With Amazon Web Services and Microsoft Azure now on greater than $2 billion annual run rates and expanding their application services nearly weekly, it’s starting to look tougher than ever for traditional hosters, enterprise cloud players and managed service providers to compete against them. When you just can’t see how to win, the better option might just be not to try.
That seems to be the new trend in enterprise cloud vendor strategies as evidenced this week in moves by Datapipe, Google, and VMware. These moves follow similar shifts in strategy taken by Accenture, Rackspace, and others in the past quarter. The strategies acknowledge a reality that is redefining what they hoped hybrid cloud meant.
On one level, IBM’s new z13, announced last Wednesday in New York, is exactly what the mainframe world has been expecting for the last two and a half years – more capacity (a big boost this time around – triple the main memory, more and faster cores, more I/O ports, etc.), a modest boost in price performance, and a very sexy cabinet design (I know it’s not really a major evaluation factor, but I think IBM’s industrial design for its system enclosures for Flex System, Power and the z System is absolutely gorgeous, should be in the MOMA*). IBM indeed delivered against these expectations, plus more. In this case a lot more.
In addition to the required upgrades to fuel the normal mainframe upgrade cycle and its reasonably predictable revenue, IBM has made a bold but rational repositioning of the mainframe as a core platform for the workloads generated by mobile transactions, the most rapidly growing workload across all sectors of the global economy. What makes this positioning rational as opposed to a pipe-dream for IBM is an underlying pattern common to many of these transactions – at some point they access data generated by and stored on a mainframe. By enhancing the economics of the increasingly Linux-centric processing chain that occurs before the call for the mainframe data, IBM hopes to foster the migration of these workloads to the mainframe where its access to the resident data will be more efficient, benefitting from inherently lower latency for data access as well as from access to embedded high-value functions such as accelerators for inline analytics. In essence, IBM hopes to shift the center of gravity for mobile processing toward the mainframe and away from distributed x86 Linux systems that they no longer manufacture.
Determining which public cloud platforms your company should standardize on is not a matter of marketshare, size or growth rate. What matters most is fit for purpose - yours. And that’s exactly what our latest Forrester Wave of this market helps you determine.
And the key questions to ask have nothing to do with the vendors in question. They are all about you - your team’s skill sets, needs and requirements. Will you mostly be building lightweight web and mobile applications from common web services you’d rather not recreate yourself? What skills do your developers bring to the problem - deep knowledge of Java and C# but light on the infrastructure configuration and middleware management front? Need to ensure data residency in specific geographies? Compliancy top your concerns list? These factors are far more important than feature by feature comparisons. Ultimately your platform selection needs to match your business requirements, and if our surveys can be trusted, you desire agility and developer productivity over most other concerns.
Where Amazon Web Services may best suit your DevOps teams with strong desire to control everything themselves, your web properties team may be far more productive on Mendix or Outsystems.
We have just published Forrester's semi-annual global tech market outlook report for 2015 and 2016 (see "The Global Tech Market Outlook For 2015 To 2016 -- Five Themes That Will Define The Tech Market"). In this report, we are projecting growth of 4.1% in 2015 and 6.3% in 2016 business and government purchases of computer and communications equipment, software, and tech consulting and outsourcing services measured in US dollars. These growth rates are distinct improvements over the 2.3% growth in 2014. The strong dollar is a key negative factor in these forecasts; measured in local currency terms, the growth track for the global tech market is higher with a gentler upward slope, from 3.3% in 2014 to 5.3% in 2015 and 5.9% in 2016.
Our global tech market outlook can be defined with five main themes:
Moderate 5% to 6% rates in 2015 and 2016 in local currency terms. While a stronger-than-expected US dollar has resulted in lower dollar-denominated growth rates for 2014 and 2015 than in our August 2014 projections, though a stronger-than-expected US dollar both years caused a downward revision in these growth rates.
The US tech market will set the pace for the rest of the world in 2015 and 2016. Not only does the US have the largest country-level tech market by far, it will have one of the fastest growth rates at 6.3% in 2015 and 6.1% in 2016. US businesses and governments are also leaders in adopting new mobile, cloud, and analytics technologies. Among other large tech markets, China, India, Sweden, and Israel will also have strong tech market growth, while Brazil, Mexico, Japan, and especially Russia will lag.
I’ve been getting a steady trickle of inquires this year about the future of the mainframe from our enterprise clients. Most of them are more or less in the form of “I have a lot of stuff running on mainframes. Is this a viable platform for the next decade or is IBM going to abandon them.” I think the answer is that the platform is secure, and in the majority of cases the large business-critical workloads that are currently on the mainframe probably should remain on the mainframes. In the interests of transparency I’ve tried to lay out my reasoning below so that you can see if it applies to your own situation.
