Alibaba Cloud has confirmed it is setting up a data centre in the UK – after setting up a landing page with ‘London is calling’ as its headline.

The data centre, whose details can be found here, is set to have high availability of 99.99%, a cooling system configured with N+1 redundancy, as well as dual availability zones to avail stronger disaster recovery capabilities.

Prices for space are available at 5% off to early adopters, with 1 core CPU, 512 MB of memory and a 20 GB disk, at the lower end of the scale, costing $3.96 per instance per month with discount, and at the higher end 8 core CPU, 16 GB memory and 40 GB disk setting you back $153.86 per month. Instances are also available with MySQL 5.6/5.7.

Among the 15 products available to London customers are ECS Bare Metal Instances, first announced on the European market at this year’s Mobile World Congress. The rest are a mix of the usual suspects, alongside an Elastic GPU Service, and two container services – one focusing on Docker and the other on Kubernetes.

The company’s most recent momentum announcements had been around the Asia Pacific (APAC) market, with no fewer than nine products launched for the region last month, alongside a second infrastructure zone in Malaysia. As is to be expected, Alibaba’s presence in the region is strong, albeit with a predominant focus in China. According to figures from Synergy Research in June, Alibaba ranks second, behind AWS, in APAC, breaking the AWS-Microsoft-Google oligopoly worldwide.

Yet moves to take European market share have been similarly important for the company. Speaking to CloudTech in May, Yeming Wang, general manager of Alibaba Cloud Europe, said ‘going global’ was a strategy which mirrored the whole of the Alibaba Group. Wang added that for many customers, Alibaba was being seen as a second or third cloud option, with the rise of multi-cloud strategies gaining prominence.

The launch of the London data centre comes amidst a report in The Information which alleges that Alibaba Cloud was scaling back its plans for US expansion. According to MarketWatch, the company has since rebuffed those claims. “Alibaba Cloud’s US strategy has always been primarily focused on working with US companies who need cloud services in China and Asia and helping Chinese companies with cloud services in the US, not competing head to head with local players,” the company said in a statement. “Our commitment to this market remains unchanged.”

Find out more about Alibaba’s London expansion here.

A decade ago, early adapters enthusiastically embraced cloud computing, but the larger business world waited skeptically with questions such as ‘how safe is this?’ ‘How much will it cost?’ ‘Will it really improve productivity?’ ‘Will it give me a competitive edge?’

Today, there is still some hesitation around migrating to the cloud. Because the cloud is still considered fairly new technology, there hasn’t been an established trust in it yet. Some organisations maintain the “don’t fix what’s not broken” mentality, arguing that on-premise infrastructure has worked effectively. Others are generally uncomfortable with having major pieces of the business running in the cloud. And the potential security risks in transferring data between on-premise and public clouds concern nearly everyone.

Yet more organisations are moving to the cloud because of the increasingly apparent benefits: greater reliability, in-depth analytics, mobility and cost-savings (usually). As the “2018 State of the Cloud” report by RightScale found: “When comparing cloud adoption in large and small companies, it is interesting to note that for the first time in 2018, a larger portion of enterprise respondents are in the two most mature stages.”

So, your organisation is now on the bandwagon and needs to build out a cloud infrastructure. Where do you begin?

A recent Forrester study found that only four percent of organisations run their applications exclusively in the public cloud. Seventy-seven percent are using multiple (hybrid) types of clouds, both on-premises (private) and off-premises (public). Gartner expects almost half of all business users to move their core collaboration and communications systems to public clouds by the end of this year, and more than seventy percent of businesses will be substantially provisioned with cloud office capabilities by 2021.

The up-front costs for setting up a private cloud may be too much for organisations with smaller budgets, which is why most organisations are adopting a hybrid cloud solution. Hybrid cloud technology allows for flexibility in the organisation without migrating everything to the public cloud and the ability to keep secure information on-premise. But hybrid cloud can also bring security risks, issues with legacy systems and budget challenges.

Migration to the cloud will change organisations’ IT role in many ways:

• Managers will need to become more business oriented – as in assessing the needs of the organisation and creating new processes to meet them
• They may lose control over certain resources i.e. internal networks, servers, operating systems, storage and applications that will be controlled in the cloud
• They will find that clouds eliminate the need for ongoing maintenance, lead to figuring out how to deploy applications faster and add value to current applications

Once your company has migrated, you may not notice the complexities in managing the cloud right away. But they are there: lack of visibility into usage and expenses, assets, costs and usage and other processes. Most companies don’t realise the need to bring in a management system until costs and applications have gotten out of control.

