Category Archives: hybrid cloud

AWS, Financial Results, hybrid cloud, Managed services, Microsoft Azure, News & Analysis, OpenStack, Private Cloud, Rackspace

Rackspace prioritises AWS and Azure partnerships for future growth

Taylor Rhodes

Taylor Rhodes, President and CEO at Rackspace

Rackspace has reported healthy growth for Q1 2016, as the team continues its transition to become managed services provider, leveraging partnerships with AWS and Microsoft Azure.

Revenues for the first quarter were reported at $518 million, a year-on-year growth of 9.9%, while profits grew 77.5%. Although the growth of the business over the last 12 months has been viewed as generally positive, industry commentators highlighted the $24 million gain from the divestiture of Jungle Disk, and what could be perceived as a lacklustre outlook for the rest of 2016 has dampened the news. The exec team expects revenues of between $519 million and $524 million for the second quarter.

“First, we saw a strong demand for our expertise and support on the AWS and Microsoft Clouds and for our OpenStack private cloud offer. Collectively, we now serve more than 400 customers on these platforms and our demand is scaling rapidly,” Taylor Rhodes, President and CEO at Rackspace. “From the October launch of our AWS service through the end of April, we’ve been actively marketing with AWS and have signed 187 customers across every firm size, geography, and vertical.”

The transition to a managed cloud services company began a number of years ago with the launch of Rackspace’s Fanatical Support services, though seemingly began making real traction within the industry last year, as the team announced expanded partnerships with Microsoft in July, when Azure public and private cloud infrastructure was incorporated into the offering, and AWS in August. The team also recently announced a new partnership with Cloud Technology Partners, which it believes will increase cloud adoption rates.

The partnerships are also enabling the company to diversify its geographical focus as over 40% of the AWS customers are coming from non-U.S. regions. Rhodes also believes the new capital-light business models employed enables the company to roll-out new offerings worldwide. Previously, new products were rolled out first in the USA, due to capital intensity, and then phased out over time into other regions worldwide, however the new model is claimed to offer Rackspace increased flexibility and agility in bringing new offerings to the market.

The shift in strategic direction is supported by a renewed effort in the marketing department, as Rhodes highlighted campaigns will now be directed towards driving brand awareness and demand generation for the managed cloud services business, specifically the Fanatical Support services offered to AWS and Microsoft Azure customers.

“Our new head of Global Sales and Marketing, Alex Pinchev, started work at the beginning of Q1,” said Rhodes. “He and his team are moving aggressively to shift resources toward our new fast-growing offers while sustaining our core business. They are training more of our sales teams to sell our new offers and are hiring additional specialists in areas of high demand. We advised you last quarter that these sales and marketing efforts will take time to gain full traction, that transition contributed to our slow start to the year”

Efforts for Rackspace on the OpenStack front would also appear to be bearing fruit, with the launch of OpenStack Everywhere, Next Generation Bare Metal Servers and the Private Cloud Powered by Red Hat offering. All three offerings would seemingly demonstrate the company’s drive towards the OpenStack private and hybrid cloud market segments. The team are confident in the growth potential of the OpenStack private cloud market, and highlighted a number of major customers wins were through this aspect of the business.

“Our role as the co-founder of OpenStack has given us unique capabilities in software development, DevOps, continuous integration and deployment, and other key disciplines,” said Rhodes. “Those capabilities provide a major differentiation for us versus other managed services providers as we expand to provide managed cloud services on AWS and the Microsoft Cloud.

“We’ve really seen a tipping point, what really looks like a significant tipping point in the market for OpenStack private clouds in the last six months to nine months. Some of our largest deals that we closed in March were OpenStack private cloud deals and some of the largest deals that we have in our pipeline today are OpenStack private cloud deal. So, really that’s the traction that we’re seeing.”

Adoption, Enterprise IT, hybrid cloud, multi-cloud, News & Analysis, Private Cloud, Public Cloud, Statistics, VMTurbo

57% of organizations still don’t have multi-cloud strategy – survey

Competition. Business concept illustrationResearch from VMTurbo has highlighted 57% of organizations have no multi-cloud strategy at all, where as 35% do not have a private cloud strategy and 28% lack one for public cloud.

