What cloud trends mean for you:
An analyst's view
@cote | http://cote.io
Research Director, Infrastructure Software, 451 R...
• IT research, advisory, professional
services, datacenter certification, and
events
• One company with 3 operating divisi...
Michael Coté
Research Director, Infrastructure Software
cote@451research.com
@cote – http://cote.io
Responsible for system...
OVER THE NEXT 10 YEARS, MANY APPLICATIONS WILL BE REWRITTEN…IF NOT
JUST REPLATFORMED
The Great Rewrite
(Don’t worry, I won...
Next Steps (beyond “cloud is a thing”)
Planning:
• Segment applications & services
• Differentiating (custom) vs.
keeping ...
Source: @agile_exec, March 5th, 2014.
We believe that application development is, indeed, a vital and valuable part of the
industry: our theory is that the majo...
Legacy…New…
Not seen here: white-collar toolchains
Sources: 451 HCTS NA 2013 conference; Chris Dancy.
“Cloud” is opening a new way of
delivering software, DevOps
$2.90
$4.50
$6.20
$8.20
$10.20
$1.40
$2.20
$3.20
$4.20
$5.30
$1.40
$1.90
$2.50
$3.20
$3.90
$5.70
$8.60
$11.90
$15.60
$19.4...
Source: "Market Monitor: Cloud-enabling Technologies Overview Report 2013," 451 Research, August 2013.
$6.97
$8.48
$9.97 $...
17% 17%
19%
22% 22%
29%
32%
34%
40% 40% 39% 40% 41%
23%
29%
32%
29% 29% 29%
31%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
Jan-...
So what are they doing?
18.7%
19.6%
14.8%
33.9%
11.3%
35.7%
20.9%
17.8%
18.3%
13.9%
12.6%
4.3%
20.4%
6.1%
10.4%
20.4%
17.0%
11.3%
5.7%
9.6%
3.5%
2...
Source: “2013 US Mobile Applications and Cloud Survey (IT Decision-Maker) December,” 451 Yankee Group, 2013.
Source: “2013 US Mobile Applications and Cloud Survey (IT Decision-Maker) December,” 451 Yankee Group, 2013.
So…DevOps anyone?
Source: 451 DevOps Study, Winter 2014. n=201 DevOps-minded individuals.
3.85%
24.73%
36.81%
34.62%
In a public cloud
envir...
Source: 451 DevOps Study, Winter 2014. n=201 DevOps-minded individuals.
Daily
8%
Weekly
22%
Monthly
18%
Quarterly
12%Semi-...
59%
54%
50%
46%
40%
20%
12%
16%
0%
17%
20%
15%
14%
15%
50%
14%
19%
19%
14%
15%
0%
23%
21%
46%
0% 10% 20% 30% 40% 50% 60% 7...
Custom written build
scripts
38%
Golden Images
24%
Third party install
programs
20%
Automation tools
16%
Other
2%
When des...
DIY
36%
CI Products
28%
Other
8%
None
28%
What build automation, or continuous integration (CI) tools are you using?
Sourc...
22.22%
25.93%
18.52%
38.89%
28.70%
Feature creep (new requirements are added inside each
cycle, lengthening the time to re...
There’s strong business
demand, work to be done as far as
the eye can see, and lots of maturing
ahead of us.
Good luck out...
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What cloud trends mean for you - an analyst's view

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See the video of me presenting this at Red Hat Summut 2004 here: http://coteindustries.com/post/82828534190/what-cloud-trends-mean-for-you-an-analysts-view-red

After boiling the ocean around cloud and DevOps, what are some tactical actions you can take to start figuring out your cloud strategy? This presentation goes over high-level way to start and gives you the market information needed to start arguing your case. Also, it covers the state of the early DevOps market, which is exciting, but relatively immature.

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  • # Brought up as a developer, so I always reduce everything to development, as you’ll see me do.# “Development” wasn’t always a super hot topic for mainstream concerns, but us fans have been banging around# Applications are of course key, and that’s suddenly become even more so# With new end-user devices, platforms like cloud, and things being more highly networks, it sure feels like there’s a lot of rewriting about to happen# This talk is a sort of launch into that voyageI’m was brought up as a developer, so I’m always trying to prove that developers are important. Over the 2000s, due in large part to our hosts and its friends like JBoss, Eclipse, etc. and others in the open source community, the developer market (selling tools and middleware used by developers) was sort of not a thing. If you wanted to found a company that worked on middleware or IDEs, you’d probably get laughed out of most sane investment offices. There didn’t seem to be as good a market there as other investments (Web 2.0 which became social), if a market all.What I’m going to go over is what I’ve started calling The Great Rewrite, which is actually probably more like The Great Rewrite part 4 (mainframes, UNIX, Microsoft [client/server], web, present), but really, who in the tech industry has time for history lessons?My working theory is that over the next ten years (because five seems to short, and 20 too long – welcome to the qualitative analyst life!) most of the applications that exist today will need to be re-written, if not quarantined to the new green screen ghettos, likely VDI and DaaS…which is a story for another time.This all matters because, as developer oriented people, we need money injected into the system that wants to do more development and pay for tools and middleware. We want a market here so we can keep getting paid well and getting new software. And for God’s sake, we want more than “social.” Pardon me for being an old guy again, but if you remember the wonderful confluence of the web, Y2K, and Enron-driven regulatory needs in enterprise software…that was a big ocean of cash sloshing around through the late 90s, through the .com crash and into the early 2000s. It was wonderful if you knew were in the tubes of money to thrust in your hand and pull out the cash you needed to live your cushy developer life.Why do these applications need to be re-written? Well, because of cloud and mobile of course.
  • # Planning:- Segment applications -- Differentiating/innovative vs. keeping the lights on; SaaS vs. custom development.-- Green-field vs. brown-field# Boot-strapping:- Benchmark yourself so you can track improvement, judge what needs to be improved-- Big Data example. With cloud: cloud, cost and speed of releasing to production -> Agility- Start PoCs and labs now to understand cloud as a platform for application delivery- Don't study too much, try small things while plodding through big problems# "Hell is other people"- The magic: Cost and speed of releasing to production -> Agility- Engage with the business to prompt new requests - as we'll see, mobile is creating all sorts of opportunities by removing old constraints and offering new moments to transact business- Cloud, and DevOps, is a culture war - choose carefully between mandates and subversive empathy
  • # Analyst come up with cheesy phrases, this is how I think about cloud changing IT# As my friend typed here, IT – SaaS = what?# You could always be a SaaS, that’s a thing. But what about everyone else: existing vendors, IT departments# As a strategic note, selling to SaaS companies is not really to cool. Cf. Porter on small number of buyers, IBM selling off x86 for 0.5x vs 19x for WhatsApp# So, what does that leave…?Us analysts like coming up with cheesy phrases - Us analysts like to gun for coming up with a corny phrase that gets associated with us. I had some fun with “the little 4” as a contrast to “the big 4” (I’m happy to tell you why I was an idiot with that moniker over beers). I’ve been trying to sum up how to strategically think about a “post cloud” IT landscape, and this is the best I’ve come up with the so far.If you take all of IT as we know it – on both sides of the firewall – and you minus out SaaS, what’s left over? Whatever it is, is what’s left over for existing technology vendors (very few are SaaSes) to sell, and for IT departments in companies to fund and do. That is, whatever “what?” ends up being is what most people in the IT world – sellers and buyers – will have as their business.You could be a SaaS, so that’s an option. Selling to SaaSes is to become a supplier, not easy. - You could become a SaaS – as many of the large vendors are doing through acquisition – or sell to SaaSes. Becoming one is interesting, no problem there. Selling to SaaSes (and public cloud providers) is a dicey move for anyone who’s read Porter. Strategically, when you’re selling a good, you’d like your customers to way outnumber the sellers in the market so the aggregate of buyers have less control. You don’t want the situation that server vendors are in where a handful of “hyper scale” web companies have so much power that they can not only drive down server costs, but completely build their own. IBM is selling off its x86 server business at 0.5 x. That’s crazy! Unless you’re some kind of genius, you don’t want to sell to SaaSes and public cloud companies.So, what’s left?(On the other end, WhatsApp was sold for a theoretic 19x multiple, but even that was imaginary future revenue of $1/user IF it got to a million users. It’s multiple in reality is probably more like infinity plus one. [Others peg it at round 47.5x].)IBM x86 sold off at 0.5x - http://coteindustries.com/post/74407276175/ibms-largest-divestitures-since-2002-fromWhatsApp infinity plus one - http://www.bloomberg.com/news/2014-02-20/facebook-values-whatsapp-like-miracle-drug-real-m-a.htmlWhatsApp 47.5x - http://www.forbes.com/sites/hollymagister/2014/02/21/whatsapp-19-billion-secret-formula/
  • # A few things left for vendors and IT to do – keeping the network up, security, desktop management – BI, and Big Data# But, like I told you I’d get to: developers. Writing software to help instrument your business. Some call it “coding businesses,” digital enterprises, etc.# Lots of that in the keynote this morning. Two examples: Starbucks mobile app, Amazon as a retailer.There are a handful of things left. The boring things like keeping the network up, and maybe desktop management. Legacy, “brown field” applications – the new mainframe and UNIX categories, as it were. There’s probably Business Intelligence and Big Data: even if run in the cloud, if you’ve ever gotten anything marginally complicated and useful in Excel, you realize how much custom “data scientisting” is needed for useful BI.Developers - There’s undoubtedly others, but what I focus on is custom written software. Developers. Medium and large sized companies have endless collections of custom written software, lots of it around case management, transactional things like retail and supply-chain, but plenty of highly customized applications that fit their business processes. These fleets of applications are just the beginning. In our vision-quests, us hallucinating future lookers in IT like to think of companies becoming “digital businesses,” others will call the “coding businesses.” Think of simple things like paying for my coffee with the Starbucks app, or using a paperless boarding pass. Look at Amazon not as a technology company, but as a retailer. They’re a retailer that uses the crap out of computers and custom written code to run their business. Read through The Everything Store and you’ll get that immediately: they’re not nerds, they’re cut-throat merchants who use computers like a rail gun against their competitors.
