of technologies such as IBM CastIron are making such integration feasible which increases the attraction and practical application of Hybrid Cloud.

We would also suggest that if both dedicated and shared resources are available options in an off premise solution, then the optimization and flexibility around hybrid use cases are far simpler as the data locality issues go away. Furthermore, the security model is simpler to manage. Decision-makers would be wise to evaluate the options for each of their workloads rather than deploying one option everywhere.
A more interesting debate is the evolution from IaaS to PaaS and SaaS. The true value of cloud computing is beyond the infrastructure layer and will come from software as a service or business process as a service solutions. Interestingly enough we see small and medium sized enterprises moving more quickly to full public cloud adoption versus larger enterprises. That is also why IBM is investing heavily not only in a portfolio of Cloud solutions for its larger Enterprise clients, but also in the development of both a Cloud portfolio that is optimized to support midsized business and of its channel to enable local Service Providers to help these SMB clients make the transition.

Do you see a role for Community Clouds (ie offerings for particular industries/groups) developing over time?

Yes, industry or community cloud will emerge especially with the rise of business process as a service (BPaaS) . Two recent examples of companies already operating in this space that I have seen are Monetize or Bison.
 Monetize offers a cloud based platform utilizing IBM technology
that currently caters over 466 million Visa accounts, with 3.000+
member banks across 36 countries.
 Bison offers small / micro retailers the opportunity to run their
business applications in the cloud enabling significant cost savings
and faster deployments.

Do you see Managed Services and Cloud services as synonymous, or are there subtle, or glaring, differences?

They are largely synonymous, and we should not get hung up with such terms anyway, it is more about a service that you license and consume via the cloud.

Indeed, do you think the whole Cloud/Managed Services vocabulary is clear and helpful to end users, or would some kind of agreed industry definitions be welcome?

The market is confusing itself with too many abbreviations, and subtle definitions. In my view we should look at business impact rather than wordings.

What are your thoughts on the advantages/disadvantages offered by all the different ICT sectors when it comes to their Cloud/Managed Services offerings?

Each different provider is coming from a different starting point, with a different heritage, different skills and capabilities and different means of differentiation, but all should be focused on what the client business needs are and, while each may have a different approach, the client needs should be driving them all to fairly similar end points. At IBM we work with Business Partners of all types – including distributors, system integrators, MSPs, CSPs, ISVs and many more. Some use our hardware and software to build their own infrastructure, while others focus on providing value elsewhere in the stack and build their solutions on our SoftLayer Cloud services instead. We are also helping ISVs and MSPs to partner to deliver collaborative offerings. There are many different approaches here, depending on how and where each player adds value.

In other words, is any one group out of, say, the telcos, the storage vendors, the network vendors, the software vendors, the ICT tier 1s, hosting companies, the dedicated MSPs, Systems Integrators, best placed to deliver Cloud/services?

Each group caters for a different need and will offer a different value add. From an IBM perspective we see 7 unique types of Managed Services Providers, each with a different background and scope. Each one provides value in a different way and we do not see any single group prevailing or dominating what will be a large and fragmented market.

How does an end user go about deciding how to engage with the Cloud/Managed services?

The most important question is to focus on what a company wants to achieve. What are the overriding business goals and how does technology support or drive that. With a broad cloud computing portfolio and deep cloud expertise, IBM helps clients realize the benefits of cloud.

For its larger enterprise clients IBM offers professional services including expert cloud strategy design, consulting, migration and implementation to help our clients best determine which model or route to take. It is the tailored approach rather than a preconceived idea or offering that makes companies trust the IBM Cloud for their business.

While for Midsize businesses, IBM is working with ISVs, MSPs and others to enable its ecosystem of Business Partners to collaborate to provide a similar service, tailored to the needs of each client. We believe local trusted solution providers will continue to be the key to success in meeting the needs of Small & Medium Business. Collectively with this ecosystem IBM provides the broadest portfolio of Cloud offerings with IBM Cloud supporting 270,000 more Web sites than Amazon including 24 of the top 25 Fortune 500 companies
Specifically, what are the type of questions that end users need to ask their potential Cloud/Service providers?

