Casualties of Cloud Wars: Customers Are Paying the Price

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1 An ENTERPRISE MANAGEMENT ASSOCIATES (EMA ) White Paper June 2014 Commissioned by: IT & DATA MANAGEMENT RESEARCH, INDUSTRY ANALYSIS & CONSULTING

2 Table of Contents Overview... 1 Stumbling Out of the Starting Block... 1 The Six Deadly Challenges to Cloud... 2 Powered by Cloud: The New Cost of Doing Business... 4 Adapt or Die: Key Factors for Future Success... 6 Summary... 7

3 Overview In the wildly public war for domination of the cloud, giants such as Amazon, Microsoft, and Rackspace continue to battle for share in the most lucrative new IT market in recent memory. While this rivalry makes for tantalizing business news, it often overshadows the difficulties customers face in building real businesses that run on clouds. Cloud customers, motivated to adopt by strong competitive pressures and the imperative to keep pace with innovation and globalization, often find their first forays falling short of the vision painted by cloud evangelists. Cloud, in the form of Infrastructure as a Service (IaaS), is often mischaracterized as a commodity and billed as a rapid path toward innovation the veritable lifting of the barriers of time and distance to enable companies to instantaneously grow their IT footprints in support of business imperatives. Those who have begun to leverage cloud infrastructures have found the realities of operating a cloud footprint can include unpleasant surprises. Cloud services must be selected, workloads must be migrated and usage must be tracked. Not unlike other complex IT systems, these cloud infrastructures must be monitored and managed. Capacity and performance management continue to be paramount, as the cloud s much-touted easy scalability depends on a watchful eye identifying and correcting problems. Unfortunately, many IT organizations lack the skills they need to perform these tasks. In part, this is because most clouds represent an entirely new platform from their pricing models to their operational metrics and thus require entirely new expertise. As a result, many companies are flying blind in their efforts to embrace the cloud. Cloud failures impact the business as well as IT. While agility in delivering IT services can be a clear differentiator separating successful and unsuccessful companies, the converse is also true. Those that cannot innovate rapidly and globally are at a disadvantage compared to more nimble and agile competitors. Cloud success is one factor separating IT organizations that deliver business value from those who cannot. And the gap between the technology haves and have nots continues to widen. This paper highlights the findings of a recent ENTERPRISE MANAGEMENT ASSOCIATES (EMA ) survey on cloud usage by enterprise IT, which gathered in-depth information about cloud outcomes and perceived value proposition from hundreds of IT professionals around the world. Their message was loud and clear. Too many organizations have been less successful than expected in capitalizing on the benefits of popular public cloud platforms. The promise of cloud remains tantalizingly out of reach, and in its place are technical headaches, pricing challenges and unexpectedly high operational costs. As the pace of business continues to accelerate, these companies cannot set the cloud promise aside. Rather, they must be prepared to support cloud infrastructures with experienced staff that understand these remote commodity systems or seek cloud vendors that are focused on addressing customer needs with a different approach. This EMA paper illuminates the realities of the current cloud market and discusses an alternative, more customer-centric approach. Users disappointed with their cloud outcomes to date may well want to take another look. Stumbling Out of the Starting Block In April 2014, EMA conducted a survey of more than 400 IT professionals around the world. They were asked to share their experiences with public cloud IaaS providers. The objective was to gather better insight into their successes and failures, achievements and challenges, wants and needs. Among the survey pool, the vast majority has made some foray into cloud, and most of the balance are planning to do so soon. Figure 1 is a snapshot of their experiences. 1 Page 1

