Cirrusly needed – an Open Cloud Environment

May 30, 2014

AdamsYou have to have been living under a rock to have not heard about the concept of the 3 rd platform, understanding that paradigm around mobile, social, big data and cloud and the influence that it’s having on organisations as a whole.
From an opportunity point of view, it’s a big number. So last year’s results showed that it was about $15 billion opportunity, but based on our latest results, we can see that there’s been an exponential growth with regards to that.
The most important characteristic that every service provider needs to understand is that this is fundamentally impacting all businesses. There’s only half of them however, that really feel that the movement to the cloud is going to either open your opportunities, disrupt the markets, or alternatively change the way in which they engage as an organisation.
There are real questions now being asked around how is it that I provide value to my customer, but equally how do I remain insightful about that customer. How do I capture more information about what they are doing?
So when you think about the very nature of that, you realise that we’re seeing a bit of a split when it comes to technology. There is the split around what does my business need functionally; what is it that my business needs from a value point of view. And as such we’re seeing this real complexity starting to show up in the value chain.
So if you take the principles of cloud and mobile etc. and you try and overlay it on the legacy ecosystem, take distribution, take your procurement businesses, take those that are trying to add professional services and a management component over the top of it, not only are organisations trying to understand how it is that you can move from a procurement [inaudible] or a balance sheet sale from a customer point of view into this new model of having an annuity based revenue.
But equally, they’re trying to understand what is this new diverse customer mix that I need to deal with. How is it that I deal with a CIO? How is it that I deal with a CMO? And in most cases when you’re actually dealing with the majority volume of organisations [set] by the small business level, how is it that I deal with the CEO? Do I want to go and have a conversation around Ethernet, around infrastructure as a service or do I want to have a conversation around what makes your business faster and more agile?
Then you take the enterprise challenge that sits on top of this and the enterprise challenge is a little bit different. The reality is I want to be as fast as the small business guys because I know that through the use of the manifestation of these different concepts of cloud and social etc I know that my competition has the ability to compete with me quickly to adopt whatever unique value proposition that I might have and come at it with something a little bit different.
So we’re in this really big sort of flux of everybody that’s involved. Equally when you look across the country mix at the moment, you can see from a maturity point of view,when I get into the slides, you can see that different countries are at different stages in their adoption cycle.
So the real questions when you’re starting to evolve yourself into an open or standards approach is really what is the problem that I’m trying to solve and whose problem is it. Because at the end of the day unless the problem is solving a customer — or unless the answer is solving a customer’s problem, then in reality we’re just trying to save ourselves. When in reality in this new world, nobody is being saved, everything is on the table.
So about, well, no, in fact it was last year, when we ran our results, we asked the question of those that are using cloud versus those that are not looking to use cloud.
Now this is private and public, across infrastructure as a service to software as a service and business process outsourcing. We’ve moved from 37% to 2%. So fundamentally you can see that all organisations are believing that they are in the cloud space. Whether or not they are behaving in the cloud space is the question.
And equally there is another question in the business which is who is driving that cloud strategy.
When we asked the questions of our customers, we found that in a lot of instances, the concept of shadow IT is really starting to evolve. The frustrations of the lines of business, the stakeholders who are customer orientated are just going around the CIO office and adopting cloud propositions, avoiding concepts around data and all of those great issues, just because they know that they need this sort of thing to be able to compete.
Equally, when you look at the challenge statement and you look at it, 60% of organisations are adopting two or more cloud services. Now, from a nature point of view, these are very much horizontal propositions. They’re very niche-based in the fact that they apply to almost every organisation.
And the challenge is from a service provider point of view is the reason that is, is because it’s easier to go and sell these horizontal propositions. To really start to get in to something vertically orientated constructs around integrated SaaS or infrastructure as a service requires a lot of effort, requires a lot of pedigree and it requires most importantly a lot of time. So at the moment we’re not there.
