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As Amazon (NASDAQ:AMZN), Microsoft (NASDAQ:MSFT) and VMware (NYSE:VMW) engage in the first battles of the multi-billion dollar hybrid cloud war, you can expect to see a fundamental shift in strategy as the public cloud matures and becomes more enterprise-centric. This should drive at least two major developments over the next 24-36 months, corresponding to rapidly evolving enterprise IT operating practices.

1) Amazon, Microsoft and VMware will drive the Hybrid Cloud

As predicted last year (see VMBlog 2014 Predictions) I expect AWS to enter the hybrid cloud market in 2014, and battle directly with traditional IT. Those who get on the hybrid cloud bandwagon will become tomorrow's leaders by delivering unprecedented levels of agility, uptime/protection and operating efficiency. They will likely leverage a hybrid cloud from one or more of perhaps a dozen emerging IaaS (infrastructure as a service) service providers. Amazon, Microsoft and VMware should be the primary beneficiaries of the shift, followed by progressive service providers who leverage one of their platforms or adopt OpenStack or even CloudStack.

These platforms are powerful because they change the game. They allow enterprises to deliver apps and services faster and more efficiently than the vast majority of traditional rack and stack infrastructures operating today. They are the bridge between traditional IT in the enterprise and the web scale IT being deployed at leading internet companies like Facebook and Google.

At stake in the short term is a potential $60B market based on a 3-year server refresh rate, for hybrid cloud software that would run on servers and allow apps to scale into one or more public clouds. Then there is the $1T+ spending on traditional IT, that could eventually shift to the cloud when one looks out 10+ years. That takes us to the second major development: the rise of hybrid cloud automation in the increasingly critical middle ground between the data center and each IaaS offering.

2) The Rise of Hybrid Cloud Automation

When you compare statistics between who wants to have a hybrid cloud and who has one, you see a stark contrast. There are very few haves relative to "have nots"; there are very few actual hybrid cloud deployments. The problem is that hybrid clouds today are highly dependent upon extensive manual processes to build, just like traditional IT. The space between the data center (and the physical and virtual apps within) and the cloud is a swamp of uncertainty, body shops and a couple dozen cloud migration tools that typically support DevTest agility for small apps or require lock-in to a single virtualization platform.

Amazon has produced perhaps the most robust sets of APIs and services for delivering hybrid clouds for production apps, but the cost and risk moat is still there for multi-tier production apps. Microsoft and VMware are catching up quickly and have enterprise IT DNA and established relationships.

Today's irony is that traditional IT is required to deploy next gen hybrid cloud-enabled IT. Yet automation (in the form of increasingly robust and powerful software) will change the pace of hybrid cloud growth and shift power from the complexity experts to the agility experts.

Automation will be key to the shift from IT complexity to agility. It will have a disproportionate influence over the adoption of hybrid cloud.

Private clouds are not enough, despite their tactical advantage over traditional racks. Eventually they run out of steam and often require lock-in to a particular vendor's platform.

It is very likely that the hybrid cloud gap will not be tamed by body shops and massive customization projects, but by software that automates most if not all key hybrid cloud processes, from application and storage to networking, hence the growing interest in virtualized networks or SDN (software-defined networks). Some apps will need to be modified for the new cloud environments, but many may not have to be. The question is simply getting them in the cloud to find out.

Many IT "experts" still see the cloud as an extension of IT complexity rather than apps and services spun up on demand versus API calls and services. With Amazon, Microsoft, VMware and others investing more than $50B in cloud infrastructure, it is very likely that we will see the triumph of automation over extensive manual processes, especially for apps that can operate efficiently (with minor tuning, for example) in the new cloud environments.

Enterprises want to deploy hybrid clouds today but most cannot without massive investments and risks. That is because the traditional ecosystem has mixed incentives, very similar to the traditional IT vendors who prefer to maintain the status quo for as long as possible.

Winners and Losers

When the hybrid cloud takes hold -and many think that 2014 will be the year of hybrid cloud- the market power will shift from hardware providers monetizing complexity to software and service providers monetizing agility. You will see more "white box" hardware deployments running increasingly agile and available software and services. This will put Amazon, Microsoft and VMware at the core of a new era in IT, and will saddle the increasingly complex, costly and tired status quo with fewer growth opportunities. Some analysts suggest that the power shift is already underway.

Source: Automation: The Next Hybrid Cloud Battle

Additional disclosure: I am the VP WW Marketing for CloudVelocity an Amazon AWS and Microsoft Azure partner.