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Sunday, Sep 04 2011

Competing with AWS

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James Urquhart wrote a piece for CNET on the ability for anyone to catch Amazon’s dominance as a public cloud infrastructure provider. Full respect from James and his words are insightful from a technological and functional requirements perspective. From a business success perspective I think it has some limitations. Volume has its place, but it is not the sole indicator of leadership.

What is leadership today?

The approach for Amazon up until the last 12 months has been one of grass roots adoption. There is however, no data exists to support or contradict my asertion. It is my belief that AWS customers are predominantly;

  1. free users (12 month trial) – tire kickers of all types
  2. credit card swipers – people genuinely evaluating features on personal or corporate credit cards
  3. early lifecycle companies – startup choosing to avoid capital equipment expenditure and focus on development
There are few exceptions to the rule, some mature enterprises for very specific workloads and some shining lights like NetFlix who are leading the adoption at scale.

gartner-2010-hype-cycleGartner Hype Cycle (2010)

Anyone who has been consulting in the cloud space knows that mainstream enterprise customers are still kicking the tires on cloud. Smaller to medium business are using SaaS based solutions in reasonable volume but an equal number of them are still stuck with legacy systems (Exchange, PC software, custom apps etc..) waiting for newer alternatives and more mature migration options.  I have mentioned many times that we sit that the precipice of “trough of disallusionment” and at the base of the wave of “early majority“.

What does “catching AWS’ mean ?

To catch AWS means to take the mantle of  leader in cloud computing. Simplistically you would say this means have the same rate of adoption, volume of customers and service offerings as Amazon. This is the profile of the past and will not be the leader of the future. The leader of cloud computing going forward needs to address the adoption of Enterprise and Small Medium Business. If you believe like me, that cloud will not cause enterprises to abandon decades of process, then the vendors need to change the model.

This is not the first time around we have seen this happen.

When DELL revolutionized (along with Gateway) the just-in-time manufacturing and delivery of computers, it was hailed as a game changing revolution. DELL maintained resolute in itscommitment to the business model. I remember ringing up DELL and requesting some onsite discussion and evaluation systems when working for a top enterprise (Fortune 500). The response was go to the website and order a system. Inevitably, enterprise adoption however was slow. Approved vendor lists and corporate acquisition policies were not easily overcome on the telephone. Only through a direct and channel sales force was it was able to gain adoption and unleash the efficiency of this business model for the enterprise customer.

A similar story could be applied to Linux and the emergence of RedHat and its support model. Take you picture of Linux builds that showed hockey stick growth curves only to be trumped buy the subscription and support model of RedHat.

There are many stories of similar profile littered throughout the timeline of modern IT. Enterprises are entities of habit and will not bend easily.

AWS itself is changing the game and offering a lot more options to support more mature infrastructure deployments. In my opinion they are courting the early majority who predominantly consist of traditional enterprises. Catching AWS is a moving target.

Leadership moving forward!

The future of leadership will focus more on profitability and revenue. It will achieve this by getting early and late majority to adopt cloud solutions. What does Amazon or any would-be successor to cloud leadership need to do.

Obviously the product needs to be robust. It does not need to be feature competitive to Amazon, but it can learn from the most desirable features and supplement it with additional enterprise features. I believe a more feature complete product for these customers will most likely come from a vendor who already has a relationship with the target market. They will have an open line of communication and product engineering team with the vision and capability to execute. They might jumpstart this process through an acquisition. There is no shortage of vendors waiting to make this acquisition and try this approach. It is a matter of picking the winners at the right price.

James covers the product features in his article, but misses a crucial component to leadership moving forward. Enterprise customers need a sales force, pre-sale technical team and services organization (consulting + support) to provide the assurance of a successful deployment (whether this is warranted is a longer discussion).

Cloud is not a transactional solution to implement, and the conservative nature of the majority adopters will demand a personal relationship to the vendor. They will need a big salesforce (direct+indirect) with a complete coverage model. Many of them will want to leverage the “best practice” in cloud observed by these vendors when dealing with other customers. They will get this through pre-sales architecture teams. Once deployed they need a mature support infrastructure and a percentage of them will leverage consulting services to deploy the final solution.

Contributed by: Brad Vaughan

SU

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