Reality Check: Infrastructure Clouds on CeBIT 2010

Last week I spend two days at CeBIT and talked with many people about Cloud infrastructure services like Amazon EC2 or Rackspace. I wanted to know if and how cloud infrastructures are already used and which business impact they have for European IT companies. What are the drivers, usecases, and obstacles of cloud computing? Here is what I found out (note that these findings are not the result of a representative market study and prone to personal bias).

Hosting Providers

Hosting Providers (at least those delivering managed and application hosting) see increasing requests of their customers to deliver hosting services that are 1) immediately available (minutes instead days or weeks) and 2) don’t require long-term contracts. As a consequence, some hosting providers work on appropriate solutions based on wide-spread virtualization technology such as VMWare, Parallels or Xen. Others already keep a pool of physical machines in standby mode dedicated to just-in-time allocation and temporary and short-term usage. I didn’t met a cloud-hosting provider that offered IaaS (Infrastructure as a Service) such as AWS does. However, I saw several companies providing solutions to turn existing infrastructures into cloud infrastructures and manage infrastructure and billing for either internal usage (“private cloud”) or cloud hosting (“public cloud”).

Consultants and Integrators

The vast majority of small integrator companies I met at CeBIT offered development and hosting for specific applications (in the domains ERP, CRM, CMS, E-Shops) for  small- and medium-sized companies. The majority of those 1) has never heard of cloud infrastructures 2) think it is a fad or 3) think it is only something for few companies with extreme scaling needs. There were also quite a couple that use it for development, testing, and demoing ongoing projects to customers. For those kind of usages, security concerns are not important (by the way, I heard several times that customers are less concerned about if their data is store securely, but more where it is stored. Don’t know if this is a common concern…). I met one CMS software and service provider that runs already a handful of their customers on AWS.

Web-Shops are very often implemented, managed, and run by web-agencies and integrators. I was surprised that I didn’t find more cloud infrastructure users in the E-Commerce domain.  I guess that Web-Shops could save a lot of money to dynamically adapt their resource usage to the varying activity by their own customers depending on holidays, seasons, weekdays (or even hours: how many Germans buy books between 3 and 4 in the morning?). Probably, long-established partnerships and investments in existing infrastructures play an important role here as well as a rather conservative mentality (“never change a running system”).

Managed Security Service Providers (MSSPs)

This group offers and advocates cloud services (anti-spam, web-security, leakage protection, secure document sharing), but they don’t use cloud infrastructures themselves, but rather built and manage their own data-centers. Since security is their core competence and asset, using cloud infrastructure services could cause irritations among their customers. In addition, full control of all aspects of their infrastructure including network and hardware is important for them.

SaaS Startups

Among this group (which was rather small at CeBIT), I found the most enthusiastic advocates and users of cloud infrastructures, which is not very surprising due to their inherent needs to start small with little capital, the potential to grow quickly and scale, and also the readiness to innovate and try new technologies.

Summary

The term “Cloud computing” was omni-present in the marketing material and discussions on CeBIT, but it’s real-world impact is still relatively small. SaaS is on the way to mainstream and seems to be the key driver to cloud infrastructure services. Application hosters watch companies like AWS very closely and even work on making their offerings more flexible with regard to contract duration and pay-per-use models. Today – at least outside the (European) startup-world – public IaaS (Infrastructure as a Service) adoption is in an early stage. It seems that companies address the demand for utility computing rather by creating private cloud infrastructures – at least as a first step.

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