4 Most have trialed multiple platforms. In a field of 415 total respondents, there were more than 1,150 instances of cloud experimentation or adoption, an average of three cloud vendors for each respondent. This could indicate an ongoing effort to find the right cloud solution, department-level fragmentation, or simply the fact that IT organizations see no need to standardize on a single vendor. It also indicates that cloud customers do not hesitate to continue trying new cloud vendors in an effort to meet their needs. When asked about their future cloud strategies, almost 60% indicate an interest in adding cloud vendors and 25% plan to switch vendors. Fewer than 20% plan to eliminate cloud providers due primarily to security, cost, compliance, or complexity issues. Figure 1 also shows that cloud use in general can be a risky proposition. Customers of VMware vcloudbased service providers report the highest success (67%) and lowest failure rates (33%), defined as stalled or unsuccessful (tried but failed) adoption. For the remaining three cloud vendors, the average success rate was only about 45%. The spread between vendors does seem to imply that as approaches to cloud vary, so do results. Those customers who continue to experiment with new vendors implicitly understand that different alternatives can address their varying needs for better or worse and, in an effort to support their business needs, soldier on to find the right fit. Amazon Rackspace Microso7 Azure VMware vcloud Service Providers 57% 43% 63% 37% 44% 56% 33% 67% Stalled or failed Ques1on: Which of the following public cloud pla:orms have you considered? Source data: EMA survey Adopted Figure 1: Adoption and failure rates for popular cloud providers The Six Deadly Challenges to Cloud What is preventing cloud success? Uncovering the challenges behind current cloud experiences can help in identifying the key elements of cloud selection going forward. In this survey, it became clear that there were six primary areas where customers discovered unanticipated obstacles (see Figure 2). Eighty-eight percent of respondents experienced at least one unexpected challenge. The most common challenge in the U.S. was support, while performance and downtime topped EMEA and APAC lists, respectively. Pricing (38%) Tied for first from a global perspective, the top challenge unearthed in the survey indicated that while cost savings may be a key benefit of cloud, the current pricing models under which they operate 88% of respondents experienced at least one unexpected challenge. The most common challenge in the U.S. was support, while performance and downtime topped EMEA and APAC lists, respectively. 2 Page 2

5 are difficult to understand. A cursory glance at the pricing schemes of major public cloud providers demonstrates the need for the customer to carefully analyze pricing models and their own IT needs before committing to an option. Performance (38%) Different clouds are architected with different back ends, and some are more susceptible to noisy neighbor syndrome than others. For customers who are sensitive to variations in performance, this can impact the cloud experience. Support (36%) The realities of cloud support contracts often take customers by surprise. Simple or ticketing support may only be available to customers at lower tiers. Customers purchasing higher-end support may still have difficulty getting access to adequate levels of hands-on expertise. Poor or overly expensive support can become a gating factor limiting cloud success. Downtime (35%) As with all external vendors, customers that experience a failure in their service are likely to be negatively impacted. The fabled scale and resilience of cloud does not immunize it from outage, however. Management of Cloud Services (33%) As noted above, cloud services require IT management, just as on-premise systems do. Unfortunately, cloud vendors often focus on innovation of the technology in lieu of improving simple cloud service management. And, to the extent that the cloud represents a new platform to most IT shops, the learning curve can be steep. Scalability (33%): Scalability is a primary lure of the cloud scaling up to meet demand and scaling down when the peak has passed. But, most users experience some real challenges both in scaling individual workloads and scaling their entire footprint because knowing when and how to scale is not as easy as it seems. APAC (100%), US (97%) and EMEA (96%) all agree the ability to target workloads toward data centers in specific regions to ensure compliance and data sovereignty is important or very important. Pricing 38% Performance 38% Support 36% Downtime 35% Management of my cloud services 33% Scalability 33% 0% 5% 10% 15% 20% 25% 30% 35% 40% Figure 2: Which of these unexpected challenges have you experienced with your organization s public cloud? 3 Page 3

6 Another key cloud concern that has recently become more salient is the topic of data sovereignty. While there is a perception that EMEA-based companies may consider this of higher import than those in North America or Asia Pacific, it was clear from the survey that all three regions consider the guaranteed location of their workloads of paramount importance. As legal frameworks advance to account for changing technology, this topic is certain to gain more attention, both among vendors and customers. Powered by Cloud: The New Cost of Doing Business Despite the challenges of embarking on cloud, most companies continue to persist in their adoption. Why? It is clear from the survey responses that the perceived benefits not only outweigh the risks, but also point to a need for agility and speed within the customer s business that cannot be otherwise addressed. IT is moving forward with cloud because without it, keeping pace with the innovation needed to remain competitive in most industries is nearly impossible. At a high level, the top reasons for pursuing cloud include business agility, application scalability, and budgetary considerations: Faster deployment of new workloads (48%): Business leaders are under pressure to adapt faster and more flexibly to industry trends. The ability to quickly deploy new workloads supports business agility by enabling IT to support the business by responding faster to new requests and requirements. Faster scaling of existing workloads (47%): It may well be the case that business agility is more a matter of scale than delivering new services. When customer demand for a product or service rapidly escalates, cloud customers can easily scale to ensure that the additional user load does not impact application performance and availability. Cloud services mitigate business challenges with almost unlimited scalability. Capital Expense (47%) and Operational Expense (45%) savings: Most IT organizations still remain, to some degree, under budgetary constraints. Cloud services offer an alternative to purchasing and supporting on-premise servers, potentially delivering CAPEX and/ or OPEX savings. Perceived advantages include more robust disaster recovery, cost and rapid scalability (see Figure 3). It is clear that for customers, the elements of the cloud environment that provide a marked advantage over on-premise servers are prized. In addition to commonly discussed cloud benefits like cost and rapid scalability, 49% view disaster recovery as a key advantage to hosting workloads in the public cloud. Disaster recovery capabilities 49% Cost 48% Rapid scalability 48% Deployment speed 45% 0% 10% 20% 30% 40% 50% 60% Figure 3: What are/would be the key advantages of hosting workloads in the public cloud? 4 Page 4

