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Hyper-Converged

How VMware, HPE, and Telefonica together bring managed cloud services to a global audience

The next BriefingsDirect Voice of the Customer optimized cloud design interview explores how a triumvirate of VMware, Hewlett Packard Enterprise (HPE), and Telefonica together bring managed cloud services to global audiences. 

Listen to the podcast. Find it on iTunes. Get the mobile app. Read a full transcript or download a copy. 

Learn how Telefonica’s vision for delivering flexible cloud services capabilities to Latin American and European markets has proven so successful. Here to explain how they developed the right recipe for rapid delivery of agile Infrastructure-as-a-Services (IaaS) deployments is Joe Baguley, Vice President and CTO of VMware EMEA, and Antonio Oriol Barat, Head of Cloud IT Infrastructure Services at Telefonica. The interview is moderated by Dana Gardner, principal analyst at Interarbor Solutions.

Here are some excerpts:

Gardner: What challenges are mobile and telecom operators now facing as they transition to becoming managed service providers?

Oriol Barat: The main challenge we face at this moment is to help customers navigate in a multi-cloud environment. We now have local platforms, some legacy, some virtualized platforms, hyperscale public cloud providers, and data communications networks. We want to help our customers manage these in a secure way.

Gardner: How have your cloud services evolved? How have partnerships allowed you to enter new markets to quickly provide services?

Oriol Barat

Oriol Barat

Oriol Barat: We have had to transition from being a hosting provider with data centers in many countries. Our movement to cloud was a natural evolution of those hosting services. As a telecommunications company (telco), our main business is shared networks, and the network is a shared asset between many customers. So when we thought about the hosting business, we similarly wanted to be able to have shared assets. VMware, with its virtualization technology, came as a natural partner to help us evolve our hosting services.

Gardner: Joe, it’s as if you designed the VMware stack with customers such as Telefonica in mind.

Baguley: You could say that, yes. The vision has always been for us at VMware to develop what was originally called the software-defined data center (SDDC). Now, with multi-cloud, for me, it’s an operating system (OS) for clouds.

Baguley

Baguley

We’re bringing together storage, networking and compute into one OS that can run both on-premises and off-premises. You could be running on-premises the same OS as someone like Telefonica is running for their public cloud -- meaning that you have a common operating environment, a common infrastructure.

So, yes, entirely, it was built as part of this vision that everyone runs this OS to build his or her clouds.

Gardner: To have a core, common infrastructure -- yet have the ability to adapt on top of that for localized markets -- is the best of all worlds.

Baguley: That’s entirely it. Like someone said, “If all of the clouds are running the same OS, what’s the differentiation?” Well, the differentiation is, you want to go with the biggest player in Latin America. You want to go with the player that has the best direct connections: The guys that can give you service levels maybe that the cloud providers can’t give. They can give you over-the-top services that other cloud providers don’t provide. They can give you an integrated solution for your business that includes the cloud -- and other enterprise services.

It’s about providing the tools for cloud providers to build differentiated powerful clouds for their customers.

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Gardner: Antonio, please, for those of our listeners and readers that aren’t that familiar with Telefonica, tell us about the breadth and depth of your company.

Oriol Barat: Telefonica is one of the top 10 global telco providers in the world. We are in 21 countries. We have fixed and mobile data services, and now we are in the process of digital transformation, where we have our focus in four areas: cloud, security, Internet of Things (IoT), and big data.

We used to think that our core business was in communications. Now we see what we call a new core of our business at the intersection of data communications, cloud, and security. We think this is really the foundation, the platform, of all the services that come on top.

Gardner: And, of course, we would all like to start with brand-new infrastructure when we enter markets. But as you know, we have to deal with what is already in place, too. When it came time for you to come up with the right combination of vendors, the right combination of technologies, to produce your new managed services capabilities, why did you choose HPE and VMware to create this full solution?

Sharing requires trust

Oriol Barat: VMware was our natural choice with its virtualization technologies to start providing shared IT platforms -- even before cloud, as a word, was invented. We launched “virtual hosting” in 2007. That was 10 years ago, and since then we have been evolving from this virtual hosting that had no portal but was a shared platform for customers, to the cloud services that we have today.

