Service Providers large and small have been delivering network-based services for decades, including infrastructure and software. These have come in the form of enterprise hosting, unified communications, managed security, and managed applications. In fact, it’s not a stretch to include traditional telecommunications services such as Voice, MPLS, and Internet access into a discussion on traditional network services, since networks are shared. Over years of delivering these services, technological advances have taken place, many without interesting names or marketing budgets tied to them.
Enter the newest headline-grabbing network service – “Cloud.” It seems the market still has differing opinions on how to define Cloud. I have heard professionals blur the lines by referring to Cloud as anything in the network, or by lumping it in with services such as managed hosting. Purists call it self-service and unmanaged. There are even sub-categories, such as IaaS, PaaS and SaaS, where even the lines between these blur. Even though there isn’t consensus on the perfect definition of Cloud, there is agreement that something important is happening.
But is Cloud really anything new? I’m not so sure. This era of Cloud very much reminds me of the start of the web hosting industry 12 or so years ago, but without the public appetite or vigor. In the age of Exodus, a “startup” building data centers for masses of startups as adoption of IP enabled applications was taking off. It was thought Exodus would run away with the web hosting market.
IT Organizations were philosophically against using external Data Centers. To the startup, Telecommunications providers like AT&T were dinosaurs and favored Companies like UUNet and PSINet when buying Internet Bandwidth. Neither enterprises nor startups would give me more than ten minutes to discuss it with them but for very different reasons.
A decade or so later we see a very different market, and adoption of these services pivoted from Startup to Enterprise. Exodus is gone and dinosaurs reign as enterprises implement complex strategies like data center consolidation, virtualization, global expansion, and disaster recovery. Amazon’s success with the ISV and SMB market is reminiscent of the stranglehold Exodus had on the Web Hosting Market. But the Cloud industry will mature, and the more they change the more they stay the same.
The decision-making process has not changed. Enterprises are curious but cautious. Just as they did a dozen years ago, business leaders evaluating web hosting services today still must answer key strategic questions: Do We build or lease? Or maybe a philosophical question of do we outsource or in source?
There are a number of underlying questions that roll up to these like use case, interoperability, security, compliance, mobility, and vendor lock in. As the previous web hosting history lesson demonstrates, not only is Cloud adoption likely to grow, but its largest users will be the Enterprise.
Today’s largest consumers of IT and Technology services also make up the largest growth potential for Cloud Services. The Enterprise’s “formal” Buyer will pivot over time to hybrid cloud models migrating workloads back and forth over their networks. They will choose Cloud Providers where they already have natural synergies. Cloud Service Providers whom they have come to rely on for a critical communication services like networks, virtualization and mobility.
So, why all of a sudden is there so much buzz about Cloud? In a nutshell, it is the financial model offered through Cloud that makes it special. For the first time in a long time businesses can consume services on demand, in an a la cart or per-user fashion, without long-term contracts or monthly financial commitments. With little risk and low cost of entry, early adopters can test drive the cloud and startups can get to market. The Cloud promises agility, operational efficiencies, and speed to market with little financial commitment.
So is Cloud new? No, and yes. Cloud has become a marketing term associated with a financial model. Whether you call it Services or Cloud, the value is the same. Innovation is the end game.