7 According to this survey, faster growth, lower costs and higher resiliency are the trifecta of reasons for the pursuit of cloud solutions, which effectively support business objectives. Traditionally, technology adoption tended to happen for primarily technical reasons; cloud breaks that mold. Driven by the accelerating requirements of today s businesses, most IT organizations are making cloud a priority, which cannot be ignored or deferred. Bridging the Gap: Anticipating Needs While the survey did point to many unexpected challenges, one heartening result was the self-awareness that companies exhibited in their approach to cloud. Most seemed to know where they needed support in order to achieve their goals. At this early stage, reinforcing the level of cloud expertise resident within IT organizations leveraging cloud is paramount to successfully swinging the pendulum toward success. A full 80% of respondents noted that they required some amount of professional services to get started in the cloud, reflecting the lack of ubiquitous domain knowledge. Among the key areas where support was needed, customers cite security/compliance, integration with existing data center services and disaster recovery planning as their top expertise gaps (see Figure 4). Aside from security and compliance services, U.S. and EMEA respondents most frequently cited the need for external support of disaster recovery planning. Security & compliance services 57% Integration with local data center Disaster recovery planning 45% 47% Ongoing management General planning support 40% 40% Workload onboarding 35% Template creation 29% 0% 10% 20% 30% 40% 50% 60% Figure 4: What type of external support does your organization require or would it require when operating its public cloud? Beyond services, there are other elements of a public cloud platform that can make it more accessible to customers. A list of these elements, laid out in Table 1, highlights some common failings: Management Dashboards: As most public clouds are built on the back of an often proprietary and differing platform than most on-premise systems, public cloud management metrics, controls and functionality tend to be foreign to customers. Virtual Machine Scaling and Resource Scalability: Scalability, both at the footprint and VM levels, is core to the promise of cloud. However, it is usually trickier to implement, both for technology and contractual reasons, than customers would like. 5 Page 5

8 Better VMware vsphere Integration: Related to the topic of management dashboards, most public clouds are not built on VMware, the dominant on-premise cloud and virtualization platform. Therefore, integration with on-premise systems presents an ongoing challenge. Transparent Pricing: Echoing the top challenge shown in Figure 2, pricing models are often inscrutable and complex, resulting in expensive surprises for many customers. Such surprises can negate the promise of cost benefits that prompted the move to cloud in the first place. What capabilities would you need to make public cloud more accessible to your organization? Better management dashboard 52% More flexible VM scaling 47% Easier resource scalability 46% Better VMware vsphere integration 45% More transparent pricing 43% Simpler onboarding 37% Certainty of geographic location of workloads 35% Table 1: Factors that could improve accessibility of cloud Further bolstering the case for a familiar platform, 74% of survey respondents also expressed a strong preference for a VMware-based cloud. This correlates positively with the findings that show the more successful cloud implementations are those on VMware-based Service Provider-based clouds (Figure 1). Finally, respondents were nearly unanimous in their agreement that high quality, highly available phone-based support was critical to their cloud implementations. This is notable, in part, because phone-based support is far from standard among public cloud companies, and more often than not, is accompanied by a high cost support contract. Adapt or Die: Key Factors for Future Success The results of this survey clearly point to the important role cloud can and will play for global businesses. It also reinforces the dedication of IT departments to overcoming the challenges presented by this new platform. In addition, however, it highlights the collective learning of hundreds of companies, which should inform any new cloud approach. It seems prudent to accept the fact that most cloud customers will not settle on a single vendor at this point in time. Instead, they will sample multiple cloud options to find the ones which best meet IT and business needs. While the big box players often make cloud short lists, the relative success with VMware vcloud-based Service Providers points to keeping an open mind to the differentiated offerings of those outside the fray. While the big box players often make cloud short lists, the relative success with VMware vcloud-based Service Providers points to keeping an open mind to the differentiated offerings of those outside the fray. 6 Page 6

