Research reveals extent of ‘aggressive’ hyperscale operator growth in cloud markets

Hyperscale operators are ‘aggressively’ growing their share of cloud service markets, according to the latest note from Synergy Research.

The analyst firm identifies 24 companies in all which meet its definition of ‘hyperscale’ – not surprisingly including the four main infrastructure players, Amazon Web Services (AWS), Microsoft, IBM, and Google – and argues these companies accounted for more than two thirds (68%) of the overall cloud infrastructure services market.

Back in December, Synergy noted that hyperscale providers operated more than 300 global data centres between them, expecting this number to surpass 400 by 2018. Of that figure, almost half (45%) of data centres were in the US, with China (8%), Japan (7%) and UK (5%) trailing far behind. The company says the current figure is now approaching 320.

This time around, the focus is on the growing dominance of the biggest players in cloud infrastructure markets, including infrastructure as a service (IaaS), platform as a service (PaaS), and private hosted cloud services. By comparison, in 2012 hyperscale operators accounted for 47% of each of those markets.

As Synergy puts it, the ‘scale of infrastructure investment required to be a leading player in cloud services or cloud-enabled services means that few companies are able to keep pace with the hyperscale operators…and they continue to both increase their share of service markets and account for an ever-larger portion of spend on data centre infrastructure equipment.’

“Hyperscale operators are now dominating the IT landscape in so many different ways. They are reshaping the services market, radically changing IT spending patterns within enterprises, and causing major disruptions among infrastructure technology vendors,” said John Dinsdale, research director and a chief analyst at Synergy. “Our latest forecasts show these factors being accentuated over the next five years.”

The value of hybrid: Operate for today and optimise for tomorrow

(c)iStock.com/rzoze19

The term “hybrid cloud” has grown in popularity among established technology vendors, but one could be forgiven for thinking it’s a convenient “cloudwash” for companies to showcase progress while delaying an inevitable shift to public cloud. I say that because to focus exclusively on cloud overlooks the reality that almost every CIO in an established enterprise today is contending with legacy as much as the need to embrace new technologies. Some critical data centre hosted systems just don’t move to cloud so easily.

It’s all simply IT, which is why I call the effective combination of public cloud, managed service provider cloud, and dedicated infrastructure “hybrid IT”. It is by no means intended as a “catch-all”, so I feel I owe it to the reader to explain precisely what I mean and how established companies are successfully exploiting the benefits of such choice on their terms.

Hybrid is about choice

At its core, hybrid is about choice: Choice to work with the appropriate combination of an organisation’s on-premises infrastructure, managed services, private cloud and public cloud infrastructure and services. With the right knowledge and information, companies can optimise IT to balance cost, risk and agility.

The first question to ask concerns value. Hybrid IT allows companies to choose the infrastructure or service that delivers the best value for them at that time. Over time, the value delivered could change and an application that is hosted on-premises could be migrated to a cloud IaaS or SaaS. Changes in cloud services (functionality and price), availability of skills, geographic requirements or software / hardware maintenance needs can all trigger the push-pull of value delivered.

Global presence is a big pull factor for cloud. Throughout the past two years the hyperscale cloud providers have battled for global coverage supremacy, opening data centres in important legal jurisdictions and population centres.  Here cloud offers low-latency local infrastructure that is becoming vital to companies to improve the experience of their global customers. It also presents options for data sovereignty and regulatory compliance.

Don’t forget the workload: It is common for business critical applications to have resource, locality, dependencies, or indeed hardware requirements that mean they are both complex and costly to migrate to cloud. Some companies will choose to outsource to a specialist to reduce their support costs, and may consider a cloud migration as factors change over time.

Hybrid IT allows enterprises to exploit legacy investment

Most clients we work with have legacy systems that are core to their business and have run for 10 years or more. These legacy systems often run on platforms such as mainframes, IBM i and previous-generation enterprise servers that cannot be transferred to a public cloud or a commodity Windows/Linux environment.

Hybrid IT has allowed them to continue maximising their return on investment in functional legacy systems, while migrating applications to the public cloud that are easily refactored for that environment. This prevents enterprises being hindered in their ability to adapt and innovate, while also freeing up capacity in legacy infrastructure to absorb increased demands.

Hybrid IT mandates integration

No-one can deny the benefits of cloud when it comes to flexibility and future capital savings, but the cost associated with a wholesale cloud migration can vastly outweigh the benefits. It is also important to note the complexities associated with transferring applications and data to the cloud. Some systems simply aren’t suited for cloud environments and others require significant re-engineering.

Here’s the rub: New systems of differentiation and innovation are usually best placed in public cloud environments, and built cloud-native, but these can rely on transactions and datasets residing in legacy systems, for example a retail website that relies on back-office inventory management. The successful hybrid IT solution must cater for this integration, and in doing so an enterprise with legacy technology gains the agility to transform without going all-in to public cloud.

Success in hybrid also mandates integration of IT real estate. I have spent more than 15 years helping companies make sense of each wave of cloud, and there are many common mistakes that result from a simple truth: It’s all IT and it all needs managing wherever it runs. If an established IT department doesn’t pay the same attention to developing its toolset, skills and processes for cloud management as it does on-premises management, then things will go wrong. Furthermore, those tools and processes must be integrated. Only then, can you benefit from the choice and flexibility of hybrid IT.

Keeping pace with new technology deployment and management is unsustainable for all but the largest IT departments. As cloud service choices continue to expand an increasing number of businesses are seeking specialist help from managed service providers who are able to provide the integration, specialist tooling and skills needed to address the complexity and breadth of hybrid IT and make it work for businesses.

Journey’s end?

Hybrid is about the long-term evolution of IT estates. Almost every company has IT distributed across multiple infrastructures and service providers, and companies that embrace the Hybrid IT management challenge are empowered to move forward.

As technology becomes ever more critical to business, the world is not going to get simpler. The ultimate goal must be to deliver a single, consistent service experience across the combination of hybrid IT environments you choose, enabling an organisation to adapt and change with business and technology needs.

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