Enterprise giants and cloud computing: What's cloudwashing vs. real DNA change?
IBM lands a $600 million outsourcing deal from NiSource that includes public and private cloud infrastructure. Hewlett-Packard launches a cloud portfolio called Helion that revolves around OpenStack, but includes a lot of hardware and services too. SAP is reorganizing in part to "become the cloud company," but everyone knows the company thrives due to licensing and maintenance revenue.
And those rip-and-read headlines are just from the past week in the land of enterprise technology giants.
I could replace any of those names above with Oracle, Dell, EMC, Cisco or any other company that derives most of its revenue from hardware or software, but sees cloud computing as the thing driving future growth.
Companies such as Amazon Web Services, Google and even Microsoft could mock those cloud-but-really-selling-you-hardware efforts as fake cloud narratives.
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In 2010, I noted how the cloudwashing was just getting started. Enterprise tech players would toss in the word "cloud" to every press release. Who could blame them? Cloud was the buzzword and a hip thing to do. These vendors were also largely blowing smoke up their customers' butts.
Calling the trend "cloudwashing" wasn't all that much fun simply because it was too damn easy four years ago.
Today, exposing cloudwashing is more tricky. The reality is that most enterprises will use a hybrid cloud model. They're not going to toss existing assets---that are depreciating and look good on the tax statement---to take their infrastructure to the cloud. Meanwhile, the pay-as-you-go model isn't perfect and can actually cost you more in certain situations. The headaches with on-premise software and hardware are also well known. But the best course between your data center and the public cloud lies somewhere in the middle.
Enterprise giants get that reality and are even starting to exploit it. The cloud isn't necessarily a threat as much as it is an option and addition to sell more stuff.
Let's take IBM. Big Blue went after Amazon Web Services in a marketing campaign after it bought SoftLayer and got into the public cloud game. However, you could pick apart SoftLayer and Big Blue's "cloud" results and find hardware and services in the mix. Is SoftLayer the only pure cloud play here? Or is IBM's infrastructure powering the cloud also some derivative in the equation? How about services? Is IBM as a service more to the point?
The NiSource deal is a seven-year outsourcing deal on the surface. But SoftLayer is involved. IBM's services are involved. Hardware and software are in the mix too. To IBM, the cloud is simply a derivative of hosting or outsourcing.
IBM's value prop goes like this: We'll run your infrastructure. Don't sweat it.
The cloud value prop sounds shockingly similar. Oracle has a similar pitch. Does anyone really doubt that Oracle is a cloud player? Even Workday and Salesforce would note that they have to compete with Oracle's software as a service lineup.
We can quibble over whether Oracle's buy into the cloud model will work, but there's a red stack that covers a lot of bases.
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SAP wants to be the cloud company and we all know that the software giant bought its way into the market via Ariba and SuccessFactors. But you can price out HANA instances via SAP's site. On some level, SAP is a cloud player and is building data center capacity to prove it. Sure, being a cloud leader is an aspirational goal for SAP, but you can't dismiss the efforts as cloudwashing.
Hewlett-Packard also has its -as-a-service models and cloud infrastructure to boot. HP's embrace of OpenStack and pledge to stay true to the kernel of the open source project is also huge.
Let's face it: Enterprise giants all have embraced open source only to wrap their proprietary technologies around it so you can't escape easily.
In the end, you could argue that the days of cloudwashing are over. Everything is cloud so therefore the term is almost meaningless. We're all going back to buying stacks as a service.
However, the real thing tech buyers have to watch is for something I'd call cloud DNA change.
Pure plays are just different. They pay more attention to user interfaces. Cloud-first players don't have legacy businesses to protect. And cloud-first players don't have sales commission models that will favor big licensing and maintenance deals over recurring revenue subscription models.
To know whether the cloud has changed the DNA of large enterprise companies you'll have to watch what they do and how they behave over time.
In the meantime, don't get locked in to a cloudwashed stack until you're sure there's a culture change you can recognize and actually see as an innovation partner for years to come.