Although hybrid cloud is considered one of the growing trends within the industry, the research suggests the noise behind multi-cloud strategies is coming from either a small number of customers, or from vendor organizations themselves. Of those who would be considered in the ‘Functional Multi-cloud Owner’ group, which only represented 10.4% of the respondents, almost half were using a two-cloud model, and just over a quarter were using a three-cloud model. The multi-cloud strategy was favoured by larger organizations in general.

“A lack of cloud strategy doesn’t mean an organization has studied and rejected the idea of the cloud; it means it has given adoption little or no thought at all,” said Charles Crouchman, CTO of VMTurbo. “As organizations make the journey from on-premise IT, to public and private clouds, and finally to multi- and hybrid clouds, it’s essential that they address this.

“Having a cloud strategy means understanding the precise costs and challenges that the cloud will introduce, knowing how to make the cloud approach work for you, and choosing technologies that will supplement cloud adoption. For instance, by automating workload allocation so that services are always provided with the best performance for the best cost. Without a strategy, organizations will be condemning themselves to higher-than-expected costs, and a cloud that never performs to its full potential.”

The survey also demonstrated the total cost of ownership is not fully understood within the community itself, less so within smaller organizations. SME’s planning to build private cloud environments estimated their budget to be in the region of $150,000 (average of all respondents), whereas the total bill for those who have already completed such projects averaged at $898,508.

The stat backs up thoughts of a number of organizations who believe there should be more of a business case behind the transition to the cloud than simply reducing CAPEX and OPEX. Last month, BCN spoke to Gwil Davies, Director & Cloud Lead in the EMEA IT Infrastructure Centre of Excellence at Deloitte, to understand the economics behind cloud computing. Davies believes a successful journey to the cloud is not just focused on reducing CAPEX and OPEX throughout the organization, but identifies where value can be achieved through a cloud-enabled business.

“I think it’s more important for organizations get a real understanding of how to use the cloud and perhaps not automatically assume that moving all of their current IT into cloud is going to be the cheaper solution.” said Davies.

The business case for the cloud is almost entirely dependent on the long-term ambitions of the business itself, though the survey does imply there is a need to further educate some corners of the IT industry on the benefits and perceived cost of private cloud. Cloud computing as a concept could be perceived to have penetrated the mainstream market, though the benefits may be less so.

centurylink, hybrid cloud, multi-cloud, News & Analysis

Century launches automation offering for hybrid and multi-cloud

multi cloudCenturyLink has launched Runner, it’s new configuration management and orchestration service designed for hybrid and multi-cloud environments.

The new offering is built with openness in mind, ensuring automation in any cloud or data centre, including its own cloud platform, other third-party cloud providers and on premise infrastructures and devices. Runner focuses on open source automation and orchestration engine as a service.

“Runner is a new product from CenturyLink Cloud that enables fast, easy automation and orchestration on the CenturyLink Cloud Platform, as well as third-party cloud providers and on-premises infrastructure and devices,” said Chris Kent, Runner Product Owner at Century Link. “Runner provides the ability to quickly provision and modifies resources on any environment, and gives users a true Hybrid IT solution, regardless of where their resources are.

“Runner, at its core, is an Ansible engine. On top of that engine exists several other custom services and APIs we’ve created, many of which were created in tandem with the Runner job service to enhance the job execution capabilities.”

The new offering is built on the assumption that customers do not have the time or resource to effectively manage a hybrid or multi-cloud environment, and also cases where customers need better distribution in case of failures. The team seem to be focusing on the concepts of execution speed and a reduction in human error as some of the prominent features to differentiate themselves in an already competitive market. CenturyLink has also differentiated itself by focusing the technology on managing and automating the infrastructure itself, as opposed to focusing on the connections themselves, as with other competitors.

AWS, Google, hybrid cloud, IBM, Microsoft, News & Analysis

AWS, Google, Microsoft and IBM pull away from pack in race for cloud market share

racing horses starting a raceNew findings from Synergy Research highlight the cloud market is still dominated by AWS, Google, Microsoft and IBM, as the pack is seemingly struggling to gain ground in the race for market share.

