Posts Tagged ‘Private clouds’

Monday’s Musings: Lessons Learned From Amazon’s Cloud Outage

Amazon’s Cloud Outage Catches Most Clients Offguard

The recent Amazon cloud outage at its Northern Virgina data center from 5 am Thursday, April 21, 2011 to roughly 5 am Friday, April 22 has shaken the confidence of some executives on public cloud computing.  Most notably, FourSquare, HootSuite, Reddit, and Quora publicly suffered visible performance issues.  The industry’s reassurances in the past on up time performance and massive redundancy capabilities combined with the massive corporate adoption had everyone believing that public clouds were bullet proof.  As calmer heads prevail, most CIOs, business leaders, and analysts realize that:

  • Cloud outages are rare but can happen. While most organizations can not deliver 99.5% up time let alone 90% performance, disruptions can and will happen.  The massive impact to so many organizations last week highlights potential vulnerabilities of betting 100% of capacity in the cloud.  More importantly, it showed that broad adoption does not equate with bullet-proof reliability.  Most organizations lacked a contingency plan.
  • Cost benefit ratios still favor cloud deployments. For most organizations, the cost of deploying in the cloud remains a factor of 10 cheaper than moving back to the traditional data center or even a private cloud.  Capital costs for equipment, labor for managing the data center, excess software capacity, and the deployment time required to stand up a server create significant cost advantages for cloud deployments.
  • Current service level agreements lack teeth and should be improved. Most organizations lack teeth in the cloud/saas contracts to address service level agreement failure.  Despite all backups and contingency plans, clients should consider scenarios where core business systems go down. What remedies are appropriate? What contingencies for system back up are in place.   Who is responsible for disaster recovery? Will the vendor provide  liability and for what?

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Research Report: Constellation’s Research Outlook For 2011

Organizations Seek Measurable Results In Disruptive Tech, Next Gen Business, And Legacy Optimization Projects For 2011

Credits: Hugh MacLeod

Enterprise leaders seek pragmatic, creative, and disruptive solutions that achieve both profitability and market differentiation.  Cutting through the hype and buzz of the latest consumer tech innovations and disruptive technologies, Constellation Research expects business value to reemerge as the common operating principle that resonates among leading marketing, technology, operations, human resource, and finance executives.  As a result, Constellation expects organizations to face three main challenges: (see Figure 1.):

  • Navigating disruptive technologies. Innovative leaders must quickly assess which disruptive technologies show promise for their organizations.  The link back to business strategy will drive what to adopt, when to adopt, why to adopt, and how to adopt.  Expect leading organizations to reinvest in research budgets and internal processes that inform, disseminate, and prepare their organizations for an increasing pace in technology adoption.
  • Designing next generation business models. Disruptive technologies on their own will not provide the market leading advantages required for success. Leaders must identify where these technologies can create differentiation through new business models, grow new profit pools via new experiences, and deliver market efficiencies that save money and time.  Organizations will also have to learn how to fail fast, and move on to the next set of emerging ideas.
  • Funding innovation through legacy optimization. Leaders can expect budgets to remain from flat to incremental growth in 2011. As a result, much of the disruptive technology and next generation business models must be funded through optimizing existing investments. Leaders not only must reduce the cost of existing investments, but also, leverage existing infrastructure to achieve the greatest amount of business value.

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Research Report: 2011 Cloud Computing Predictions For Vendors And Solution Providers

This blog was jointly posted by @Chirag_Mehta (Independent Blogger On Cloud Computing) and @rwang0 (Principal Analyst and CEO, Constellation Research, Inc.)

Part 1 was featured on Forbes: 2011 Cloud Computing Predictions For CIO’s And Business Technology Leaders

As Cloud Leaders Widen The Gap, Legacy Vendors Attempt A Fast Follow
Cloud computing leaders have innovated with rapid development cycles, true elasticity, pay as you go pricing models, try before buy marketing, and growing developer ecosystems.  Once dismissed as a minor blip and nuisance to the legacy incumbents, those vendors who scoffed cloud leaders now must quickly catch up across each of the four layers of cloud computing (i.e. consumption, creation, orchestration, and infrastructure) or face peril in both revenues and mindshare (see Figure 1).  2010 saw an about face from most vendors dipping their toe into the inevitable.    As vendors lay on the full marketing push behind cloud in 2011, customers can expect that:

