Cloud, Commodity Infrastructure and Company Valuations

Last week was another interesting week with more changes and activity in the cloud management ecosystem. It was Eucalyptus Systems’ turn to double down and make some management changes bringing Marten Mickos in as the new CEO. Om Malik at GigaOM wrote a good summary of the change. But what really caught my eye in the article was the potential valuation of Eucalyptus at $100M (wow!).

In this early market there are many opportunities for innovative new players (like Eucalyptus and Platform Computing) to challenge the status quo of incumbent enterprise management and virtualization vendors who have long term (read:“locked in and costly”) relationships with enterprise users. The open source approach that Eucalyptus is taking typically succeeds in companies where there are already well defined solutions (SQL, UNIX) and open source is a way to lower the price. In the case of IaaS (Infrastructure as a Service), which is an emerging and early market there isn’t the same dynamic for open source to play off against. The potential for a high valuation for an organization like Eucalyptus or Platform is tied to the ability to deliver on the promise of cloud, which can enable enterprise customers to usher in a shared commodity architecture.

Platform Computing has a track record of delivering on commodity architecture for more than 18 years, having helped many of our large enterprise customers break down their silos through the adoption of our cluster and grid middleware. We see the cloud market evolving in a similar way, as organizations look to adopt a commodity architecture for a larger part of their enterprise infrastructure. We agree that there is a lot of opportunity for the creation of value in this move, but also believe that enterprise users will demand industrial solutions and nimble vendors who can deliver to their demanding enterprise requirements.

Webinar Today: “Beyond Virtualization: Redefining Services with Private Cloud”

Today we’re hosting a Webinar to discuss how private clouds can provide a more responsive and cost effective IT service delivery model. We’re lucky to have Rick Parker, IT Manager, Fetch Technologies and Joe Szalkiewicz, VP, The Pinnacle Group, on board to share their experiences in their organizations’ private cloud implementations.

As many of you may know, Fetch Technologies is a software company that works with organizations to extract, aggregate and use real-time information from different websites. Fetch will share how moving to a private cloud allowed them to become more responsive to their customer demands without additional costs. The Pinnacle Group, a systems integrator that offers IT hardware, software and networking solutions and services, will talk about their experiences implementing in private clouds for their customers and why companies are looking to private clouds to help streamline their operations.

Please join us on Tuesday, March 16 at 11:00 a.m. EST for this in-depth look at how companies can utilize existing IT assets more effectively and efficiently with a private cloud computing model.

To register for the event, please visit: http://www.platform.com/go/2010/beyondvirtualization/index.asp

EMC's Chuck Hollis: Good Blog Post

Chuck Hollis at EMC posted an interesting blog last week; see Clouds Need To Be Better Than The Environments They Replace. Chuck is right but we are missing one overriding point about private clouds, namely that one aspect of “better” is often the ability to take control away from the vendors. This often is THE key value proposition for senior IT architects in the context of private clouds.

Chuck makes the case for better quite well, including:
· Usual progression of value propositions that drive new technology/model adoption that cloud is following: Cool --> Cheaper --> Better. Agreed. Maybe add Accessible
· Cost-to-Serve. Time-to-Serve. Agreed--this is a great way to think about this because service is at the forefront. Maybe also add Ease-to-Serve.
· Private Cloud defined as being under control of IT. Agreed, and agreed on the other elements of the definition. However, the issue is how to get there. This gets to my control point.

Cloud (including private cloud) management and middleware are is a strategic control decisions for enterprises. One option is to extend VM management, provisioning and hardware resource management platforms. This should and will inevitably happen. However, there is another decision that needs to be made about whether to architect a “layer of independence” into the overall stack and system. Enterprises that want more control over their system and more leverage over their hardware and software vendors are likely to view independent and/or open source management and middleware solutions as a way to make their overall business model or investment plan “better” by squeezing more (performance-wise and financially) from their best-of-breed proprietary solutions.

This is what it’s really about. The users taking control over IT to get better service, and IT taking control over its supply chain to either get better service or deliver better service. The point is that “better,” when it comes to private clouds, means not just a better alternative to today’s architectures/solutions/capabilities, it can mean a better alternative to their current position in the supply chain.