AWS still leads the way in the segment, accounting for roughly 31% of the global market share, with IBM, Google and IBM collectively accounting for the next 22%. The next 20 players in the market, companies such as HPE, VMWare and Alibaba for example, account for a collective 27%. AWS year-on-year growth was estimated at 57% while Google and Microsoft both demonstrated more than 100% growth over the same period.

“This is a market that is so big and is growing so rapidly that companies can be growing by 10-30% per year and might feel good about themselves and yet they’d still be losing market share,” said John Dinsdale, Chief Analyst at Synergy Research Group. “The big question for them is whether or not they are building a sustainable and profitable business. This can be done by focusing on specific regions or specific services, but the bulk of the market demands huge scale, a broad footprint, very deep pockets and a long-term corporate focus.”

Worryingly for the rest of the pack outside of the top four, the gap would appear to be growing as AWS, Google, Microsoft and IBM are pulling further ahead. The 20 companies outside the top four averaged year-on-year growth of approximately 41%, though Synergy claim the cloud segment grew more than 50% over the course of Q1.

The team estimate the quarterly cloud infrastructure service revenues, which include IaaS, PaaS and private & hybrid cloud, has now surpassed the $7 billion milestone, with the US accounting for roughly 50% of the worldwide market share.

 

Growth

Azure, hybrid, hybrid cloud, IoT, Microsoft, News & Analysis, Public Cloud

Microsoft shifts focus to Chinese cloud market

MicrosoftMicrosoft has announced a successful year in the Chinese market, as well as intentions to step-up its expansion plans in the region, according to China Daily.

The company claims it now has more than 65,000 corporate clients, and appetite for its Azure offering in Chinese enterprise organizations is steadily increasing. As part of the expansion plans, Microsoft lowered its prices for Chinese customers earlier this month, seemingly in an effort to undercut its global competitor AWS, as well as local powerhouses such as Alibaba Tencent.

“Though the GDP growth is slowing down, Chinese companies still need to focus on three points to remain relevant and competitive: innovation, productivity and the return of investments,” Ralph Haupter, CEO of Microsoft in China. “And cloud computing can help in all of the above three aspects. We will focus on manufacturing, retail, automotive, media and other industries to further expand market share.”

While China has proved to be one of the top priorities of the majority of the cloud players in recent years, a recent report from BSA highlighted the region was one of the poorest performers in the global IT community. Measuring each country of their cloud policies and legislation, as well as the readiness of its enterprises, China ranked 23 out of the top 24 IT nations worldwide, mainly due to poor performance in the data privacy, cybercrime, promotion of free trade and security categories, though it was one of the worst performers across every category.

Despite concerns from the BSA, Ji Yanhang, an analyst at Analysys International, believes the market has strong potential, stating “China’s national strategies, such as boosting high-end manufacturing, will increase demand for cloud services in the coming years.”

The announcement follows last weeks’ quarterly earnings call, where CEO Satya Nadella reported that Office commercial products and cloud services revenue grew 7%, Office consumer products and cloud services revenue grew 6% and Dynamics products and cloud services revenue grew 9%. Azure revenues grew 120% over the period, though this is down from 140% growth in the previous quarter.

Financial Results, hybrid cloud, Microsoft, News & Analysis

Mixed fortunes for Microsoft cloud business

Microsoft To Layoff 18,000Microsoft has reported mixed fortunes for its cloud business unit during its quarterly earnings call, as while cloud revenues grew across the board, the results are slightly down on the previous quarter.

Office commercial products and cloud services revenue grew 7%, Office consumer products and cloud services revenue grew 6% and Dynamics products and cloud services revenue grew 9%. Revenue in Intelligent Cloud grew 3% to $6.1 billion, with Azure revenue up 120%, though this is down from 5% and 140% respectively in the previous quarter. Despite the slight slow-down, the team remain upbeat for future business. Profits for the Intelligent Cloud business unit fell 14% to $2.19 billion for the quarter.

