Based on a recent interview with Microsoft (NASDAQ:MSFT) GM Mike Neil:
With Microsoft (MSFT) and VMware (NYSE:VMW) entering the hybrid cloud battlefield, and the Amazon AWS (NASDAQ:AMZN) steam engine continuing to convert more static racks into dynamic services, enterprises are poised to shift massive investments in data center infrastructure purchases into cloud services in the coming years. At least that's the prediction being made by several respected analysts, including Gartner's Bittman (see Private Cloud Matures, Hybrid Cloud is Next, for example).
The shift to the hybrid cloud should drive a massive consolidation of data center and infrastructure buying power into a few dozen service providers and set the stage for the resurgence of software as a strategic IT asset. At the core of the shift are at least three key hybrid cloud benefits, including enhanced agility and operating efficiency. (Here is a hybrid cloud operating model courtesy of the CloudVelocity blog.)
The combination of massive investments in cloud (IaaS) and the inevitable shift to service and software-driven IT takes me back to Microsoft and the third in a series of hybrid cloud blogs based on interviews with key executives, including Microsoft's Azure and the Hybrid Cloud Race and Microsoft and the 2014 Hybrid Cloud Showdown. Microsoft is in perhaps its most pivotal position since the 1980s, this time with giant footprints in device and server operating systems, yet playing catch-up with the amazing strides made by Amazon in establishing the multi-billion public cloud market.
Microsoft no doubt takes great comfort in the hybrid cloud predictions. It is in the hybrid cloud that it has a strategic disruption opportunity that will likely play itself out over the next 3-5 years. When I recently met with Microsoft GM Mike Neil I asked him about the evolution of hybrid cloud and the critical role Microsoft could play in hybrid cloud adoption.
Neil sees several key hybrid cloud catalysts, all related to the levels of confidence, control and predictability that enterprises of all sizes will require before they put mission critical apps in the cloud. Despite the public cloud's success in DevTest and with new apps built for the cloud, improvements in service agreements and security and compliance capabilities will be crucial for widespread enterprise adoption, according to Mike.
The biggest drivers for the cloud according to Osterman Research were a reduction in the labor spent maintaining servers, enhanced application failover and disaster recovery and improved application availability and accessibility.
Key points of public cloud resistance (again according to the study): 4% of those surveyed fully trust the public clouds while 12% trust them overall - yet 62% have at least some concerns and 22% have significant trust issues.
The top barriers to public cloud adoption, per Osterman, were related to data migration challenges and hidden costs as well as security service integration, including LDAP and Active Directory. More than 50% were also concerned with how the data in the cloud would sync with the data center. Also, 48% were concerned about lock-in.
It should be noted that while Microsoft's Azure is behind Amazon's AWS in multiple areas, it is catching up quickly. Some even argue that Azure has better performance when it comes to cloud storage. Yet many of the inhibitors to cloud are regarding the difficulties inherent with migration, hidden costs and the integration of security and authentication services. This gets to the control, confidence and predictability that Neil mentioned.
Neil then discussed how Microsoft would address today's public cloud reservations, by articulating a more enterprise-centric vision based on: tighter service level agreements, delivering Active Directory services between the data center and the cloud, "battle testing" Azure at a very rapid rate, and enabling agility across multiple clouds. He also made it clear that Microsoft understands the stakes, stating simply as he summarized that "Azure is our next OS."
We spoke briefly about VMware's emergence into the hybrid cloud and how this battle might shape up differently than the preceding virtualization battle kicked off when Microsoft launched Hyper-V. He mentioned Microsoft's "full stack experience" with Azure's "homogenous landscape," versus VMware's more hands off role in some areas, including the prospects of channel conflicts with partners.
He also predicted that "cloud will grow to the point of becoming strategic national infrastructure," as he contrasted the Microsoft vision to the execution and vision of various cloud competitors, some of whom may be forced to grapple with a more challenging mix of local issues in many countries as they build out data centers or choose to partner.
"Cloud is the next logical step for Microsoft," Neil advised. Clearly recent research on cloud perceptions is in line with Microsoft's perspective on how the hybrid cloud will evolve. The question then comes down to how well Microsoft can continue to execute on its quite compelling vision. If the last twelve months of Azure developments are any indication, they are well on their way.
Disclosure: I am long MSFT. 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 a Microsoft Azure and Amazon AWS partner.