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June 11, 2010

The Shape of Enterprise Cloud Models in 2020

Nicole Hemsoth

If you predicted out loud that there would be hybrids everywhere in the year 2020, many within earshot would likely agree with you — that is if you were talking about automobiles. According to the research firm BroadGroup, however, the hybrids that will be taking over are, of course, hybrid clouds in the enterprise. And if their speculations are correct, there’s going to be a massive migration underway over the next ten years.

According to the most recent report released from the European analysts, private clouds in the enterprise environment are merely a stepping stone that will usher enterprises into a future of hybrid clouds as a vast majority — in other words, now is just the beginning test phase of a much larger movement of nearly all non-critical workloads into large public clouds.

As Few as 10 Percent of Applications Will Remain in Private Clouds in 2020?

Stating that clouds of all varieties will find their way into nearly every enterprise vertical in the coming years is not a new prediction by any means. Despite all the chatter, few have been willing to quantify this movement or place real figures into the claims. What was most striking about BroadGroup’s report wasn’t the general projection about cloud movement, it was the specificity of their predictions.

In its public release, BroadGroup’s made the concrete statement that “by 2020, for the majority of enterprises, as little as 10 percent of applications will remain in private clouds. These applications will be core or critical to the business. Non-critical applications will be provisioned via public cloud computing services or via virtual private clouds on public service infrastructures” although it is noted that the main exception will be in financial services and central government.”

So in other words, the in-house cluster persists because enterprises, even in the (not so distant) future, are going to be wary of the public cloud for critical elements of their operations, right? In terms of clouds ever overcoming security barriers, this is a bleak view when coupled with such optimistic projections.

To get more information about how BroadGroup arrived at this estimate of the hybrid cloud coup, I discussed the topic with the author of the report, Marion Howard Healy shortly after the public release. Although it may seem a little nitpicky, the public release said that 10 percent of applications will remain in the private cloud. For some reason, using a “will” versus a “might” kind of makes a difference. I wasn’t necessarily taking her to task about this issue so much at trying to get at the heart of such certainty.

Of those figures, certainties and beliefs based on the BroadGroup’s study, which is entitled “Competing in the Clouds: Emerging Strategies for Enterprise Data Centers“, Healy stated:

I am not sure what’s gone out, but I qualified that in certain statements as little as 10 percent could remain in private clouds — core critical applications or virtual private clouds. I think virtual private clouds in Europe are an important movement; people in Europe are used to using virtual private networks and I think as things develop and more in Europe provide cloud services then my belief is that companies will become more comfortable with moving as long as it’s in a virtual private environment.

I must be candid — I too have trouble with that statement too as it might be overly optimistic. But I do think if you qualify it there’s no reason why, if you’re looking at the whole gamut from SMEs up to large corporate, then that could be quite a valid statement but if you’re looking at just corporate then it’s a perfectly valid statement to make.

Since that’s gone out, I wish the “could” went out other than the “will” but I think by 2020 if you look back 10 years at what’s happened in terms of Internet and social media, innovation and technology time cycles are diminishing things are moving faster, it’s not unrealistic to think that in 10 yers the datacenter and IT marketplace will change significantly from this moment. IT are traditional technology people and new people are coming in with recognition of the internet which will speed the willingness to engage.

Healy continued her clarification about the possibilities of hybrid cloud taking shape as the dominant cloud model in enterprise by making a parallel to the initial fear surrounding early use of credit cards for online transactions. At first, everyone was worried about what could happen if they sent their financial and personal information out into this strange “inter net,” but as it grew more common and regulations and standards were developed to safeguard consumer interest, it rather quickly became as acceptable as paying with a physical card at any store.

Just like we know there are risks with credit cards out there, vendors manage these risks and it becomes a norm — I do stand behind some of that statement. The other thing that’s key for that to happen is for standardization and interoperability, trust, security, and there are bodies who are working to put best practices in place, and that’s important — this standardization to help trust.