“We exceeded $10 billion in commercial cloud annualized revenue run rate,” said Satya Nadella, CEO at Microsoft. “We’re halfway to our FY 2018 goal of $20 billion. This quarter, we surpassed 270 million monthly active devices running Windows 10. We’re proud of our progress and look forward to making more as enterprise deployments accelerate.

“We’re expanding into new markets such as security, analytics and cloud voice, where we see an opportunity and where we can differentiate. For example, the cyber security market is expanding rapidly, and it’s a place where we have unique capabilities, like Advanced Threat Protection, Cloud App Security and Advanced eDiscovery. This combination drove a 35% quarter-over-quarter growth of monthly active users of our premium information protection services in Office 365. A key driver of this growth is our new premium Office 365 suite, E5.”

While the figures show revenues slowing slightly, the company has still demonstrated growth in the cloud computing segment and overall consensus throughout the industry would generally attribute Microsoft as the number two player in the market. Share price took a slight dip following the news, however Nadella leadership and guidance into new markets has seen positive growth in market performance since his appointment in 2014. Share price has increased from just below $40 to roughly $55 during Nadella’ tenure as CEO.

“The cloud is being built into every organization’s quest to optimize and grow,” said Nadella. “With our results this quarter, it remains clear we are one of the two leaders in this market. Azure revenue increased 120% in constant currency, with revenue from premium services growing triple digits for the seventh consecutive quarter. We are innovating in new areas to help organizations digitally transform. We’re expanding our competitive strength in hybrid computing. We’re generating opportunity for developers and partners.”

In terms of moving forward, the company has prioritized the hybrid cloud market as a means of growth. By utilizing the Azure Stack offering, Microsoft claims customers are able to process certain workloads in Azure data centres, while also keeping mission critical workloads in-house on the Azure Stack itself. The company believes the scale of the data centre and Azure Stack offering is number one in the industry.

“That I think is where the world is going to go to, where distributed computing will remain distributers,” said Nadella. “So Azure’s stack is completely unique to Microsoft. No one else who is in the public cloud business at any scale has that kind of capability. So I would say that’s another point of differentiation.”

Cost Reduction, Deloitte, Enterprise IT, hybrid cloud, Opinion

Understanding the economics of the cloud – its more than just a money saver

Businessman drawing business planA recent survey from Spiceworks highlighted 93% of enterprise organizations are now using at least one cloud based service within their operations, but there does seem to be a general feeling within the community that the benefits are not clearly understood.

While most early adopters of such platforms, as well as other future tech, have focused on the performance capabilities which cloud can offer, the mainstream market believes the cloud is a cost reduction tool, a point which professional services giant Deloitte disagrees with.

“The image of the cloud projected by the market is sometimes that all forms of cloud are cheaper, but it is a question of using the right tool for the right job,” said Gwil Davies, Director & Cloud Lead in the EMEA IT Infrastructure at Deloitte. “What decision makers at these organizations need to realize is that the cloud is not necessarily cheaper.”

“I think it’s more important for organizations get a real understanding of how to use the cloud and perhaps not automatically assume that moving all of their current IT into cloud is going to be the cheaper solution.”

The concept of the cloud being a cheaper alternative to traditional IT is sometimes a case of a lack of understanding of the technology itself, but also the journey on which organizations need to undertake to ensure cloud computing is being used in an effective manner. Selecting a cloud provider is only a small facet of the cloud itself, a fact which can be under-appreciated by enterprise decision makers.

“Technology is a small part of the challenge, business transformation of the organization is key to the success of the cloud,” said Davies. “You have to be really clear on the why, the what and the how. Specifically you have to have a keen eye on value. Some of the most successful cloud implementation projects generate value in new ways. These decision makers have specifically identified where clear business value can be generated. If the answer is to reduce costs, the cloud is not always the right option.”

Speaking at Cloud World Expo, Davies highlighted that a successful journey to the cloud is not one which focuses on reducing CAPEX and OPEX throughout the organization, but identifies where value can be achieved through a cloud-enabled business. Identifying where the value is, but also monitoring the progress of the project can be the difference between effective investment and throwing money away.

“There are sometimes surprises – and most organisations will need to invest in some base capabilities, before a migration of systems into the cloud can begin,” said Davies. “The business case needs to be defined around what the value of the transition is to the business – huge benefits can be realised, and often it’s not just about reducing the current cost of your IT systems.”

One conclusion which can be drawn from the aforementioned survey as well as others, is the concept of cloud computing has penetrated into the mainstream market. But the question as to whether the benefits of scalability, compute power, agility, flexibility etc. have been effectively received is less clear.

“It varies very widely (whether benefits beyond cost reduction are understood), as customers are in different stages of their cloud journey,” said Davies. “In my opinion, the cloud as a technology is one of the most transformative opportunities available to enterprise organizations in recent years. The cloud is unlocking a huge amount of value throughout the organization, which wouldn’t have been possible even two years ago. There is a huge potential to reach new customers, create new opportunities and experiences, as well as become more competitive in the market place.

Different organizations are in different places though. The starting point for organizations, who are at the investigating the cloud, and haven’t identified what the cloud means to the wider business, is mostly cost saving.”

Financial Results, hybrid cloud, News & Analysis, Quarterly Earnings, VMware

Leadership restructure has little impact as VMWare reports 5% growth

VMWare campus logoVMWare has reported healthy growth during its Q1 earnings call despite disruptions in the management team over the period.

Revenues for the first quarter were reported at $1.59 billion, an increase of 5% in comparison to the same period in 2015, though license revenues saw a drop of 1% to $572 million. The company now expects second-quarter revenue of $1.66 billion to $1.71 billion, compared with analysts’ average estimate of $1.66 billion.

“Q1 was a good start to 2016, both for results and against our strategic goal of building momentum for our newer growth businesses and in the cloud,” said Patrick Gelsinger, CEO at VMWare. “Our results were in line with our expectations for the period and support our outlook for the full year.”

Over the course of the period, there may have been concerns surrounding changes in the leadership team, and how a restructure would impact the performance of the business on the whole. Carl Eschenbach announced last month he would be leaving his post as VMWare President and COO to join venture capital firm Sequoia Capital as a Partner. CFO Jonathan Chadwick also left the business in January.

Eschenbach joined the firm in 2002 as VP of Sales, was appointed as co-President and COO in 2011 and eventually as the stand-alone President in 2012. During Eschenbach’s time at VMWare, revenues grew from $31 million in 2002, to more than $6 billion in 2015. The changes in leadership would not have appeared to have stifled the company’s performance, as its cloud business units performed healthily over the first quarter.

“We think on the executive side, it really is the combination of being able to attract new players than – I mentioned Rajiv (Rajiv Ramaswami, GM, Networking and Security) we brought in a leader for China, Bernard (Bernard Kwok, Greater China President); we’ve been able to continue to attract talent,” said Gelsinger. “We’ve also had commented on our very strong bench, and – like Maurizio (Maurizio Carli, VP Worldwide Sales), we had brought him over from Europe a year plus ago to prepare for this eventuality, and so we had been grooming and preparing for these transitions.”

The company also reported healthy growth for its cloud business unit, including NSX, VSAN, End-User Computing and vCloud Air Network. The company highlighted standalone vSphere license bookings were less than 35% of total bookings, a figure which was more than 50% two years ago. The team claim this reduction demonstrates the product offering has been successfully diversified.

“Turning to hybrid cloud. Total bookings for vCloud Air Network grew over 25% year-over-year,” said Zane Rowe, CFO at VMWare. “We see significant interest from cloud and service providers around the world wanting to utilize our hybrid cloud technologies. For example, as Pat mentioned earlier, IBM will be delivering a complete SDDC offering based on VMware’s technologies across their expanded footprint of cloud data centres worldwide. vCloud Air also performed well in Q1 with large enterprise customer adoption.”

In terms of long-term strategy, Gelsinger outlined a three-point plan to facilitate VMWare’s growth in the cloud market segment. Firstly, the business will consolidate its position in the private cloud space, a segment which it describes as the ‘foundation of our business’. Secondly, through the vCloud Air service and vCloud Air Network, the company aims to encourage its customers extend their private cloud into the public cloud. And finally, connecting, managing and securing end points across a range of public clouds, including Amazon Web Services and Microsoft Azure.

hybrid, hybrid cloud, News & Analysis, telstra

Telstra launches one-to-many Cloud Gateway offering

GatewayAustralian telco Telstra has bolstered his position in the growing cloud market with the launch of Cloud Gateway.

The Cloud Gateway is Telstra’s new solution which enables businesses to connect to multiple public cloud environments, acting as a one-to-many “gateway” model via Telstra’s IP network.

“Most organisations don’t realise the full value of cloud out of a single service,” said Philip Jones, Global Products and Solutions at Telstra. “Instead, our customers are investing in sophisticated hybrid cloud environments, which come with their own range of fragmented networking challenges.

“These include managing multiple vendors, portals and contracts, while trying to maintain a high level of security, performance and operational efficiency. We believe that just because these solutions are sophisticated, doesn’t mean that they should also be complex. Cloud Gateway is Telstra’s simple way to connect multiple clouds, and create hybrid environments.”

The product offering will enable Australian customers to connect to Microsoft Azure, Office365, AWS, IBM SoftLayer, and VMware vCloud Air, while international customers can only connect to AWS and IBM SoftLayer for the moment.

“Telstra is very well positioned to help customers with hybrid and multi-cloud strategies, as we bring the cloud and the network together,” said Jones. “The network is the fundamental piece of the puzzle that helps provide a secure and reliable application experience. Having a single touchpoint also helps reduce IT complexity, enabling our customers to maximise the benefits of investing in cloud.”

Telstra has been making moves within the cloud space in recent months, following the announcement of a cloud innovation centre in February. The centre was launched alongside partners AWS and Ericsson with the focus of accelerating the adoption of cloud technologies.

“Telstra’s vision is to build a trusted network service for mission critical cloud data, and we are excited to explore the opportunity of bringing this vision to life with Ericsson and AWS,” said Vish Nandlall, CTO of Telstra, at the time of the announcement. “The Cloud Innovation Center at Gurrowa intends to bring together cloud experts from Ericsson, AWS and Telstra to encourage cloud adoption and the development of new business opportunities for Telstra and our customers.”

hybrid, hybrid cloud, Met Office, News & Analysis

Met Office launches weather app on hybrid cloud platform

SkyThe Met Office has launched its latest app on its new hybrid cloud platform, Weather Cloud, in an effort to increase the speed of delivery and accuracy of its weather data to customers.

The platform itself enables the company to processes meteorological data for mobile, at scale, across all Met Office platforms, to ensure the team can deliver information to the public at times of extreme weather events. In designing the app, the team took a DevOps orientated approach, releasing a Minimum Viable Product (MVP) in the first instance, while monitoring customer feedback to refine the proposition.

“We know that more and more people are choosing mobile devices to access their weather information from the Met Office and it’s vital we continue to address this changing behaviour so we can deliver our world-class weather service,” said Owen Tribe, Head of Digital at the Met Office. “The new app technology will enable us to evolve our digital presence and the ways in which people want to access their weather information in the future.”

During Storm Katie in March, the Met Office received a 200% increase in traffic and with over 8 million visits over the course of the weekend. The team claim the new Weather Cloud platform will better enable them to deal with increased traffic and facilitate better planning for short-term weather events. The company also highlighted the ability to scale down in times of lesser demand to reduce public funds spent on the platform.

Weather Cloud was implemented in AWS with assistance from CloudReach, though the DevOps journey has been maintained as the team continue to make updates to the app based on customer feedback.

“The Met Office now has AWS Cloud infrastructure supporting its services, which can respond to changes in demand quickly, is highly resilient in case of any failures and supports stringent security requirements,” said James Monico, Founder at CloudReach. “Using AWS means that the Met Office does not have to maintain hardware that would otherwise be unused for large parts of the year, but it can instead add and remove resources quickly and dynamically as demand fluctuates.”