Wikibon Blog

It’s Amazon’s world…we just live in it.

Amazon’s aggressive push into the traditional enterprise space will place pressure on CIOs and enterprise IT suppliers alike. To release this pressure, CIOs must treat AWS as another tool in their bag, embrace the public cloud generally and help their organizations understand the right strategic fit for public cloud services; balancing convenience with compliance. Meanwhile, technology suppliers must differentiate by focusing on best-of-breed services, industry-specific capabilities and delivering business value deep within regions around the globe.

The Marketplace section of today’s WSJ had an article entitled Tech Titans Clash in ‘Cloud.’ The basic premise was that while Amazon, Google and Microsoft have been battling it out in mobile and search, the next wave of competition is the enterprise space. The analysis had some statements that underscore the next phase of CIO budget pressures is here; now.

In particular, the accompanying video had commentary from Spencer Ante, a “respected journalist” who had some statements that will give CIOs headaches. For example, he said things like the following:

In it’s heyday, IBM controlled 50% of the IT industry’s revenue and a whopping 2/3rds of its profit. I remember in the 1980’s, when IBM would release its annual report and 10Ks we used to pour through the documents looking for clues as to how its lines of business were performing. Because I was a storage analyst at the time, I was seeking any guidance on that segment of the company’s business so that my forecasts could be somewhat consistent with the industry’s leader. In short – IBM was what mattered most in the storage business.

A Massachusetts company called Prelert released a new application yesterday that combines machine learning and predictive analytics to detect and report anomalous behavior emanating from  IT infrastructure. If that sounds a lot like what Splunk does, you’re right.

In fact,  Anomaly Detective is a downloadable app that runs on top of Splunk Enterprise. The release ties into Splunk’s push to position Splunk Enterprise as a Big Data application development platform as much as a suite of Big Data applications itself. Splunk released a software development kit for JavaScript to GA in October, followed by two new SDKs, one for Java and another for Python, in December.

Investors have been in love with Amazon this past year, and why not? The company’s market cap has soared to over $120B since it bottomed in 2009 at just over $20B, delivering very attractive returns.

Last weekend, the Wall Street Journal published a report citing sources that claim Amazon’s AWS business exceeded $2B in 2012 and will generate $3.8B in 2013, an 81% growth rate. The numbers are getting crazy. Some of these same and other sources have the AWS market (unclear what this means) hitting $38B by 2015 and AWS revenue reaching $20B by the end of the decade. The Journal article cited comments from Amazon CEO Jeff Bezos claiming that AWS can be at least as large as the company’s retail business. By comparison, Amazon’s retail operation is expected to grow 25% this year to $73.6B.

As data is continuously collected and created, companies have difficulty just storing it, missing any opportunity to leverage the information. The wave of big data has the potential to flip the burden of data management into the opportunity of new value creation. Yesterday’s solutions don’t accomplish this today and will be even less effective tomorrow.

While the volume of data has grown exponentially over the last few decades, the fundamental and underlying technology on which we store data hasn’t. Sure, we’ve had improvements in densities (to store more data) and connectivity (to provide better access to data), but the pace of data growth has overwhelmed the benefits of these technological advancements.

We all know there’s lots of excitement and buzz surrounding Hadoop, but talk to some CIOs in “non-web” industries about moving mission critical apps to the open source Big Data framework and you’re bound to hear a little fear in their voices.

They’re worried that Hadoop is not ready for primetime because it has a single point of failure. That is, if the NameNode in a cluster goes down, the entire cluster goes down. Spinning clusters back up into working order following a NameNode failure takes time and, by definition, mission critical applications can’t go down … ever. Until the SPOF is solved, more than a handful of Fortune 500 companies will continue paying Oracle through the nose rather than risk a disruption to critical apps.

Software Defined Networking (SDN) dominates networking industry conversation today. The $1B+ acquisition of Nicira by VMware got everyone’s attention. Big Switch also received good buzz at the launch of its open ecosystem. While it is Wikibon’s advice that enterprise CIOs shouldn’t wait for the market to mature more before trying to jump into an SDN solution, one of the underpinnings of future solutions is available today. OpenFlow (which is only a piece of the SDN story) requires a controller and OpenFlow enabled switches. According to the SDN Central website, the following vendors are currently shipping OpenFlow-enabled switches: