Got Cloud? What Companies Want
Customers often sign lowballed service contract offers and then discover they need to buy add-ons. Ideally, they "should understand every component of their software architecture and the resource requirements related to each so they can pick the right provider or combination of providers in order for their applications to perform as needed," said David Roth, CEO and cofounder of AppFirst.
01/07/14 5:00 AM PT
Cloud service users are becoming more vocal about what they want from cloud providers and how they want to pay for it -- and cloud providers may be listening. Cloud firms are beginning to offer more flexible options and are gradually shifting to utility-style pricing models.
There is no single factor pushing the movement toward these changes. However, some of the things potential users want are showing up in their offers, suggests an analysis by CloudScreener. There is a need among SMBs for less costly cloud storage capacity, for example. Also, potential cloud customers do not want to make long-term commitments to a service provider.
"Right now, every enterprise I talk to has a future model that has a point where everything is cloud first," said Rick Sizemore, director of the cloud computing practice at Alsbridge.
"They want a resource pool that they can apply to everything at any time. They are looking at the cloud first as their model going forward. I haven't seen a single customer in the last six months who is not doing that," he told the E-Commerce Times.
CloudScreener provides companies in search of public cloud services with a free comparison tool to identify their needs in terms of infrastructure and then compare those needs with available offers based on price, performance, security, stability and flexibility.
Sixty-five percent of the 25,000 cloud computing comparisons requested in the last year indicated that companies were looking for no long-term commitment with their supplier. Only 25 percent of the comparisons indicated a willingness to commit to a period of one year or more.
Companies that were confident they could predict their needs indicated they would accept a set contract period if it would get them a price reduction.
Sixty percent of the comparison requests focused on virtual machine services offering medium storage capacity. Only 11 percent were for large capacity. The remaining 29 percent of the comparisons were either for small-capacity services or for specific configurations -- high CPU or high RAM, for example.
However, storage size was not a decisive factor in the choice of a cloud service provider, Anthony Sollinger, cofounder of Cloudscreener, told the E-Commerce Times.
"I think the frustration in the market is not customers needing to find something smaller or lower-priced, but rather wanting to match the sizing of the price to the sizing of the need," said David Roth, CEO and cofounder of AppFirst.
"One of the main benefits of the cloud is the ability to scale up and down. Yet no cloud vendor helps customers size an application, and a one-size-fits-all solution is not meeting customers' needs," he told the E-Commerce Times.
Cloud customers would prefer the ability to size an application so they can get just enough for what they need rather than just a lower price, he said. They would like to know which part of an application can run in smaller, lower-cost cloud offerings and which requires something bigger and higher-priced.
"Currently, no cloud vendors are doing this," Roth said. "They want the correct amount of cloud resource for what the application requires."
Existing Cloud Cover
Not all cloud vendors readily support customers' wish lists for a different cloud rental model. For example, most cloud vendors have high-volume repeatable offerings. There is a subset of cloud vendors that enable tailored services including mixing and matching cloud with non-cloud resources, noted Roth.
A cloud ecosystem is the only way to tailor requests to customers, according to Saju Sankaran Kutty, head of transformed outsourcing for cloud at Infosys.
"Individual cloud service providers are components of this ecosystem. When you buy directly from a CSP, the ability to unlock full potential is low as contracts are complex, and value only comes from large-volume commitments," Kutty told the E-Commerce Times.
Not Just Door Openers
Customers often sign lowballed service contract offers hoping for a door opener. Then they discover that they need to buy bigger add-ons to meet their needs.
"The customers ideally should understand every component of their software architecture and the resource requirements related to each so they can pick the right provider or combination of providers in order for their applications to perform as needed," AppFirst's Roth cautioned.
Cloud offerings are not yet so standardized that it matters little which provider a customer selects.
"A majority of customers falls into this trap (door-opening deal) and soon realize that the solution for their problems can be only met in a multi-cloud scenario," InfoSys' Kutty said -- that is, "a combination of multiple private and multiple public clouds."
Rather than offering customers flexible subscription lengths, today's cloud vendors typically offer flexibility in terms of more desirable configurations. In general, short-term contracts cost more. Some vendors offer a pay-as-you-go option.
Most providers base payments on use, but to get the optimum configuration and performance, a commitment is required, said Roth. "Many cloud providers will negotiate longer-term commitments to deliver what the customer needs."
Today, subscription lengths are determined according to volumes, but deals are stacked to benefit the providers, said Kutty. "You get more flexibility with volumes, and hence aggregators benefit."
Love for Linux
Linux is strongly prevalent in the enterprise work place, the CloudScreener analysis found. Seventy-five percent of the requests for cloud provider comparisons were for virtual machines running Linux versus 25 percent for machines running Windows.
"For open source platforms like Red Hat or Suse, you still pay licensing -- it is not totally free," Alsbridge's Sizemore said, but "we are clearly seeing movement to Linux from everything else."
Obviously, a lot of applications run only on Windows servers. Going forward, though, it looks like people are going to standardize on Linux as a default platform and then specialize on other platforms only if they lack a choice, Sizemore observed.
"I do not hear anyone talking about running any new applications on a thick stack of Windows servers. Part of it is the life of the model makes it more expensive," he explained. "The tools now for applications on all those platforms are just as robust as they are on the Windows side."
Customers looking for Linux and low entry levels will find those options, said Karl Van den Bergh, vice president of products and alliances for Jaspersoft. Options at the lower levels of the cloud stack that offer a fair amount of choice at an elastic price do exist.
For example, Infrastructure as a Service at the OS level uses Linux in multiple varieties. At the application server level, customers can run most any platform. At the database level, customers looking for open source options have MySQL and PostgreSQL.
"What we see missing is anything above the databases," Van den Bergh told the E-Commerce Times. "Applications by the hour are still very uncommon. Today, if you are buying a cloud-based application, you are typically signing up for a monthly contract. That limits you in data storage and the number of users that can access the application."
No elasticity in cloud pricing exists beyond the database, Van den Bergh explained. There is a divide between what people are used to paying for infrastructure, or how they are used to paying, and utility-based pricing. At the cloud application level, it is subscription contract.
That is starting to change with some cloud application providers; Jaspersoft now offers analytics by the hour via Amazon Web Services, for example, with no user or data restrictions or limits. Pricing starts at 40 US cents per hour and comes with all the commercial features available on the company's server.
"We believe that utility pricing models higher up in the stack will come," said Van den Bergh. "We believe that is the way customers in the future will want to buy software -- by the hour."
Not everyone on the provider side is rooting for a better pricing structure, however. It might just be hype driving that momentum -- the rallying cry of smaller companies looking for a good deal in the cloud, suggested Sizemore.
The cloud industry is not at a pay-as-you-go and keep-it-small service level, he maintained. Enterprises are looking for things that they can use to drive SLAs.
"If you talk to IT folks, they are looking for strategic purchases and strategic partnerships so they can get out of the business of doing piecemeal purchases," said Sizemore. "They want an ability to manage their cost structure from the provider. They want a visibility of what they are getting and SLAs that mean something. The larger you get, the more important that is. Everybody wants an SLA they can manage."
Change in the Wind
Still, the cloud providers are moving toward a more consumer-friendly model. Over the next 12 to 18 months, there will be an inflection point between buying something from IBM or Amazon and getting the same thing, Sizemore predicted.
"One of the biggest things happening with the cloud is seen in the software industry itself," he said. "Companies are demanding an open model so they can run whatever it is that they have in the cloud."
Shopping in today's cloud market is like buying a car, suggested Sizemore. "You must shop at separate car dealerships. The customer must go to the location that sells the particular car type desired. The changeover will let the buyer go to any dealer to get what is desired.
Cloud buyers ultimately might force the switch to utility pricing, said Van den Bergh. "Customers are going to flock to the vendors who offer utility pricing. Everybody else will have to change."