Where Will the Hybrid Cloud Take Us?

Verizon’s Enterprise Solutions group thinks that hybrid clouds will be one of the top trends, and a telling comment is that they see the cloud supplanting the VPN as an enterprise service.  While this may seem outlandish on the surface, I think there’s a lot of logic/truth behind the statement, and it also explains some of the recent M&A.

According to users I’ve surveyed, the trend is away from “network services” in a pure connectivity sense and “application services” in a broader sense.  It’s not that the enterprise isn’t seeing connectivity requirements going forward, but that they see these requirements as increasingly supported via the public Internet, increasingly linked to ancillary activities like worker mobility, and increasingly a part of a broader plan for worker empowerment.  In these new missions, there’s a compute element involved too.  So users, looking as always for one-stop shops for IT/network services, are certainly amenable to the shift from VPNs to the cloud.

From the seller side, this has to be a dream come true.  With enterprises continually demanding lower costs for network connectivity, the prospect of adding something with a bit more margin credibility to the mix is a welcome one.  Network operators also realize that the most common hybrid missions involve mission-critical apps and thus tend to favor major partners rather than little bitty cloud firms.  The operators also have lower ROI targets, which means that they can be price leaders while still securing tolerable margins.

If all this shifting is real (and I think it is) then it also spells trouble for pure-play network vendors and should provide encouragement to vendors like Cisco who have more direct cloud stories.  It explains why Alcatel-Lucent in their SDN and cloud story seems to be magnifying private clouds, multi-vendor clouds, and end-to-end software-defined network behavior.  If you don’t sell servers then you need to stress the value of network performance and application-specific behavior because applications are all it’s about in this brave new world.  And of course cloud deployment and hybridization are management issues, not to mention being possibly the only differentiator that software players have.

Some management refinement is critical for hybrid clouds even if you DO have control over both sides of the story.  Nobody I talk with at the enterprise level believes that they’re going to cloudsource their major apps, but nearly everyone believes they will offload peak-load capacity to a public cloud partner and fail over to that partner if something goes awry in the data center.  This means not only the “basic” steps of spinning up new instances and load-sharing (or load-substituting) but also more complicated tasks of keeping databases in sync and insuring that all the software versions available everywhere match the approved versions.

Something like this could be a boon to the IT players who have cloud offerings too, including HP, IBM, and Microsoft.  Arguably these firms have recognized the need for hybridization from the first, and their seeming slow start in the media-hype cloud race is attributable not to their being behind but to their targeting a market segment that’s slow to develop.  Slow, but representing the majority of the real dollars downstream.

Even some incumbent-giant cloud providers like Amazon are going to find this hybrid trend increasingly troubling because Amazon still lets third-party players carry the water for EC2 compatibility in private cloud implementations.  That’s risky because all the features of AWS aren’t available in the basic platforms offered by third parties, and that forces Amazon to accept a functionality gap between public and private cloud that will dumb down their own hybridization capabilities, perhaps even make them less valuable.  Ideally, hybrid clouds are PaaS clouds in that they should offer a set of platform services to facilitate hybridization, and they should also sustain the same OS and middleware in the public and private parts of the cloud.  While you can do that in IaaS through administration, PaaS makes hybridization easier and it also offers potentially greater benefits because PaaS displaces not only hardware costs but also software-platform costs.


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