9 Other key factors in customer success include: Transparent pricing: Challenges with understanding pricing models inevitably lead to challenges communicating pricing to management, estimating costs and making sound investment decisions. The clearer the pricing model of the cloud platform, the more likely the cost objectives will be met. Ease-of-management: Accept that cloud represents a new platform for IT to manage and select a cloud that eases that transition whether by presenting familiar metrics, easy-to-use portal environments, or shareable reporting. Support: The cost and quality of support, as well as the medium by which it is delivered (ticketing system, , phone), can significantly hamper or accelerate cloud success. Consider the support model and its pricing when making a cloud selection. Services: Survey respondents were remarkably self-aware in identifying areas where their in-house expertise fell short. With an honest assessment in hand, cloud vendors can be evaluated on the basis of their service offerings, from disaster recovery to onboarding. Most IT organizations will continue to move briskly toward greater and greater cloud footprints. By standing on the shoulders of the experiences of their peers, success in the cloud is within reach for companies large and small around the globe. Summary In general, EMA research finds that while production use of Software as a Service (SaaS) and Platform as a Service (PaaS) is significantly increasing, the use of IaaS for production is growing more slowly. The findings of the research study outlined in this paper tell the true tale of why this is the case. Companies using large IaaS vendors such as Rackspace and Amazon are experiencing failure rates approximating 60%. This is unacceptably high in an era when IT budgets are growing only minimally. Companies using large IaaS vendors such as Rackspace and Amazon are experiencing failure rates approximating 60%. This is unacceptably high in an era when IT budgets are growing only minimally. This research also highlights the fact that VMware-based service providers, such as iland (which co-commissioned this survey), have built out cloud offerings designed to address many of the challenges identified in this study. Of particular note is the fact that as the research shows, customers of VMware-based clouds report higher success rates than those of proprietary competitors. While EMA analysts have repeatedly noted a deficit of cloud knowledge within enterprise IT organizations, this type of knowledge comes from a combination of information sharing and experience. From this perspective, the iland model, with its focus on high quality support, can help enterprise IT organizations build the expertise they need from within. Cloud hosting offers a wide variety of advantages to companies with the expertise to take advantage of it. Applications can be rolled out faster, resources can be rented, rather than purchased, and infrastructure can be right-sized to support monthly and seasonal processing peaks. iland s focus on personalized service, excellence in customer support, and sharing of knowledge may well open up IaaS to customers who, to date, have been unable to successfully take advantage of these benefits. Companies cannot afford to turn their backs on cloud computing, as it represents a key tool in the race for innovation across industries and around the world. However, by carefully considering their cloud choices, IT organizations can mitigate the risk associated with cloud and enjoy the benefits cloud services have to offer. 7 Page 7

10 About Enterprise Management Associates, Inc. Founded in 1996, Enterprise Management Associates (EMA) is a leading industry analyst firm that provides deep insight across the full spectrum of IT and data management technologies. EMA analysts leverage a unique combination of practical experience, insight into industry best practices, and in-depth knowledge of current and planned vendor solutions to help its clients achieve their goals. Learn more about EMA research, analysis, and consulting services for enterprise line of business users, IT professionals and IT vendors at or blogs.enterprisemanagement.com. You can also follow EMA on Twitter, Facebook or LinkedIn. This report in whole or in part may not be duplicated, reproduced, stored in a retrieval system or retransmitted without prior written permission of Enterprise Management Associates, Inc. All opinions and estimates herein constitute our judgement as of this date and are subject to change without notice. Product names mentioned herein may be trademarks and/or registered trademarks of their respective companies. EMA and Enterprise Management Associates are trademarks of Enterprise Management Associates, Inc. in the United States and other countries Enterprise Management Associates, Inc. All Rights Reserved. EMA, ENTERPRISE MANAGEMENT ASSOCIATES, and the mobius symbol are registered trademarks or common-law trademarks of Enterprise Management Associates, Inc. Corporate Headquarters: 1995 North 57th Court, Suite 120 Boulder, CO Phone: Fax: