Enterprise IT groups will then comprehend that internal offerings have to meet the much higher expectations of developers—expectations raised by what they now recognize is possible. Internal IT groups will confront the reality that warmed-over virtualization isn't nearly enough—and getting to public levels of agility will require process streamlining and end-to-end automation. In a word, it will mean re-engineering, which is much more difficult than buying a new product with the expectation that it will magically make one's private cloud as attractive as the public alternatives.
Expect to see many, many articles next year on the organizational change necessary to successfully implement private cloud computing. If you're implementing a private cloud and haven't thought through how you're going to integrate end-to-end automation and remove process roadblock, you have a problem. A big problem. The recent tit-for-tat storage price battle between Google and Amazon, key to the first AWS Re: Invent conference, is just a warm up for Next year will see ferocious price competition as CSPs attempt to blunt Amazon's growth.
Even those that have heretofore eschewed price competition will have no choice but to jump into the fray. For example, Hewlett-Packard, which not that long ago said "the notion of just standing up a VM for raw compute is kind of done" and promoted the importance of a cloud ecosystem, this week launched its OpenStack-based cloud service with a pricing structure that undercuts Rackspace by a third. That's not exactly the mark of a provider focused on value-added services. We'll see plenty more of these price wars as CSPs recognize platform wars are a market share land grab.
The Little Book of Cloud Computing Security, Edition by Lars Nielsen
The winners turn into monopolies and the losers slink off the field. However, as Warren Buffett so memorably says, "Only when the tide goes out do you discover who's been swimming naked. Next year, cloud providers will come to understand that cloud pricing is a marginal cost-yield management exercise; efficient design, low-cost operation and, crucially, high utilization are fundamental to success. Land grab economics favor CSPs with access to significant capital.
Expect those with access to pursue that advantage. It's arming for the battle. One can expect real dislocations in the CSP industry as players have to rethink their business plans based on lower revenue streams, including some who conclude that being a cloud provider is a never-ending money pit and decide to exit the industry. They won't be the last.
See a Problem?
Look for a real bloodbath in the CSP industry next year—but realize that, for customers, this bloodbath will pay enormous dividends in lower costs. Next year will bring home the fact that enterprises are never going to settle on a single cloud technology or provider. By definition, enterprises are complex, heterogeneous technology environments. They collect multiple products in a given technology category the way others collect bottle caps or old magazines: Randomly and irrationally.
Even if a given enterprise resists the urge to buy one of everything, its nice, neat, homogenous environment gets spoiled the instant the CEO decides to buy another company that inevitably, standardized on a different product. Many IT organizations and CSPs have hoped that the world would standardize on a single technology—most commonly, one based on VMware—but that's just not going to happen.
The reality for every enterprise of any size is that it will use multiple cloud technologies spread among multiple deployment environments, with those technologies all providing different orchestration software frameworks, heterogeneous APIs and single-purpose management infrastructures.
The task for enterprise IT for is to comprehend this fact and develop plans to implement a management framework that can span all cloud environments in use. Key requirements include consistent identity management, common monitoring, a management platform that provides a single pane of glass to control all cloud environments and common billing more on that in a moment. Expect to hear lots in about cloud management or cloud broker products, which sit above multiple cloud environments and provide these key requirements. Just as Esperanto has the beauty of logic but fails in the reality of a polyglot world, so, too, will the fantasy of a single cloud technology environment used everywhere confront the messiness of the typical enterprise IT world.
Once one accepts life will never live up to an idealized vision, then one can get on with the real job of dealing with things as they really are. Next year will also bring home the financial implications of enterprise adoption of pay-as-you-go pricing. The negligent habits typical of enterprise system management, in which utilization rates still commonly hover in the mid-teens, carry heavy financial burdens in today's cloud world.
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