|By Paul Andersen||
|December 3, 2012 08:15 AM EST||
One of the major issues facing cloud service providers is the expense of building out infrastructure without knowing how or when revenues will follow. As a result, cloud providers are reevaluating their approach to hardware and software investments and engaging with technology and networking vendors to develop creative pricing models that are aligned with cloud business principles and engineered to reduce risks.
In a perfect world, cloud service providers would pay for infrastructure only after a customer has made a purchase - in order to maintain a tight correlation between revenues and expenses. In the real world, however, implementing this type of model is easier said than done. This was especially true during the ‘iron' age, when hardware and software were highly coupled and there were very few alternatives to big vendors that focused on selling high-dollar, high-performance networking gear.
Today, however, new approaches are emerging with the goal of minimizing upfront investments in both hardware and software. One of the most compelling new approaches takes advantage of performance improvements in server virtualization. Leveraging virtualization has several benefits, one of which is the ability to maximize the use of compute resources. Although specialized hardware can provide some performance advantages, the downside is that unused compute resources cannot be utilized or shared by other functions. For many service providers operating on thin margins, idle resources that cannot be monetized can mean the difference between profit and loss.
In contrast, virtualized server resources can be spun up and spun down to perform a wide range of functions and enable a wide selection of services. While hardware will always remain a large expense, standardizing on server virtualization generates savings in the form of volume discounts and also provides the flexibility to ensure maximum ROI is being extracted from the infrastructure. In other words, a virtual machine that ran load balancing yesterday for one customer could just as easily run application services today for a different customer.
The other major benefit of server virtualization is the ability to decouple expensive software and networking functionality from the underlying hardware. While hardware needs to be purchased up front to provide the foundation for services, software does not. Software can be purchased on demand. In fact, software can enable service providers to be real-time technology resellers - seamlessly making products from a range of technology vendors available to their customers. Or software may be purchased on demand in direct proportion to the provider's need to scale or support services purchased by their customers.
A notable example of this trend is software-based networking products - as exemplified by virtual load balancing, secure access and WAN optimization. Instead of focusing only on high-performance dedicated hardware, networking vendors now give cloud service providers the ability to run essential functions in virtualized environments on commodity servers. By giving service providers the ability to move application networking functions onto a common virtualized server infrastructure - and focusing on integration with orchestration and cloud management systems - networking vendors are giving service providers the ability to significantly lower the cost of service creation.
Although significant, this shift is only the beginning. Service providers are demanding even greater creativity from technology and networking vendors. Although virtualized solutions lower capex and opex and provide the ability to respond quickly to customer needs, they still require service providers to invest up front in costly perpetual licensing. Even with the advent of lower-cost and time-bound subscription models, service providers are still required to purchase licenses up front on the expectation of turning a profit as they resell services.
In response, some technology and networking vendors are breaking new ground and turning traditional pricing models on their heads. As an example, a vendor may charge service providers a nominal amount to run software load balancing in a virtualized environment and forgo traditional licensing schemes. In this new model, service providers pay nothing in the way of user licenses until such time as they ramp customers.
Whether the load balancing is used "under-the-cloud" to support and scale software services, or made available "over-the-cloud" as infrastructure services, these new models offer service providers "map-of-the-earth" pricing. In other words, the service provider pays the networking vendor in direct proportion to demand.
Customers simply purchase services on-demand and get charged by the service provider according to metrics such as time or bandwidth. As customers pay, the cloud service provider and application delivery networking vendor generate revenue simultaneously based upon a predetermined arrangement. Depending on the type of networking service being resold and depending on the nature of the service provider's business model, billing could be driven by throughput, users, connections or transactions per second or any variation that provides the most compelling offering to customers and the greatest margin to the service provider.
On the flip side, for these new business models to gain traction, billing and provisioning for customers, providers and vendors must be automated and integrated with service provider cloud management systems. For technology and networking vendors, that means putting as much effort into orchestration as they put into core capabilities - an effort that is well underway.
By standardizing on a common hardware architecture, leveraging virtualized to maximize ROI, decoupling hardware from software and evolving to new on-demand software business models, cloud providers gain a massive improvement in their ability to be profitable. With less risk and less outlay, service providers are better able to manage and grow their business and a rising tide lifts both service providers and technology and networking vendors. As business increases for the cloud provider, technology and networking vendors can also build automated volume discounts into the business model, which may be triggered to encourage growth and further control costs.
As cloud computing and cloud services continue to accelerate, cloud providers - whether offering software, platform or infrastructure services - are well advised to seek out technology and networking vendors with a broad suite of virtualized offerings and a willingness to work with providers on pricing strategies and business models that enhance profitability for both parties.
