A Tale of Two Clouds

It’s the best of times; it’s the worst of times  according to representatives of service providers the world over who met at TeleManagement World in Nice, to assess not only the current recession but also the changes sweeping through the industry, challenging old -- and holding out promise for new -- business models.

Two themes were pervasive:  managed services of all kinds, and “cloud”.

A well-attended panel session on cloud computing including senior representatives from BT,  Amazon, Microsoft and VMWare was moderated by Roger Pilc of CA.  He kicked off the discussion by drawing a parallel between the “network cloud” of the 1990s that morphed into the IP-everywhere environment spawned by the Internet and the World Wide Web, and the current focus on “cloud” environments that presage “computing everywhere”  where applications and computing resources are easily and cheaply available “on-demand” from multiple sorts of end-user devices.

 J P Rangaswami, BT’s Managing Director of Strategy and Innovation, quickly picked up this theme and reminded everyone that “clouds” are already delivering applications as SaaS, with consumers attracted by simplicity and convenience of the services.  Small and medium enterprises are attracted by the ability to use large-scale computing resources at inexpensive pay-as-you go pricing and no need for large capital spending.  Large enterprises are experimenting with all sorts of “cloud” services, ranging from common ones, like SalesForce.com, to prototyping and application development and testing.  They, too, are attracted by low-cost utility pricing, but lurking fears of data security and privacy issues impede a rush.  And many enterprise applications require re-architecting, as their behavior in clouds will be different from that in internal data centers.

Virtualized data centers, in effect, are internal or private clouds, while those offered by Amazon or Microsoft  are external in the sense they are not under an enterprise’s direct control.  Hence the concerns about data security and privacy.

In a keynote address earlier in the week, Amazon CTO Werner Vogels had provocatively  challenged attendees to rethink all their assumptions about data centers and computing.  Using Amazon EC2 customer examples, he noted that a user can bring up and provision server resources in a cloud-provided environment in as little as 2-3 minutes, while in a large enterprise environment it may take as long as 6-7 weeks.  But perhaps more importantly, the cloud-based server can be released in a single minute, where in an enterprise environment it may never be released.  With many heads nodding agreement, Vogels emphasized:  “The business, cost and operational advantages of the cloud far outweigh all the disadvantages.”

In many of the formal sessions and countless informal discussions with senior execs from SPs all over the world, cloud and managed services themes were related.  Echoing the “worst of times” theme, a senior European SP executive noted that “the problem for incumbent operators is their incumbency.”  With other more agile providers able rapidly to innovate and experiment with new services and let the market quickly decide winners and losers, many traditional providers are hampered by the weight of their legacy services and unable to keep up.  In this environment, a range of “cloud based” services seems compelling because “it’s all about creating new markets with new services that are attractive to new audiences.”  Google applications and the Apple iPhone application development and distribution network were cited multiple times in this context.  An executive from outside the SP industry laid down a clear challenge:  “Your (SP) future will be based on the relevance of your services  --  not bundle pricing!”

It’s in that context that SPs are considering what sorts of hosted apps could be offered on SP platforms as managed services.  And some SPs are considering offering “pure cloud” computing services, whether bundled with apps or not, and still others considering extensive cloud computing offers as part of their outsourcing business models.

And so we return to the image of two clouds:  The Internet cloud of the 1990s, and the “new cloud” we are now beginning to understand.

Eric Pulier, a serial entrepreneur currently CEO of ServiceMesh, is  marshalling an impressive consortium of global enterprises and financials to focus on business models and standards that will enable the extension of cloud services reliably, rapidly, and interoperably.  He argues that cloud computing is driving everything toward an “a la carte menu with elastic capacity,” embracing infrastructure as a service, platform as a service, software as a service, and application development and test as a service.  In his view, IT groups will morph into Platform Services Groups, buying and providing everything as a service.  Cloud empowers diverse users, with access to unlimited suites of applications, supported by Internet-linked federations of developers.  This, he believes, will feed a firestorm of creativity and agility unlike anything seen before – even more than the wave of creativity spawned by the Internet itself.

For SPs and enterprises alike, cloud-based services  offer new ways of rapidly prototyping, developing, testing, deploying, and taking to market new services while limiting costs.

Are you using cloud services?  For what purposes?  Are you thinking about internal or external clouds?  Or are you taking a wait and see attitude?