Transitioning From The Enterprise To The Cloud

By Juergen Urbanski

At its user conference DreamForce’09, Salesforce.com released some impressive statistics on the traction that its Force.com platform has been gathering. The company claims 135,000 custom applications and 10,000 sites are built on Force.com. Already, 55% of the HTTPS transactions the company processes come through the API (i.e., from partner applications) versus only 45% coming from Salesforce’s own applications.

What drives that adoption and how does Force.com stack up against the alternatives?

New research [email info@techalpha.com] by GigaOmPro analyst firm TechAlpha contrasts the strengths and weaknesses of Force.com vs. platforms provided by NetSuite, Workday and Intuit. TechAlpha finds that PaaS is gaining most traction with corporate developers, not independent software vendors (ISVs).

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This article, written by Laton McCartney, first appeared on CIOZone.com and is re-posted here courtesy of Information-Security-Resources.com

It’s too early to gauge the full impact that cloud computing will have on the responsibilities and priorities of chief information officers, but some changes are already evident.

Clearly, CIOs will serve as the change agents as the cloud becomes more pervasive through the enterprise.

They’ll likely need to educate fellow C-level executives from the CEO and CFO on down as to how cloud computing can benefit the organization - and where it may fall short or create security problems.

Likely it will be up to the IT chief to act as a relationship and portfolio manager in negotiating with cloud service providers and monitoring their performance.

And that’s just for starters. Here are five ways the cloud could alter the CIO position

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By George Gilbert

This post originally appeared on GigaOm here.

VMware has finally joined Microsoft, IBM and Oracle as one of the four horsemen in the market for platforms for building, running and managing corporate and cloud applications. With its SpringSource acquisition, VMware can now compete with specialized platform-as-a-service offerings like Microsoft’s Azure. In addition, SpringSource’s introduction of Cloud Foundry yesterday makes a crucial connection between deploying Spring-based and other Java applications in the enterprise and the cloud while giving developers an increased ability to manage their applications in a self-service mode.

Before the SpringSource acquisition, VMware faced potentially diminishing returns by putting a layer that manages virtualization on ever more of the enterprise infrastructure. That layer, which VMware pioneered and dominated, cracked open Microsoft’s control of the hardware by sliding a hypervisor underneath the operating system.

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By Juergen Urbanski

The crisis in IT is not about performance or features, it is about complexity.  Complexity makes the enterprise choke on IT operations cost

Performance, in terms of CPU, memory and network bandwidth, is becoming an increasingly abundant commodity that simply gets better, cheaper and faster each year.  The time has passed when any one company can create a sustainable competitive advantage based on hardware alone.

However, there are two scarce commodities that become increasingly prominent year after year relative to the declining costs of the above: latency and human attention.  Latency is forever constrained by the speed of light and the distance between elements of a distributed system.  IT labor does not ride on Moore’s Law either, to the contrary.  As systems increase in scale, complexity increases and more human attention is consumed by the number, relationships and diversity of IT assets in the data center.  Since the number and variety of nodes in an architecture that must be “supervised” by the administrator increases, there are more combinations of things that can go wrong.

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By Juergen Urbanski

Our Summer poll among enterprise storage customers suggests that appetite for experimentation with innovative technologies is low in the current environment.

Key themes emerging from our in-depth survey of 60 enterprises include:

• Cutting cost today: Customers are concentrating storage spend on a smaller number of leading OEMs (e.g., EMC, IBM, HP, DELL, NetApp, SUN), who may not always be the lowest cost providers, presumably in the hope of wringing volume discounts out of their established vendors and avoiding the complexity and management overhead that can come with more heterogeneous environments. In a notable departure from past practice, they push storage vendors to quote software separately from hardware. Many consider price per GB a top criterion for new purchases, a slightly short-sighted view perhaps that neglects lifetime TCO per GB. Customers are rolling out storage efficiency technologies as fast as they can. The motivation for this move though is to push back additional capex as long as possible, rather than keep more data around for longer. Read the rest of this entry »

By Juergen Urbanski

Q: Jeff, what percentage of enterprise IT demand for storage will be fulfilled by service provider (i.e., external) clouds in 3-5 years? What drives that?

A: In 2014, 80% of new storage capacity and 50% of spend may go to the cloud, driven by the complexity crisis you laid out. The opex for sustaining IT is driving the majority of TCO, even though disk and array prices continue to decline. Most IT organizations will lack the time, budget or experience that will be required to successfully fulfill their own storage needs. Against that, we can deliver our service to customers at one fifth to one tenth the TCO of equivalent NAS-class enterprise storage arrays, assuming street pricing and a 3-year depreciation cycle.

Q: What percentage of enterprise IT demand for storage will be fulfilled by enterprise (i.e., private) clouds in 3-5 years?