Migrating from Grids to Clouds

John Barr (Research Director for Financial Services at 451 Group) published an interesting article yesterday (available to 451 Group subscribers), on Oracle’s migration from Grid’s to clouds. It’s a good summary of the approach that Oracle has used to cloak themselves in some of the current industry terms, evolving from Real Application Clusters, to Oracle Grid, to their new found focus on Cloud.

Based on our activities in the market, John’s article really caught my eye, and I figured it was a good opportunity to provide some additional thoughts and comments based on what we are seeing in the market.

The notion of Grid to Cloud (or whatever the next distributed computing paradigm) is one that we see with our customers as they continue to evolve their infrastructure. As stated in John’s article, many clients view this as a continuum, beginning with their Grid activities and then building on the expertise of the large scale, utility, shared services approach they have developed with their grids to evolve towards a cloud. The additional step most organizations take on this path is the integration of additional automation or virtualization technologies into the mix, to dynamically create and configure the resources in their grid, based on workload demands.

What is really interesting in this evolution is how ‘cloud like’ many of these Grid and HPC customer infrastructures are. Typically these environments, are large scale, shared amongst different users and business units, charged back based on some notion of consumption, and operated in the Google or Amazon like model for efficiency with 1000’s of servers per system administrator. The experience in operating these distributed computing environments (Clusters, Grids) has allowed many F1000 companies across multiple industries to jumpstart their cloud initiatives, providing them internal expertise and technologies that they can build from to broaden the adoption of this commodity shared infrastructure to additional applications and users.

We have shared some of our customer Grid and Cloud stories (like CERN) as we have worked with clients on this evolution and will be providing more examples as we move forward. Hopefully many in the cloud community can get beyond the terminology debate and concentrate on the capabilities and characteristics that make these shared computing environments similar, so that people can learn and build from past experience.

Never A Dull Week in Cloud Management:

Last week was an eventful one for the cloud management software space with CA acquiring of one of the small startups in the space, 3Tera - and the shuffling of management technologies between EMC and VMware.

I wanted to provide some thoughts on both of these news items as indicators of the fundamental shift taking place in the market that is being driven by the adoption of cloud computing models within enterprise IT environments.

CA and 3Tera

By now many will have heard the news about this acquisition by CA that expands their footprint from enterprise management into cloud management. Multiple analysts, authors and publications have weighed in on its impact on the market. Out of the many articles on this acquisition, I found some good content from Om Malik at GigaOM, where they had predicted a move like this by one of the management players, and Denise Dubie at NetworkWorld who has some extra insight on the roadmap plans for 3Tera within CA.

One blog I particularly liked was written by James Staten, Principal Analyst at Forrester who wrote a perspective on the benefit of and need to include workload management in the IaaS solution. This is very consistent with what we are seeing in our customer engagements around Platform ISF. Self-service provisioning of environments on the cloud is a table-stake requirement. What makes the real difference for customers is the ability to bring workload management into the mix and balance the supply and demand to maximize the effectiveness of the private cloud infrastructure.

VMware and EMC Ionix

Our friend Timothy Pickett Morgan at The Register covered another big piece of news last Friday, with EMC moving significant enterprise management assets to VMware, enabling VMware to be the “Enterprise Management” play in the EMC and VCE family. It appears that vCenter will now become the focal point for enterprise management in the new cloud model, in direct competition with the incumbent “Big 4” providers (I guess we can call them the Big 5 now?). To me this is further indication of the drive for a few large vendors to consolidate and provide the entire cloud stack for enterprise customers, locking them in across multiple layers of technology and reducing their options and choice to control their environment.

Is there a common theme across these acquisitions and shuffles? To me, it appears there is - and it’s the big players moving to lock-in and control the emerging cloud model. I am not sure this will result in the best outcome for enterprise customers, particularly if they are forced to choose between competing, “all inclusive” cloud stacks. There is room and value in cultivating an alternative approach that leaves customers in control of future cloud architectures.