Internet of @ThingsExpo has announced today that Chris Matthieu has been named tech chair of Internet of @ThingsExpo 2017 New York The 7th Internet of @ThingsExpo will take place on June 6-8, 2017, at the Javits Center in New York City, New York. Chris Matthieu is the co-founder and CTO of Octoblu, a revolutionary real-time IoT platform recently acquired by Citrix. Octoblu connects things, systems, people and clouds to a global mesh network allowing users to automate and control design flo...
Dec. 7, 2016 02:00 AM EST Reads: 572
In addition to all the benefits, IoT is also bringing new kind of customer experience challenges - cars that unlock themselves, thermostats turning houses into saunas and baby video monitors broadcasting over the internet. This list can only increase because while IoT services should be intuitive and simple to use, the delivery ecosystem is a myriad of potential problems as IoT explodes complexity. So finding a performance issue is like finding the proverbial needle in the haystack.
Dec. 7, 2016 01:45 AM EST Reads: 6,155
Data is the fuel that drives the machine learning algorithmic engines and ultimately provides the business value. In his session at 20th Cloud Expo, Ed Featherston, director/senior enterprise architect at Collaborative Consulting, will discuss the key considerations around quality, volume, timeliness, and pedigree that must be dealt with in order to properly fuel that engine.
Dec. 7, 2016 01:00 AM EST Reads: 1,611
According to Forrester Research, every business will become either a digital predator or digital prey by 2020. To avoid demise, organizations must rapidly create new sources of value in their end-to-end customer experiences. True digital predators also must break down information and process silos and extend digital transformation initiatives to empower employees with the digital resources needed to win, serve, and retain customers.
Dec. 7, 2016 12:45 AM EST Reads: 1,233
The WebRTC Summit New York, to be held June 6-8, 2017, at the Javits Center in New York City, NY, announces that its Call for Papers is now open. Topics include all aspects of improving IT delivery by eliminating waste through automated business models leveraging cloud technologies. WebRTC Summit is co-located with 20th International Cloud Expo and @ThingsExpo. WebRTC is the future of browser-to-browser communications, and continues to make inroads into the traditional, difficult, plug-in web co...
Dec. 7, 2016 12:15 AM EST Reads: 1,366
In his general session at 19th Cloud Expo, Manish Dixit, VP of Product and Engineering at Dice, discussed how Dice leverages data insights and tools to help both tech professionals and recruiters better understand how skills relate to each other and which skills are in high demand using interactive visualizations and salary indicator tools to maximize earning potential. Manish Dixit is VP of Product and Engineering at Dice. As the leader of the Product, Engineering and Data Sciences team at D...
Dec. 7, 2016 12:15 AM EST Reads: 1,014
The Internet of Things (IoT) promises to simplify and streamline our lives by automating routine tasks that distract us from our goals. This promise is based on the ubiquitous deployment of smart, connected devices that link everything from industrial control systems to automobiles to refrigerators. Unfortunately, comparatively few of the devices currently deployed have been developed with an eye toward security, and as the DDoS attacks of late October 2016 have demonstrated, this oversight can ...
Dec. 7, 2016 12:00 AM EST Reads: 1,255
What happens when the different parts of a vehicle become smarter than the vehicle itself? As we move toward the era of smart everything, hundreds of entities in a vehicle that communicate with each other, the vehicle and external systems create a need for identity orchestration so that all entities work as a conglomerate. Much like an orchestra without a conductor, without the ability to secure, control, and connect the link between a vehicle’s head unit, devices, and systems and to manage the ...
Dec. 6, 2016 11:45 PM EST Reads: 727
"Once customers get a year into their IoT deployments, they start to realize that they may have been shortsighted in the ways they built out their deployment and the key thing I see a lot of people looking at is - how can I take equipment data, pull it back in an IoT solution and show it in a dashboard," stated Dave McCarthy, Director of Products at Bsquare Corporation, in this SYS-CON.tv interview at @ThingsExpo, held November 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA.
Dec. 6, 2016 10:15 PM EST Reads: 1,139
Unsecured IoT devices were used to launch crippling DDOS attacks in October 2016, targeting services such as Twitter, Spotify, and GitHub. Subsequent testimony to Congress about potential attacks on office buildings, schools, and hospitals raised the possibility for the IoT to harm and even kill people. What should be done? Does the government need to intervene? This panel at @ThingExpo New York brings together leading IoT and security experts to discuss this very serious topic.