A: Longer term we expect to see very few private clouds in the general enterprise space, except for government and perhaps some extreme high performance computing situations. I doubt the average enterprise customer will be able to successfully buy, configure, deploy, manage and grow a private storage cloud. If they couldn’t keep up with data growth in the legacy world, in spite of attempts to standardize on fewer vendor products and interfaces and more storage monitoring and management, what makes anyone think they will be able to handle more hardware, more variable performance components, more monitoring that would be typical of a private cloud?

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By Juergen Urbanski

This post originally appeared on GigaOm here.

Data Domain today finally agreed to be acquired by EMC for $33.50 per share, triggering payment of a $57 million break-up fee to NetApp. For EMC the buy is very much about “keeping your friends close but your enemies closer.”

Storage efficiency (notably de-duplication) is the enemy of a business model predicated on pushing more disk capacity out the door year after year (GigaOM Pro note, sub required), which is why customers we spoke to would have preferred to see such a disruptive technology remain in the hands of an independent vendor. And where, exactly, does this leave NetApp?

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By Juergen Urbanski

This post originally appeared on GigaOm here.

As Mike Speiser discussed recently, flash solid-state drives (SSD) will enable a once-in-a-decade improvement in storage price-performance. Crucially, flash SSDs enable storage to keep up with the rapid advances in CPU speeds driven by Moore’s Law. This may enable customers to dramatically scale back purchases of expensive Fibre Channel (FC) disks and, potentially, high-end FC arrays. However, some early flash SSDs implementations come with a set of limitations that customers need to be aware of, notably around usability and resilience.

Why now?
Solid-state disks have been proclaimed the “future of storage” in the past, but we are now approaching an actual inflection point because:

- SSD pricing is declining at more than 50 percent per year, and SSDs have recently become cheaper than their nearest competitior (FC disks) as measured by effectively usable capacity; the gap will continue to widen in favor of SSD, as disk prices decline just 25-30 percent annually.

- The exciting (and cost-effective) use case for SSD is as a cache for frequently accessed data that front-ends lower-cost SAS and potentially SATA disks, rather than as primary storage.

- Weaknesses of using SSDs as flash memory are starting to be addressed through smart firmware that sits in the controller.

Pace of adoption
Overall, TechAlpha believes flash SSD is one of the most disruptive trends in storage, but it will only become material to the market beyond 2010. Customers we interviewed for our GigaOM Pro research note (subscription required) tend to focus more on cost per GB in the current economic climate, and less on cost per Input/Output Operations Per Second (IOPS), which is where flash SSD excels. However, the vendor executives we interviewed agree that flash SSD is the single most disruptive trend for which their companies are preparing, causing them to completely rethink how and where data is stored.

Three developments are likely to converge in 2011 and drive broader adoption:

- Vendors will bring more robust flash SSD solutions to market.

- Customers will look beyond short-term IT cost savings toward business value enabled by technological innovation. One large bank we heard from estimated that every millisecond of storage response time reduction translates to tens of millions of dollars in incremental annual profit, because securities trades are executed faster.

- Flash SSD pricing will be comfortably below that of FC on a cost-per-effective-GB basis.

We believe flash SSD will start to replace a good share of the high-performance (i.e., FC) disk market in the next 2-3 years. Already, flash SSDs are starting to take off in the high IOPS use cases, delivering much reduced power consumption and radically better read performance. The speed of broader adoption, though, will largely depend on how well vendors address some limitations (which we describe in more detail in our GigaOM Pro note). The early adopter workloads will likely be search, video rendering, email and potentially other mission-critical applications.

By George Gilbert

This post originally appeared on GigaOm here.

Moore’s Law has enabled new applications by powering computing on an exponential price/performance curve. But increasingly, the proliferation of a new generation of large-scale applications is being constrained by another price/performance curve that hasn’t shown much improvement: IT operations and the cost of delivery. To create ever more sophisticated applications that can be delivered from public or private clouds, we have to ride a delivery cost curve that looks more like Moore’s Law. Otherwise, we’ll choke on our systems.

Timothy Chou, ex-president of Oracle On Demand, has written a book (“Cloud: Seven Clear Business Models“) that takes a fresh perspective on cloud computing. To him, the key promise of the cloud is to reduce the cost of delivering applications by improving IT operations. Traditional legacy applications such as Oracle or SAP have a fully loaded cost of delivery of $1,000-$1,500 per user per month. Several years ago, Oracle On Demand got that cost down to $50-$100, whether it was Oracle-hosted or customer-hosted. SalesForce.com has squeezed that cost down even more to $7-$10, though admittedly just for the much lighter-weight CRM portion of the suite.