On the one hand, Healy is suggesting that as clouds become more common and safeguards are in place, moving out to the public cloud won’t be a concern. The problem with this statement is that it negates their other statement that companies will never let go of physical datacenters because they don’t trust the cloud. So this leaves us back at square one in the entire enterprise cloud debate — which is, dramatic adoption rates or stifling stagnation for years despite the possibilities cloud could provide?

What This (Will) (Could) Might Mean for the Enterprise Datacenter

It seems that there is still a certain traditionalism at play in these predictions since the report contends that enterprises will never let their important data out of the firewall. If this is the case, then what is the future of cloud computing in the enterprise if everyone is climbing about the Migration Express with no real plans to adopt it fully? According to Marion Howard Healy, the culprit here is exactly what you probably anticipated — security, data movement, compliance and regulation. It’s as though the report sees no solution that will be “good enough” to allay concerns enough to make public cloud a viable option.

Barriers to migrating to private cloud are convincing – the biggest is around trust and security of the new technologies. In terms of using public cloud services and where your data is located for European users in part because of our data protection legislation in Europe — that’s one challenge. I think overall one of the biggest challenges that some don’t understand and some have faced is the move to IT as a kind of support mechanism inside companies to IT as a service and the provision of IT as a new consumption model; it implies all sorts of new challenges if they go into their own private cloud and understanding costs and how to charge back and. Change of change of culture, mindset and operating style.

Differences Across the Pond for Enterprise Cloud?

During the discussion with BroadGroup’s Marion Howard Healy, the theme of Europe and America’s differences in cloud adoption models continued to surface. She suggests that the differences that exist in terms of not only level of adoption but the type are rooted in differing regulation practices and standards.

Contracts, SLAs are a big sticking point in Europe and many are testing the water; putting non-critical into public clouds (test and development a big one here and CRM) in terms of infrastructure though it’s a harder thing to try to do. As companies get more into this and more things arrive, the contractural terms need to be in synch and getting this all in order is a challenge.

I am not sure in terms of data protection from the U.S. perspective looking to us, but from Europe looking over to the U.S. the us patriot act worries people in Europe in terms of “if I put my data out into a center in the U.S. I don’t know where my data is…where does it land? In terms of the difference, the issue is about data protection. There are difference in terms of willingness to use it, this is more established on your side than ours but in terms of managed service providers moving up the value chain and offering cloud services beginning at the server arms and resource pools, in Europe that’s a stepping stone to moving into the cloud but in conjunction with those who are established in the marketplace so we’re not ging to Amazon or other big suppliers, but those who you know and trust already. Amazon is trustworthy but people have a perception that SLAs are different and the security is slightly different. For instance, as I heard at a discussion in February they were looking at security on the application level whereas people here look at it on the firewall level.

Viva La Datacenter

Based on their findings, which were formed from profiles and interviews with around a dozen large vendors in Europe and the United States as well as discussions with end users at events, BroadGroup contends that in five years, the sheer number of datacenters will dwindle, even if the enterprise is not already making use of public clouds. This is because of a projection that companies will need to use third-party datacenters and collocation providers to house their infrastructure so that they are able to benefit from the larger economies of scale model that is shifting IT as a whole — at least in the verticals where security might be less of a concern (simulation and modeling, digital content creation, testing and development and so on). What this means is that there could be growth for hosted managed service providers, especially if creating a solid foundation of trust and reliability are at the top of any provider’s list — in practice rather than rhetoric, of course. This will not just be the case for large datacenters either; BroadGroup contends that “there will be strong growth in the number of medium-sized datacenters providing access to pooled resources for local community and specific sector needs.”

The Metaphorical Hybrid

To bring it back to the hybrid car metaphor, let’s make the same claim — by 2010 as little as 10 percent of all cars on the road will be non-hybrids or other sort of dramatically different vehicle than the majority now. Yes, it’s a completely different industry with radically different considerations, but it nonetheless provides us with an interesting point of contention: in a rapidly-evolving marketplace, how much change can we realistically expect in one short decade? After all, with the right incentives (which are so often rooted in cost) who’s to say that such a dramatic shift couldn’t occur? Distinctions about what is possible are important to make now—whether they’re wildly speculative or on the mark doesn’t matter as much as the fact that the discussion persists about what is possible in terms of growth.