Service Provider Panel on VMware vCloud

September 16th, 2009 by Julia Lim

One goal I had for VMworld was to learn first-hand from customers about their cloud adoption and uses. Here are some notes from a session earlier in the day which, while not sharing first-hand customer experience with the clouds, brought together in one panel leading cloud service providers.  Since service providers are perfect customers for EM7, I was curious as to what they had to say - what cloud offerings they provided, what their customers were actually buying and what was keeping customers from cloud adoption.

One more note: I think from the panel, only Hosting.com is a vCloud Express provider. There wasn’t time to ask questions, but I think it would have been interesting to hear his perspective on how, other than on price for what is designed to be a quick and cheap service offering, his company is going to compete for customers and more importantly, keep customers. A key component of vCloud Express is the ability to easily move cloud applications from public to private clouds and/or from one participating service provider to another, i.e., lowering switching costs. I can only imagine there are other value-added services that will build those switching costs back up – but this is a solution designed for low-cost and casual use. How much will those kinds of customers really pay for value-add?  Something to follow going forward.

Extending your IT Beyond the datacenter: the vCloud Initiative

Dan Chu, VMware VP of Emerging Business, headed up this panel, starting off with the ubiquitous VMware vCloud positioning slides.

Cloud Drivers:

• need to conserve capital
• scale service quickly to match business needs

Issues with early public clouds:

• concerns about manageability,  security, SLAs
• lock-in to proprietary service
• not compatible with enterprise IT

Tech Target ran a Cloud Computing Readership Survey in June – the results of which are popping up in VMware marketing materials (If anyone can find the link for this, please share)
What is the biggest barrier to adoption of cloud services?

• Cost/benefit unclear 24%
• Unknown management headaches 22%
• Lack of security 17%
• Lack of reliability 6.03%
• No standard way to switch providers 6.43% (rather low but perhaps this is more of an “advanced” requirement; if you don’t have apps running in the cloud, it’s pretty forward-thinking to consider this)
• Disruption to IT org charge/politics 4.22%

VMware Approach: (vCloud)
1) Enterprise Ready – proven robust platform used by 150K+ customers; policy-based management, SLA, security, high availability for the cloud
2) Choice – across internal and external clouds; broadest ecosystem of service providers
3) Broad Application Compatibility – optimized for new and existing apps; no need to rewrite or reimplement your apps (this is SpringSource – horizontal platform for taking apps to cloud)

And of course now there’s vCloud Express – a new class of cloud compute services offered by VMware vCloud ecosystem partners providing:

• self-service portal
• VMware vCloud API
• web-based signup/activation
• utility pricing
• credit card billing
• interoperability across service providers (here’s the switching costs issue)
• “VMware virtualized”

Panelists:

Toby Ford, Assistant VP of IT, AT&T (Technology Strategy for everything above the network – hosting, UC, telepresence, managed security)
AT&T’s Hosting and Apps service is becoming a billion dollar business: colocation, managed hosting, utility hosting, cloud hosting

Maggy McClelland, Managing Director, Managed Services, Colt
Leading player in pan-European business communication and IT solutions, own and manage network infrastructure across Europe, 18 European data centers = Distributed Cloud, largest accredited SWIFT (banking) network-provider. Establishing a cloud stack for enterprise cloud services.

Craig McClellan, CTO, Hosting.com
One of the partners announcing vCloud Express yesterday with VMware.
Cloud Hosting Solutions: include portal, network services, provisioning system (all in house) and now vCloud Express. Talked about providing a “single pane of glass” across all services a customer has with them.

Ken Owens, VP Technology, Savvis
IT Outsourcing company – world’s premier IT infrastructure services providers. Dedicated Cloud Compute (private cloud); OpenCloud Compute (multi-tenant/public/shared); Project Spirit (announcement with VMware and Cisco yesterday – multi-tenant, billing/provisioning, regional virtual data center, single pane of glass)

Joe Crawford, Executive Director, Verizon, IT Solutions Prod Mgmt, Prod Development Solutions.
CaaS  (Computing-as-a-Service) Delivers On-Demand Computing with Exceptional Security and Performance. And wrapping other services on top of this, in particular  Security services.

