What is “The Cloud” Really?


Once upon a time I read a very good marketing paper that began with the statement: “People buy quarter-inch drill bits, but they want quarter-inch holes”.  The biggest mistake most tech companies make in marketing their products is they talk about the features of their quarter-inch drill bits, not the quality of the quarter-inch holes that can be made, or how the features of that hole are relevant or important for how the hole is going to end up being used.”  Assuming you accept this, I make the following observations about how most companies in “the cloud management space” are making it harder for their markets to understand what they do rather than easier.

Specifically, the concern I have is that “managing the cloud” or “the cloud management market” or “managing cloud computing”
is going to look markedly different depending on where you sit.  In particular, I think there are actually four cloud management markets or segments, with overlapping requirements to be sure, but still different enough that any company, vendor, or IT organization trying to “manage the cloud” should think about positioning itself in that context.  I also believe much of the confusion (or FUD) around “the cloud” and “cloud management” is because people use similar terms to mean very different things, each valid in its own right, but very, very different.

  • Segment 1 – Existing IT organizations that have on-premise services and also either have or aspires to have cloud-based services as well (whether IaaS, PaaS, SaaS, etc).  This management market will have a particular set of benefits and challenges associated with how the entity tries to integrate these IT services, and the management thereof, to make it look reasonably seamless (so they don’t simply replace one set of complex problems for a different set of complex problems).  Private/public clouds will create variations on this theme, with security and billing being the two main differences, but otherwise very similar problems.
  • Segment 2- The opposite end of this spectrum – organizations that aggressively pursue doing as much in the cloud as possible, and only doing on-premise what is either not yet available in cloud form or too business-critical to yet trust to a cloud-based solution.  I’ve spoken to a dozen CIO’s in the last two months who have set a mandate for their organizations along exactly these lines — cloud when you can, on-premise when you have to.  This is primarily an SMB-based discussion today, but it’s starting to bleed up into the enterprise space.

These first two represent more of a true user of “cloud-based” services and benefits.

  • Segment 3 – Groups that are actually hosting the cloud services used by the first two markets; the so-called “the service provider market.” It’s a real market, but tends to have a set of problems much more in common with the on-premise guys (insofar as they’re managing workloads within a well-defined IT  infrastructure — they’re still “on-premise,” just a different “premise” from the captive IT organization).  Their users come from the cloud, rather than being a captive user community.  This “where are the users coming from” tends to cause the management problems to have different priorities than the captive user version, but otherwise has more in common than not.  The one variation in this space is how high up into the stack a given organization chooses to go (IaaS, PaaS, SaaS, etc), which will also heavily influence what “management” means to them.   For example, Amazon is clearly an IaaS vendor in this space, and doesn’t know or care about applications per se.
  • Segment 4 – Also a provider market, but where all the services provided are actually located in the cloud, rather than a captive data centerConformity is representative of this type of market.  We provide a SaaS-based solution (which also happens to manage SaaS a specific problem of using SaaS applications, but that’s not a relevant distinction here) that runs entirely in the cloud, we don’t have a data center at all (except for a VPN server and a MS Domain Controller); we do everything else in the cloud (including development / builds / e-mail / calendaring / billing…. you name it).  This type of market will also have unique and real management problems, but with a very different emphasis than the first three.  It’s also still small, but rapidly growing, based on many VC discussions I’ve had in the last four months.

These last two represent more of a true provider of cloud-based services, even though they may also have “user-like” problems they need to solve.

As already noted, there is much overlap in these four “spaces,” so I don’t think one can be entirely pure in this four market segment model.  But the particular problems and their urgency will create a form of segmentation thatwill influence and govern how cloud management companies need to talk about themselves, what they do, what pain points they address, and the value of their solutions, because the value of a given solution will vary greatly depending on where in this four-market segmentation model a given customer views themselves.

So, assuming you agree at least in spirit with this segmentation, it might be helpful to start to introduce some of this nomenclature into the industry’s on-going discussion about cloud management issues.

Anyway, this is what occurred to me when I’ve tried to compare various “cloud management” offereings; it’s a bit of apples-and-oranges.  For example, CA or BMC might be expected to want to market its cloud-based offerings to companies in the first market, as on-premise is “core” and cloud is an “adjacent” space in this market (using the Baan / Zook “core/adjacency” nomenclature).

Smaller players, like UnivaUD, market its cloud-based offerings to companies in the third market, and while there’s clearly overlap and bleed-over between these two views,  they’re different enough that trying to compare them might not make sense.

As an aside, It’s also why I think “virtualization = cloud” is a horrible hoax that some vendors are foisting off on the rest of the industry.   Virtualization is an important technology, to be sure, but it’s a quarter-inch drill bit in the fullest sense of the word, and absent any discussion of what problem is being solved and why, carries almost no useful context in any final analysis of “the cloud management market.”



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