Recurring Revenue Authors: Liz McMillan, Yeshim Deniz, Elizabeth White, Roger Strukhoff, Pat Romanski

Related Topics: Containers Expo Blog, Weblogic, Microsoft Cloud, Recurring Revenue, Artificial Intelligence, Log Management, Server Monitoring, @CloudExpo

Containers Expo Blog: Blog Feed Post

Cloud Computing Is the Next Great Land Rush and It Is Happening Now

Cleaning Up the Cloud Computing Pricing Mess

Cloud Computing is the next great land rush and it is happening now.  All the major technology companies have their offerings.  And it seems like everyone is entering the market – even the hosting companies want in on the land rush.

In theory, migration to the Cloud makes business sense; you’re enabling companies to rent computing power that would cost them too much to buy.  I won’t bore you with yet another blog post on the ‘what is it’ topic.  There is a great synopsis of Cloud Computing published by Mache Creeger and I recommend checking it out.  In our model, we’re allowing companies to pool their resources on the supply side of Cloud Computing and leverage a much bigger, better shared infrastructure on the demand side of the equation.

Cloud Computing is about lower costs and greater use of resources.  Greater flexibility, more options and overall, more computing power.  It’s a shared cost.  And it’s based on what you use.  Or is it?

One of the areas of Cloud Computing that still needs to be addressed is the issue of pricing.  Pricing the Cloud has gone beyond complex and confusing and entered the realm of ridiculous on some levels.  We’ve met with countless service providers in the past year and the basic message is clear:  Come back when you can give me something that doesn’t need a PhD from MIT to decipher.  This message was also pretty clear at last month’s Interop Las Vegas event.

The odd thing is that everyone agrees that Cloud Computing pricing needs to be standardized.  Many companies want this to be an industry group that develops standardization. Industry groups and alliances have been throwing this topic around for a long time now – we’ve seen this question come up for more than two years.  But why is it that nothing has happened?  As a company that has what I would call truly transparent pricing, I’ve been confused about this for a while.

I was recently on a conference call with a potential data center partner when I got insight into what I truly believe is the answer.

Standardized pricing and corresponding tools that allow end user customers to peer into the rack and seriously drill down into the granular cost of the Cloud are simply bad for business.

In fact, the parties on the supply side of Cloud Computing – elastic computing providers, managed hosting companies, platform-as-a-service shops, big iron manufacturers, etc. – don’t have much incentive at all to strive toward pricing transparency and standardization.  Why would magic quadrant hosting providers or heavily vested IaaS providers effectively even the playing field by adopting a standard pricing metric when it is their brand that is ultimately buttering their bread today?  Is a company like Amazon or Google really going to adopt the same pricing standard as every other company getting into the race?  Maybe, but don’t hold your breath in hopes to see them at the front of the line.

I think the work of Cloud standards advocates like Reuven Cohen of Enomoly has been really great for cracking the nut of Cloud interoperability.  But it may be a stretch when they dream of Cloud interoperability extending beyond the technical exchange and integration of systems and data.   Here is a reality check:  All the big Cloud Computing providers in the market are profiting from preventing the very process of commoditization they allegedly support.  And even if you aren’t part of that group, pricing is an integral part of the profit picture and thus cannot be decoupled from the discussion.  Just because you get together and document some sort of standard or benchmark doesn’t mean you’ve solved the problem for the stakeholder that matters most (the customer).  In fact, I think these types of standards groups may only serve to muddy the waters further on the subject because they don’t pay enough attention to  the connection with the bottom line for a Cloud operator.

Understanding the profit motivations of the Cloud providers and then dissecting the current modus operandi for pricing exposes a huge gap that I think will shape a big part of cloud development initiatives in the next few years.

Let me give you an example to prove my point:

Cloud Computing service providers seem to believe that they can and should charge for the Cloud on an hourly basis.  On the surface that sounds great, because it’s better than paying for a machine for the whole month, isn’t it?  But underneath there is a lot more to it.  Think about it.  If you use a server for one minute of an hour, you’re charged for the whole hour.  That’s crazy.  One sixtieth of an hour costs you the whole hour?  Sure the pricing is reduced, but what are you really getting?  I think Allan Leinwand captures broader implications of this silliness quite well when analyzing the state of Cloud pricing.  He said, “CPU hours: that’s not something I go buy. I buy a blade server, and the hours are infinite, they’re mine.” Leinwand has a big point and it has a direct impact on the future capability of Cloud Providers to achieve mainstream relevance to the average enterprise.  6fusion’s CEO and co-founder John Cowan analyzes the implications of pricing on the buying community here in a separate post.

And if it were really just as simple as clocking CPU hours and sending out a bill, maybe we could alleviate this pain point in the Cloud and move on.  But it doesn’t end there.  Invariably, Cloud Vendors have to “tack on” all sorts of ancillary charges and fees to make money.  Everything from RAM to storage to bandwidth and even Support get thrown in as separate line items.  The pricing becomes convoluted and difficult to predict.  It’s a huge mess, but there is no incentive to solve the problem, given there is a lot of money to be made from the confusion.

I have no problem with the supply side making money.  After all, that’s what a company is in business to do.  What I have a problem with is the lack of transparency or ability to leverage these systems for anything more than just the technical accomplishment of elastic computing (don’t get me wrong, that is a biggie!).  When Cloud providers don’t give you proper insight into what you are using, and if you can’t make the mental jump between what you do today (ex, buy more blades) and what the Cloud represents, the advancement of the industry suffers.

Herein lies the gap.

Service Providers must deliver more insight and transparency into the Cloud, not fog the pricing just to earn more margins for a brief time.  Customers are far too smart for this to work long term.  Ultimately, we believe that in order for the Cloud to succeed, the industry needs to help customers understand their true usage and the true value they are getting before and after they make the decision to use Cloud Computing to run critical IT systems.  A granular metering and billing technology that transcends the politics of brand and vertical silos, while satisfying the need to be a ‘profitable’ service provider, will go a long way to helping to clean up the mess that is Cloud pricing today.

Read the original blog entry...

More Stories By John Cowan

John Cowan is co-founder and CEO of 6fusion. John is credited as 6fusion's business model visionary, bridging concepts and services behind cloud computing to the IT Service channel. In 2008, he along with his 6fusion collaborators successfully launched the industry's first single unit of meausurement for x86 computing, known as the Workload Allocation Cube (WAC). John is a 12 year veteran of business and product development within the IT and Telecommunications sectors and a graduate of Queen's University at Kingston.