Firstly most companies that are considering the use of cloud computing services are looking at the wrong metrics when making their decision. They need to look beyond IT issues to considering the full impact on the company as a whole. It would be wise for decision-makers to consider what no longer needs to be done and the costs of those things when working with a cloud computing environment.

We would suggest that cloud computing means that companies can shift to thinking more about what they need to accomplish rather than being locked into thinking about how something needs to be accomplished. The cloud services provider addresses the how leaving companies free to focus on the what. In the end, companies could focus more on productivity and what they need to do to prosper in this rapidly changing market. Lifting the burden of IT from decision-makers’ thinking could result in a great deal of innovation.

Secondly when it comes to discussing how the cloud services provider addresses the IT challenges, you need to be clear on the contractual arrangements. I would suggest that you:

 Avoid providers that offer cloud “as is” – it suggests that it is
new, untried and untested or is associated with highly
standardized, low cost & low margin services – a case of “buyer
beware” (see also reliability below).

 Avoid potential lock in - Buying cloud services as you need them
can offer a level of flexibility, scalability and cost control cloud that
is great for customers – but providers seeking reliable, repeating
revenue can try to lock the customer into a longer term
relationship. Most customers recognize that, where the provider
is spending money to build them a private cloud by investing in
new hardware, then some form of minimum term is necessary, with
a payment in the event of early termination payment to recognize
this. However assistance will then be needed to migrate to a
new provider and this needs to be agreed up front. IBM Labs
has developed new cloud storage software that provides a simple
interface for clients to securely migrate data across multiple clouds,
while keeping it confidential and secure in order to protect clients
from this kind of lock in.

 Avoid unreliable providers - Often one of the sales messages of
cloud is that is cheaper than on premise. This can be true, but
it is not necessarily always the case. However, whichever way you
measure the cost of the service, it is probably significantly lower
than the losses that a customer would incur if their cloud service
did not work. Going for a cheaper and potentially less reliable
provider is therefore very much a false economy.

These are just a few of the many considerations involved. The new draft EU Data Protection Regulation will impose new obligations on cloud providers and it will be interesting to see how this impacts the market here in Europe.

For example, there’s much talk surrounding Cloud security and compliance. Are end users right to be so concerned, or is the topic something of a red herring?

Concerns about control and security have made a lot of companies either delay Cloud deployments or consider opting for private
cloud deployments only. Those with such concerns should speak
to IBM or one of its partners about the enhanced security
solutions now available – indeed these days the latest Cloud deployments are often more secure than the majority of on-premise deployments.

SLAs seem to be fairly critical when it comes to signing up with a Cloud/Services provider. Do you think end users understand what they are signing up to, or is it only when things go wrong that they find out…too late?!

There are many considerations, including those mentioned earlier, but overall the contract needs to ensure that the service supports the client needs. There are frameworks that we provide and specialist advisors that can help with this and it will be interesting to see how the new EU Data Protection Regulation and other regulations impact things here in Europe.

How important is it that end users have true visibility of the Cloud/Services provider’s offering? ie do they need to know how many other vendors/colos might be behind any particular service?

This should not be a concern for the end-user. The company or IT Department however should be concerned. They must asses the trust they have in their cloud / managed services provider, in terms of continuity, stability, scalability, security and support.

Unlike other Web Services players, with IBM Softlayer we offer the client complete visibility into the hardware infrastructure behind the cloud. It is nonsense to say that you don’t have to worry about the underlying infrastructure. With SoftLayer, you can drill down to the server, the rack, the network board, the serial numbers ... everything down to the encryption level on the drive even in multi-tenanted systems.

