There is an arms race raging between cloud and IT platform providers, and the war is about to take place in the large enterprise. As Amazon, Google, Microsoft and Oracle focus on the large enterprise market, they have traditional IT platform providers in their crosshairs; that is, HPE, Dell/EMC, Cisco, VMware, IBM, et al. Cloud providers have been hugely successful in the small to mid-sized enterprise market but have struggled in the large enterprise market, thanks to security, compliance and the overall complexity of the large enterprise market where the list of requirements are long and the inertia to change is high. At present, we’re in the calm before the storm, with cloud and platform providers creating relationships or partnerships to address mostly hybrid cloud demand, but make no mistake about it, the cloud providers are after the platform vendors’ revenues.
Here are the top five things you need to know to prepare.
Software-Advantage Cloud Providers: The cloud providers have been busy hiring the best and brightest software engineers and commoditizing their hardware investments. They are all in on software building blocks, and that software eats the world. At ONUG, we had thought early on that the separation of hardware and software from infrastructure would create a new industry structure made up of commodities hardware players and a new set of innovative software companies that were faster to deliver features and value. Well, we were right about the new industry structure, but it’s the cloud providers that ceased this opportunity. Cloud providers are in a feature war with traditional enterprise platform vendors, and they are winning. In fact, most ONUG Community members believe that the cloud providers will solve the security issues that hamper most cloud workload deployments much faster than traditional players. In short, the cloud providers are moving faster as they are truly software-based, giving them speed to market advantage.
Enterprise Initiatives-Advantage Cloud Providers: The cloud providers are viewing the enterprise market in a fundamentally different way than traditional platform suppliers. For example, Google’s eSDN initiative seeks to make enterprise infrastructure 1/10th the cost and 10 times easier + faster than today. The cloud providers have no installed base or margins to preserve, and with software as their preferred weapon, they can change the rules of the game in their favor.
Financials-Advantage Cloud Providers: According to IDC, cloud providers spent some $27B on infrastructure in 2017, and IDC projects a 14.2% GAGR that will balloon spending to $48.1B in 2020. That’s the size of Cisco’s revenue in 2017!
Installed Base-Advantage Platform Providers: In reality, this advantage is mixed as Microsoft and Oracle understand the large enterprise market extremely well. But in the large enterprise, legacy applications simply do not go away; many run workloads on mainframes. The large enterprise is slow to move, and this inertia may prove to be one of the best advantages of the IT platform suppliers in this war.
Skills and Training-Advantage Platform Providers: Many of the cloud providers are focused on container-based and serverless workloads. While this is great for new native cloud applications, the biggest impediment for large enterprise adoption is lack of skills and correspondingly high cost of training. At ONUG, IT organization structure, culture and skills have been shown to be the largest barrier of entry for cloud adoption.
In addition, there have been many failed attempts for vendors to offer a common stack or bridge between private and public cloud. The vendor community always seems to be in the process of “King making,” with mixed results that tend to waste tens of millions of dollars, if not more. Unfortunately, customers pay that cost as it diverts attention and investment away from product and service development. We’ve seen this in OpenStack, ONF, OCP, Eucalyptus and now with Kubernetes/Docker and the Cloud Native Computing Foundation or CNCF.
But what the Kubernetes/Docker initiative has in its favor over past vendor initiatives is that most major cloud providers will offer the same flavor of Kubernetes. That is, if the cloud providers offer a common container ecosystem and IT leaders in large enterprises implement said container ecosystem in a thoughtful way, then IT departments should be able to run container workloads across clusters on multiple clouds. This would be a major new software building block for the large enterprise market and fundamentally change the way IT is delivered.
In war strategy terms, this is the cloud providers’ flanking strategy over the platform suppliers. There’s a three-year war chest build up happening now. We’ll see how this plays out at ONUG as all the major cloud and platform providers will be there showing their weapons.