Dec. 6, 2016 09:15 PM EST Reads: 330
We are always online. We access our data, our finances, work, and various services on the Internet. But we live in a congested world of information in which the roads were built two decades ago. The quest for better, faster Internet routing has been around for a decade, but nobody solved this problem. We’ve seen band-aid approaches like CDNs that attack a niche's slice of static content part of the Internet, but that’s it. It does not address the dynamic services-based Internet of today. It does...
Dec. 6, 2016 08:45 PM EST Reads: 1,078
Data is the fuel that drives the machine learning algorithmic engines and ultimately provides the business value. In his session at Cloud Expo, Ed Featherston, a director and senior enterprise architect at Collaborative Consulting, discussed the key considerations around quality, volume, timeliness, and pedigree that must be dealt with in order to properly fuel that engine.
Dec. 6, 2016 06:45 PM EST Reads: 2,151
As data explodes in quantity, importance and from new sources, the need for managing and protecting data residing across physical, virtual, and cloud environments grow with it. Managing data includes protecting it, indexing and classifying it for true, long-term management, compliance and E-Discovery. Commvault can ensure this with a single pane of glass solution – whether in a private cloud, a Service Provider delivered public cloud or a hybrid cloud environment – across the heterogeneous enter...
Dec. 6, 2016 05:30 PM EST Reads: 1,705
An IoT product’s log files speak volumes about what’s happening with your products in the field, pinpointing current and potential issues, and enabling you to predict failures and save millions of dollars in inventory. But until recently, no one knew how to listen. In his session at @ThingsExpo, Dan Gettens, Chief Research Officer at OnProcess, discussed recent research by Massachusetts Institute of Technology and OnProcess Technology, where MIT created a new, breakthrough analytics model for ...
Dec. 6, 2016 05:15 PM EST Reads: 396
More and more brands have jumped on the IoT bandwagon. We have an excess of wearables – activity trackers, smartwatches, smart glasses and sneakers, and more that track seemingly endless datapoints. However, most consumers have no idea what “IoT” means. Creating more wearables that track data shouldn't be the aim of brands; delivering meaningful, tangible relevance to their users should be. We're in a period in which the IoT pendulum is still swinging. Initially, it swung toward "smart for smar...
Dec. 6, 2016 04:45 PM EST Reads: 797
Everyone knows that truly innovative companies learn as they go along, pushing boundaries in response to market changes and demands. What's more of a mystery is how to balance innovation on a fresh platform built from scratch with the legacy tech stack, product suite and customers that continue to serve as the business' foundation. In his General Session at 19th Cloud Expo, Michael Chambliss, Head of Engineering at ReadyTalk, discussed why and how ReadyTalk diverted from healthy revenue and mor...
Dec. 6, 2016 03:15 PM EST Reads: 1,645
SYS-CON Events has announced today that Roger Strukhoff has been named conference chair of Cloud Expo and @ThingsExpo 2017 New York. The 20th Cloud Expo and 7th @ThingsExpo will take place on June 6-8, 2017, at the Javits Center in New York City, NY. "The Internet of Things brings trillions of dollars of opportunity to developers and enterprise IT, no matter how you measure it," stated Roger Strukhoff. "More importantly, it leverages the power of devices and the Internet to enable us all to im...
Dec. 6, 2016 03:15 PM EST Reads: 630
Information technology is an industry that has always experienced change, and the dramatic change sweeping across the industry today could not be truthfully described as the first time we've seen such widespread change impacting customer investments. However, the rate of the change, and the potential outcomes from today's digital transformation has the distinct potential to separate the industry into two camps: Organizations that see the change coming, embrace it, and successful leverage it; and...
Dec. 6, 2016 02:30 PM EST Reads: 3,349
The 20th International Cloud Expo has announced that its Call for Papers is open. Cloud Expo, to be held June 6-8, 2017, at the Javits Center in New York City, brings together Cloud Computing, Big Data, Internet of Things, DevOps, Containers, Microservices and WebRTC to one location. With cloud computing driving a higher percentage of enterprise IT budgets every year, it becomes increasingly important to plant your flag in this fast-expanding business opportunity. Submit your speaking proposal ...
Dec. 6, 2016 02:30 PM EST Reads: 2,216
20th Cloud Expo, taking place June 6-8, 2017, at the Javits Center in New York City, NY, will feature technical sessions from a rock star conference faculty and the leading industry players in the world. Cloud computing is now being embraced by a majority of enterprises of all sizes. Yesterday's debate about public vs. private has transformed into the reality of hybrid cloud: a recent survey shows that 74% of enterprises have a hybrid cloud strategy.
Dec. 6, 2016 02:15 PM EST Reads: 2,257