An example: companies that are used to having bills in the hundreds of dollars may suddenly start seeing costs coming in at $40,000 a month. Bills and Invoices will be difficult to understand. Unbudgeted costs may be incurred. Forecasting will be more difficult. It can get overwhelming quickly.

The best way to manage it before it gets to that point is including a cloud expense management (CEM) system in place upon migration (or as early as possible). A good CEM will not only manage expenses and financials but will:

• Provide the visibility needed for control and forecasting
• Help identify billing errors and overspending
• Identify cost-savings opportunities

Gartner predicts that by 2020 organisations that lack cost optimisation processes will on average overspend by forty percent in the public clouds. Thus, your organisation could benefit significantly through a partnership with a managed services provider that knows expense management and can provide additional services to address needs outside of what the CEM system. This includes – among others — negotiating contracts and ensuring that you’re being charged correctly; providing analysis of your spending; looking for cost savings; and integrate other internal systems to work with the CEM system.

An IT expense management partner who understands these complexities can assist enterprises in driving value and improving governance of these rapidly growing expense categories. Getting ahead of the complexities the cloud brings with a CEM program will not only manage expenses but to increase the visibility into usage and costs to optimise the benefits the cloud can bring to your organisation.

In July 2018, Broadcom announced its plan to acquire CA Technologies for almost $19 billion. While analysts have furiously debated the merits of a chip manufacturer buying an enterprise software company, the CA acquisition heralds a momentous shift in the $25 billion IT operations management (ITOM) software market.

For more than two decades, four technology vendors – BMC, CA, IBM and HP – have dominated the ITOM software market. In 2012, these big four collectively accounted for 55% of the ITOM software industry. By 2017, their market share had declined to less than 30% (Gartner).

More crucially, the CA acquisition means that the big four as you’ve known them no longer exist. Here is how the big four lost their way – and why IT leaders need to start working with a new breed of insurgents that are transforming IT operations management.

A quick history lesson: How four incumbents lost their way

A decade ago, most ITOM startups expected to scale and then sell out to a big four provider at some point in their journey. Today, most startups begin with a business plan that’s all about stealing market share from a big four product suite. Here’s a synopsis of where these four companies stand today.

BMC: BMC Software started life as a mainframe management tools company in 1980. By 2013, it was clear that the company had run out of steam. BMC’s annual revenues from 2010-2013 showed a tepid CAGR growth of 0.78% – $1.91bn in 2010 versus $1.97bn in 2013. In May 2013, private equity players Bain Capital and Golden Gate Capital acquired a majority stake in BMC for $6.9bn. Five years later, another private equity firm, KKR, agreed to buy BMC from its previous investors for $8.5bn. In 2018, BMC’s annual revenues were still stuck at $2bn, despite significant product and go-to-market investments over the last five years.

CA Technologies: CA was the dominant mainframe utility software company of the 1980s. A serial acquirer, CA was well known for buying companies and milking customers for maintenance fees. In recent years, CA experienced the same problems of stagnant products and stalled growth. The company registered a negative CAGR of 0.18%, with revenues marginally declining from $4.26bn in 2015 to $4.23bn in 2018. With all options exhausted, CA sold itself to Broadcom last month.

IBM: IBM Tivoli started in 1989 as a systems management vendor for IBM mainframe hardware. In 1996, IBM bought out Tivoli and folded over thirty acquisitions into the Tivoli division. By 2012, IBM Tivoli was the leading ITOM software player with $3.2bn in annual revenues. However, IBM made few actual investments in upgrading the Tivoli architecture to meet the demands of a new generation of ITOM buyers. In 2016, IBM signed a 15-year deal with HCL Technologies for offloading the development and maintenance of Tivoli products. Today, the best mention you get to the venerable Tivoli brand on IBM’s website is deep in its Cloud & Smarter Infrastructure division.

HP: HP launched its OpenView family of IT management tools in the early 1990s. After acquiring Peregrine, Mercury Interactive, and Opsware in the last decade, HP grew its OpenView portfolio to more than $1bn in annual revenues. However, with all the troubles that HP experienced after the Autonomy deal, it sold its entire ITOM software portfolio to Micro Focus in 2016. Reacting to the HPE-Micro Focus $8.8bn merger, The Register pointed out that “Micro Focus is considered by some to be something of a retirement home for software businesses that have seen better days.”

