Three meetings to explain cloud to customers? Yes, it’s that bad

Although I hadn’t realized it right away, the idea for last week’s news story about how providers struggle to explain (but not over-explain) cloud computing to customers was really a long time in the works.

People don’t argue about what a router is. They don’t disagree about the definition of a virtual desktop. Nobody takes creative license with the concept of CRM. But when it comes to the vocabulary for cloud computing, all bets are off.

I guess I could complain about it — except that I already did (oops). But what has continued to eat away at me  was how much time I spend getting cloud providers (and to a lesser extent their suppliers) to explicitly define what they mean by “(public, private, virtual private, hosted, fill in the blank) cloud” because those terms have almost become subjective. Maybe subjective isn’t the best choice of words. There are official-ish definitions out there. But for some providers, their usage is sort of… optional.

Trust me, I really don’t want to get into these discussions. I actually hate the whole “Well, does it have an orchestration layer? Is it self-provisioning? What’s the billing model? How is this different from dedicated hosting?” dance when really the more interesting thing to talk about it is what this service actually does. But I’m telling you, it just happens.

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Why are telecom companies the red-headed stepchildren of cloud?

For the record: Lest the blog title gives you the wrong impression, I’m not one of those crazy people who think gingers have no souls. Telecom companies? Another story (just kidding — it was too easy). There are some pretty awesome gingers out there (and some pretty innovative telcos), but the “red-headed stepchild” expression seemed fitting when looking at market’s attitude toward carrier cloud services.

I had the good fortune of chatting a few weeks ago with Forrester’s James Staten, vice president and principal analyst of all things cloud (and apparently, based on his head shot, another awesome ginger), about some recent trends in the market. During our conversation, we started talking about telcos in the cloud space, and he pointed out something from some of his recent research that I’d heard anecdotally several times:

“When we ask enterprise customers, ‘Who would you buy cloud services from?’ at the bottom of the list are telcos, and just above that are the hosting companies, so when it comes to getting cloud services, the brands of AT&T, Verizon or any of these companies might be a detriment.”

In case you’re wondering, at the top of the list were hardware/software providers and systems integrators.

This comment was in the back of my mind during a recent interview I did with AT&T, following the updates made to their IaaS product, Synaptic Compute as a Service. We have a full Q&A coming next week right here, though there was one question that didn’t quite make the final editing cut (for space reasons) but that seemed too interesting to leave out. I asked AT&T’s John Potter, vice president of As A Service Solutions, what he thought about this apparent stigma.

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Cloud commandment No. 1: Know thy customer

It sounds pretty obvious, right? Whether you’re trying to close a sale or just get a foot in the door, of course you should understand the requirements and limitations of your specific customers and market segment. As well-seasoned channel vets know, this is especially true in the SMB market. And with SMBs expected to be at the start of the cloud adoption curve, this dogma should be top of mind for cloud providers.

But for some longtime hosting providers and network operators trying to get a foothold into SMB cloud services, this mentality is somewhat of a lost art, according to John Zanni, vice president of service provider marketing and alliances at Parallels, which hosted its annual customer summit last week in Orlando. After years of selling what eventually became commodities — bandwidth and rack space — some of these providers must now revisit their sales and marketing strategies because remaining competitive is no longer just about price and technology, Zanni told me in a recent phone interview.

“To be able to continue growing and profiting, you need to be able to offer services beyond those horizontal services,” Zanni said. That means focusing on specific segments within the SMB market, which “is just an expertise that most of [those providers] did not build,” he added.

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Polycom wholesales ‘Video as a Service,’ but what’s in it for cloud providers?

Meet Polycom, the network operator and wholesale cloud provider… wait, what?

Polycom. Yeah, you know them. They make the magic boxes that let you join a mobile video conference while the butler drives you to work or that make it virtually impossible to get away with playing Words with Friends during a meeting ever again (damn you, Triple Word box — so close, yet always so far away). Little-known fact: Their R&D department apparently consists of a bunch of third graders that test the ruggedness of their endpoints by playing “phone baseball” (by the way, anyone know if they’re hiring? I’m not a third grader nor am I blessed with good hand/eye coordination, but I am really good at breaking stuff. Like, really good).

Right, so we know Polycom the video conferencing vendor. Now meet Polycom, the Video Conferencing as a Service provider that wants you as a partner (yes, you, the one with the Cat 5 cables draped fashionably around your neck). So, what has this eligible bachelor have to offer cloud providers and cloud-minded telcos, MSPs and VARs? Here are the highlights:

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What does 2012 hold for cloud providers (besides the Mayan apocalypse)?

OK, we know. You’ve got apocalypse fatigue. But hear us out.