How Big is the Mainframe LOB?
It's hard to get exact figures for the mainframe contributions to IBM's STG (System & Technology Group) total revenues, but the data they have shared shows that their mainframe revenues seem to have recovered from the declines of previous quarters and at worst flattened. Because the business is inherently somewhat cyclical, I would expect that the next cycle of mainframes, rumored to be arriving next year, should give them a boost similar to the last major cycle, allowing them to show positive revenues next year.
SaaS has been around for 20 years, cloud platforms nearly a decade. That must mean they’ve worked all the kinks out, right. You know better. There are wide variances in the maturity, stability and enterprise-readiness of the many cloud services categories. There are certainly differences between vendors within the same category, as demonstrated in each of our Forrester Waves, but there are significant differences between the many classes of cloud services. For example, internal private clouds are far less mature than their public counterparts and the desktop-as-a-service category continues to struggle to find its place in the market.
This is the reason Forrester created the Tech Radar. This class of report helps enterprise clients delineate between categories of services based on their maturity, adoption by other enterprise clients and helps ascertain the likely return on investment you can expect at its current level of maturity. The latest Cloud Computing Tech Radar, published this month on Forrester.com, plots each major category of cloud services along two axis:
I’ve been talking to a number of users and providers of bare-metal cloud services, and am finding the common threads among the high-profile use cases both interesting individually and starting to connect some dots in terms of common use cases for these service providers who provide the ability to provision and use dedicated physical servers with very similar semantics to the common VM IaaS cloud – servers that can be instantiated at will in the cloud, provisioned with a variety of OS images, be connected to storage and run applications. The differentiation for the customers is in behavior of the resulting images:
Deterministic performance – Your workload is running on a dedicated resource, so there is no question of any “noisy neighbor” problem, or even of sharing resources with otherwise well-behaved neighbors.
Extreme low latency – Like it or not, VMs, even lightweight ones, impose some level of additional latency compared to bare-metal OS images. Where this latency is a factor, bare-metal clouds offer a differentiated alternative.
Raw performance – Under the right conditions, a single bare-metal server can process more work than a collection of VMs, even when their nominal aggregate performance is similar. Benchmarking is always tricky, but several of the bare metal cloud vendors can show some impressive comparative benchmarks to prospective customers.
There is always a tendency to regard the major players in large markets as being a static background against which the froth of smaller companies and the rapid dance of customer innovation plays out. But if we turn our lens toward the major server vendors (who are now also storage and networking as well as software vendors), we see that the relatively flat industry revenues hide almost continuous churn. Turn back the clock slightly more than five years ago, and the market was dominated by three vendors, HP, Dell and IBM. In slightly more than five years, IBM has divested itself of highest velocity portion of its server business, Dell is no longer a public company, Lenovo is now a major player in servers, Cisco has come out of nowhere to mount a serious challenge in the x86 server segment, and HP has announced that it intends to split itself into two companies.
And it hasn’t stopped. Two recent events, the fracturing of the VCE consortium and the formerly unthinkable hook-up of IBM and Cisco illustrate the urgency with which existing players are seeking differential advantage, and reinforce our contention that the whole segment of converged and integrated infrastructure remains one of the active and profitable segments of the industry.
EMC’s recent acquisition of Cisco’s interest in VCE effectively acknowledged what most customers have been telling us for a long time – that VCE had become essentially an EMC-driven sales vehicle to sell storage, supported by VMware (owned by EMC) and Cisco as a systems platform. EMC’s purchase of Cisco’s interest also tacitly acknowledges two underlying tensions in the converged infrastructure space:
We’ve been seeing for years in our surveys, that business users and application developers are the primary consumers of cloud services. SaaS and cloud platforms are not infrastructure or alternatives to the corporate data center but are instead application services your organization leverages to create new user experiences and greater efficiencies that maximize profitability and derive trends that result in business insights.
In 2015 this realization will become a motivator for vendors and enterprise CIOs to focus their cloud strategies on empowering business and developers first and put aside their own concerns and priorities. In 2015, cloud adoption will accelerate and technology management groups must adapt to this reality by learning how to add value to their company’s use of these services through facilitation, adaptation and evangelism. The days of fighting the cloud are over. This means major changes are ahead for you, your application architecture, portfolio, and your vendor relationships.
In this playbook, we do not predict the future of technology but we try to understand how, in the age of the customer, I&O must transform to support businesses by accelerating the speed of service delivery, enabling capacity when and where needed and improving customers and employee experience.
All industries mature towards commoditization and abstraction of the underlying technology because knowledge and expertise are cumulative. Our industry will follow an identical trajectory that will result in ubiquitous and easier to implement, manage and change technology.