The big four are (mostly) dead – here’s why

So why did the big four players lose their way? A distinct absence of innovation, a strong dependence on legacy portfolios and maintenance revenues, and unwieldy product suites sealed the fate of the big four. Here are our top three reasons for their decline:

Reason #1: Acquisitions are not a substitute for organic innovation

A big reason for the fall of the legacy ITOM software providers was an over-reliance on acquisitions. The big four executives spent all their time pursuing deals and acquiring the hottest technology startups – instead of keeping their product stacks modern and relevant. The playbook was simple: fold the latest acquisition into an existing division and incentivise armies of salespeople to bundle and sell the new solution. Here’s a quick timeline of some notable acquisitions made by the big four since 2000:

• BMC Software has splurged on companies like Remedy (IT service management), ProactiveNet (performance management), RealOps (runbook automation), BladeLogic (data centre automation), Cordiant (application performance monitoring), and Numara (IT service management) to bolster its ITOM software portfolio
• CA Technologies built its monitoring portfolio with acquisitions like Wily Technology, Nimsoft, WatchMouse, and RunScope while Arcot, Xceedium and IdMLogic helped shape its identity management solutions
• IBM Tivoli acquired CIMS Lab (IT asset utilisation), Micromuse (event correlation), Collation (discovery), BigFix (patch management), and Intelliden (network automation) to keep its Tivoli division growing every year
• HP bought companies like Peregrine Systems (IT service management), Trustgenix (identity management), Mercury Interactive (IT service delivery), Bristol Technology (business transaction monitoring), Opsware (data centre monitoring), and ArcSight (security) to extend the capabilities of its OpenView suite

Reason #2: How legacy software and maintenance fees propped up big four revenues

If there’s one technology that embodies legacy, it is mainframes. The dirty secret of the big four was their addiction to mainframe monitoring and management for revenue generation. If you look at CA’s revenues (excluding services) in 2018, mainframe solutions accounted for 55% of revenues and 64% of segment operating margins. In contrast, enterprise solutions drove only 45% of revenues and just 9% of its segment operating margins. Similarly, for BMC, mainframe tools brought in 43% of overall revenues in 2013 – the last year in which the company reported financial results before selling itself.

Another factor that prevented the big four from embracing innovation, in the form of SaaS delivery models, is maintenance fees. At BMC, maintenance revenues accounted for 52% ($1.12bn), 50% ($1.08bn), and 50% ($1.02bn) of overall revenues in 2013, 2012 and 2011. Micro Focus made 67% ($720.7m) and 66% ($754.5m) of its revenues from maintenance fees in 2017 and 2016.

Reason #3: Big four suites: Bloated, disjointed, and out of touch with market realities

When you analyse any big four solution, you find suites like HP OpenView are built on legacy tools like Operations Manager i and Network Node Manager i. Even BMC’s recent Cognitive Service Management sits on age-old solutions like Remedy and Discovery. The big four resorted to buying and folding different products into their ITOM portfolios to keep flagship suites like Tivoli and TrueSight relevant. Sales teams then sold the mantra of a single pane of glass for enhanced visibility and control across your IT infrastructure.

Most big four suites would take several quarters to implement, along with the need for expensive third-party professional services. Besides the time and cost overruns, the process of consolidating disparate products into a single framework was a Herculean challenge. Most big four suite implementations failed to deliver the efficiency, simplicity, and scalability that was originally promised during the sale.

Don’t fear change – embrace it

What’s next for DevOps and IT operations teams? New players have emerged to fill the vacuum created by the exit of the big four. Cutting-edge, cloud-based technologies are taking the place of tool suites. And business consolidation, including the likes of Splunk/VictorOps, VMware/CloudHealth, are presenting new challengers to old technology. The future is agile, modular and flexible. As business blazes a new trail forward, it’s time for technology to transform along with it.

Tresorit, a European provider of cloud security and collaboration software, has announced it has raised €11.5 million (£10.4m) in series B funding to help accelerate growth and scale marketing and sales operations.

The company, which sits in the enterprise file and sync space, offers products focused at the legal, healthcare and HR departments around encrypted storage and secure file sharing, as well as GDPR-compliant solutions. Tresorit already has more than 17,000 customers, with recurring revenue growing on average by three times each year for the past three years.

Funding for the series B, which takes the company’s total funding to €15m, included contributions from 3TS Capital Partners, who led the round, and PorfoLion.

Like others in the space, such as Egnyte, Tresorit’s particular focus on the enterprise side of the market – and with one eye looking at the continually rising number of data breaches – has stood the company in good stead.

The company said it saw growing interest in its service particularly in the months leading up to GDPR. “More and more businesses realise that the cloud is a convenient way to store and share files, but are afraid to make the switch due to security and compliance concerns,” Tresorit spokesperson Katalin Jakucs told CloudTech. “With security guaranteed by Tresorit’s end-to-end encryption and various data control features, businesses don’t have to worry about achieving compliance in the cloud.”

Writing in a blog post following the announcement, Tresorit CEO Istvan Lam said future plans included product enhancements, such as control features and password recovery, as well as the launch of Tresorit Send, a standalone file sharing offering. “With the help of the new investment, we aim to enable many more organisations to keep control over their data online,” wrote Lam.

“Tresorit’s service is critically important for customers in light of the growing number of data breaches reported on a daily basis,” said Jozsef Kover, partner at 3TS in a statement. “The management team has a clear vision on how the company will further expand its reach, especially among enterprise and SMB clients.

“The company has already established itself as a leader in its market and is experiencing strong, consistent growth,” added Kover. “We look forward to support the management on their journey to further expansion and global scale.”

Kover will join the board of Tresorit as part of the move.

The global public cloud computing market continues its predictable growth trend. By and large, it's viewed as an IT commodity, where customers have no loyalty to cloud service providers that follow a 'race to the bottom' mindset — providing the lowest price at a given moment in time. That said, everything about this business model seems somewhat tentative.

The worldwide cloud infrastructure as a service (IaaS) market grew 29.5 percent in 2017 to reach a total revenue of $23.5 billion — that's up from $18.2 billion in 2016, according to the latest market study by Gartner. Moreover, Amazon was the leading vendor in the IaaS market during 2017, followed by Microsoft, Alibaba, Google and IBM.

Cloud IaaS market development

"The top four providers have strong IaaS offerings and saw healthy growth as IaaS adoption is being fully embraced by mainstream organizations and as cloud availability expands into new regions and countries," said Sid Nag, research director at Gartner. "Cloud-directed IT spending now constitutes more than 20 percent of the total IT budget for organizations using cloud. Many of these organizations are now using cloud to support production environments and business-critical operations."

In the IaaS market, the competitive landscape is consolidating around the current leaders. The top four providers are all hyperscale IaaS providers and represent approximately 73 percent of the total IaaS market and 47 percent of the combined IaaS and infrastructure utility services (IUS) market.

Amazon is the clear leader in the worldwide IaaS market with an estimated $12.2 billion revenue in 2017 — that's up 25 percent from 2016. Growth in 2017 was driven not only by customers that are migrating from traditional data centers to cloud IaaS, but also by customers implementing digital transformation projects, reflecting a broad range of use cases.

According to the Gartner assessment, Microsoft has secured the number two position in the IaaS market with growth of more than 98 percent on its IaaS offering, with revenue surpassing $3.1 billion in 2017. Microsoft delivers its IaaS capabilities through its Microsoft Azure offering, which is a collection of infrastructure and platform services.

In the third position, China's Alibaba growth in 2017 of 63 percent reflects the company's successful investment in research and development (R&D). Alibaba has the financial capability to continue this trend and invest in global expansion, giving them the potential to become an alternative to the leading global hyperscale cloud providers in select regions. Alibaba could disrupt the current cloud incumbents.

Outlook for cloud service adoption and growth

"This reflects a fundamental change in what and how organizations are consuming technology. Some legacy infrastructure offerings, such as IUS, are seeing lower and slower uptake that impacts the combined IaaS and IUS market," Mr. Nag said. "Additionally, a groundswell of demand for cloud-skilled personnel is forcing technology providers to change how they compete to meet this exploding demand."

There is no doubt that the IT infrastructure future will be driven by increased cloud computing adoption within on-premises data centers and in public cloud service platforms. A broad variety of hybrid cloud combinations and multi-cloud vendor deployments will be commonplace. What's unclear is the viability of cloud providers that are unable to maintain their ROI, as the competitive battle evolves over time.

The future of enterprise software will be in some part automated, with machine learning (ML) and artificial intelligence (AI) technologies really starting to come to the fore. For all the actors cast in this fascinating drama – from the largest cloud vendors to startups, and from business analysts to data scientists – it’s time to either start learning their lines or, in some cases, rip up the script altogether.

The script in question? The Empire Strikes Back.

Work-Bench, a New York-based venture capital firm focusing on enterprise technologies, released its 2018 Enterprise Almanac report last month with that very title. The reason relates to the culmination of a long-standing trend. 10 years ago, it was a clear fight between the on-prem empire and the ‘cloud rebel alliance’, as the report puts it. Today’s rebel alliances have to fight not just the on-prem overlords, but the cloud hypervendors – Amazon, Microsoft, Google et al.

This is a trend that is not going away any time soon. Michael Yamnitsky, venture partner at Work-Bench and author of the report (left), jokes that next year’s report will most likely be titled Return of the Jedi. Yet as the report asserts, large technology companies are ‘#winning’ – the report’s hashtag – at AI. Not only are the largest cloud vendors releasing various toolkits – Amazon with SageMaker and Lex, Azure with Machine Learning Studio – they’re also hoovering up the best AI talent.