As 2011 comes to a close, cloud providers are on the brink of — well, not an apocalypse. Seismic shift might be a more appropriate term.

Cloud and networking guru Tom Nolle outlines five big cloud computing trends that will reshape the cloud provider market in 2012, making the cloud far more successful and profitable for the providers that get on board.

Perhaps the most interesting of all is Nolle’s depiction of the rise of the “virtual cloud operator,” a spin-off of the “virtual network operator” (VNO) wholesale telecom model.

If “cloud VNO” models are combined with cloud federation, then every application developer has the potential to be a cloud provider on a global scale. How many new services or features could be easily created and supported by this internetworked cloud infrastructure? The result could be an explosion of innovation that remakes the whole relationship among consumers, business users, networks and IT.

The question of “Who is a cloud provider?” is bound to get a lot more interesting if the playing field opens this way. This kind of shift will also undoubtedly leave prospective customers kind of jumpy about the cloud security and compliance implications (because not everyone is comfortable with multiple providers touching their data).

Yeah, yeah. SAP’s making a move for the cloud. But what else is going on here?

They say a magician’s best trick is diverting the audience’s attention long enough to create the illusion that he just pulled a rabbit out of a hat or made a scantily-clad assistant disappear. I’m not quite so cynical to believe that there’s anything subversive about all of the analysis of what SAP’s $3.4 billion bid this weekend for SuccessFactors Inc. means for Wall Street or whether SAP overpaid. But I do think there are some other interesting things to look at besides the rabbit in the hat.

Here’s a quick rundown at some other interesting angles the tech media and blogosphere is exploring.

• Bloomberg pulls no punches: This acquisition is the anti-Apotheker.

SAP AG’s then-chief Léo Apotheker told investors in 2009 that the German company’s homegrown technology was “significantly better” than that of Oracle Corp. (ORCL), which had “not done a good job with acquisitions.”

[...]

[Successors and co-CEOs Bill] McDermott and [Jim Hagemann] Snabe have changed tack at the largest maker of business-management software to do a better job meeting demand for new technologies, such as cloud computing, real-time analytics and mobile applications. The SuccessFactors deal shows SAP’s previous go-it-alone approach to the cloud was lacking, said Thomas Otter, a vice president at Gartner Inc.

“My first reaction was: what took you so long?” Otter said in a phone interview from Heidelberg, Germany, less than 50 miles away from SAP’s headquarters in Walldorf. “This means a fundamental shift in terms of their cloud strategy, which has been rather slow to get off the ground. This is a tacit admission that their cloud strategy was a failure.”

• All Things D says this is the start of a SaaS feeding frenzy, crunching the numbers to speculate on the next M&A target:

The first and most obvious thing that’s going to result from the SAP deal is that speculation will surge about another, similar deal. Already this morning, analysts at BMO Capital have upgraded Taleo, a SuccessFactors rival, on the theory that it is now in play and that Oracle is the most likely buyer. Taleo specializes in cloud-based talent management software, and is about the same size by revenue as SuccessFactors. Publicly traded since 2005, Taleo saw its shares close Friday at $32.96, within 13 percent of its historic high of $37.10, giving the company a market capitalization of about $1.4 billion, making it a relatively easy target for Oracle and its $32 billion war chest. BMO boosted its price target on Taleo shares to $40 from $28.

Another one to watch is Workday, yet another provider of cloud-based human resources software, which last month raised $85 million at an implied valuation of $2 billion as warm-up for an expected IPO next year. It’s on track to do about $320 million in billings in 2011, and is nearing profitability.

Another company that will probably be considered for takeout is NetSuite, the company that specializes [in] cloud-based software for running a business. Trading as of Friday at a valuation just shy of $3 billion, it could be a takeover target, too, though its business is humming along just fine. It’s on its way to closing the year with sales north of $235 million — much of that derives from taking customers away from SAP.

• The New York Times’ Bits blog calls us all back down to Earth regarding how long it’s taken SAP to respond to Oracle’s acquisition of RightNow Technologies. Enterprise customers are not moving as fast on the cloud as vendor marketing machines and frenzied bloggers and journalists seem to be:

After the sales boost, as the plan runs, SuccessFactors is the means by which SAP migrates the data bases of big business over to the new computing world.

This is a long-range plan, and not tomorrow’s work at SAP. And so it is an interesting counterpoint to much of the rhetoric inside the tech world about the speed with which the new paradigm for computing — big data centers accessed over the Internet instead of computing systems run inside a company — will take hold among tech’s biggest customers.

In Silicon Valley, said Lars Dalgaard, the chief executive of SuccessFactors, “There is a lack of understanding of how companies do things, and how lethargic they are about change.”

