Enterprise Cloud MythsRandy Bias @randybiasMarch 8th @cloudscalingCloud Connect 2011
Are Enterprise (IaaS) Clouds a Mistake?
Public or Private Clouds Built in the ‘Enterprise’ style
The Myth
“We need Enterprise Clouds because ...”
The Myth Continued
Enterprises need more ... FUD??
The Fundamental Assumption in the Myth
vs.
Greenfield AppsLegacy Apps
Enterprises Love Commodity Clouds
There Are Two Battles Waging
Enterprise Clouds
Commodity Clouds
The Battle Lines
Public Privatevs.
vs.Public Public
The Error in Cloud as “Outsourcing”
Public Private
vs.
vs.
Where are the cost savings? “multi-tenancy?”
The Enterprise ‘No Clothes’ Moment ...
Where is the enterprise cloud business model equivalent of Amazon Web Services?
$0B
$0.5B
$1.0B
2007 2008 2009 2010 2011
The Amazon Model is Winning
$0M
$150M
$300M
2007 2008 2009 2010 2011
Source: Public estimates from Cloudscaling/UBS & RAX earnings statements
AWS 5-year Projected Revenue at 100-50% CAGR
$0B
$3B
$6B
$8B
$11B
2009 2010 2011 20122013
20142015
2016
Source: Public estimates from Cloudscaling & UBS + Cloudscaling estimates
AWS Growth & Momentum is Staggering
0B
175B
350B
525B
700B
3 14 40102
262
655
Q4’06 Q4’07Q4’08
Q4’09Q4’10
Q4’11
Source: Public AWS blog & PR announcements
S3 Published Growth Numbers
The Starkest Example Possible(‘Private’ Hosting vs. Public Cloud)
-10%
0%
10%
20%
30%
40%
Q4’08 Q1’09 Q2’09 Q3’09 Q4’09 Q1’10 Q2’10 Q3’10 Q4’10
RAX Cloud RAX Hosting
Q/Q % growth rates
Source: Public RAX earnings statements
Commodity Cloud as % RAX Total Revenue
0%
7%
13%
20%
2007 2008 2009 2010 2011
Source: Public RAX earnings statements
The Punchline?Enterprise Clouds Have Greatest Investment
$0B
$8B
$15B
$23B
$30B
2009 2010 2011 2012 2013Commodity Cloud Enterprise Cloud
Source: Cloudscaling estimates based on public data (conservative)
What’s Different About Commodity?
Attribute Commodity Enterprise
H/W Cost OptimizationHomogeneous & standardizedDesign-for-Failure
Self-service, low friction
Scale Engineering
Open Source
Cloud-oriented Biz Model
Initial Capital Expense:Enterprise vs. Commodity Cloud
$0
$500
$1,000
$1,500
$2,000
$225
$1,892
H/W Cost per Sellable ‘VMU’ (1GB RAM, 1 vCore)
CommodityEnterprise
Source: Cloudscaling confidential financial models for IaaS clouds
Labor Operational ExpenseEnterprise (300:1) vs. Commodity Cloud
(1500:1)
$0M
$38M
$75M
$113M
$150M
Year 1 Year 2 Year 3 Year 4 Year 5
Commodity Enterprise
Servers : IT Headcount
Source: Cloudscaling estimates based on known IaaS deployments
The Evidence Suggests ...
Go CommodityServe Greenfield
“Cloud-ready” appsEmbrace the Change