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Cloud services: If not now, when?


The notion of using cloud-based services still terrifies enterprise IT pros, even though such services have advanced in both quality and variety for years. IT pros remain frozen by the specter of losing control of data, security breaches and random service outages. Some of these reasons may be losing validity.

In stark contrast to that fact, however, was the smashing success Amazon Web Services (AWS) had last week with re:Invent, its first conference  In the six years since AWS launched, cloud services have been increasingly embraced by start-ups and media delivery companies, along with a slew of forward-thinking developers .

Amazon executives, such as CTO Werner Vogels, a senior vice president Andy Jassey and founder Jeff Bezos, brought their value proposition to the masses in person. We’ve heard their case for cloud services before:  You can change Capex to variable expense, you can pay lower variable expenses, you don’t have to guess your capacity needs and you can have apps set up in minutes.

They hammered on traditional IT vendors, claiming the economics of AWS is disruptive to the HPs, Dells, Microsofts and Oracles of the world. Amazon is a low-volume, high-margin business and it’s not the game that the old guard can play, they said. They may have a point. With the possible exception of IBM, most of the long time stalwarts of the industry — many so reliant on hardware and more traditional services — have yet to present a compelling cloud services strategy that would make its largest customers disregard AWS.

For instance, you want security? AWS has all the standard security certifications, and the company can help implement them with a bigger and better team than you have.

But still, many IT shops have the same reasons for not moving forward.  They are risk averse, they don’t throw things out, legacy apps are hard to move and there are few examples of traditional enterprises that have made the leap. Amazon trots out its old standby, Netflix, along with more recent enterprises, including  NASDAQ, NASA, the United States Tennis Association, McGraw Hill and Novartis to name a few. Comcast, for instance, has been reinventing parts of its business using AWS, spending two years quietly refashioning its media delivery network.

Real enterprises still look for accounts they can relate to. At the conference, Amazon touted its prized new public customer Pinterest — not exactly a revenue-generating machine that supports a legacy back end.

And try to dig up a customer reference on the exhibit floor. One energetic marketing manager brightened when I asked for a name. He offered up If you don’t know who they are, look them up. Hint: It’s not a competitor to the Subway chain of sandwich shops.

Not too far into the future, enterprises will absorb the cultural changes associated with cloud adoption. Amazon with AWS will be a winner, and some of its competitors will win as well. In the 1990s, we had the likes of Gates and Ballmer, Ellison and others, armed with “kill the competitor” strategies that generated high margins. This is a different game. For example, at re: Invent, AWS followed Google when it dropped the price of its cloud storage by 25%. The next morning, someone from Hitachi told me his customers asked, “Why does storage have to cost so much?” Is it getting hot in here or what?

In data-driven 21st century architectures, apps and processes must be automated as business shifts, as IT shops will be determined to not get stuck with hardware — and software — limitations. Security is integrated from the ground up. There are new attitudes. Failure is not an option? Forget that. AWS CTO Vogels says to regard failure is normal. Failure is always around the corner. Embrace it. It’s the new black.

The main thing is that if you are not constraining yourself up front, you will build more successful architectures. It will take more time, which is fine because this team, like another team from Seattle that forged new ground 30 years ago, has the long view. Amazon, and its competitors, look increasingly inevitable.

Margie Semilof is editorial director of the Data Center & Virtualization media group.

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