  • How this is effecting industries:# Wall Street - from people to computers#Retail - from paper to computers, Square, Uber#Healthcare - from paper to computer#Consumer IoT and such stuff (more or less obvious)# All that white-collar toolchain stuff (Office, etc.) not here, but a big deal, obviously.
  • #Cloud, in this context (applications-cum-business services) is the enabler, the platform, the underlying physics and grammar that enables good poetry and lyrics.#Let’s look at the pools of money you’re operating in… You need to know this so that you’re not lost in a valueless land, and so that you can speak business language: things that matter to them: money.
  • The public cloud landscape, minus SaaS.This is the pool of money you’re operating in.35.83% CAGR
  • The software behind cloud.20.84% CAGR from 2012 to 2016New numbers coming out this week or next.
  • # What’s most interesting is that private cloud build out, much of the rest if SaaS usage of courseIn our surveys, it’s not just consumer apps, companies are looking to use public and private cloud as well. Granted, this is across all categories of aaS, but private cloud is not really SaaS, right? So that’s some interesting build out.Here you can also get a sense of the public vs. private cloud discussion… that’s a story for another time, but an area that’s wise to investigate fully: what will your policy be, why, and how will you balance risk and opportunity cost?
  • # Let’s look at your peers, or the bridge jumpers…
  • # If you live your life by the bridge jumper principal, here’s the bridges your peers are jumping off…#Here you can also get a sense of the public vs. private cloud discussion…#Private hosting – managed hosting – whatever is a sort of sleeper trend we see continually.#Obviously the grid nature of cloud is good for batch job applications.#ERP is well entrenched, always a hassle that ERP stuff.#Test/dev is the place you see new technologies, bottoms-up – like virtualization# One area in particular, mobile to show the pattern playing out
  • Mobile highlight – there’s business value in it!This is one of the higher impact areas, and a good representation of doing new things with IT to drive. Imagine how the new form and time-factor of mobile creates new opportunities for business, and removes old constraints.
  • # What are people doing with mobile? What’s important to provide them?# Still, these are all pretty basic, right? There’s got to be some better stuff. Something like Uber is amazing if you haven’t tried it (use my code!)# Historic example of online banking, depositing checks at ATMs instead of with tellers… Paperless tickets and checking your position on a queue on your phone… Uber with calling a car…# Tactically, how you achieve all this is starting to look like DevOps
  • We recently did our first iteration of a DevOps study. I wanted to do a very specific one targeting DevOps buyers, our attempt at taking a swag at “the DevOps market.” Puppet Labs, Loggly, and Boundary helped support it. Puppet Labs has been doing a broader, multi-year survey which is equally interesting. As we do more iterations it will get better at carving up this market.One of the main things I wanted to test was an idea of what DevOps was and then attempt to identify a toolchain. What we found was that things are a lot more immature, toolchain wise, than you’d expect…
  • # Let’s start at the infrastructure layer: where do people run things?# Surprisingly(?), there’s a mixture of cloud uses. You see this in our TIP and other studies as well. Always consternates me as I like pubic cloud.# 59 – 60% do “hybrid cloud”Speak to PaaS existential crisis here, a topic that comes up every quarter or so. I’m looking for the new J(2)EE, be it Cloud Foundry, OpenShift – a standard, not a stack.