Figure 1. The Four Layers Of Cloud Computing

General Trends

  • Leading cloud incumbents will diversify into adjacencies. The incumbents, mainly through acquisitions, will diversify into adjacencies as part of an effort to expand their cloud portfolio. This will result into blurry boundaries between the cloud, storage virtualization, data centers, and network virtualization.  Cloud vendors will seek tighter partnerships across the 4 layers of cloud computing as a benefit to customers.  One side benefit – partnerships serve as a pre-cursor to mergers and as a defensive position against legacy on-premises mega vendors playing catch up.
  • Cloud vendors will focus on the global cloud. The cloud vendors who initially started with the North America and followed the European market, will now likely to expand in Asia and Latin America.  Some regions such as Brazil, Poland, China, Japan, and India will spawn regional cloud providers. The result – accelerated cloud adoption in those countries, who resisted to use a non-local cloud provider.  Cloud will prove to be popular in countries where software piracy has proven to be an issue.
  • Legacy vendors without true Cloud architectures will continue to cloud wash with marketing FUD. Vendors who lack the key elements of cloud computing will continue to confuse the market with co-opted messages on private cloud, multi-instance, virtualization, and point to point integration until they have acquired or built the optimal cloud technologies.  Expect more old wine (and vinegar, not balsamic but the real sour kind, in some cases) in new bottles: The legacy vendors will re-define what cloud means based on what they can package based on their existing efforts without re-thinking the end-to-end architecture and product portfolio from grounds-up.
  • Tech vendors will make the shift to Information Brokers. SaaS and Cloud deployments provide companies with hidden value and software companies with new revenues streams.  Data will become more valuable than the software code. Three future profit pools willl include benchmarking, trending, and prediction.  The market impact – new service based sub-categories such as data-as-service and analysis-as-a-service will drive information brokering and future BPO models.

SaaS (Consumption Layer)

  • Everyone will take the SaaS offensive. Every hardware and system integrator seeking higher profit margins will join the Cloud party for the higher margins.  Software is the key to future revenue growth and a cloud offense ensures the highest degree of success and lowest risk factors.  Hardware vendors will continue to acquire key integration, storage, and management assets.  System integrators will begin by betting on a few platforms, eventually realizing they need to own their own stack or face a replay of the past stack wars.
  • On-premise enterprise ISVs will push for a private cloud. The on-premise enterprise ISVs are struggling to keep up with the on-premise license revenue and are not yet ready to move to SaaS because of margin cannibalization fears,lack of   scalable platforms, and a dirth of experience to run a SaaS business from a sales and operation perspectives. These on-premise enterprise software vendors will make a final push for an on-premise cloud that would mimic the behavior of a private cloud. Unfortunately, this will essentially be a packaging exercise to sell more on-premise software.  This flavor of cloud will promise the cloud benefits delivered to a customer’s door such as pre-configured settings, improved lifecycle, and black-box appliance. These are not cloud applications but will be sold and marketed as such.
  • Money and margin will come from verticalized cloud apps. Last mile solutions continue to be a key area of focus.  Those providers with business process expertise gain new channels to monetize vertical knowledge.  Expect an explosion of vertical apps by end of 2011.  More importantly, as the buying power shifts away from the IT towards the lines of businesses, highly verticalized solutions solving specific niche problems will have the greatest opportunities for market success.
  • Many legacy vendors might not make the transition to cloud and will be left behind. Few vendors, especially the legacy public ones, lack the financial where with all and investor stomachs to weather declining profit margins and lower average sales prices.  In addition, most vendors will not have the credibility to to shift and migrate existing users to newer platforms.  Legacy customers will most likely not migrate to new SaaS offerings due to lack of parity in functionality and inability to migrate existing customizations.
  • Social cloud emerges as a key component platform. The mature SaaS vendors that have optimized their “cloud before the cloud” platform, will likely add the social domain on top of their existing solutions to leverage the existing customer base and network effects.  Expect to see some shake-out in the social CRM category. A few existing SCRM vendors will deliver more and more solutions from the cloud and will further invest into their platforms to make it scalable, multi-tenant, and economically viable.  Vendors can expect to see some more VC investment, a possible IPO, and consolidation across all the sales channels.

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Tuesday’s Tip: 10 SaaS/Cloud Strategies For Legacy Apps Environments

Legacy Apps Customers Seek Practical Advice

Organizations determining when and how to make the move to SaaS and Cloud face realistic challenges in gaining buy-in and realizing the apparent and hidden benefits of SaaS/Cloud.  In a recent survey of over 300 companies, 73 respondents who were wary of SaaS/Cloud were asked to list the top 3 reasons they did not plan to deploy a SaaS/Cloud solution in the next 12 months (see Figure 1).  The top 3 reasons related to legacy environments, org structure, and governance include:

  • Legacy apps CIO’s. CIO’s vested in protecting the existing investments may often proceed with caution for SaaS and Cloud solutions.  In some cases, sunk cost mentality takes hold and the goal of being 100% pure with a single vendor clouds the vision to meet needed business requirements.
  • Burden of legacy apps. Legacy apps maintenance and upkeep represents a key barrier to SaaS and Cloud adoption.  Organizations often remain complacent about maintenance and upgrades, preferring to avoid substantial changes and risk.   Becuase the money and resources to support legacy apps consume most of the budget, organizations have little funds for innovation and experimentation.  Eventually, business decision makers procure SaaS/Cloud solutions to by-pass IT.
  • No IT team buy in.  Many constrained IT teams have not taken the time to understand the requirements to support SaaS and Cloud apps in a hybrid mode.  SaaS requires organizations to revisit SOA strategies, integration requirements, and master data management.  Business leaders and decision makers often overlook these dependencies at the organization’s long term expense.

Figure 1.  Legacy Issues Hamper SaaS/Cloud Adoption


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