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By Juergen Urbanski

Two trends shape big picture industry strategy

We think the storage industry is at an inflection point and may be about to face serious business model disruption from a combination of factors, including virtualization, flash solid state disk, increased storage efficiency and the advent of cloud computing. Against that context, it seems to us that the sweet spot currently is in one of two camps:

1. Fully integrated infrastructure solutions, notably for small- and medium-sized enterprises, from HP, IBM, Cisco + EMC, Sun + Oracle, or Dell + TBD. HP, IBM and Cisco in particular are driving a major vendor and technology re-alignment in the data center. That re-alignment, let’s call it data center tectonics, aims to bring unprecedented levels of integration across virtualized resource pools of storage, servers and networking. The general idea behind this strategy is that, while many of the point products in each silo are commoditizing, customer total cost of ownership has not come down as a result because operational complexity has not come down. In other words, IT labor does not ride on Moore’s law, particularly as the data center gets more complex not more simple. Hence, these mega-vendors are hoping to justify high margins on an integrated solution - unified computing for example - if they can bring customers’ operational costs down. This is particularly relevant for small- and medium-sized enterprises, since those tend to lack the human and financial resources to stitch together best-of-breed point solutions from various vendors. Moreover, since the mega-vendors rarely have the focus to create best-of-breed solutions across all their product lines, they are most successful at selling storage as part of a larger deal, notably with servers. Finally, those mega-vendors also leverage their commercial clout with suppliers (e.g., large volumes beget low input costs) and customers (e.g., one-stop-shop solution and account control). So that can be a very sustainable, profitable position.

2. Next generation best-of-breed solutions targeting the large enterprise and service provider space. A host of challengers are attacking the legacy storage OEMs with innovative point solutions optimized for specific workloads or environments. Not surprisingly, a lot of that innovation falls into four areas: virtualization, flash solid state disk, storage efficiency and cloud computing. Most of these challengers are small ankle-biters. Data Domain is the largest of the challengers in revenue terms, and has carved out a leading position in just one area – de-duplication to achieve higher storage efficiency. In general, the only long-term future we see for these ankle-biters is in the arms of the mega-vendors. Given the data center tectonics trend and the commercial rationale for further consolidation described above, it makes a lot of sense for the mega-vendors to resell, OEM or buy the ankle-biters. (It remains to be seen whether the other large challenger, 3PAR, can carve out a large enough position at the high-end next to IBM, HDS and EMC to remain independent long term.)

NetApp is stuck in the middle

The basic strategic challenge for NetApp is that the company is ’stuck in the middle’ between these two trends / sweet spots. Fundamentally, NetApp suffers from the fact that it is, for the most part, still a single product line with limited growth opportunity in its core market. Its attempt to penetrate the data center with its “unified storage” message has met only moderate success and its WAFL (wide area file layout) is actually limiting its growth in different segments. While goodwill / sentiment towards NetApp is still very positive among the customers and channel partners we spoke with, the company’s revenue from large enterprise accounts seems down about a quarter year over year. At the same time, the company may feel exposed to the downside from cloud computing, given that Facebook and Yahoo seem to have turned away from NetApp. Meanwhile, arch rival EMC has relied on more than a dozen acquisitions for access to innovation and a broader portfolio, and has aligned itself closely with Cisco. In essence, NetApp seems very exposed and needs to increase its relevance to customers for continued growth.

Acquiring Data Domain provides some growth for NetApp but does not solve strategic challenges

Data Domain not only provides NetApp with industry-leading storage efficiency technology but also, and this is often overlooked, provides a back door into EMC accounts.

• NetApp management estimates that NetApp, which has a leading position in de-duplication for primary storage, will have only 6 percent customer overlap with Data Domain, which dominates de-duplication in backup settings.
• On the offensive, NetApp can leverage Data Domain as a way to penetrate new accounts where EMC or HDS may be entrenched in primary storage, with the eventual goal of cross-selling NetApp primary storage into those accounts.
• On the defensive, Data Domain products can be cross-sold into NetApp’s large enterprise customer base (60-70 percent of NetApp revenue) and to international markets (45 percent of NetApp revenue, but only 22 percent of Data Domain revenue). In particular, this should prop up NetApp sales into top enterprise accounts, which have been underperforming of late.

With a cash pile of only a fraction the size of EMC’s, and lacking a track record of successful M&A, it remains to be seen though how NetApp will fare longer term as a stand-alone entity in a consolidating industry. Perhaps it might be driven closer into the arms of its partner IBM who already OEMs NetApp solutions.

EMC’s bid for Data Domain seems primarily a defensive move

EMC’s bid prevents EMC competitors and its partners (e.g., Dell) from accessing a technology that is reasonably strategic to the industry. It also precludes arch-rival NetApp from getting inside EMC accounts via a “Trojan horse.” Moreover, it provides EMC with more of a proven solution compared to selling its owns Avamar product or products from partner Quantum. And finally, it may reduce pricing pressure, since Data Domain reported running into EMC on 50-60 percent of deals. EMC’s reported tactic was to bundle de-duplication functionality into these deals at no extra cost.