Most of the early uses of cloud IaaS were for small and medium-sized businesses and tactical Dev/Test environments. For enterprises the cloud as a critical environment for production apps was a pipe dream. The hybrid cloud will change all of that this year as Microsoft (NASDAQ:MSFT) and VMware (NYSE:VMW) enter the IaaS scene and Amazon (NASDAQ:AMZN) completes its injection of enterprise DNA into its sales and marketing ranks. By the end of 2014 real hybrid cloud deployments will deliver new, unprecedented IT operating models, starting with the rise of hybrid cloud DR and DevTest.
Hybrid cloud DR will allow enterprises to slash their spending on third-party data centers, those used only occasionally during outages or maintenance windows. These costly facilities are the artifacts of hardware-bound thinking, and can increase IT costs by more than 50%. They have been a necessary expenditure, because in many cases the cost of downtime can be even higher than the cost of buying and operating expensive, duplicate infrastructure.
The hybrid cloud promises to change all of that.
New IaaS operating models are emerging that allow enterprises to "pay as they consume" IaaS, versus being locked into massive 24/7 investments. Imagine paying a cloud provider only for use, say 5% of the time versus having to pay a third party for keeping a data center running 365 days a year. IaaS could be triple the cost of a dedicated environment, but with fractional use it becomes much cheaper. For those running primary and secondary data centers "hot" the cloud may not be as attractive an option, but the cost savings may compel them to at least consider them for the massive reductions in operating and capital expenses.
The gating factor until recently has been agility, enabled by automation. With hybrid cloud agility, apps and services can be deployed into a cloud as needed, which promises to decouple the enterprise IT team from costly, long-term fixed commitments to third parties in favor of contracts based on usage. This marks a revolutionary shift in IT as we know it today.
Yet there is more.
Hybrid cloud agility would also allow for DevTest and production environments to be treated similarly (with cloned infrastructure and network services and the app stack), reducing the speed and deployment time of traditional app development. The silos today separating the labs from production environments could be transformed into mere logical boundaries that could be crossed with fewer errors and delays; software would be developed and tested in environments virtually identical to production.
Under these new (hybrid cloud) DR and Dev/Test scenarios the cloud becomes more than just another data center, but rather the core of a new web-scale IT operating model. See this hybrid cloud deployment blog at CloudVelocity (my employer). The futures of Amazon, Microsoft and VMware cloud efforts are thus closely tied to their ability to transform IT, versus simply offering a new flavor of infrastructure. That brings the notion of hybrid cloud agility front and center, just as VMware added agility between servers and Cisco (NASDAQ:CSCO) added agility between PCs and servers even earlier. Cloud service providers and third-party data center operators without hybrid cloud agility will be rendered obsolete because the economic power of agility and efficiency for the enterprise is overwhelming.
When it comes to agility both Microsoft and VMware have an advantage over Amazon due to their legacy footprints and familiarity with existing software and private cloud infrastructures. Amazon has the most seasoned IaaS. Between these two camps the power to easily move entire app and service stacks between the data center and the cloud may become the most critical determinant of share gains. Cloud success is then driven by the power of new operating models versus simply direct operating costs.
Disclosure: I am long MSFT, AMZN. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.
Additional disclosure: CloudVelocity is an Amazon and Microsoft partner.