|By John Cowan||
|May 2, 2012 07:30 AM EDT||
This is Part III in a series by 6fusion Co-founder and CEO John Cowan on the emerging trend of Cloud Brokerage and the impact it will have on the technology industry and markets. Be sure to check out Part I of the series here and Part II here.
The feedback and fallout from Part II of this post has been quite interesting. I thought for sure the bulk of the flack I would have to take would be from the cloud vendor incumbents I said would be relegated to the world of retail cloud business. But since I posted my perspective I’ve found myself digging in to the nature of the Total Addressable Market (TAM) for the Cloud Brokerage industry.
For those of you keeping score at home, I said the market for cloud brokerage is more that 10 times the market for cloud computing software and related services.
Yes, 10 times.
And it is because this market is so big that cloud brokerage will spawn the next generation of technology innovation.
But before I get to the underlying technologies that are on the horizon and necessary for the future that I, along with my collaborators, envision, let me first spend a few paragraphs to explain why I am not just pulling numbers out of my, um, ‘IaaS’.
On the 6fusion iNode Network the median server in production in the cloud is a quad core dual processor unit with an average of 4TBs of available storage. Using this standard configuration, partners and customers yield approximately $42,000 per year in net billable proceeds. I would classify that number, give or take on either side of it, to be a reasonable annual revenue estimation.
IDC recently reported that the 2011 server shipments topped out at 8.3 million units. At a $42K clip, that is a market growing by a healthy $350 billion each year.
But of course, as we all know, server shelf life is not exactly the same as what you’d expect from a box of Krusty-O’s from the Kwik-E-Mart.
A quick trip down the hall to Gary Morris’s office at 6fusion is always an educational adventure. “Depreciation,” Gary explains, “is a systematic and rational process of distributing the cost of tangible assets over the life of those assets. US GAAP calls for depreciation of servers using the server’s cost, estimated useful life and residual value. Typically, computers, software and equipment are depreciated over a period of 1 to 5 years, with the average useful life being 3 years.”
If we take Gary’s use of the GAAP average as a multiplier, it means there is estimated to be over $1trillion in billable utility computing presently in use around the world.
The point here is that cloud brokerage is underpinned by the availability of both private and public compute, network and storage resources. And it is this massive untapped market that will drive the next wave of innovation.
If the origins of the cloud business belonged to the innovation of companies like Amazon, Rackspace and VMware, then the future of the cloud brokerage belongs to a new cadre of agnostic intermediaries that will enable a true utility computing marketplace to flourish.
The unification of the market is what I refer to as the point in time at which cloud computing technologies in production today can be used to interface to the commodity market. In order for that to happen, cloud brokerage as an industry must form and deliver the underlying technologies necessary to make a true market.
Just what are these technologies? Let’s take a look at three areas of innovation that will underpin the future of the utility computing.
Cloud brokerage technologies are best considered in the context of supply, demand and delivery.
Universal Resource Metering: Quantification of Demand and Supply
I delivered a presentation in Asia a few weeks ago and I opened with a slide that had two simple definitions: Utility and Commodity.
A Utility, I paraphrased, “is a service provided by organizations that are consumed by a public audience.”
A Commodity, according to common definition, “is a class of goods or services that is supplied without qualitative differentiation.”
Theoretically, you can have a utility without it necessarily being commodity. But it rarely ever works that way because in order to have a utility in the way we think about the utilities we consume every day, you must have scale. And in order to achieve scale, the utility must be pervasive and uniform. One should not require any special skills in order to use it. It must be simple and consistent to use. Think about your interaction with things like power or water services or subscribing to the Internet.
Utility is a word used quite often to describe the cloud. In a post a couple months ago Simon Wardley aptly explained the difference between the cloud and a computer utility. The difference, says Wardley, is really only that “cloud was simply a word used by people to explain something that really wasn’t well understood to people who were even more confused than they were.”
So is the cloud really a computer ‘utility’? Not yet.
You see, what the cloud is missing is the factor that truly negates qualitative differentiation – common measurement. You simply cannot claim something to be a true utility if every provider measures services differently. Common utilities all share the characteristic of universal measurement. Think about it. Power. Water. Energy. The Internet. Whatever.
A standardized unit of measurement for the computer utility will be one of the greatest innovations to come from the emerging market for cloud brokerage because it will establish basis from which a commodity market can emerge.
Cloud Infrastructure Federation: Tapping Global Supply
When you buy corn or wheat or soybeans by contract on a commodity exchange today, you don’t buy a brand. You buy a commodity. Cloud brokers of the future will move commodities, not brands. Today, cloud brokers form ‘partnerships’ with service providers. But for a true brokerage model to blossom, there can be no possibility for vendor discrimination. Anyone that brings product to market can and should trade it. The denial of interoperability cannot happen.
With this in mind true cloud brokers will overcome the interoperability hurdle through collaboration and cooperation. This doesn’t mean ascribing to one API framework or another, regardless of how high and mighty the leading retail cloud properties might become. It means absolving oneself from the politics of the API game completely.