He added that the existing systems “that tell how a plane lands, that keep a heart beating, you don’t change that quickly.”

ALU to cloud providers: Let’s talk about something besides the data center

Alcatel-Lucent (ALU) has recently announced a cloud software and hardware package that it calls CloudBand, and here’s the first thing you need to know about it: Non-network operators need not apply.

Alcatel-Lucent, which has a strong foothold with the telcos, is laying its new “carrier cloud solution” at the feet of network operators. Its vision is for operators to look beyond the cloud data center and give the network a starring role in cloud provisioning.

“By leveraging the power of the network, [operators] can actually offer a brand new tier of service and SLAs attached to service — guaranteed performance, guaranteed bandwidth, latency optimization, jitter optimization — that can only really be achieved if you … look at the connectivity layer and the compute/storage layer together,” said Dor Skuler, vice president of cloud services at Alcatel-Lucent.

But let’s not get ahead of ourselves. I have personal hangups about the word “solution,” so let’s break down what CloudBand actually is. Continued »

Cloud partner drama: Just like landlord/tenant disputes, only more fun

(And by “more fun,” of course, we mean more expensive, frustrating, damaging and high-risk)

We recently gave you some insight into five business challenges cloud resellers must anticipate when partnering with a cloud provider. Some news out of the UK cloud market is making me wonder if we’re due for a counterpoint piece for cloud providers, outlining five warning signs your reseller is hustlin’ you.

The Register reports:

UK-based Livedrive, which provides a cloud storage backend, ended its contract with US reseller Backify because, it claimed, the firm was “a fly-by-night operation” that didn’t pay for its services. The American backup biz, which offered [end users] a free backup service using Livedrive’s systems, has denied any wrongdoing and blames Livedrive for technical problems.

“Backify had a problem because they weren’t paying the fees that were due to us,” Livedrive MD Andrew Michael told The Register. “The problem started because they were paying us by credit card and their credit card was getting declined when they were adding new customers.”

No word on how much money Livedrive was allegedly fleeced out of, and Backify’s website has since gone bye-bye. It isn’t offering much by way of an explanation (or defense) except to say, “LiveDrive has terminated Backify’s reseller account, and Backify.com is no longer in service.” It also offers would-be customers a referral to Backblaze, a “better and more reliable backup solution,” which (under the circumstances) looks like a Judas kiss for those guys.

Cloud news roundup: Salesforce makes mobile/social play, Nirvanix scores its biggest deployment this year

Is there such a thing as a quiet news week for cloud providers? No, we didn’t think so either. Here are a few things worth watching from the past week:

• Salesforce.com acquires Model Metrics: What do pigs, rabbits and polar bears have in common with Salesforce.com? They’re all now on the list of animals known to eat their young. The cloud CRM powerhouse acquired one of its own partners, cloud integrator and consulting shop Model Metrics, for an undisclosed sum. Salesforce.com execs, including new COO George Hu and EVP Maria Martinez, said in prepared statements on Monday that Model Metrics‘ success in mobile and social cloud services will help Salesforce further “empower” its partners. Talkin’ Cloud‘s blog had some interesting ideas about how this deal may play out for cloud partners:
  

  “Model Metrics, in its previous life a Salesforce partner with more than 1,000 deployments under its belt, specialized in developing mobile applications that bridged the gap between a customer’s smartphone or tablet and their cloud data according to their specific needs. If Model Metrics can teach that strategy to Salesforce’s partners — maybe even helping resellers become mobile ISVs — it could boost business all around.”

• Nirvanix finds recurring revenue in private cloud: Cloud storage provider Nirvanix announced that it has inked its biggest deployment this year: eight petabytes of unstructured data in a private cloud built for the University of Southern California school system. Note the key words there: private cloud. Large enterprises (and, yes, universities) are highly unlikely to put all or perhaps even most of their storage in the public cloud (at this point in the game, at least). But on-premises private cloud? That sounds less scary to them. It also sounds, at first blush perhaps, like a vanilla software sale for the provider — except for the fact that this will be fully managed as a service for USC (the “recurring revenue stream” alarm bells should be going off now). And this is how cloud providers will compete and stay afloat in the market. Nirvanix describes its private cloud storage as “a local instance of a cloud storage node in your organization’s data center premises while you only pay for storage that you actually consume.” And in case anyone wanted to take a page from its playbook, here’s what Nirvanix had to say about the USC deal specifically:
  

  Deployed within USC’s central data center, the Nirvanix Private Cloud Storage solution will enable the university and its clients to upload digital content from any location and ensure that it is available anywhere around the world by virtue of Nirvanix’s Cloud File System software. Additionally, any changes made to files stored in the Nirvanix Private Cloud will be immediately reflected across the whole cloud, ensuring that multiple users collaborating and accessing the same file always have the latest version. This level of data consistency is critical for such a massive amount of unstructured data and is not available from any other cloud storage service or storage system vendor.