Work-Bench’s vision is ‘hoping that new talent gets excited about the enterprise’ – and as this publication put it when covering the original report, the promises of AI and ML will give plenty of reason to get excited in the coming years.

In an email conversation with CloudTech, Yamnitsky gives his verdict on what has changed in the industry over the past 12 months, the rise of Salesforce as an AI force, and what the biggest cloud players and BI vendors will do from here.

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CloudTech: How much has changed in the enterprise software industry between this year’s and last year’s reports?

Michael Yamnitsky: A lot! The industry is constantly evolving. That’s what makes early stage venture so much fun. Building a new company in a highly dynamic, competitive market means you always need to play mental chess to figure out the right moats and pockets of value you can monetise.

CT: The report touches on the shift of moving natural language processing to business reports. There are companies looking to do this, but is this ‘democratisation of data’ really going to change things at the executive level?

MY: It will – but it will take time. The promise of products like Salesforce Einstein are to allow anyone to find insights in data without prior knowledge of the underlying data structures. Executives are certainly not precluded from this shift.

CT: Is it wanted from all sides – and what does this mean for data scientists? Is it similar to citizen developer initiatives from a few years ago, or will this take food off their table?

MY: That’s an interesting question and it comes down to culture. Some data scientists embrace democratisation, while others want to keep the lid shut so their work – and position of power – in the company remains stable.

CT: You focus on Salesforce as someone to keep an eye on for AI with its Einstein suite – could you elaborate a bit more on why that is, compared with other companies?

MY: Salesforce Einstein is based on a product built by BeyondCore, a startup Salesforce bought a few years ago. The product is very impressive. Salesforce just doesn’t have mindshare in the BI space. People do not know much about it. Salesforce has a good eye for marketing and I’m [sure] will have no problem catching up.

There are some stealth early-stage companies trying to emulate Salesforce Einstein functionality with standalone products and Tableau seems eager to compete in this area – but otherwise Salesforce has a highly differentiated product in the market.

CT: If you are a more traditional BI vendor reading this report, what do you have to do?

MY: Traditional BI vendors certainly understand this shift and seem to know what to do about it given the recent developments and M&A we see in the market.

CT: What do the next 18 months or so hold for the ‘mega clouds’, as you call them in the report? Market share remains stellar and capex continues to climb – and they seem to be leaning on their huge growing shares in infrastructure to particularly explore ML tools. Will that last?

MY: The mega clouds continue to surprise us. We assumed last year they would stick to building developer tools. That’s certainly the case for Microsoft and Amazon, but Google seems eager to build vertical AI applications starting with customer service.

I would not disqualify the other two from pursuing a similar strategy, or from pursuing any other product-market extension for that matter. It’s a good time to be a mega cloud.

Google Cloud is cutting the umbilical cord further when it comes to Kubernetes. The company is helping fund the move to transfer ownership and management of the technology’s resources to the Cloud Native Computing Foundation (CNCF) with the help of a $9 million grant.

The move will see the CNCF, as well as Kubernetes community members, taking responsibility for all day-to-day project operations. This will include testing and builds, as well as maintenance and operations for Kubernetes’ distribution.

Kubernetes was first released by Google in 2014, and was moved over to the CNCF, a neutral arbiter of cloud development technologies, shortly after its inception in 2015. The technology officially became the first to ‘graduate’ from the foundation in March, a sign that it had reached mature levels of governance and adoption. Last month Prometheus, an open source systems monitoring technology, became the second to graduate.

“With the rapid growth of Kubernetes, and broad participation from organisations, cloud providers and users alike, we’re thrilled to see Google Cloud hand over ownership of Kubernetes CI/CD to the community that helped build it into one of the highest velocity projects of all times,” said Dan Kohn, CNCF executive director.

“Google Cloud’s generous contribution is an important step in empowering the Kubernetes community to take ownership of its management and sustainability – all for the benefit of the project’s ever-growing user base,” Kohn added.

“Developing Kubernetes in the open with a community of contributors has resulted in a much stronger and more feature-rich project,” wrote William Denniss, product manager for Google Kubernetes Engine in a blog post. “By sharing the operational responsibilities for Kubernetes with contributors to the project, we look forward to seeing the new ideas and efficiencies that all Kubernetes contributors bring to the project’s operations.”

At the Open Source Summit in Vancouver last week, the CNCF announced 38 new members had joined the foundation. Among the companies readers of this publication will recognise include hosting firm OVH, SQL database provider Cockroach Labs, and consulting firm InfraCloud Technologies.