Amazon VPC: Private Clouds aren't Clouds and Public Clouds aren't Public

By Narinder Singh

Amazon's announcement today on Virtual Private Clouds (VPC) and Werner Vogels' enthusiastic blog response have been used by advocates to validate positions for and against the notion of the "private cloud." We've been part of that debate ourselves (see Rise and Fall of the Private Cloud, Beware of the Wolf in Blue Clothing, and in a dialogue here with Christopher "Fire Hydrant" Hoff). While we strongly advocate technologies like virtualization, we're critical of the notion that a private cloud can be at the center of a future state IT strategy.

Two takeaways from today's announcement of Amazon's Virtual Private Cloud:

• It's very exciting. This is another major step in the right direction to seamlessly integrate with, but still isolate, legacy on-premise investments that are a drag on enterprise IT departments.
  
• Vogels' own blog spells it out clearly - "Private Cloud is not the Cloud" - it'd hard to be any clearer. Amazon's providing a Virtual Private Cloud is as much of an endorsement of the private cloud as their Virtual Private Storage (S3) is of on-premise storage.

One of the ironies of the public cloud vs. private cloud debate is that the private cloud isn't really a cloud and the public cloud isn't all public. Every "private cloud" to date has proved to be just an upgrade to your own data center - you still own the cost of all IT management. Alternately, every "public" cloud provider has aspects of being 'private' - it's just a question of what level. Although you can access the "public" cloud almost ubiquitously, your data is yours alone and no one else can see it. What makes a cloud "public" is that the some aspect of the hardware, OS,database, app server, metadata, etc. is shared across customers. For Amazon VPC, nearly every layer of the stack is private, it just happens that the underlying hardware they sit on may be the same.

Unless it generates its own electricity and hosts and operates its own equipment, people and data center facility, a company already uses the concept of shared services. The move toward the "public" cloud simply pushes that usage much higher up the stack. A discussion with about a dozen enterprise CIOs (companies 2-20B+ in revenue) raised an inherent business expectation: because price/performance of underlying technology was constantly improving, their cost profiles should also reflect that ('flat % of spend is actually an increase'). These CIOs unanimously agreed that their objective was not to own physical assets but to have the right level of control over the assets they used. In that context, two factors will drive cloud computing - the inherently higher capability/cost and the ability to provide more and more control over the underlying assets. On both fronts Amazon VPC is a significant step forward.

But even this misses the bigger story behind this week's announcement- Cloud computing allows for a nearly unprecedented rate of innovation in a very significant part because of multi-tenancy; Amazon's story is a proof-point of this effect. Some will note that Amazon competitors have offered similar features, but I don't think there is anyone who a few years ago would have predicted Amazon, or anyone else would deliver this list of services so quickly to the entire market. Look at their timeline of advancements since their days of only being just an online bookstore:

• Simple Storage Service (S3)- March 13, 2006
• Simple Queuing Service (SQS) - July 11, 2006
• Elastic Cloud Computing (EC2) - August 24, 2006
• Flexible Payment Services (FPS) - August 2, 2007
• Simple DB - December 13, 2007
• DevPay - December 18, 2007
• Elastic Block Store (EBS) - August 20, 2008
• Cloudfront - November 18, 2008
• Elastic MapReduce - April 2, 2009
• Virtual Private Cloud - August 26, 2009
  

And these are just major new services that don't include improvements to existing services (e.g. EC2 running windows).

Innovation and advancements at this pace is a testament to strong strategy and execution, but only possible by relying on the fundamental tenant of the cloud - a shared multi-tenant delivery model. In just three years Amazon has provided a set of capabilities to the entire market that most companies and IT shops would love to claim for themselves. Amazon successfully moves faster than the on-premise alternatives by constantly improving a single code-base instead of installing and managing independent versions of software deployed at each customer. This is the secret sauce of multi-tenancy and explains why certain providers can move faster than everyone else; you're not fighting the gravity of multiple versions and codebases.

Amazon's innovations should serve as an example of why enterprises should take advantage of cloud computing; your services will constantly improve at a rapid rate - without having to manage all hardware and software infrastructure, its integration, upgrades and maintenance.

Appirio PS Enterprise: Moving Services Enterprises to the Cloud

by Narinder Singh

Today is an exciting day for us. We're announcing our Professional Services Enterprise (PS Enterprise) product and introducing our PS Cloud blog. PS Enterprise is an on-demand professional service automation (PSA) solution, built entirely on Salesforce's force.com platform. Unlike competitive solutions that originated in the SMB space, our solution is designed from the ground up to meet the needs of enterprise-class service organizations, delivering end-to-end support for managing people, projects, customers and transactions. PS Enterprise is different from other solutions because it supports a services business end-to-end, bridging the gap between how projects are sold and how they are delivered.

PSA is a market that has held out promise for quite a while but true success stories are few and far between. Even "successful" companies like QuickArrow and OpenAir have less than 100,000 users after many years of toiling in the market. So the question is why are we so excited about it? We are excited about this market for two reasons.

1) Services firms have been under-served by traditional solutions
In our view, though services are a large and growing part of the global economy, they have not been well supported by enterprise technology. Traditional business applications are centered on inventory and transactions, not the people and projects at the heart of services firm. And silo’d PSA applications have been a failure– NetSuite has acquired two in the last year that after ten years of existence had only a small fraction of the users of other SaaS apps and focused mostly on the SMB. Most firms, especially larger services firms, are still using legacy and custom-built solutions, with lots of painful spreadsheet workarounds. There’s got to be a better way.

Industry analysts are predicting rapid growth for a category of solutions they’re calling “Service Resource Planning.” The idea is to do for the services industry what ERP did for manufacturing. But unlike ERP, everyone agrees that SRP will be built and delivered on modern, cloud-based infrastructure. Services firms are already aggressively adopting cloud-based solutions for CRM – over 6000 professional services companies use Salesforce CRM today. But what about the core operations of their business? Appirio PS Enterprise is built 100% on Force.com, and is tightly integrated with Salesforce’s CRM. Combine PS Enterprise with Salesforce’s Sales Cloud and the Service Cloud, and you get what Salesforce and Appirio are calling the “Professional Services Cloud.” It’s the perfect platform for Services Resource Planning.

2) Services firms are likely to be among the first to cloudsource their IT infrastructures
We started our company in 2006 with the mission of accelerating enterprise cloud adoption. Our vision is to provide cloud solutions that will enable companies to move large parts, or even all, of their IT infrastructure to the cloud.

Over the past few years, we've seen SaaS applications like Salesforce CRM gain broad acceptance within the enterprise. Companies are now looking to SaaS applications as they modernize their portfolio of packaged applications. We've also been excited to see growing interest in moving custom applications to cloud platforms like Salesforce's Force.com and Google's App Engine. Over the next 1-3 years, we expect the majority of new packaged application purchases and custom application development to move to the cloud.

Further out, we see companies moving the majority of their application and infrastructure portfolios to the cloud. We call this cloudsourcing, which is the intersection of the two predominant trends in enterprise computing today - cloud computing and outsourcing. As a practitioner of cloudsourcing today, we experience the benefits on a daily basis in the form of significantly lower costs (our IT costs are 1/3 of industry benchmarks), superior agility (adding products or practice areas is an almost instant exercise), and innovation (we get new and exciting capabilities without painful upgrades).

We built our cloud solution portfolio with an eye toward accelerating the movement to cloudsourcing. With the introduction of PS Enterprise, we think that services firms with between 500 - 3000 employees are ready for cloudsourcing. They are typically forward-thinking businesses without the operational complexity of industries like manufacturing or the regulatory requirements of industries like healthcare. Over 6000 services firms have already moved their sales and marketing processes to the cloud with Salesforce. Many of these firms are also early adopters of cloud-based finance, HR and collaboration solutions. The big missing piece to-date has been an enterprise-class platform to help these business manage their people and projects. This is where PS Enterprise comes in.

What this means for customers
With a combination of Salesforce CRM, Appirio PS Enterprise and Google Apps, a services firm has the foundation for a server-less, highly scalable, cost-effective and agile IT infrastructure. In the coming weeks, we'll also disclose partnerships that help with their HR and financial systems needs. With this, we believe services firms can experience what we experience every day in our own business; dramatically lower cost, instant visibility, and the ability to adapt and overcome any market condition.