  • # For better or worse, we closely conflated frequently releasing to production with DevOps, so what was the maturity?# Pretty good, actually. Around 48% do it in less than 30 days. Ignore the problematic “On demand,” just a bad question.# When we asked if people were satisfied? with this, it was split more or less 50/50.
  • # Wanted to explore the “DevOpstoolchain,” so this is a first pass – two deep dives will follow#There’s wide use of tools, but none “dominant.” - About half of DevOps groups are current users of third party tools, the others plan to use or evaluate third party tools # People will pay - There’s a market beyond DIY in-house solutions # The market is exploring - many respondents are evaluating and doing POC activities across the spectrum.# Topology/Architecture Orchestration is surprisingly low, particularly given the multi-platform convergence currently underway (Cloud/Physical/Virtual)#If you dig into what people are using in the monitoring and management space, it’s mostly “older” tools.#So, let’s dig into two of the more high-profile parts of the toolchain: automation and CI.
  • The fact that less than 50% of the DevOps-minded respondents reported using release and configuration managements tools, and only 16% reported using DevOps-oriented automation tools is revealing of how much opportunity there is to market to this need. Large parts of the early DevOps market, and we would assume mainstream development market, have yet to use these tools.
  • # Silver bullets don’t solve problems, people shooting silver bullets do…]#This is where all that culture talk comes in…# People, they’re always a problem: let’s say 85% or so of these problems are directly due to people#We also have TheInfoPro which does regular surveys about cloud use in the wilds. There, non-IT roadblocks far outweigh technology roadblocks for cloud adoption: 70% to 19% (the rest is “no roadblock.”- Getting buy in, or 38.89+25.93+22.22
  • What cloud trends mean for you - an analyst's view

    1. 1. What cloud trends mean for you: An analyst's view @cote | http://cote.io Research Director, Infrastructure Software, 451 Research
    2. 2. • IT research, advisory, professional services, datacenter certification, and events • One company with 3 operating divisions • Global focus • 200+ staff, 100+ analysts • 1,300+ client organizations: enterprises, vendors, service providers, and investment firms • 7,500+ individual subscribers • Reach 16,000 end-users annually http://451research.com - @451Research
    3. 3. Michael Coté Research Director, Infrastructure Software cote@451research.com @cote – http://cote.io Responsible for systems management, application development, cloud software, and misc. “infrastructure software” agenda. Before 451 I worked Dell in corporate strategy/M&A for software & cloud; as an analyst for 6+ years at RedMonk; software developer for 10+ years.
    4. 4. OVER THE NEXT 10 YEARS, MANY APPLICATIONS WILL BE REWRITTEN…IF NOT JUST REPLATFORMED The Great Rewrite (Don’t worry, I won’t blue sky for too long.)
    5. 5. Next Steps (beyond “cloud is a thing”) Planning: • Segment applications & services • Differentiating (custom) vs. keeping the lights on (SaaS) • Green-field vs. brown-field Boot-strapping: • Benchmark yourself first • Start PoCs and labs now • Do small things while plodding through big problems “Hell is other people” • Agility is the magic: reduced cost and release speed • Engage with “the business” • Cloud, and DevOps, is a culture war
    6. 6. Source: @agile_exec, March 5th, 2014.
    7. 7. We believe that application development is, indeed, a vital and valuable part of the industry: our theory is that the majority of cloud spending originates with software developers as the prime movers. Applying the formula 'IT - SaaS = what?' it increasingly seems the case that the 'what?' is custom-written software for ISVs, SaaS and increasingly companies like Nike and Starbucks that are relying on in-house software development for new products such as the Fuelband and mobile payments. Starbucks, for example, is estimated to have pulled in $1bn in sales from its mobile app. While developers are notoriously parsimonious when it comes to paying for tools and middleware, Atlassian's $149m in revenue is testament that companies will pay for developer tools straight out. We also note the bets the venture community is placing on developer-oriented companies like those coming from the post-seed round, pre-A round firm Heavybit. - Me! “Atlassian bundles ALM components around the popular git version control system,” 451 Research, March 4th, 2014
    8. 8. Legacy…New… Not seen here: white-collar toolchains Sources: 451 HCTS NA 2013 conference; Chris Dancy.
    9. 9. “Cloud” is opening a new way of delivering software, DevOps
    10. 10. $2.90 $4.50 $6.20 $8.20 $10.20 $1.40 $2.20 $3.20 $4.20 $5.30 $1.40 $1.90 $2.50 $3.20 $3.90 $5.70 $8.60 $11.90 $15.60 $19.40 $0 $2 $4 $6 $8 $10 $12 $14 $16 $18 $20 2012 2013 2014 2015 2016 Infrastructure Public Cloud Forecast ($bn) Total ISaaS PaaS Source: "Market Monitor: Cloud Computing Overview Report 2013," 451 Research, August 2013.