AT&T: 10 years ago – hurdles for IT were the same as shown in that TechTarget survey when it came to outsourcing IT. But now speed and the ability to drive down costs make the opportunities more real.

Hosting.com: In the mid-sized market – 90 days ago, we saw a big shift in our customers from choosing dedicated servers to cloud solutions. Mid-sized companies tend to be quicker to adopt. Why? Maybe web-centric app movement to cloud for high availability. Also many of our customers are developers and using cloud solutions for load testing in particular.

Verizon: Companies you would not think would go to cloud (because of security and compliance issues) are starting to look at it. Lower-cost delivery model and security wrap that we put around the cloud offerings make it more compelling; we have Chief Security officers wanting to learn more about our cloud solutions.

Hosting.com: In the last month – starting to talk to companies that want to move to federated cloud – have less “cloud” footprint in own data centers but want to grow public cloud usage OR move their entire virtual footprint out to public cloud hosting.

AT&T: customers are saying – we like the idea of using your compute and storage in the cloud, but how do we move app to you?

Savvis: (Asked about security concerns with the cloud) Security isn’t new. We’ve been solving these issues for years now. Virtualization adds a few unique issues but you have to talk to your customers about how you’ll handle those issues.

What are the key enterprise requirements your customers are looking for in the cloud?
Colt: in this economic climate, better balance between capex and opex expenditure. Brings them to point of considering outsourcing. Then the discussion starts - what makes sense to move, what are the risks and what is the business case. Customers are looking for cost efficiency and increasing flexibility and agility without increasing risk. Of course at this point, easier to do this with less enterprise/mission-critical apps.

AT&T: Security, reliability, performance. Service level agreements are critical to getting over hurdles to adoption.

Colt: not just SLAs but what are the business outcomes/impacts in the event that the SLAs are not executed to absolute perfection. This is a cultural change for our business as well – everyone in the company needs to understand the impacts.

Verizon: Enterprises want transparency. (My note: single pane of glass) but also chargeback.

What about competing against the public cloud players like Amazon?

AT&T: Key in competing with something like Amazon – showing who’s touched the data is important to enterprises.

Savvis: never really looked at Amazon as a threat in the enterprise space. Their customers are ready to give up some security, automation and flexibility for low-cost and speed. We have to provide all of that for enterprise customers.

How much are your customers saving?
Verizon: Roughly 25% savings. Sometimes more or less. Sometimes significantly more. Managed hosting customer – their new cloud implementation is coming in at 40% less and that’s with much more flexibility.

AT&T: Depends on predictability of the workload. If predictable, those enterprises can deal with it effectively themselves using VMware. Where they have huge demands to scale up or down quickly, that’s where we can provide some real cost savings.

Colt: 25% savings for a customer that I can think of. But I actually think it’s dangerous to try to put general numbers because it is always dependent on the business.

Hosting.com: Why is it about reducing their spend? Why not say it’s about doubling capacity and dramatically changing the way enterprises can provision?
You guys are competitors to some sense. But is that the biggest competition or is it inertia for people waiting to move to the cloud? How do you get them past the hurdles to move?

Savvis
We usually start with cost savings – 25-30%. But then it’s about use cases and value/functionality delivered there. Our network and security services are always refreshed. We’re not constrained by reducing capital. We have to invest in that and spread cost across all customers.

AT&T
Any project like test and development (or anything not in production) you should be thinking about moving to the cloud. These are the bursty workload applications that make sense for the cloud. Also Disaster Recovery is a great opportunity to deliver “as a service”. Not having to spend capital ahead of these kinds of uses and have unused capacity are great benefits of moving to the cloud.

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