Are the cloud wars over or just getting started?

One of the biggest opportunities for enterprises large and small are cloud-based solutions. These solutions vary from Infrastructure to Software in a myriad of different forms and products.

Many consider the cloud wars between the public cloud, Infrastructure as a Service (IaaS) vendors including Amazon AWS, Microsoft Azure, Google Cloud, IBM Cloud, Oracle Cloud, Alibaba Cloudand several others. In the enterprise, Amazon, Microsoft and Google are often considered the three big providers. However, the landscape is a bit more complicated and it is important to distinguish between webscale/ startup versus enterprise cloud use.

WHO IS THE CLOUD WINNER?

To understand the enterprise is to understand a very complicated beast. Not because it needs to be complicated, but because it is. While there are many reasons why the enterprise is as complicated as it is, it really doesn’t matter. It just is. And once you accept that, the path to success becomes clearer.

Amazon has done a great job of capturing the hearts and minds of both webscale/ startup and enterprises from the start. Their early entrance into the market during a time when cloud was a needed solution served them well. Amazon continued to provide new products and services ahead of their competition at an incredible clip. One of Amazon’s challenges has been their ability to attract significant momentum from the enterprise space. That is partly to do with Amazon’s approach and partly to do with the enterprise readiness.

Microsoft was slower to bring a cloud solution to market. For the longest time, Microsoft followed in Amazon’s shadow from just about every metric watched. However, about a year or so ago, that changed. Microsoft had finally caught up with Amazon and had shipped a service before Amazon. This was the first time that anyone had beat Amazon to the punch. While Microsoft still holds second place in terms of overall market share, their growth in the enterprise space is growing significantly.

In the cloud space, Google has been that company you want to see succeed in some form but has struggled to do so. For many years, Google was seen as having the superior technology to both Amazon and Microsoft. Their challenge in the enterprise space has been around relationships and adoption. Similar to Amazon, Google has struggled to make significant inroads into the enterprise. Google’s historical customer was not the same as their cloud target. Meanwhile, Microsoft continues to leverage their long-standing, existing enterprise relationships.

Not to be ignored, IBM, Oracle and Alibaba continue to make inroads, but at a markedly slower pace than the bigger rivals. Each of these companies have unique challenges unlike the others.

BREAKING DOWN RELATED FACTORS

Beyond the core services and market share, there are a number of other factors that are influencing cloud growth. Again, this excludesthe Software as a Service (SaaS) market which is far more specific to needs.

Is IaaS a commodity? In a word, no. Each of the core cloud providers take a different approach and have a varied product mix to their cloud offering.

Cloud Product Mix

Each of the providers mentioned above have a common core set of services. Each uses a slightly different approach to the core services. Beyond core services, the product mix varies greatly between providers. Most enterprise customers architect to a specific provider’s architecture versus commonality across providers.

Approach and Relationships

The approach that each provider takes toward enterprise accounts is one of the most distinguishing factors. Of the providers, Microsoft, IBM & Oracle are able to leverage their enterprise experience and relationships. Amazon and Google have taken a very different approach to build their enterprise relationships. Historically, Amazon and Google have relied on their online purchase approach. However, enterprises are accustomed to a very different approach. Over the past several years, Amazon and Google have worked to build out their sales organizations to work directly with enterprise clients.

To add further complexity, providers are still determining who the customer is, who (specifically) to target and how to target them. Unlike past engagements where IT (and ostensibly the CIO) was the ultimate target, that is not necessarily the case with cloud services. This is especially true as enterprise companies look beyond fundamental technology advantages toward business outcomes.

Private and Hybrid Solutions

The enterprise demand is a fairly complicated web of applications, requirements, data and network connections. Add to these regulatory and compliance requirements, and one sees how this becomes incredibly complicated. Then there are the perceived requirements and limitations that play a significant role in the decision process. For many enterprise organizations, the concept of public cloud services is very appealing. However, the requirements stood in the way of leveraging them. Private cloud services offered an opportunity address some of these challenges. Microsoft was an early entrant two years ago. Since then, Amazon, Google and IBM have produced their own variants of private cloud services. None of the solutions are like the solutions from other providers and vary more widely than their public cloud counterparts. Part of the challenge is for the customer to understand their specific needs to best understand how each solution matches up. This is really no different from the process enterprises should already be considering before engaging public cloud services.

The combination of private and public cloud services usher a new opportunity to leverage a hybrid approach to an enterprise’s cloud strategy. It is important to differentiate between hybrid and multi-cloud solutions.

Culture

The perceived culture of each provider varies greatly and plays a role in an enterprise’s decision of which provider to engage. There are two aspects to culture that play into this perspective. The first is in how each provider engages with their customer and relates accordingly. Even if a provider’s solution is superior, their culture and the relationships they have with customers play a big role in the decision process. Second is how the provider supports their products. For example, Amazon continues to produce a large number of services each and every year. This is great. But from a customer standpoint, it can be a) confusing to navigate the portfolio and b) concerning to know that no company can maintain services that may not gain adequate traction. Therefore, deprecation comes into play as a potential risk. Google has been well known to leave products in ‘beta’ for extended periods of time and deprecate services with little notice. For the enterprise, this can be risky as they often make investments and build significant strategies that span a longer period of time.

Economics

There is still the narrative that cloud is cheaper than the traditional data center. However, if you run the calculations, the costs are actually ~4x more expensiveto run the same application in cloud as in the corporate data center. There are a number of reasons for this.

If, however, the application is refactored or rearchitected for cloud, these costs come way down. Is cloud cheaper? Generally, no. There is often a premium to leveraging cloud. But there are many other advantages that ultimately drive enterprises to leverage cloud. And these advantages far overshadow the like-for-like comparison potential.

LOOKING BEYOND CLOUD

Most enterprise do not make decisions about cloud providers only based on their core cloud services. They take into account a myriad of factors including the other products and services that the provider offers beyond cloud. For example, an existing IBM customer may look to IBM for their cloud service before an alternative provider. Or an enterprise may look to leverage Google’s cloud service based on their other work with Google’s ecosystem. The point is that these decisions do not come lightly nor are the more significant decisions made in a silo. There is a lot to unpack with each of these factors.

So, are the cloud wars over or are they just getting started? For the enterprise, we are in the very early stages of true cloud enablement. The winners will be those that can best relate to the complexity and ever-changing enterprise buyer. That is not a simple nor clear path forward. It is a changing target that is impacted in many ways. Add in the complexity that comes from increased regulation, data privacy, artificial intelligence, edge and IoT.

I have long since said that cloud will be the single biggest opportunity for enterprises. That statement is still true today. Not all roads end with public cloud. Cloud is just one of many ways that enterprises will consume services.