But in saying that therein lies the real challenges. How do CIOs and how do these exec tables set up to understand whether or not they actually should by nature be moving for a cloud first strategy much in the way in that the web environment people are moving for a mobile first engagement. Equally if they are going to do that, understanding the value of information inside the business and therefore the policies that you use around the way in which that information is stored and applied.
Cloud is not without its challenges. I think everybody in the room would realise this. If we stay with the execs, fundamentally shifting the governance models around the way in which you engage cloud is a problem statement in its own right. But equally the challenge to service providers is not to hold back with the legacy models of yesterday. But it is to move forward bravely and understand that the value of a service provider is to stay in that complexity space.
The moment you think you’re safe and you’ve got a simple proposition, you need to evolve very quickly. Because when you look at it, the more mature countries have had somewhat less issues. But by and by, the biggest challenge statement for us all in the room, CIOs and service providers alike, is the fact that there is a distinct lack of capability in the marketplace.
Now what that means is it’s not a local problem. It’s not even a regional problem, it’s a global problem. So when you’re thinking about great resources that you have and why they want to be with your business, you’re left in the sort of situation of understanding that they have a fundamental choice. They could be with you or they could be in America. They could be with you or they could be in Europe.
So really making sure that you have a really good understanding of one, your customers’ maturity; equally, two, your country’s maturity and three, how it is that you can attract great people to your business to help with this migration process and mitigate some of these real challenges that we’ve seen.
And I draw the example of Thailand here. Whilst it was a small sample set, the things from a cloud enablement, cloud adoption point of view that we don’t want to see is anyone having a bad experience. So it’s about setting greater expectations, realistic expectations and driving through on them.
This is a really interesting piece to my mind. When you look at the proportion of spend that’s being allocated to cloud at the moment, you can see that there is 34% migrating its way to 37% over the next couple of years.
Now fundamentally what this means is the challenge on the CFO and the challenge on traditional governance metrics from a finance point of view to evolve to be able to handle this, to be able to set levels of tolerance around what it’s going to cost from a budgetary point of view, from an IT perspective is a real issue.
For migration to cloud, we’ve seen that really that in year one, the upfront costs are about 60% to 80%. So once you’re in the cloud, it’s sort of okay. James mentioned before the issue around [lock in] and the irony about [lock in] and really the soft barrier — well, it’s actually a hard barrier is really the commercial cost of change.
So from an open point of view, if open was to make things more dynamic and allow people the opportunity from one workload provider to another workload provider, then we’re now entering this world which I’ve started to — I’ve spent a lot of time focusing on and this is the concept around brokerage.
Do businesses really care about who their provider is over time? And equally, are they dynamic enough to be able to allocate such that they can get proportional cost savings as a result of it?
And the answers are this is still evolving right now. But as customers become more information-led, by nature of that, they will be capturing more information. Once you start reaching proportional scales with regards to that information, the benefits of cost of change relative to a storage network or process-intensive workloads becomes more real and as such we are going to see those sorts of things coming through.
So really what I wanted to do now is just actually take the time to move on to the panel discussion because I think the panel discussion is probably a more important part of the session.
But briefly in summary, look, cloud is becoming BAU for the Asia-Pac region. There are differing levels of maturity going on. When you look at the country leaders at the moment, it is Australia and New Zealand. I’m unashamedly proud of that the fact that it is happening. Ironically it’s a government-led strategy that is actually driving that from a New Zealand point of view.
And organisations are having to change in their own right. Having great conversations around how it is that you evolve your own propositions is good, but never lose sight of the customer. And the reality is every customer application is going to be different and every Asia Pacific country is facing their own challenges right now.
To compare country to country is difficult because some are very much private cloud orientated versus public cloud orientated. And so in the context of having to deal with each of those countries, you need the right people on the ground. There’s very much a parochial nature to that engagement.
Adam Dodds, IT Services Research Manager, IDC
Courtesy: NetEvents

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