The Underlying Transport System: Delivering the Commodity
It doesn’t always happen, but when a commodity contract comes due, something must be delivered. The party that holds the paper for a hundred thousand units of corn must be able to take possession of it. Modern commodity markets are supported by an elaborate network of supply chain delivery systems – from tankers to trains and transport trucks.
The equivalent underlying transport system must exist for the cloud infrastructure market.
Commodity brokers don’t own the transport system for the market. And for good reason. However, if you subscribe to the early analyst view of cloud brokerage, they do. The analysts see brokers facilitating the transaction and delivering the compute commodity itself. To me, they either don’t fully grasp the potential of the broker or they are describing something all together different.
Cloud interoperability is not a new concept. It has been bandied about the blogosphere for several years already. The problem to date is that such movements have been nothing more than thinly veiled product sales pitches. The cloud brokers of the future will drive the innovation to construct the underlying transport system to “connect the clouds.”
In the final part of this series I will explore the future state of cloud computing; a world where the immovable IT asset becomes movable in a commodity exchange.
Developers want to create better apps faster. Static clouds are giving way to scalable systems, with dynamic resource allocation and application monitoring. You won't hear that chant from users on any picket line, but helping developers to create better apps faster is the mission of Lee Atchison, principal cloud architect and advocate at New Relic Inc., based in San Francisco. His singular job is to understand and drive the industry in the areas of cloud architecture, microservices, scalability ...
Apr. 26, 2017 03:00 AM EDT Reads: 3,447
Today we can collect lots and lots of performance data. We build beautiful dashboards and even have fancy query languages to access and transform the data. Still performance data is a secret language only a couple of people understand. The more business becomes digital the more stakeholders are interested in this data including how it relates to business. Some of these people have never used a monitoring tool before. They have a question on their mind like “How is my application doing” but no id...
Apr. 25, 2017 10:30 PM EDT Reads: 7,140
Is your application too difficult to manage? Do changes take dozens of developers hundreds of hours to execute, and frequently result in downtime across all your site’s functions? It sounds like you have a monolith! A monolith is one of the three main software architectures that define most applications. Whether you’ve intentionally set out to create a monolith or not, it’s worth at least weighing the pros and cons of the different architectural approaches and deciding which one makes the most s...
Apr. 25, 2017 08:45 PM EDT Reads: 2,733
Cloud Expo, Inc. has announced today that Aruna Ravichandran, vice president of DevOps Product and Solutions Marketing at CA Technologies, has been named co-conference chair of DevOps at Cloud Expo 2017. The @DevOpsSummit at Cloud Expo New York will take place on June 6-8, 2017, at the Javits Center in New York City, New York, and @DevOpsSummit at Cloud Expo Silicon Valley will take place Oct. 31-Nov. 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA.
Apr. 25, 2017 08:30 PM EDT Reads: 2,508
In large enterprises, environment provisioning and server provisioning account for a significant portion of the operations team's time. This often leaves users frustrated while they wait for these services. For instance, server provisioning can take several days and sometimes even weeks. At the same time, digital transformation means the need for server and environment provisioning is constantly growing. Organizations are adopting agile methodologies and software teams are increasing the speed ...
Apr. 25, 2017 08:15 PM EDT Reads: 3,291
To more closely examine the variety of ways in which IT departments around the world are integrating cloud services, and the effect hybrid IT has had on their organizations and IT job roles, SolarWinds recently released the SolarWinds IT Trends Report 2017: Portrait of a Hybrid Organization. This annual study consists of survey-based research that explores significant trends, developments, and movements related to and directly affecting IT and IT professionals.
Apr. 25, 2017 08:00 PM EDT Reads: 1,633
This recent research on cloud computing from the Register delves a little deeper than many of the "We're all adopting cloud!" surveys we've seen. They found that meaningful cloud adoption and the idea of the cloud-first enterprise are still not reality for many businesses. The Register's stats also show a more gradual cloud deployment trend over the past five years, not any sort of explosion. One important takeaway is that coherence across internal and external clouds is essential for IT right n...
Apr. 25, 2017 12:15 PM EDT Reads: 1,634
Back in February of 2017, Andrew Clay Schafer of Pivotal tweeted the following: “seriously tho, the whole software industry is stuck on deployment when we desperately need architecture and telemetry.” Intrigue in a 140 characters. For me, I hear Andrew saying, “we’re jumping to step 5 before we’ve successfully completed steps 1-4.”
Apr. 25, 2017 11:15 AM EDT Reads: 1,708
Enterprise architects are increasingly adopting multi-cloud strategies as they seek to utilize existing data center assets, leverage the advantages of cloud computing and avoid cloud vendor lock-in. This requires a globally aware traffic management strategy that can monitor infrastructure health across data centers and end-user experience globally, while responding to control changes and system specification at the speed of today’s DevOps teams. In his session at 20th Cloud Expo, Josh Gray, Chie...