The hardware part is important; we have to have reliable and powerful technology. For us, it’s very important to provide trust to the customers. Trust, because what they are running in their data centers is similar to what we have in our data centers. Having VMware and HPE as partners provides this trust to the customers so that they will move the applications, and they know it will work fine.

Gardner: HPE is very fond of its Synergy platform, with composable infrastructure. How did that help you and VMware pull together the full solution for Telefonica, Joe?

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Baguley: We have been on this journey together, as Antonio mentioned, since 2007 -- since before cloud was a thing. We don’t have a test environment that’s as big as Telefonica’s production environment -- and neither does HPE. What we have been doing is working together -- and like any of these journeys, there have been missteps along the way. We stumbled occasionally, but it’s been good to work together as a partnership.

As we have grown, we have also both understood how the requirements of the market are changing and evolving. Ten years ago providing a combined cloud platform on a composable infrastructure was unheard of -- and people wouldn’t believe you could do it. But that’s what we have evolved together, with the work that we have done with companies such as Telefonica.

The need for something like HPE Synergy and the Gen10 stack -- where there are these very configurable stacks that you can put together -- has literally grown out of the work that we have done together, along with what we have done in our management stack, with the networking, compute, and storage.

Gardner: The combination of composable infrastructure and SDDC makes for a pretty strong tag team.

Baguley: Yes, definitely. It gives you that flexibility and the agility that a cloud provider needs to then meet the agility requirements of their customers, definitely.

Gardner: When it comes to bringing more end users into the clouds for your managed services providers, one of the important things is for end users to move into that cloud with as much ease as possible. Because VMware is a de facto standard in many markets with its vSphere Hypervisor, how does that help you, being a VMware stack, create that ease of joining these clouds?

Seamless migrations

Oriol Barat: Having the same technology in the customer data center and in our cloud makes things a lot easier. In the first place, in terms of confidence, the customer can be confident that it’s going to work well when it is in place. The other thing is that VMware is providing us with the tools that make these migrations easier.

Baguley: At VMworld 2017, we announced VMware Hybrid Cloud Extension (HCX), which is our hybrid cloud connector. It allows customers to locally install software that connects at a Layer 2 [network] level, as well as right back to vSphere 5.0 in clouds. Those clouds now are IBM and VMware cloud native, but we are extending it to other service providers like Telefonica in 2018.

The important thing here is by going down this road, people can take some of the fear out of going to the cloud.

So a customer can truly feel that their connecting and migrations will be seamless. Things like vSphere vMotion across that gap are going to be possible, too. I think the important thing here is by going down this road, people can take some of the fear out of going to the cloud, because some of the fear is about getting locked in: “I am going to make decisions that I will regret in two years by converting my virtual machines (VMs) to run on another platform.” Right here, there isn’t that fear, there is just more choice, and Telefonica is very much part of that story of choice.

Gardner: It sounds like you have made things attractive for managed service providers in many markets. For example, they gain ease of migration from enterprises into the provider’s cloud. In the case of Telefonica, users gain support, services and integration, knowing that the venerable vendors like VMware and HPE are behind the underlying services.

Do you have any examples where you have been able to bring this total solution to a typical managed service provider account? How has it worked out for them?

Everyone’s doing it

Oriol Barat: We have use cases in all the vertical industries. Because cloud is a horizontal technology, it’s the foundation of everything. I would say that all companies of all verticals are in this process of transformation.

We have a lot of customers in retail that are moving their platforms to cloud. We have had, for example, US companies coming to Europe and deploying their SAP systems on top of our platforms.

For example in Spain, we have a very strong tourism industry with a lot of hotel chains that are also using our cloud services for their reservation systems and for more of their IT.

We have use cases in healthcare, of companies moving their medical systems to our clouds.

We have use cases of software vendors that are growing software-as-a-service (SaaS) businesses and they need a flexible platform that can grow as their businesses grow.