That may not seem very cloudy to some, but offering such transparency -- and in single-tenanted systems, granular control over configuration -- delivers special benefit to our customers. For example if we had a customer who was writing a big data solution for retail - they were using SSD drives, and their developers were demanding better performance from the drives. These developers looked into the drives, and found that their drives actually had two versions of firmware. They swapped the firmware on the drives -- simply pushing a button and making an API call -- and performance went up 25 percent. In opaque environments that lack this granularity, you’ve got to buy 25 percent more machine.

This extreme level of visibility comes from SoftLayer’s Infrastructure Management System (IMS), an API layer that today offers 2,200 documented methods across 180 discrete services.

How do you see the Cloud/Managed Services market developing over time? Will we reach that true utility model, with a handful of major providers, or will there always be room for smaller operators?

100% true utility is not likely to happen in my lifetime! There will always be companies, processes or applications that run on premises or outside a cloud. This does not mean that there will not be a level of consolidation in the future as the market fir cloud suppliers starts to rationalize around a handful of major providers each with an ecosystem of partners. However we are still far from that and even when it does occur, there will always be a place for local specialist solution provider partners around those major vendors fulfilling specific client needs. That is why an open standards approach is crucial, allowing a collaborative approach to providing the best possible client solution.

Please can you provide details of IBM’s Cloud/Managed Services strategy to date?

With a broad cloud computing portfolio and deep cloud expertise, IBM can help clients confidently realize the benefits of cloud.,We offer a comprehensive set of capabilities, providing the foundations of building and deploying both private or hybrid clouds, delivering platform and infrastructure capabilities as a service, and supplying our suite of software capabilities available on the cloud; ranging from collaboration to business process management and web analytics.

Recently we acquired Softlayer to extend our SmartCloud services portfolio, offering now self-service cloud infrastructure with instant deployment and over 100 Software as a Service solutions

IBM’s cloud solutions are engineered to Open Standards, allowing a more collaborative approach to providing solutions.

And last but not least importantly we integrate our ecosystem partners, incorporating technologies to bring the benefits of cloud to clients.

This approach to offer clients truly the best possible cloud deployment format, breakthrough new business technologies AND the seamless integration with existing applications and infrastructures is the reason why:
 80% of Fortune 500 companies use IBM cloud capabilities
 30% of the 100 most visited websites have chosen for our cloud
infrastructure
 IBM now powers almost 270.000 more sites than Amazon!

What’s happening in this space at IBM right now? (I believe the labs are developing plenty of clever ideas!)

We are shifting more and more weight behind our cloud strategy. This is already resulting in major market penetration. With $1 billion in revenue in the past quarter alone we are by far the leader in cloud computing revenue. But we are not done yet.

We have deployed 400 employees to OpenStack, an open source software project with more than 200 corporate members that goes after much of the proprietary cloud systems of Amazon, Microsoft and Google.

We also keep investing in the development of our delivery capabilities and offerings, offering businesses possibilities of which we currently can only dream about.

How do you see IBM’s offering developing into the future – what would you like to see the company doing over and above its current portfolio?

You can expect a series of announcements from IBM in 2014 that will challenge the competition and shake up the market. More than 100 products, like e-commerce and marketing tools, will be launch on the Cloud as a comprehensive series of offerings for business, as will another 40 infrastructure services, like big data analysis and mobile applications development. This comes on top of over 100 SaaS offerings that IBM already has.

Can you give one or two brief examples of how IBM is helping end users leverage the benefits of the Cloud/Managed Services?

In addition to the examples mentioned earlier, Monitize and Bison, others like Tiket.com are among the thousands of clients that are realizing the benefits of the Cloud with IBM and its partners.

After moving to the IBM Cloud Tiket.com achieved their objective of improving their response to massive spikes in their business – on one occasion they sold 5,000 Big Bang concert tickets in 15 minutes with 15,000 concurrent users. Their main competitor crashed for four hours under a similar workload.

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