HP Cloud Services Business Unit Strategy: The Value of Architecture

The industry hype around Cloud computing is clouding the issues that potential users should really care about. Despite sharing a common name and category of “cloud”, cloud offerings could be as different as the fluffy white clouds on a sunny day and the dark threatening clouds on a stormy day. The term Cloud Services is being applied equally to several new approaches and options from which IT organizations must choose. And quite frankly, vendors add to customer confusion with obtuse and seemingly generic marketing that does not clearly articulate why customers should select their approach over competitive solutions. For example, the value propositions being espoused by suppliers of these new approaches and options are very similar.  Further adding to the confusion is that large infrastructure vendors such as HP have options available for each of the new approaches. This results in confused customers, who think that all of the vendor offerings are similar. So they are no further along in answering the question, “Which vendor do I select to help develop my Cloud approach?”

In an effort to help IT organizations cut through the confusion, we are drilling deeper into one of HP’s cloud options in this paper. (For a more general overview of all HP’s cloud options, see our analysis report “HP’s Everything as a Service Strategy”)  In this paper we’re going to:

• Provide a quick outline of Ptak/Noel’s view of the new cloud options for enterprise IT organizations
• Discuss our view of the cloud-architected option in more detail and why it is different from the other two
• Discuss our take on how HP’s newly formed Cloud Services business unit is tackling that cloud-architected option.

Ptak/Noel’s View of Cloud Options

The term Cloud Services is being applied equally to several new approaches that IT organizations can use to:

1. Deliver purchased resources for business applications and services. This is often referred to as building private clouds, where the enterprise IT organizations buy or build cloud delivery solutions for the exclusive use of their enterprise (see the orange column in Figure 1)
2. Obtain resources for business applications and services. This is often referred to as using public clouds, where enterprise IT organizations rapidly obtain additional resources for immediate capacity needs from external providers that buy or build cloud solutions (see the purple column in Figure 1).
3. Obtain or deliver business applications and services. This option seeks to use cloud delivery solutions for service providers to deliver new types of cloud-architected software services (see the green column in Figure 1).  Enterprise IT organizations can be both consumers and providers of these software services depending on the goals of their enterprises.

This means that enterprise IT executives must choose where and when to apply each Cloud approach, as well as the suppliers for each new approach.

Figure 1:  Enterprises can choose from three cloud sources (source Ptak/Noelⁱ)

Ptak/Noel’s View of the Cloud-Architected Software Services Difference

Today, much of the Cloud hype revolves around the first two options in Figure 1.  When we look at the software architectures that IT organizations will be provisioning on top of the orange and purple cloud options, as illustrated in Figure 1, it has not changed from what is running on physical or even virtual servers today. This means that many enterprises are thinking about Cloud as a way to provision more application capsules/images/appliances (whatever your favorite term is). In other words, they see the cloud as a way to enable resource capacities to dynamically grow and shrink more rapidly for existing applications without fundamentally changing how the application is architected. While there is value in using the cloud in this way, it do not revolutionize software services.

The third option, however, has the potential of being an innovative, disruptive solution because the software service can be architected in a fundamentally different way.  The software is architected from the ground up, as a globally delivered service.  The necessity for this new architectural approach arises because of the large scale and diverse usage requirements that must be handled effortlessly by globally offered service solutions.  To meet those requirements, the final service is often purpose-architected from processors at the bottom layer, to business interfaces at the top layer.  This purpose-architecting typically means that service design, infrastructure engineering and operational automation are done simultaneously and collaboratively in order to achieve specific goals for the cloud-architected service.  In other words, coordinated efforts between development and operations organizations (DevOps) are a reality and essential within the most successful service providers.

The third option can also be the most bewildering, because today, it is easily and often confused with outsourcing or hosting of traditional applications on cloud infrastructure.  Using our cloud sourcing options in Figure 1, outsourcing or hosting traditional applications is actually our second option. For example, the average email user may find it difficult to discern the difference between using a Microsoft Exchange service hosted on Rackspace’s cloud and a cloud-architected email service such as Gmail.  Exchange may have more enterprise-class capabilities than Gmail. However, does Exchange’s rich feature set stem from how it is architected or from the fact that it’s been in the enterprise market longer than Gmail?  The capabilities that are tied to design and engineering, in other words, the structural advantages built into Exchange’s DNA will not be easily replicated by Gmail.  The opposite will also be true.  How those structural advantages are exposed as competitive weapons for enterprises will determine whether one service will be adopted over another. Ultimately, the right choice for the customer depends on the best fit for the specific competitive needs of that customer.