A lot of people are using these platforms as disaster recovery (DR) for the platforms that they have on-premises.

I would say that all verticals are into this transformation.

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Gardner: It’s interesting, you mentioned being able to gain global reach from a specific home economy by putting data centers in place with a managed service provider model.

It’s also important for data sovereignty and compliance and General Data Protection Regulation (GDPR) and other issues for that to happen. It sounds like a very good market opportunity.

And that brings us to the last part of our discussion. What happens next? When we have proven technology in place, and we have cloud adoption, where would you like to be in 12 months?

Gaining the edge

Baguley: There has been a lot of talk at recent events, like HPE Discover, about intelligent edge developments. We are doing a lot at the edge, too. When you look at telcos, the edge is going to become something quite interesting.

What we are talking about is taking that same blend of storage, networking and compute, and running it on as small a device as possible. So think micro data centers, nano data centers. How far out can we push this cloud? How much can we distribute this cloud? How close to the point of need can we get our customers to execute their workloads, to do their artificial intelligence (AI), to do their data gathering, et cetera?

And working in partnership with someone who has a fantastic cloud and a fantastic network just means that a customer who is looking to build some kind of distributed edge-to-cloud core capability is something that Telefonica and VMware could probably do over the next 12 months. That could be really, really strong.

Gardner: Antonio?

Oriol Barat: In this transformation that all the enterprises are in, maybe we are in the 20 percent of execution range. So we still have 80 percent of the transformation ahead of us. The potential is huge.

Looking ahead with our services, for example, it’s very important that the network is also in transformation, leveraging the software-defined networking (SDN) technologies. These networks are going to be more flexible. We think that we are in a good position to put together cloud services with such network services -- with security, also with more software-defined capabilities, and create really flexible solutions for our customers.

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Baguley: One example that I would like to add is if you can imagine that maybe Real Madrid C.F. are playing at home next weekend ... It’s theoretical that Telefonica could have the bottom of those network base stations -- because of VMware Network Functions Virtualization (NFV), it’s no longer specific base station hardware, it’s x86 HPE servers in there. They can maybe turn around to a betting company and say, “Would you like to move your front-end web servers with running containers to run in the base station, in Real Madrid’s stadium, for the four hours in the afternoon of that match?” And suddenly they are the best performing website.

That’s the kind of out-there transformative ideas that are now possible due to new application infrastructures, new cloud infrastructures, edge, and technologies like the network all coming together. So those are the kind of things you are going to see from this kind of solutions approach going forward.

Listen to the podcast. Find it on iTunes. Get the mobile app. Read a full transcript or download a copy. Sponsor: Hewlett Packard Enterprise.

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How modern storage provides hints on optimizing and best managing hybrid IT and multi-cloud resources

The next BriefingsDirect Voice of the Analyst interview examines the growing need for proper rationalizing of which apps, workloads, services and data should go where across a hybrid IT continuum.

Managing hybrid IT necessitates not only a choice between public cloud and private cloud, but a more granular approach to picking and choosing which assets go where based on performance, costs, compliance, and business agility.

Listen to the podcast. Find it on iTunes. Get the mobile app. Read a full transcript or download a copy.

Here to report on how to begin to better assess what IT variables should be managed and thoughtfully applied to any cloud model is Mark Peters, Practice Director and Senior Analyst at Enterprise Strategy Group (ESG). The discussion is moderated by Dana Gardner, principal analyst at Interarbor Solutions.

Here are some excerpts:

Gardner: Now that cloud adoption is gaining steam, it may be time to step back and assess what works and what doesn’t. In past IT adoption patterns, we’ve seen a rapid embrace that sometimes ends with at least a temporary hangover. Sometimes, it’s complexity or runaway or unmanaged costs, or even usage patterns that can’t be controlled. Mark, is it too soon to begin assessing best practices in identifying ways to hedge against any ill effects from runaway adoption of cloud? 

Peters: The short answer, Dana, is no. It’s not that the IT world is that different. It’s just that we have more and different tools. And that is really what hybrid comes down to -- available tools.