Apr. 25, 2017 06:30 AM EDT Reads: 3,169
In his session at 20th Cloud Expo, Scott Davis, CTO of Embotics, will discuss how automation can provide the dynamic management required to cost-effectively deliver microservices and container solutions at scale. He will discuss how flexible automation is the key to effectively bridging and seamlessly coordinating both IT and developer needs for component orchestration across disparate clouds – an increasingly important requirement at today’s multi-cloud enterprise.
Apr. 25, 2017 06:00 AM EDT Reads: 4,328
Keeping pace with advancements in software delivery processes and tooling is taxing even for the most proficient organizations. Point tools, platforms, open source and the increasing adoption of private and public cloud services requires strong engineering rigor – all in the face of developer demands to use the tools of choice. As Agile has settled in as a mainstream practice, now DevOps has emerged as the next wave to improve software delivery speed and output. To make DevOps work, organization...
Apr. 25, 2017 03:15 AM EDT Reads: 8,868
In his general session at 19th Cloud Expo, Manish Dixit, VP of Product and Engineering at Dice, discussed how Dice leverages data insights and tools to help both tech professionals and recruiters better understand how skills relate to each other and which skills are in high demand using interactive visualizations and salary indicator tools to maximize earning potential. Manish Dixit is VP of Product and Engineering at Dice. As the leader of the Product, Engineering and Data Sciences team at D...
Apr. 25, 2017 03:00 AM EDT Reads: 5,903
Software as a service (SaaS), one of the earliest and most successful cloud services, has reached mainstream status. According to Cisco, by 2019 more than four-fifths (83 percent) of all data center traffic will be based in the cloud, up from 65 percent today. The majority of this traffic will be applications. Businesses of all sizes are adopting a variety of SaaS-based services – everything from collaboration tools to mission-critical commerce-oriented applications. The rise in SaaS usage has m...
Apr. 22, 2017 06:15 PM EDT Reads: 4,792
The proper isolation of resources is essential for multi-tenant environments. The traditional approach to isolate resources is, however, rather heavyweight. In his session at 18th Cloud Expo, Igor Drobiazko, co-founder of elastic.io, drew upon his own experience with operating a Docker container-based infrastructure on a large scale and present a lightweight solution for resource isolation using microservices. He also discussed the implementation of microservices in data and application integrat...
Apr. 22, 2017 05:45 AM EDT Reads: 6,155
We'd all like to fulfill that "find a job you love and you'll never work a day in your life" cliché. But in reality, every job (even if it's our dream job) comes with its downsides. For you, the constant fight against shadow IT might get on your last nerves. For your developer coworkers, infrastructure management is the roadblock that stands in the way of focusing on coding. As you watch more and more applications and processes move to the cloud, technology is coming to developers' rescue-most r...
Apr. 22, 2017 04:00 AM EDT Reads: 4,053
2016 has been an amazing year for Docker and the container industry. We had 3 major releases of Docker engine this year , and tremendous increase in usage. The community has been following along and contributing amazing Docker resources to help you learn and get hands-on experience. Here’s some of the top read and viewed content for the year. Of course releases are always really popular, particularly when they fit requests we had from the community.
Apr. 22, 2017 03:45 AM EDT Reads: 3,531
Even for the most seasoned IT pros, the cloud is complicated. It can be difficult just to wrap your head around the many terms and acronyms that make up the cloud dictionary-not to mention actually mastering the technology. Unfortunately, complicated cloud terms are often combined to the point that their meanings are lost in a sea of conflicting opinions. Two terms that are used interchangeably (but shouldn't be) are hybrid cloud and multicloud. If you want to be the cloud expert your company ne...
Apr. 21, 2017 04:15 PM EDT Reads: 2,215
SYS-CON Events announced today that CollabNet, a global leader in enterprise software development, release automation and DevOps solutions, will be a Bronze Sponsor of SYS-CON's 20th International Cloud Expo®, taking place from June 6-8, 2017, at the Javits Center in New York City, NY. CollabNet offers a broad range of solutions with the mission of helping modern organizations deliver quality software at speed. The company’s latest innovation, the DevOps Lifecycle Manager (DLM), supports Value S...
Apr. 18, 2017 03:30 PM EDT Reads: 4,386
The human body is the most complex machine ever created! With a complex network of interconnected organs, millions of cells and the most advanced processor, human body is the most automated system in this planet. In this article, we will draw comparisons between working of a human body to that of a datacenter. We will learn how self-defense and self-healing capabilities of our human body is similar to firewalls and intelligent monitoring capabilities in our datacenters. We will draw parallels b...
Apr. 16, 2017 01:00 PM EDT Reads: 2,767
Cloud adoption is often driven by a desire to increase efficiency, boost agility and save money. All too often, however, the reality involves unpredictable cost spikes and lack of oversight due to resource limitations. In his session at 20th Cloud Expo, Joe Kinsella, CTO and Founder of CloudHealth Technologies, will tackle the question: “How do you build a fully optimized cloud?” He will examine: Why TCO is critical to achieving cloud success – and why attendees should be thinking holisticall...
Apr. 16, 2017 10:00 AM EDT Reads: 2,904