Cloud infrastructure-as-a-service (IaaS) is a hot market. Amazon Web Services, now five years old, drives a lot of attention and customer volume, but the vendor strategists at enterprise-facing providers such as IBM, HP, AT&T and Verizon have been building and delivering IaaS offerings. As I’ve studied the market, I’ve heard wildly different types of requirements from buyers and quite a range of offerings from service providers. Yet much of the industry dialogue is about one central idea of what IaaS is – think that’s wrong headed. I found that there were really two buyer types: 1) informal buyers outside of the IT operations/data center manager organizations, such as engineers, scientists, marketing executives, and developers, and 2) formal buyers, the IT operations and data center managers responsible for operating applications and maintaining infrastructure.
With this idea in mind, I set out to test the views of IT infrastructure buyers in the Forrsights Hardware Survey, Q3 2010 and learned that:
After 2+ years of cloud hype, only 6% of enterprises IT infrastructure respondents report using IaaS, with another 7% planning to implement by Q3, 2012. After flat adoption from 2008 to 2009, this represents an approximate doubling from 2009, off a very small base.
Almost two thirds of IT infrastructure buyers themselves don’t believe they are the primary buyer of cloud IaaS! We asked them which groups in their company are using or most interested in cloud IaaS. Only 36% of IT infrastructure buyers listed themselves, while 7% didn’t know. The rest, 58% said that IT developers, Web site owners, business unit owners of batch compute intensive apps, and other business unit developers were more interested in using IaaS than themselves.
Pop Quiz: What’s the fastest way to build a credible, enterprise-relevant and highly profitable cloud computing services practice? Buy one that already is. That’s exactly what Verizon did last week when it pushed $1.4B across the table to Terremark. Despite its internal efforts to build an infrastructure-as-a-service (IaaS) business over the last two years, Verizon simply couldn’t learn the best practices fast enough to have matched the gains in the market it received through this move. Terremark has one of the strongest IaaS hosting businesses in the market and perhaps the best enterprise mix in its customer base of the top tier providers. It also has a significant presence with government clients including the United States’ Government Services Agency (GSA) which has production systems running in a hybrid mode between Terremark’s IaaS and traditional managed hosting services.
Confidential Forrester client inquiries have shown struggles by Verizon to win competitive IaaS bids with its computing-as-a-service (CaaS) offering, often losing to Terremark. This led to Verizon reselling the Terremark solution (its CaaS for SMB) so they could try before the buy.
Forrester’s survey and inquiry research shows that, when it comes to cloud computing choices, our enterprise customers are more interested in infrastructure-as-a-service (IaaS) than platform-as-a-service (PaaS) despite the fact that PaaS is simpler to use. Well, this line is beginning to blur thanks to new offerings from Amazon Web Services LLC and upstart Standing Cloud.
The concern about PaaS lies around lock-in, as developers and infrastructure and operations professionals fear that by writing to the PaaS layer’s services their application will lose portability (this concern has long been a middleware concern — PaaS or otherwise). As a result, IaaS platforms that let you control the deployment model down to middleware, OS and VM resource choice are more open and portable. The tradeoff though, is that developer autonomy comes with a degree of complexity. As the below figure shows, there is a direct correlation between the degree of abstraction a cloud service provides and the skill set required by the customer. If your development skills are limited to scripting, web page design and form creation, most SaaS platforms provide the right abstraction for you to be productive. If you are a true coder with skills around Java, C# or other languages, PaaS offerings let you build more complex applications and integrations without you having to manage middleware, OS or infrastructure configuration. The PaaS services take care of this. IaaS, however, requires you to know this stuff. As a result, cloud services have an inverse pyramid of potential customers. Despite the fact that IaaS is more appealing to enterprise customers, it is the hardest to use.
Over the course of this year, I’ve spoken with many organizations that are continuing to expand their usage of information-as-a-service (sometimes called data services) to support new business requirements such as self-service customer portals, real-time BI, and single-version-of-the-truth. With the growing complexity of data, increasing volume of data, and exploding security challenges all driving demand, IaaS is poised to grow significantly in the coming years, especially as existing integration technologies are failing to meet these new requirements. What we see is that most organizations that have embraced an IaaS strategy over the years aren’t looking back; they’re continuing to expand its usage to support more requirements such as real-time data, creating data domains, improving the ability to securely deliver information, integration with unstructured data and external sources, various Web portals, and enterprise search.
Recently, my colleague Gene Leganza, who serves Enterprise Architecture Professionals, compiled the top 15 technology trends EA should watch over the next three years . One of the trends Gene highlighted is that information-as-a-service (IaaS) is finding a broader audience. I see more organizations continuing to show strong interest in IaaS, as evidenced by increasing inquiries, to help with growing data integration challenges that traditional solutions are not addressing. IaaS can significantly alter IT’s approach to its data management strategy and delivers a flexible framework to support transactional, BI, and real-time data.
Here are my top predictions for 2011 related to IaaS:
At its Professional Developers Conference this week, Microsoft made the long-awaited debut of its Infrastructure as a Service (IaaS) solution, under the guise of the “VM-role” putting the service in direct competition with Amazon Web Services’ Elastic Compute Cloud (EC2) and other IaaS competitors. But before you paint its offering as a "me too," (and yes, there is plenty of fast-follower behavior in today’s announcements), this move is a differentiator for Microsoft as much of its platform as a service (PaaS) value carries down to this new role, resulting in more of a blended offering that may be a better fit with many modern applications.
This week Amazon Web Services announced a new pricing tier for its Elastic Compute Cloud (EC2) service and in doing so has differentiated its offering even further. At first blush the free tier sounds like a free trial, which isn't anything new in cloud computing. True, the free tier is time-limited, but you get 12 months, and capacity limited, along multiple dimensions. But it's also a new pricing band. And for three of its services, SimpleDB, Simple Queueing Service (SQS), and Simple Notification Service (SNS) the free tier is indefinite. Look for Amazon to lift the 12 month limit on this service next October, because the free tier will drive revenues for AWS long term. Here's why:
A few weeks back I posted a story about how one of our clients has been turning cloud economics to their advantage by flipping the concept of capacity planning on its head. Their strategy was to concentrate not on how much capacity they would need when their application got hot, but on how they could reduce its capacity footprint when it wasn't. As small as they could get it, they couldn't shrink it to the point where they incurred no cost at all; they were left with at least a storage and a caching bill. Now with the free tier, they can achieve a no-cost footprint.
On September 15th between 11am-12pm EDT Forrester held an interactive TweetJam on the future of cloud computing including Forrester analysts Jennifer Belissent, Mike Cansfield, Pascal Matzke, Stefan Ried, Peter O’Neill , myself and many other experts and interested participants. Using the hashtag #cloudjam (use this tag to search for the results in Twitter), we asked a variety of questions.
We had a great turnout, with more than 400 tweets (at last count) from over 40 unique Tweeter’s. A high level overview of the key words and topics that were mentioned during the TweetJam is visualized in the attached graphic using the ManyEyes data visualization tool.
Below you will find a short summary of some key takeaways and quotes from the TweetJam:
1. What really is cloud computing? Let’s get rid of 'cloud washing!'
Have questions about cloud computing and the top challenges and opportunities it presents to vendors and users? Then join us for an interactive Tweet Jam on Twitter about the future of cloud computing on Wednesday, September 15th, 2010 from 11:00 a.m. – 12:00 p.m. EDT (17:00 – 18:00 CEST) using the Twitter hashtag #cloudjam. Joining me (@hkisker) will be my analyst colleagues Mike Cansfield (@mikecansfield), Pascal Matzke (@pascalmatzke), Thomas Mendel (@drthomasmendel), and Stefan Ried (@stefanried). We’ll share the results of our recent research on the long term future of cloud computing and discuss how it will change the way tech vendors engage with customers.
Looking through the current industry hype around the cloud, Forrester believes cloud computing is a sustainable, long-term IT paradigm. Underpinned by both technology and economic disruptions, we think the cloud will fundamentally change the way technology providers engage with business customers and individual users. However, many customers are suffering from "cloud confusion" as vendors' marketing stretches cloud across a wide variety of capabilities.
To help, we recently developed a new taxonomy of the cloud computing markets (see graphic) to give vendors and customers clear definitions and labels for cloud capabilities. With this segmentation in hand, cloud vendors and users can better discuss the challenges and benefits of cloud computing today and in the future.
It’s no secret traditional news organizations are struggling to stay relevant today in an age where an always-connected generation has little use for newspaper subscriptions and nightly news programs. The Associated Press (AP), the world's oldest and largest news cooperative, is one such organization who has felt the threats which this paradigm shift carries and thus the need to intensify its innovation efforts. However, like many organizations today, its in-house IT Ops and business processes weren’t versatile enough for the kind of innovation needed.
"The business had identified a lot of new opportunities we just weren't able to pursue because our traditional syndication services couldn't support them," said Alan Wintroub, director of development, enterprise application services at the AP, "but the bottom line is that we can't afford not to try this."
To make AP easily accessible for emerging Internet services, social networks, and mobile applications, the nearly 164-year-old news syndicate needed to provide new means of integration that let these customers serve themselves and do more with the content — mash it up with other content, repackage it, reformat it, slice it up, and deliver it in ways AP never could think of — or certainly never originally intended.