  “How many conventional storage devices can even handle eight Petabytes distributed around the world?” said Paul Froutan, former head of Google data center operations and current Nirvanix CTO. “The answer: none. This is why companies are shifting to the consumption economics and business flexibility inherent in cloud storage services.”

• CompTIA launches cloud credentials: Fellow TechTarget blogger and veteran tech writer Ed Tittel blogged about this last week, but we thought it was worth highlighting here, too, in case you missed it. Nonprofit trade association and IT certification giant CompTIA announced it will launch a cloud computing credential and exam in December 2011 for enterprises and cloud providers, CompTIA Cloud Essentials: 50 questions, 60 minutes, 720 minimum passing score (meaning 72%, or 36 out of 50 correct answers). The exam will cover: configuration of networks, including archive, backup and restoration technologies; business continuity and storage administration; system integration and application workload; and basic troubleshooting and connectivity. CompTIA consulted a variety of large, established cloud providers — including Amazon, Cisco, Citrix, EMC, Google, HP, IBM, Microsoft, Rackspace and VMware — to develop the exam’s content. In the standard-less Wild West of the cloud market, something like this could be good news for MSPs and resellers that want to give customers an industry stamp of approval and/or become more knowledgeable and confidant about the technology itself. Tittel notes that CompTIA has not released any pricing information, but speculates that the exam will “probably be between $180 and $250 in keeping with other typical CompTIA exam price points.”

Making cloud performance a ‘check box item’

Although cloud security issues seem to elicit the most frantic FUD-fests from prospective customers, cloud performance will be an equally important benchmark that enterprises expect their cloud providers to meet. The most sophisticated (and secure) cloud service is worthless if it takes customers two or three minutes to complete every transaction.

But therein lies the rub. While cloud providers can invest millions in high-performance computing infrastructure and faster, flatter data center architectures, it could all be for naught if customers are complaining about flaky application performance due to Internet congestion or hellish latency (and guess whose help desk gets the irate customer call?). Sure, many cloud providers have enabled customers to provision private connections into their environments, but part of why cloud services appeal to enterprises is their universal accessibility via the Internet.

Web acceleration and content delivery network (CDN) provider Akamai is angling to get in this game. At its customer conference this week in Boston, Akamai unveiled a new service it’s developing, codename “Chamonix,” which is targeted directly at cloud providers.

The service aims to enable cloud providers to sell Akamai’s Web optimization to their facilities as a “check box item,” which would be provisioned and partitioned instantly and transparently for the cloud provider and its customer (versus the lengthy and manual integration once required to set this up). Cloud providers will be able to white-label it or use the Akamai brand.

Chamonix (along with Akamai’s other managed services) should help cloud providers convince customers to get cozier with using cloud services for more than just testing and development, said Michael Cucchi, a director of product marketing at Akamai.

There’s some evidence that cloud providers are taking performance more seriously. CloudSleuth, a cloud performance monitoring service and online cloud provider community sponsored by Compuware Corp., recently released some data they’ve been crunching for the past year on cloud provider performance around the world with their Global Provider View app (a fun little map/database to tinker around with, if you’re so inclined).

The CloudSleuth team set up Compuware’s Gomez monitoring nodes in about 30 locations and launched a very basic (and fake) application within dozens of cloud provider environments around the world. Each node, mimicking an end user in a different location, collected response times every 15 minutes from all the cloud providers’ facilities that were part of the informal study — Rackspace’s facility in Texas, Amazon’s EC2 in Northern Virginia, CloudSigma in Switzerland, Windows Azure in Singapore, etc.

With most of the nodes placed in the U.S. and the laws of physics at work, naturally the results were skewed toward cloud providers nearby U.S. data centers. But the informal study “wasn’t meant to [determine] who’s best in the world at cloud,” said Ryan Bateman, a CloudSleuth product marketing manager. Instead, it was designed to give enterprises some insight into what the user experience might be like for users in Dublin accessing a cloud-based application in Florida, he said.

So, what does this mean for cloud providers? One of the interesting takeaways from the data is that cloud performance more or less improved for a group of top-tier cloud providers between August 2010 and July 2011 (check out the second graph in CloudSleuth’s blog post). During that period, response times shortened by about a second. CloudSleuth hasn’t yet surveyed the cloud providers to find out how they achieved those results, but it’s clear that cloud performance is on their radars.