More on the SDN, NFV, and Cloud Opportunities

One of my previous blogs has generated a lot of discussion on the question of what the SDN market might be, and whether any market-sizing on the SDN space is simply an exercise in hype generation.  This comes at the same time as a series of articles, the latest in Network World, that cast doubt on some cloud numbers.  According to NWW, some analysis of the cloud market shows a very high rate of adoption (70% or more) and even a high rate of multiple-cloud hybridization, where others suggest that the majority of businesses haven’t done anything at all with the cloud.

A big part of the problem here is in definition, starting with what “the cloud” or “SDN” mean.  Many will define the cloud as any service relationship involving hosted resources, in which case every human who uses any remote storage service like Google Drive or Microsoft SkyDrive is a cloud user.  It would also cover users of shared hosting for their websites.  But if you look at services limited to IaaS, PaaS, SaaS offerings based on shared infrastructure, the population of users would fall significantly.  In the SDN space, virtually every vendor wants to call what they do “SDN” so it follows that anyone doing networking at all is doing SDN by that definition.  If you limit the population to those doing formalized centralized control of network behavior using either OpenFlow or another protocol set (MPLS, BGP, etc.) then we’re way down in the single digits in terms of adoption.  And in both cloud and SDN, we’ve found that the population of “users” is made up primarily of “dabblers”, companies who have significantly less than 1% of their IT spending committed to either cloud or SDN.

Another problem we have is in defining a “business”.  If we look at the US, we find that there are about 7.5 million purported business sites, and that well over half of them represent businesses with fewer than 4 employees.  So if we mean “business” when we say it, any assertion that the cloud has even 50% penetration is downright silly.  In point of fact, if you look at the business population of the US, the most cloud-intensive of all the global markets, you find that only about 10% of businesses currently use cloud computing other than basic web hosting or free online storage.  In the enterprises, by contrast, you’d find that nearly 100% had adopted cloud technology, though on a very limited scale.  The “limited” qualifier today means less than 1% of IT spending.  The number who spend even 25% of their IT on the cloud is statistically insignificant.

The reason behind all this hype is the media, who demand that everything be either the single-handed savior of all global technology or the last bastion of International Communism.  Why?  Because those two polar stories are easy to write and get a lot of clicks.  So if you’re a vendor, you’re forced to toe the marketing line or languish in editorial Siberia forever.  Still, this might be a good time to be thinking about more than gloss and glitter.  Both service providers and enterprises are under their own unique pressures, and they look to initiatives like the cloud, SDN, and NFV for salvation.

Amazon, so they say, is going to launch its own TV service, presumably one that competes with other players like Roku for providing access to Amazon Prime.  All of these services rely on the “free aether” of the Internet, which of course isn’t free except in an incremental-price sense.  Operators have to pay to produce the capacity that all these guys are consuming to support their own business models, and that’s the proximate cause of initiatives like NFV, aimed at both reducing the hemorrhage of revenue per bit by reducing the cost per bit, and by increasing the revenue through higher-level service participation.  Vendor support is lumpy; some are stepping up and others are hanging back.  Same with SDN, of course.

Enterprises too have the benefit issue; over 70% of CIOs told me in the surveys that they would prefer to promote technologies that improved benefits rather than cut costs, but of that group two-thirds say they have no specific directions to follow toward benefit nirvana.  Most enterprises think that SDN isn’t relevant to them at all, or that if it is the technology is really about somehow preparing for the private cloud.  Why they need to do that, given that they don’t know what the benefits of the private cloud are, remains a mystery.

So what’s needed?  I think there are three elements to the future of “the cloud” and the same three for the future of SDN and NFV.  Yes, resource pools and cost-efficient production of services, applications, and features is one of them.  Connecting these flexible resource pools is another—obviously the SDN dimension.  The third, and the most important, is a new application architecture that exploits the combination of hosting flexibility and connectivity flexibility, and does so in the context of an increasingly mobile-broadband-linked population and workforce.  I think we have a handle on resource efficiency, and on network connectivity, but we’re never going to drive benefits or even finalize resources our networks without that application model.

The cloud (forgive me, Amazon!) is not IaaS; that’s only an on-ramp for getting legacy stuff onto the cloud.  The cloud is a future world of highly composible and distributable software components that migrate here and there over very flexible networks to live in a transient sense on flexible resource pools.  Applications, resource pools, and flexible connectivity are the three legs of the stool holding up the cloud, like Atlas purportedly held up the earth.  We can only advance so far in any area without advancing in all or tipping the whole thing over.  We’re all in the cloud together, despite the fact that to a lot of vendors we don’t seem to be connecting SDN or NFV with the cloud at all, and it’s the cloud that’s the path to those benefits.  So when somebody talks to you about SDN or NFV and leaves out the cloud, run screaming.  They’re inflicting the death of a thousand hypes on you.

Remember, though, that the cloud is about elastic, composable services.  So if somebody says “cloud” to you and doesn’t talk about componentized software and web services, REST, or SOA, run screaming too.  And maybe all these technical dimensions are why vendors and media alike are degenerating into sloganeering.  The truth of our future is hard…complicated.  A nice fuzzy lie would be so much easier, and build enough clicks on stories or product data sheets in the short term.  But it won’t build a market, and eventually we’re going to have to do that or watch networking become a junk yard of old ideas.

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