    11. 11. Source: "Market Monitor: Cloud-enabling Technologies Overview Report 2013," 451 Research, August 2013. $6.97 $8.48 $9.97 $11.41 $12.76 $3.36 $4.61 $5.97 $7.49 $9.10 $0.28 $0.36 $0.47 $0.62 $0.76 $10.61 $13.45 $16.41 $19.52 $22.62 $0 $5 $10 $15 $20 $25 2012 2013 2014 2015 2016 Cloud Enabling Technologies ($bn) Total Security Automation & Management
    12. 12. 17% 17% 19% 22% 22% 29% 32% 34% 40% 40% 39% 40% 41% 23% 29% 32% 29% 29% 29% 31% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Corporate Market: Public and Private Cloud Usage (Private not tracked until Jul 2012) % using public cloud % using private cloud Source: A total of 1,137 respondents involved in their company's IT buying decisions participated in the January 8-27 survey, including 470 whose company currently use public cloud. ChangeWave Research is a service of 451 Research, from "Corporate Cloud Computing Trends," 451's ChangeWave, Feb 11, 2014.
    13. 13. So what are they doing?
    14. 14. 18.7% 19.6% 14.8% 33.9% 11.3% 35.7% 20.9% 17.8% 18.3% 13.9% 12.6% 4.3% 20.4% 6.1% 10.4% 20.4% 17.0% 11.3% 5.7% 9.6% 3.5% 25.2% 17.8% 17.4% 14.3% 11.3% 9.1% 9.1% Batch Computing Applications Collaborative Applications E-business Hosting Customer-facing Enterprise Applications Cloud Native Applications Back-office Enterprise Applications Test and Development Q. Where do you currently host or plan to host these workloads? Private On-prem Private Hosted Hybrid Public Source: 451 Research Custom Cloud Study, n=230.
    15. 15. Source: “2013 US Mobile Applications and Cloud Survey (IT Decision-Maker) December,” 451 Yankee Group, 2013.
    16. 16. Source: “2013 US Mobile Applications and Cloud Survey (IT Decision-Maker) December,” 451 Yankee Group, 2013.
    17. 17. So…DevOps anyone?
    18. 18. Source: 451 DevOps Study, Winter 2014. n=201 DevOps-minded individuals. 3.85% 24.73% 36.81% 34.62% In a public cloud environment, such as Amazon Web Services In a private cloud environment, whether that private cloud is hosted externally or entirely on-premises On an internal physical or virtualized server, not connected to a public or private cloud environment A mix of all of the above When running your application in production, where does it reside?
    19. 19. Source: 451 DevOps Study, Winter 2014. n=201 DevOps-minded individuals. Daily 8% Weekly 22% Monthly 18% Quarterly 12%Semi-Annually 4% Annually 4% On demand 31% Other 1% How often do you deploy to production?
    20. 20. 59% 54% 50% 46% 40% 20% 12% 16% 0% 17% 20% 15% 14% 15% 50% 14% 19% 19% 14% 15% 0% 23% 21% 46% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Testing Performance Monitoring and Log Mgmt Other Release management Configuration management & automation Topology/Architecture What tools are you using? Currently Use Plan to use in next 6 months Plan to evaluate in next 5 months No plans to use or evaluate
    21. 21. Custom written build scripts 38% Golden Images 24% Third party install programs 20% Automation tools 16% Other 2% When designing and writing your software, how do you model and specify how the application should be deployed? Source: 451 DevOps Study, Winter 2014. n=201 DevOps-minded individuals.
    22. 22. DIY 36% CI Products 28% Other 8% None 28% What build automation, or continuous integration (CI) tools are you using? Source: 451 DevOps Study, Winter 2014. n=201 DevOps-minded individuals.
    23. 23. 22.22% 25.93% 18.52% 38.89% 28.70% Feature creep (new requirements are added inside each cycle, lengthening the time to release) An inefficient process: Hand-off from development to test, to security etc. Lack of tools or inefficient tools for Release management, Log management, etc. Human resource constraints (can't hire enough skilled people so we bottleneck on those we have) Number and complexity of environments – Cloud, On- premises, Virtual and Physical What is holding you back from reducing release cycles? Source: 451 DevOps Study, Winter 2014. n=201 DevOps-minded individuals.
    24. 24. There’s strong business demand, work to be done as far as the eye can see, and lots of maturing ahead of us. Good luck out there!

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