@ThingsExpo Stories
DXWordEXPO New York 2018, colocated with CloudEXPO New York 2018 will be held November 11-13, 2018, in New York City and will bring together Cloud Computing, FinTech and Blockchain, Digital Transformation, Big Data, Internet of Things, DevOps, AI, Machine Learning and WebRTC to one location.
DXWorldEXPO | CloudEXPO are the world's most influential, independent events where Cloud Computing was coined and where technology buyers and vendors meet to experience and discuss the big picture of Digital Transformation and all of the strategies, tactics, and tools they need to realize their goals. Sponsors of DXWorldEXPO | CloudEXPO benefit from unmatched branding, profile building and lead generation opportunities.
DXWorldEXPO LLC announced today that "Miami Blockchain Event by FinTechEXPO" has announced that its Call for Papers is now open. The two-day event will present 20 top Blockchain experts. All speaking inquiries which covers the following information can be submitted by email to [email protected] Financial enterprises in New York City, London, Singapore, and other world financial capitals are embracing a new generation of smart, automated FinTech that eliminates many cumbersome, slow, and expe...
The best way to leverage your Cloud Expo presence as a sponsor and exhibitor is to plan your news announcements around our events. The press covering Cloud Expo and @ThingsExpo will have access to these releases and will amplify your news announcements. More than two dozen Cloud companies either set deals at our shows or have announced their mergers and acquisitions at Cloud Expo. Product announcements during our show provide your company with the most reach through our targeted audiences.
DevOpsSummit New York 2018, colocated with CloudEXPO | DXWorldEXPO New York 2018 will be held November 11-13, 2018, in New York City. Digital Transformation (DX) is a major focus with the introduction of DXWorldEXPO within the program. Successful transformation requires a laser focus on being data-driven and on using all the tools available that enable transformation if they plan to survive over the long term. A total of 88% of Fortune 500 companies from a generation ago are now out of bus...
With 10 simultaneous tracks, keynotes, general sessions and targeted breakout classes, @CloudEXPO and DXWorldEXPO are two of the most important technology events of the year. Since its launch over eight years ago, @CloudEXPO and DXWorldEXPO have presented a rock star faculty as well as showcased hundreds of sponsors and exhibitors! In this blog post, we provide 7 tips on how, as part of our world-class faculty, you can deliver one of the most popular sessions at our events. But before reading...
Cloud Expo | DXWorld Expo have announced the conference tracks for Cloud Expo 2018. Cloud Expo will be held June 5-7, 2018, at the Javits Center in New York City, and November 6-8, 2018, at the Santa Clara Convention Center, Santa Clara, CA. Digital Transformation (DX) is a major focus with the introduction of DX Expo within the program. Successful transformation requires a laser focus on being data-driven and on using all the tools available that enable transformation if they plan to survive ov...
As IoT continues to increase momentum, so does the associated risk. Secure Device Lifecycle Management (DLM) is ranked as one of the most important technology areas of IoT. Driving this trend is the realization that secure support for IoT devices provides companies the ability to deliver high-quality, reliable, secure offerings faster, create new revenue streams, and reduce support costs, all while building a competitive advantage in their markets. In this session, we will use customer use cases...
DXWorldEXPO LLC announced today that ICOHOLDER named "Media Sponsor" of Miami Blockchain Event by FinTechEXPO. ICOHOLDER give you detailed information and help the community to invest in the trusty projects. Miami Blockchain Event by FinTechEXPO has opened its Call for Papers. The two-day event will present 20 top Blockchain experts. All speaking inquiries which covers the following information can be submitted by email to [email protected] Miami Blockchain Event by FinTechEXPO also offers s...
With tough new regulations coming to Europe on data privacy in May 2018, Calligo will explain why in reality the effect is global and transforms how you consider critical data. EU GDPR fundamentally rewrites the rules for cloud, Big Data and IoT. In his session at 21st Cloud Expo, Adam Ryan, Vice President and General Manager EMEA at Calligo, examined the regulations and provided insight on how it affects technology, challenges the established rules and will usher in new levels of diligence arou...
Dion Hinchcliffe is an internationally recognized digital expert, bestselling book author, frequent keynote speaker, analyst, futurist, and transformation expert based in Washington, DC. He is currently Chief Strategy Officer at the industry-leading digital strategy and online community solutions firm, 7Summits.
Digital Transformation and Disruption, Amazon Style - What You Can Learn. Chris Kocher is a co-founder of Grey Heron, a management and strategic marketing consulting firm. He has 25+ years in both strategic and hands-on operating experience helping executives and investors build revenues and shareholder value. He has consulted with over 130 companies on innovating with new business models, product strategies and monetization. Chris has held management positions at HP and Symantec in addition to ...
Cloud-enabled transformation has evolved from cost saving measure to business innovation strategy -- one that combines the cloud with cognitive capabilities to drive market disruption. Learn how you can achieve the insight and agility you need to gain a competitive advantage. Industry-acclaimed CTO and cloud expert, Shankar Kalyana presents. Only the most exceptional IBMers are appointed with the rare distinction of IBM Fellow, the highest technical honor in the company. Shankar has also receive...
Enterprises have taken advantage of IoT to achieve important revenue and cost advantages. What is less apparent is how incumbent enterprises operating at scale have, following success with IoT, built analytic, operations management and software development capabilities - ranging from autonomous vehicles to manageable robotics installations. They have embraced these capabilities as if they were Silicon Valley startups.
Internet-of-Things discussions can end up either going down the consumer gadget rabbit hole or focused on the sort of data logging that industrial manufacturers have been doing forever. However, in fact, companies today are already using IoT data both to optimize their operational technology and to improve the experience of customer interactions in novel ways. In his session at @ThingsExpo, Gordon Haff, Red Hat Technology Evangelist, shared examples from a wide range of industries – including en...
The standardization of container runtimes and images has sparked the creation of an almost overwhelming number of new open source projects that build on and otherwise work with these specifications. Of course, there's Kubernetes, which orchestrates and manages collections of containers. It was one of the first and best-known examples of projects that make containers truly useful for production use. However, more recently, the container ecosystem has truly exploded. A service mesh like Istio addr...
Rodrigo Coutinho is part of OutSystems' founders' team and currently the Head of Product Design. He provides a cross-functional role where he supports Product Management in defining the positioning and direction of the Agile Platform, while at the same time promoting model-based development and new techniques to deliver applications in the cloud.
Predicting the future has never been more challenging - not because of the lack of data but because of the flood of ungoverned and risk laden information. Microsoft states that 2.5 exabytes of data are created every day. Expectations and reliance on data are being pushed to the limits, as demands around hybrid options continue to grow.
Business professionals no longer wonder if they'll migrate to the cloud; it's now a matter of when. The cloud environment has proved to be a major force in transitioning to an agile business model that enables quick decisions and fast implementation that solidify customer relationships. And when the cloud is combined with the power of cognitive computing, it drives innovation and transformation that achieves astounding competitive advantage.
Poor data quality and analytics drive down business value. In fact, Gartner estimated that the average financial impact of poor data quality on organizations is $9.7 million per year. But bad data is much more than a cost center. By eroding trust in information, analytics and the business decisions based on these, it is a serious impediment to digital transformation.