Earlier this year, NTT communications commissioned a poll of 1600 ICT decision makers including IT directors, CIOs, CTOs across the USA and Europe. These are people in charge of setting tactical and strategic policies for development teams. The NTT poll asked them various questions such as which applications best suit which infrastructure? Is there a link between application maturity and applications that suit the cloud versus corporate datacenter?
The results from the poll and the analysis form the highlights of the NTT Cloud Reality Check report. The report shows key trends by country, industry, as well as by company size. We asked Len Padilla Vice President Product Strategy at NTT Europe about some of the key insights.
NTT found that the ‘which cloud’ decision is not merely a technical one but a complex one. Can you explain?
Let me give a little bit of background on the research first. What we were looking for with the research and the survey was to understand in which environment people were putting what kinds of applications.
Remote IT is a spectrum with a lot of available options. We encountered everything from customers running applications in their datacenter and managing it themselves to having their datacenter and having us manage it, all the way through colocation and managed hosting on public and private clouds.
The term cloud poses a terminology problem because it covers a lot of different things. To some, it means PaaS or SaaS, to others public or private cloud. What we were looking to do is to get a good idea of where people are making decisions to put their applications — a sort of mapping of CRM in this place, ERP in this place, internal intranet in this other place.
What we ended up getting was data all across the board. There isn’t any consensus on where to put things in terms of applications. Maybe this research was a little early. When we talk to existing customers, prospects, analysts, we find there’s a maturity scale in the process of where people are putting applications. The industry at large is pretty early in the journey. We’re not quite at the point where people are making clear decisions on which environments to put applications based on the type of applications. There are a whole bunch of other things that govern their decision-making. There could be company politics and company policy, technical reasons, or financial. That’s why there’s no clear consensus on where people are putting applications in specific environments based on application type.
Most ICT decision makers don’t believe the cloud lives up to its potential. Why the disillusionment?
As Gartner noted in the 2014 hype lifecycle report, we’re just getting into the trough of disillusionment or getting out of there as an industry. One of the things that led to that was the promise of the cloud that it would simplify and be inexpensive. People believe that cost would tag along with demand and reduce expenditures. Cloud has the potential to do that. It’s like anything else. If you use a tool incorrectly, it won’t give you great results similar to using a screwdriver for a hammer. What happens is, people might dive into the cloud and want to manage steady-state applications the same way in the cloud as they managed and architected them to run on physical machines in their datacenter. Let’s just take this as is, install it on a bunch of virtual machines and hopefully by magic it will be cheaper. But what they often find is, by taking a steady-state application that was running on close to advertised hardware and putting it in a cloud environment, they end up paying all over again.
One thing is consuming virtual machines in the cloud, which is the easy part. The hard part is tailoring the applications and the way they work to take advantage of the benefits of the cloud. The same thing happens for availability. People expect that by moving their application to a cloud infrastructure, the application must automatically get distributed everywhere and be safe from outages. Then they find that unless they do something to take advantage of the tools offered in the cloud, it doesn’t just happen automatically. There’s something they need to do there.
Sometimes there’s a bit of a learning curve in terms of how to construct the application and how to prepare technically, economically, and culturally for it. If people do that, it will get us out of the trough of disillusionment and into realizing benefits. As people realize this, they will overhaul applications and get them into a state to move them into the cloud and get better availability, better security, and even lower cost. Mostly the trough of disillusionment happens with existing applications. For net-new applications built for the cloud, people already consider factors like replication and distribution strategies that take advantage of the way that a particular cloud is built. They take advantage of the fact that you can turn things on and off very quickly to save on resources when they’re not using them instead of running a bunch of idle VMs.
What did NTT learn about the types of clouds that companies adopt across industries?
Within IaaS, we broke cloud down into public and private, and we also sliced by PaaS and SaaS. SaaS has pretty good adoption rate. While many customers use SaaS applications like Salesforce, SugarCRM, and so on, PaaS is a very specialized market. PaaS is primarily developer-focused, and there isn’t quite an uptake. I jokingly say to analysts that this year is again supposed to be the year of PaaS, let’s see how it goes. PaaS offers great features for companies that know how to use them, but not many companies take advantage of the very specialized toolset as a general-purpose thing. But that could change.
On the IaaS side, we saw different adoption rates in terms of applications and geography. Anything with sensitive data either financially related, customer or employee data like HR, ERP, or CRM type of systems tended to go towards private cloud when deployed in a cloud environment. Applications related to collaboration, file sharing, front-end websites tended towards public clouds. Although there is some split, the sides don’t correlate strongly as we expected.
What does the research reveal about bimodal IT?
One of the things we talked to customers about was how they procure IT. Some customers may have an idea that they want to use cloud or move some applications to the cloud, but the way that they buy doesn’t necessarily align with that goal. They’re used to long procurement cycles, things done with purchase orders, fixed budgets, and fixed procurements. That goes against what people want when they talk about the cloud. They want a dynamic environment where they pay for just what they use. At the end of the day, it’s usage driven by users that define what gets purchased and what doesn’t.
We constantly remind customers that it’s great to want cloud and to want to put systems on the cloud. But you need to make sure both the internal human and systems side of how they procure are ready for dynamic procurement. If you have the same team buying office furniture and cloud computing, you can expect some trouble.
Lastly, how is NTT enabling the digital transformation for your customers?
It depends on the specific customer. We have customers to whom we provide technical services. In those cases, we are not directly involved in the most interesting part of their digital transformation. On the other hand, we do have customers who usually come to us after they’ve been working with us for a while maybe as a networking customer, a colocation customer, or through hosting services. Once we understand their business model, not just for technical services, but what they are trying to achieve, what is their end-goal, we have a lot more to offer with their digital transformation.
We’ll take a look at their technical portfolio and help find a better way to manage that. Sometimes it’s promoting one of our technology services or bringing in a partner from a rich ecosystem. We help with general or specialized application management. On the consulting side, we’ll sit with customers and figure out what it is that they try to achieve. We’ll help them understand the different pieces that go with that. It’s not just the technology piece. We’ll be involved with running workshops with the company. Is the company shaped the right way to take advantage of the digital transformation?
We often see they might be very keen to change the technical side of things, but not aware of the human part that goes with it. If you have a department of people developing applications for a system for which you’re thinking of replacing with a SaaS offering that does a similar or the same thing. You may have solved the technology problem, but you could create a human resources issue. We’ll highlight the technical challenges and also remind them of other consequences. That goes for moving to the cloud too. When it comes to also business continuity or disaster recovery, they’ll jump in and talk about the technology piece. Technology is necessary, but there’s a huge human element. They might get lured to the technology piece but forget the human side.
NTT Communications provides a broad spectrum of technology services mostly enabling customers in their journey to the cloud. We offer everything from simple to complex network services, datacenter based wholesale services, retail colocation services all the way up through hosting solutions in private clouds or hosted in our own cloud to public cloud managed hosting services. What we found in this research is that most companies use a blended approach. Almost all of the customers we see prefer not just one solution. Almost all of them use a hybrid approach.
Hopefully, someday we’ll be able to consume IT like water or electricity. Until then applications have to take a stepwise approach. It takes a large complex organization 5-20 years to go to the cloud. Applications get re-engineered along the way. Companies need a provider to hook everything together. Not like discrete services that don’t talk to each other. That’s the value NTT provides. We’re trying to take all these different environments and make them behave as much as a possible like a single machine. We provide a single interface to support and manage them.
Thank you, Len, for sharing your insights. For a detailed report on the findings, see the NTT Cloud Reality Check white paper.