Thoughts RightScale Annual State of the Cloud Report

In January of 2015 cloud portfolio management company RightScale Inc. surveyed 930 users of cloud services for their Annual State of the Cloud report.  The findings are both interesting and insightful.  Several key findings are highlighted here.

  1. Cloud is a given and hybrid cloud is the preferred strategy. According to the survey 93% of respondents are using the cloud in one way or another.  Further more than half (55%) of enterprises are using hybrid clouds – either private clouds or an integration with on premise solutions.
  • Savvy start-ups realize that public clouds can be expensive relative to self-hosting in an economy co-lo facility. Until traffic ramps to the point where the ability to immediately scale justifies it there is no urgency to host in AWS or Azure.
  • Public clouds are ideal for a variety of scenarios – unknown, unpredictable, or spiking traffic, the need to host in a remote geography, or where an organization has other priorities than to focus on hosting. Conversely self-hosting can be more economical.  Example, Amazon c3.2xlarge – 8 vCPU and 16 GB RAM (as of May 2015) is $213 / month or approximately $2500 / month / per server.  Organizations who already have an investment in a data center or have on premise capacity often find it cost-effective to self-host for internal applications.
  • Many enterprises are not surprisingly reluctant to walk away from significant capital investments in their own equipment. Hybrid clouds allow organizations to continue to extract value from these investments for tasks that may be difficult or costly to implement in a public cloud.  For example, high security applications, solutions which must interact with behind the firewall systems, or processing / resource intensive programs.

93% of Respondents Are Using the Cloud

  1. DevOps rises; Docker soars. DevOps is the new agile.  It is the hip buzz word floating around every organization.  According to Gene Kim, author of the Phoenix Project, DevOps is the fast flow of code from idea to customer hands.  The manifestation of DevOps is the ability to release code as frequently as several times a day.  To achieve this level of flexibility organizations need to eliminate bottlenecks and achieve what Kim calls flow.  Tools like Puppet, Chef, and Docker are enablers for DevOps.  In forthcoming surveys it can be expected that Microsoft’s InRelease (part of Visual Stuido Online) and Hyper-V Containers will have prominent roles in organizations that use the Microsoft stack.

DevOPs Adoption Up in 2015

  1. Amazon Web Services (AWS) continues to dominate in public cloud, but Azure makes inroads among enterprises. AWS adoption is 57 percent, while Azure IaaS is second at 12 percent.  (Among enterprise respondents, Azure IaaS narrows the gap with 19 percent adoption as compared to AWS with 50 percent.)  This is consistent with other market surveys – see Synergy Research Group Study from October 2014.
  • At this point the market has effectively narrowed to only two major cloud IaaS providers Amazon and Azure. While there are other offerings from Rackspace, IBM, HP and other non-traditional sources (i.e., Verizon) these seem to be solutions for organizations who already have a relationship with this vendor or there is a specific reason for going away from the market leaders.
  • There are certainly many other PaaS solutions including Google, Salesforce.com, Heroku (owned by SFDC). Similarly there are many SaaS solutions again including Google Apps, NetSuite, Salesforce.com, Taleo, and many other vertical specific solutions.
  • This respondent base is heavily represented by small business – 624 SMB vs. 306 Enterprise. Although Microsoft is working hard to attract start-ups the reality is that today most entrepreneurs chose open source technologies over Windows.  Conversely Microsoft technologies are disproportionately represented in larger enterprise.  While today AWS is the undisputed market leader Azure is growing quickly and can be expected to close the gap.  Microsoft is investing heavily in their technology, is actively reaching out to the open source community, and is making it apparent that they are not satisfied with being an also ran.
  1. Public cloud leads in breadth of enterprise adoption, while private clouds leads in workloads.
  2. Private cloud stalls in 2015 with only small changes in adoption.
  • Private clouds are being used for functional and load testing as well as hosting internal applications (i.e., intranet) where the costs and risks associated with a public footprint do not exist. It makes sense that where in the past organizations would have had “farms” of low end desktop PCs and blade servers in server closets that these types of applications have been moved to private clouds that are hosted on virtualized servers that can be centrally managed, monitored, and delivered to users more cost effectively.
  • It is interesting that the data suggests that the market virtualization infrastructure has matured and is not growing. The market leader in this space continues to be VMWare with Microsoft gaining traction in enterprises.
  1. Significant headroom for more enterprise workloads to move to the cloud. An interesting data point – 68% of enterprise respondents says that less than 20% of their applications are currently running in the cloud.
  • It will be interesting to see how his number changes over time. Reversing the statistic – 80% of enterprise applications are still run on premise.  This could be due to IT organizations heavy investment in capitalized equipment / data center.  It could be that the economics of a public cloud are still too expensive to justify moving to a public cloud.  There could be technical limitations such as security which are holding back cloud adoption.  Finally, there could be organizational prejudices against taking what is perceived as a risk to embrace the public cloud.  Very likely it is all of the above.
  • The role of a visionary CTO is to move their organization forward to embrace new technologies, break down prejudices, and find new and better ways to serve customers. Cloud vendors are working to make it easier for organizations of all sizes to adopt the cloud by lowering cost, increasing security, and providing new features which make management more seamless.
  • While this study does not provide any data on the breakdown of PaaS vs. IaaS it is a reasonable assumption that most enterprise adoption of the cloud is IaaS as this is by and large simply re-hosting an application as-is. PaaS applications on the other hand typically need more integration which in many cases involves software development.  Once done, however, PaaS applications are often more secure, scalable, and extensible as they take advantage of the hosting platform infrastructure.

Cloud Challenges 2015 vs. 2014

Finally, RightScale has a proprietary maturity model which ranks organizations comfort level with using cloud related technologies.  Interestingly the data suggests that nearly 50% of organizations have yet to do any significant work with the cloud.  This data can certainly be expected to change over the next 2-3 years.

Cloud Maturity of Respondents

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