Update on the Cloud

Giza was one of the sponsors of this year’s IGT Cloud Investment Summit for Virtualization and Cloud/SaaS Based Technologies which was held today in Tel Aviv. The conference brought together startups, investors, and large corporations to get their take on the state of the Cloud.

As has been the case in the last couple of years, Cloud Computing is probably the biggest buzzword in the software/IT world. Increasingly, companies are harnessing the power of distributed computers to reduce both IT and development costs.

With the rise of Amazon’s Web Services and Google’s App Engine, small and medium-sized companies can also harness the power of the Cloud for everything from storage to high-performance computing tasks. In short, it feels the Cloud is definitely upon us, a feeling that was reinforced by today’s event.

Some of my takeaways:

1. Infrastructure vs. Platform vs. Service – We continue to see the evolution of the “as a service” notion. It is increasingly important to think in general terms of Software as a Service, Platform as a Service, and Infrastructure as a Service. In other words, to distinguish the offerings provided by Salesforce.com (software) on the one hand, from Amazon Web Services (Infrastructure and Platform) on the other, as well as offerings provided by a company like GigaSpaces that enables the smooth interface between the two.
   
   In this continuum, startups should constantly be looking for ways to fill in the gaps between the three general aspects of the cloud. Specifically, the participants today talked about issues such as integration, security, and reliability which are currently limiting factors on the growth of the industry.
    
2. The Cloud is Changing the Landscape – Two presentations in the morning session drove the point that the advent of the Cloud has opened up new business areas for companies that historically have not been involved in IT.
   
   Nava Levy from Amdocs argued that Communication Service Providers (mainly telcos) are increasingly looking at providing Cloud IT service as a new revenue stream. She made the point that CSPs can leverage a number of advantages, such as their strong relationship with their customers and heavy financial muscle, in order to branch out into cloud-based services. This will emerge as a growing factor in their constant struggle to avoid becoming dumb pipes.
   
   Similarly, we heard Simone Brunozzi, Amazon’s Technology Evangelist for Europe, who gave a rundown of the various offerings that make up Amazon Web Services. This has expanded from the popular S3 and EC2 storage and virtual servers, to a whole host of other services. These include the content delivery network CloudFront and ElasticMapReduce, which allows the relatively easy deployment of servers under the Hadoop framework for high performance tasks such as those demanded by scientific or financial users.
   
   The point is that we see companies in completely different fields – telecommunications services and online retail – both competing in a new realm. Who will succeed? Will the telcos be able to utilize their strong market position to gain traction or will their dinosaur-like size give the advantage to fleeter competitors like Amazon or maybe Oracle?
    
3. Barriers to Entry – The meatiest part of the morning came from a panel discussion involving the “customers” of Cloud Computing, e.g. company CIOs. In theory, Cloud Computing, especially the Software as a Service aspect of it, should be the CIO’s best friend, as it allows the company to deploy IT services without a lot of the attendant costs in hardware and deployment.
   
   And while there does seem to be a general willingness to adopt some aspects of the cloud, there is still some hesitation as well.
   
   The biggest issues continue to be security and reliability. Some information (think health or banking records) will certainly not be migrating to the Cloud anytime soon, both due to government regulation and basic security concerns.
   
   Gadi Gilon, Partner’s CIO, mentioned that at the moment Cloud Computing is seen as a good solution for offloading a lot of the company’s non-mission critical applications. The core apps, however, will remain in-house for the foreseeable future. On the other hand, we may be seeing a rise in hybrid systems that communicate between both the external Cloud and internal company Cloud.
   
   Gilon made a point that startups need to remember: When selling to large companies they will be competing in many ways with expensive legacy systems. The point being that startups should always think how to best adapt themselves to integrate with old existing systems.
    
4. “Starvation for Innovation” – Probably the biggest takeaway from the conference, at least from the perspective of an investor was this: There is a move towards Cloud-based services at the same time that the Cloud is enabling very large companies to engage in new lines of business. At the same time, these companies have been cutting back on their internal R&D efforts.
   
   The result is a good environment for acquisitions, as the large companies will seek to buy the abilities that they lack. Startups that find the right way to navigate the new landscape may very well find themselves in a strong position in the next few years.

Comments

[Michael Maham]

Hey Shai-

Very interesting stuff. I'm curious though about how long the security concerns will be a barrier. Banks already allow individuals to access accounts...and suffer breaches. I think as some first-mover goes to the cloud and becomes much more nimble (or leaner or one of the other benefits) then others will get over it or fall behind.

[Videoovervågning]

thanks for sharing about it.