News from the Cloud: Bi-Weekly Highlights

July 12, 2013 Appirio

The most interesting news this week is probably the launch of a new cloud computing exchange in Germany. Here’s our take on that news and more.

Cloud Economics 2.0: German Stock Exchange starts cloud computing exchange
ZDNet, 7/2/2013

Summary: In Europe-related cloud news, German Stock Exchange, Deutsche Börse, announced last week that it will be offering a public trading of cloud resources, accelerating cloud economics to the public level. Starting in 2014, the service will focus on selling by cloud providers and buying by large enterprises or intermediates.

Our take: Very bold and forward-thinking move but there are many operational hurdles before this can truly become a reality for enterprises. More likely in the short-term is cloud brokers or local providers using the exchange as a B2B marketplace.

Hey Amazon: Where’s Your Private Cloud?
CIO.com, 7/2/2013

Summary: Now that some of Amazon’s largest competitors, such as Microsoft and Rackspace, have started creating hybrid offerings combining public and private cloud, there has been recent discussion around the absence of a clear private-cloud strategy on Amazon’s part. Though Amazon currently does not have a private cloud service for customers to run their own data centers, some are wondering if this will become necessary in the near future.

Our take: Amazon’s strength is in staying pure to their vision of a multi-tenant cloud service. Private clouds dilute many of the advantages of going to the cloud in the first place so we see Amazon’s position as an advantage rather than a disadvantage.

Dell, HP to talk cloud transition at Structure:Europe
GigaOM, 7/10/2013

Summary: After Gartner set expectations for the public cloud services market to hit $130 billion this year, companies such as Dell and HP have shifted their cloud strategies in an effort become a more comfortable choice for corporate IT buyers. Many are curious to see how cloud transitions of both companies will progress this year.

Our take: Dell and HP have recognized the reality that the corporate data center is going to be replaced over time and are creating offerings that will ease the transition for themselves and their customers. The challenge will be shifting their business models from hardware and software sales to becoming PaaS and IaaS providers. The other option would be to follow the Oracle playbook of arming the next-gen ISVs.

Cloud Computing Market May Become An Oligopoly of High-Volume Vendors
Forbes, 7/11/2013

Summary: In determining where the cloud marketplace is headed, senior analyst at 451 Research, Owen Rogers, points to the emergence of an “IT oligopoly”, where the primary cloud computing market could be consolidated into the hands of only the most powerful vendors. Along these lines, there are predictions that the vendors who will succeed in the space will be those that can forecast demand, invest appropriately to meet it, and perform large scale deliveries.

Our take: The assumption is hard to argue with at the infrastructure layer where scale providers such as Amazon and Google are likely to dominate. At the platform layer, we expect to see a broader array of players and even more so at the application layer. It’s easier to build applications on PaaS such as Google Cloud Platform or Force.com so we expect a growth in the number of cloud ISVs rather than a consolidation, at least in the medium-term.

Are your cloud plans in synch internally?
ZDNet, 7/11/2013

Summary: As the role of the IT manager is quickly transforming, companies are evaluating internal structure around cloud services. Evolve IP conducted a survey of over 1,000 business executives and found that of those surveyed, C-level executives see more value in the cloud than IT managers. The survey also shows that within the next three years, nearly 75% of these respondents plan to take on more cloud services.

Our take: These findings are consistent with McKinsey’s research showing that C-level execs are becoming cloud believers and expect more from moving to the cloud than just cost savings. Part of the issue is that realizing benefits beyond cost savings require IT teams to not just replace their technology but start operating in fundamentally different ways.

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