For some classes of cloud-architected software services, the primary competitive advantage is low total cost of ownership.  However, Ptak/Noel believes there will be other types of competitive advantages to be gained from cloud-architected software services that cannot be delivered by traditional hosted software.  The service providers that succeed will be those able to design and operate innovative services, and articulate the other  competitive advantages.

Ptak/Noel’s Take on HP Cloud Services

In our opinion, HP’s vision for the cloud computing future is captured in its tag line: “Everything as a Service.” HP defines its vision as “A world of information, opportunities and experiences – from computing power to business processes to personal interactions – delivered wherever, however and whenever you need it.” We believe HP is trying to harness both the evolutionary and revolutionary aspects of making this cloud computing future a reality with several options. The newly formed Cloud Services organization will provide one of those options.

In our opinion, HP’s Cloud Services business unit is tackling the revolutionary aspects, by delivering “global-class cloud services” to enterprise customers.  This maps closely to our third option from Figure 1.  It seems to us that HP intends to define “global-class cloud services” as only those services architected to use the potentially disruptive nature of newer cloud technologies.  For example, Scott McClellan, VP and Chief Technologist of HP’s Cloud Services Business, noted that, “In order for these global-class clouds to be revolutionary, you have to use what’s new and different. Traditional IT architectures are inadequate for these types of clouds. They simply will not scale for millions of simultaneous users, each requiring excellent service performance. So for global-class clouds, there is tremendous value in the architecture of the service.”

HP believes that they have the expertise and sophistication to apply new technologies to domains where they make sense, and to know when specific cloud technologies have matured sufficiently to be useful on a global scale.  To do this HP Cloud Services intends to leverage the expertise gained from:

• Its experience in co-designing innovative cloud infrastructure solutions with customers that are some of today’s leading-edge service providers.
• Its experience in providing consumer cloud services such as Snapfish.
• EDS’ experience of mapping enterprise needs to different technological capabilities.

It seems to us that HP’s strategy for its Cloud Services organization reveals an understanding that architecting and operating innovative cloud services requires more than acquiring new technology.  We believe this is important because HP Cloud Services as a provider of “global-class cloud services” must differentiate its offerings from HP’s other cloud options.  It must show how its mix of new technology and a collaborative approach to service design and operations provides unique competitive advantages for each potential client.  If this is HP Cloud Service’s differentiation, one challenge will be in providing believable innovation-driven proof-points of success.  In our experience, the more a service provides a unique competitive advantage for a customer, the less willing those customers will be to publicize the advantage of using that service. This will result in increasing the importance of independently validated customer stories that will help potential HP enterprise customers understand “what is possible” using HP’s “global-class services” delivered by the Cloud Services organization.

But more importantly, in our opinion, is the immediate challenge of clearly articulating the business value and the competitive advantage, derived from the revolutionary approach itself.  As we stated earlier, the links between the architectural and operational differences of our third option, and distinctive enterprise competitive advantages are glossed over because of indistinguishable or generic marketing messages.  It is hard to stand out when every other vendors’ cloud option is promoting similar value propositions of ‘lower cost’ and ‘higher agility.’

We believe, the similarity in value proposition creates an unnecessary hurdle for HP to overcome when discussing “everything as a service” with prospective enterprises that do not already ‘get it’. It can allow HP’s option for revolutionary cloud services to be either dismissed by prospects and competitors as defensive posturing or visionary babble, when we believe it should not be dismissed at all.

When the competitive advantages of the cloud-architected software services become a crystal-clear “AHA moment” for potential buyers, it will pole-vault over the adoption chasm.  In other words, the opportunity for HP’s Cloud Services organization is to make its distinctive differentiators so clearly obvious that mainstream-adopter audiences’ response to hearing it is, “Well, that’s what I need! And it would take me too long and cost too much money for me to do it myself, so where do I sign?”

ⁱ For an overview presentation of the evolution of cloud computing see Dancing with Clouds, by Jasmine Noel, Founding Partner, Ptak/Noel.  This presentation is updated periodically as new vendor announcements are made.

ⁱⁱ For a more general discussion of HP’s strategy for harnessing both the evolutionary and revolutionary aspects of cloud computing see HP’s Everything as a Service Strategy by Audrey Rasmussen and Jasmine Noel, Ptak/Noel.