Peters

Peters

It’s not that those tools themselves demand a new way of doing things. They offer the opportunity to continue to think about what you want. But if I have one repeated statement as we go through this, it will be that it’s not about focusing on the tools, it’s about focusing on what you’re trying to get done. You just happen to have more and different tools now.

Gardner: We hear sometimes that at as high as board of director levels, they are telling people to go cloud-first, or just dump IT all together. That strikes me as an overreaction. If we’re looking at tools and to what they do best, is cloud so good that we can actually just go cloud-first or cloud-only?

Cloudy cloud adoption

Peters: Assuming you’re speaking about management by objectives (MBO), doing cloud or cloud-only because that’s what someone with a C-level title saw on a Microsoft cloud ad on TV and decided that is right, well -- that clouds everything.

You do see increasingly different people outside of IT becoming involved in the decision. When I say outside of IT, I mean outside of the operational side of IT.

You get other functions involved in making demands. And because the cloud can be so easy to consume, you see people just running off and deploying some software-as-a-service (SaaS) or infrastructure-as-a-service (IaaS) model because it looked easy to do, and they didn’t want to wait for the internal IT to make the change.

All of the research we do shows that the world is hybrid for as far ahead as we can see.

Running away from internal IT and on-premises IT is not going to be a good idea for most organizations -- at least for a considerable chunk of their workloads. All of the research we do shows that the world is hybrid for as far ahead as we can see. 

Gardner: I certainly agree with that. If it’s all then about a mix of things, how do I determine the correct mix? And if it’s a correct mix between just a public cloud and private cloud, how do I then properly adjust to considerations about applications as opposed to data, as opposed to bringing in microservices and Application Programming Interfaces (APIs) when they’re the best fit?

How do we begin to rationalize all of this better? Because I think we’ve gotten to the point where we need to gain some maturity in terms of the consumption of hybrid IT.

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Peters: I often talk about what I call the assumption gap. And the assumption gap is just that moment where we move from one side where it’s okay to have lots of questions about something, in this case, in IT. And then on the other side of this gap or chasm, to use a well-worn phrase, is where it’s not okay to ask anything because you’ll see you don’t know what you’re talking about. And that assumption gap seems to happen imperceptibly and very fast at some moment.

So, what is hybrid IT? I think we fall into the trap of allowing ourselves to believe that having some on-premises workloads and applications and some off-premises workloads and applications is hybrid IT. I do not think it is. It’s using a couple of tools for different things.

It’s like having a Prius and a big diesel and/or gas F-150 pickup truck in your garage and saying, “I have two hybrid vehicles.” No, you have one of each, or some of each. Just because someone has put an application or a backup off into the cloud, “Oh, yeah. Well, I’m hybrid.” No, you’re not really.

The cloud approach

The cloud is an approach. It’s not a thing per se. It’s another way. As I said earlier, it’s another tool that you have in the IT arsenal. So how do you start figuring what goes where?

I don’t think there are simple answers, because it would be just as sensible a question to say, “Well, what should go on flash or what should go on disk, or what should go on tape, or what should go on paper?” My point being, such decisions are situational to individual companies, to the stage of that company’s life, and to the budgets they have. And they’re not only situational -- they’re also dynamic.

I want to give a couple of examples because I think they will stick with people. Number one is you take something like email, a pretty popular application; everyone runs email. In some organizations, that is the crucial application. They cannot run without it. Probably, what you and I do would fall into that category. But there are other businesses where it’s far less important than the factory running or the delivery vans getting out on time. So, they could have different applications that are way more important than email.

When instant messaging (IM) first came out, Yahoo IM text came out, to be precise. They used to do the maintenance between 9 am and 5 pm because it was just a tool to chat to your friends with at night. And now you have businesses that rely on that. So, clearly, the ability to instant message and text between us is now crucial. The stock exchange in Chicago runs on it. IM is a very important tool.

The answer is not that you or I have the ability to tell any given company, “Well, x application should go onsite and Y application should go offsite or into a cloud,” because it will vary between businesses and vary across time.

If something is or becomes mission-critical or high-risk, it is more likely that you’ll want the feeling of security, I’m picking my words very carefully, of having it … onsite.

You have to figure out what you're trying to get done before you figure out what you're going to do with it.

But the extent to which full-production apps are being moved to the cloud is growing every day. That’s what our research shows us. The quick answer is you have to figure out what you’re trying to get done before you figure out what you’re going to do it with. 

Gardner: Before we go into learning more about how organizations can better know themselves and therefore understand the right mix, let’s learn more about you, Mark. 

Tell us about yourself, your organization at ESG. How long have you been an IT industry analyst? 

Peters: I grew up in my working life in the UK and then in Europe, working on the vendor side of IT. I grew up in storage, and I haven’t really escaped it. These days I run ESG’s infrastructure practice. The integration and the interoperability between the various elements of infrastructure have become more important than the individual components. I stayed on the vendor side for many years working in the UK, then in Europe, and now in Colorado. I joined ESG 10 years ago.

Lessons learned from storage

Gardner: It’s interesting that you mentioned storage, and the example of whether it should be flash or spinning media, or tape. It seems to me that maybe we can learn from what we’ve seen happen in a hybrid environment within storage and extrapolate to how that pertains to a larger IT hybrid undertaking.

Is there something about the way we’ve had to adjust to different types of storage -- and do that intelligently with the goals of performance, cost, and the business objectives in mind? I’ll give you a chance to perhaps go along with my analogy or shoot it down. Can we learn from what’s happened in storage and apply that to a larger hybrid IT model?

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Peters: The quick answer to your question is, absolutely, we can. Again, the cloud is a different approach. It is a very beguiling and useful business model, but it’s not a panacea. I really don’t believe it ever will become a panacea.

Now, that doesn’t mean to say it won’t grow. It is growing. It’s huge. It’s significant. You look at the recent announcements from the big cloud providers. They are at tens of billions of dollars in run rates.

But to your point, it should be viewed as part of a hierarchy, or a tiering, of IT. I don’t want to suggest that cloud sits at the bottom of some hierarchy or tiering. That’s not my intent. But it is another choice of another tool.

Let’s be very, very clear about this. There isn’t “a” cloud out there. People talk about the cloud as if it exists as one thing. It does not. Part of the reason hybrid IT is so challenging is you’re not just choosing between on-prem and the cloud, you’re choosing between on-prem and many clouds -- and you might want to have a multi-cloud approach as well. We see that increasingly.

What we should be looking for are not bright, shiny objects -- but bright, shiny outcomes.

Those various clouds have various attributes; some are better than others in different things. It is exactly parallel to what you were talking about in terms of which server you use, what storage you use, what speed you use for your networking. It’s exactly parallel to the decisions you should make about which cloud and to what extent you deploy to which cloud. In other words, all the things you said at the beginning: cost, risk, requirements, and performance.

People get so distracted by bright, shiny objects. Like they are the answer to everything. What we should be looking for are not bright, shiny objects -- but bright, shiny outcomes. That’s all we should be looking for.

Focus on the outcome that you want, and then you figure out how to get it. You should not be sitting down IT managers and saying, “How do I get to 50 percent of my data in the cloud?” I don’t think that’s a sensible approach to business. 

Gardner: Lessons learned in how to best utilize a hybrid storage environment, rationalizing that, bringing in more intelligence, software-defined, making the network through hyper-convergence more of a consideration than an afterthought -- all these illustrate where we’re going on a larger scale, or at a higher abstraction.

Going back to the idea that each organization is particular -- their specific business goals, their specific legacy and history of IT use, their specific way of using applications and pursuing business processes and fulfilling their obligations. How do you know in your organization enough to then begin rationalizing the choices? How do you make business choices and IT choices in conjunction? Have we lost sufficient visibility, given that there are so many different tools for doing IT?

Get down to specifics

Peters: The answer is yes. If you can’t see it, you don’t know about it. So to some degree, we are assuming that we don’t know everything that’s going on. But I think anecdotally what you propose is absolutely true.

I’ve beaten home the point about starting with the outcomes, not the tools that you use to achieve those outcomes. But how do you know what you’ve even got -- because it’s become so easy to consume in different ways? A lot of people talk about shadow IT. You have this sprawl of a different way of doing things. And so, this leads to two requirements.

Number one is gaining visibility. It’s a challenge with shadow IT because you have to know what’s in the shadows. You can’t, by definition, see into that, so that’s a tough thing to do. Even once you find out what’s going on, the second step is how do you gain control? Control -- not for control’s sake -- only by knowing all the things you were trying to do and how you’re trying to do them across an organization. And only then can you hope to optimize them.

You can't manage what you can't measure. You also can't improve things that can't be managed or measured.

Again, it’s an old, old adage. You can’t manage what you can’t measure. You also can’t improve things that can’t be managed or measured. And so, number one, you have to find out what’s in the shadows, what it is you’re trying to do. And this is assuming that you know what you are aiming toward.

This is the next battleground for sophisticated IT use and for vendors. It’s not a battleground for the users. It’s a choice for users -- but a battleground for vendors. They must find a way to help their customers manage everything, to control everything, and then to optimize everything. Because just doing the first and finding out what you have -- and finding out that you’re in a mess -- doesn’t help you.

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Visibility is not the same as solving. The point is not just finding out what you have – but of actually being able to do something about it. The level of complexity, the range of applications that most people are running these days, the extremely high levels of expectations both in the speed and flexibility and performance, and so on, mean that you cannot, even with visibility, fix things by hand.

You and I grew up in the era where a lot of things were done on whiteboards and Excel spreadsheets. That doesn’t cut it anymore. We have to find a way to manage what is automated. Manual management just will not cut it -- even if you know everything that you’re doing wrong. 

Gardner: Yes, I agree 100 percent that the automation -- in order to deal with the scale of complexity, the requirements for speed, the fact that you’re going to be dealing with workloads and IT assets that are off of your premises -- means you’re going to be doing this programmatically. Therefore, you’re in a better position to use automation.

I’d like to go back again to storage. When I first took a briefing with Nimble Storage, which is now a part of Hewlett Packard Enterprise (HPE), I was really impressed with the degree to which they used intelligence to solve the economic and performance problems of hybrid storage.

Given the fact that we can apply more intelligence nowadays -- that the cost of gathering and harnessing data, the speed at which it can be analyzed, the degree to which that analysis can be shared -- it’s all very fortuitous that just as we need greater visibility and that we have bigger problems to solve across hybrid IT, we also have some very powerful analysis tools.

Mark, is what worked for hybrid storage intelligence able to work for a hybrid IT intelligence? To what degree should we expect more and more, dare I say, artificial intelligence (AI) and machine learning to be brought to bear on this hybrid IT management problem?

Intelligent automation a must

Peters: I think it is a very straightforward and good parallel. Storage has become increasingly sophisticated. I’ve been in and around the storage business now for more than three decades. The joke has always been, I remember when a megabyte was a lot, let alone a gigabyte, a terabyte, and an exabyte.

And I’d go for a whole day class, when I was on the sales side of the business, just to learn something like dual parsing or about cache. It was so exciting 30 years ago. And yet, these days, it’s a bit like cars. I mean, you and I used to use a choke, or we’d have to really go and check everything on the car before we went on 100-mile journey. Now, we press the button and it better work in any temperature and at any speed. Now, we just demand so much from cars.

To stretch that analogy, I’m mixing cars and storage -- and we’ll make it all come together with hybrid IT in that it’s better to do things in an automated fashion. There’s always one person in every crowd I talk to who still believes that a stick shift is more economic and faster than an automatic transmission. It might be true for one in 1,000 people, and they probably drive cars for a living. But for most people, 99 percent of the people, 99.9 percent of the time, an automatic transmission will both get you there faster and be more efficient in doing so. The same became true of storage.

We used to talk about how much storage someone could capacity-plan or manage. That’s just become old hat now because you don’t talk about it in those terms. Storage has moved to be -- how do we serve applications? How do we serve up the right place in the right time, get the data to the right person at the right time at the right price, and so on?

We don’t just choose what goes where or who gets what, we set the parameters -- and we then allow the machine to operate in an automated fashion. These days, increasingly, if you talk to 10 storage companies, 10 of them will talk to you about machine learning and AI because they know they’ve got to be in that in order to make that execution of change ever more efficient and ever faster. They’re just dealing with tremendous scale, and you could not do it even with simple automation that still involves humans.

It will be self-managing and self-optimizing. It will not be a “recommending tool,” it will be an “executing tool.”

We have used cars as a social analogy. We used storage as an IT analogy, and absolutely, that’s where hybrid IT is going. It will be self-managing and self-optimizing. Just to make it crystal clear, it will not be a “recommending tool,” it will be an “executing tool.” There is no time to wait for you and me to finish our coffee, think about it, and realize we have to do something, because then it’s too late. So, it’s not just about the knowledge and the visibility. It’s about the execution and the automated change. But, yes, I think your analogy is a very good one for how the IT world will change.

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Gardner: How you execute, optimize and exploit intelligence capabilities can be how you better compete, even if other things are equal. If everyone is using AWS, and everyone is using the same services for storage, servers, and development, then how do you differentiate?

How you optimize the way in which you gain the visibility, know your own business, and apply the lessons of optimization, will become a deciding factor in your success, no matter what business you’re in. The tools that you pick for such visibility, execution, optimization and intelligence will be the new real differentiators among major businesses.

So, Mark, where do we look to find those tools? Are they yet in development? Do we know the ones we should expect? How will organizations know where to look for the next differentiating tier of technology when it comes to optimizing hybrid IT?

What’s in the mix?

Peters: We’re talking years ahead for us to be in the nirvana that you’re discussing.

I just want to push back slightly on what you said. This would only apply if everyone were using exactly the same tools and services from AWS, to use your example. The expectation, assuming we have a hybrid world, is they will have kept some applications on-premises, or they might be using some specialist, regional or vertical industry cloud. So, I think that’s another way for differentiation. It’s how to get the balance. So, that’s one important thing.

And then, back to what you were talking about, where are those tools? How do you make the right move?

We have to get from here to there. It’s all very well talking about the future. It doesn’t sound great and perfect, but you have to get there. We do quite a lot of research in ESG. I will throw just a couple of numbers, which I think help to explain how you might do this.

We already find that the multi-cloud deployment or option is a significant element within a hybrid IT world. So, asking people about this in the last few months, we found that about 75 percent of the respondents already have more than one cloud provider, and about 40 percent have three or more.

You’re getting diversity -- whether by default or design. It really doesn’t matter at this point. We hope it’s by design. But nonetheless, you’re certainly getting people using different cloud providers to take advantage of the specific capabilities of each.

This is a real mix. You can’t just plunk down some new magic piece of software, and everything is okay, because it might not work with what you already have -- the legacy systems, and the applications you already have. One of the other questions we need to ask is how does improved management embrace legacy systems?

Some 75 percent of our respondents want hybrid management to be from the infrastructure up, which means that it’s got to be based on managing their existing infrastructure, and then extending that management up or out into the cloud. That’s opposed to starting with some cloud management approach and then extending it back down to their infrastructure.

People want to enhance what they currently have so that it can embrace the cloud. It’s enhancing your choice of tiers so you can embrace change.

People want to enhance what they currently have so that it can embrace the cloud. It's enhancing your choice of tiers so you can embrace change. Rather than just deploying something and hoping that all of your current infrastructure -- not just your physical infrastructure but your applications, too -- can use that, we see a lot of people going to a multi-cloud, hybrid deployment model. That entirely makes sense. You're not just going to pick one cloud model and hope that it  will come backward and make everything else work. You start with what you have and you gradually embrace these alternative tools. 

Gardner: We’re creating quite a list of requirements for what we’d like to see develop in terms of this management, optimization, and automation capability that’s maybe two or three years out. Vendors like Microsoft are just now coming out with the ability to manage between their own hybrid infrastructures, their own cloud offerings like Azure Stack and their public cloud Azure.

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Where will we look for that breed of fully inclusive, fully intelligent tools that will allow us to get to where we want to be in a couple of years? I’ve heard of one from HPE, it’s called Project New Hybrid IT Stack. I’m thinking that HPE can’t be the only company. We can’t be the only analysts that are seeing what to me is a market opportunity that you could drive a truck through. This should be a big problem to solve.

Who’s driving?

Peters: There are many organizations, frankly, for which this would not be a good commercial decision, because they don’t play in multiple IT areas or they are not systems providers. That’s why HPE is interested, capable, and focused on doing this. 

Many vendor organizations are either focused on the cloud side of the business -- and there are some very big names -- or on the on-premises side of the business. Embracing both is something that is not as difficult for them to do, but really not top of their want-to-do list before they’re absolutely forced to.

From that perspective, the ones that we see doing this fall into two categories. There are the trendy new startups, and there are some of those around. The problem is, it’s really tough imagining that particularly large enterprises are going to risk [standardizing on them]. They probably even will start to try and write it themselves, which is possible – unlikely, but possible.

Where I think we will get the list for the other side is some of the other big organizations --- Oracle and IBM spring to mind in terms of being able to embrace both on-premises and off-premises.  But, at the end of the day, the commonality among those that we’ve mentioned is that they are systems companies. At the end of the day, they win by delivering the best overall solution and package to their clients, not individual components within it.

If you’re going to look for a successful hybrid IT deployment took, you probably have to look at a hybrid IT vendor.

And by individual components, I include cloud, on-premises, and applications. If you’re going to look for a successful hybrid IT deployment tool, you probably have to look at a hybrid IT vendor. That last part I think is self-descriptive. 

Gardner: Clearly, not a big group. We’re not going to be seeking suppliers for hybrid IT management from request for proposals (RFPs) from 50 or 60 different companies to find some solutions. 

Peters: Well, you won’t need to. Looking not that many years ahead, there will not be that many choices when it comes to full IT provisioning. 

Gardner: Mark, any thoughts about what IT organizations should be thinking about in terms of how to become proactive rather than reactive to the hybrid IT environment and the complexity, and to me the obvious need for better management going forward?

Management ends, not means

Peters: Gaining visibility into not just hybrid IT but the on-premise and the off-premise and how you manage these things. Those are all parts of the solution, or the answer. The real thing, and it’s absolutely crucial, is that you don’t start with those bright shiny objects. You don’t start with, “How can I deploy more cloud? How can I do hybrid IT?” Those are not good questions to ask. Good questions to ask are, “What do I need to do as an organization? How do I make my business more successful? How does anything in IT become a part of answering those questions?”

In other words, drum roll, it’s the thinking about ends, not means.

Gardner:  If our listeners and readers want to follow you and gain more of your excellent insight, how should they do that? 

Peters: The best way is to go to our website, www.esg-global.com. You can find not just me and all my contact details and materials but those of all my colleagues and the many areas we cover and study in this wonderful world of IT.

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Globalization risks and data complexity demand new breed of hybrid IT management, says Wikibon’s Burris

The next BriefingsDirect Voice of the Analyst interview explores how globalization and distributed business ecosystems factor into hybrid cloud challenges and solutions.

Mounting complexity and a lack of multi-cloud services management maturity are forcing companies to seek new breeds of solutions so they can grow and thrive as digital enterprises. 

Listen to the podcast. Find it on iTunes. Get the mobile app. Read a full transcript or download a copy.

Here to report on how international companies must factor localization, data sovereignty and other regional factors into any transition to sustainable hybrid IT is Peter Burris, Head of Research at Wikibon. The discussion is moderated by Dana Gardner, principal analyst at Interarbor Solutions.

Here are some excerpts:

Gardner: Peter, companies doing business or software development just in North America can have an American-centric view of things. They may lack an appreciation for the global aspects of cloud computing models. We want to explore that today. How much more complex is doing cloud -- especially hybrid cloud -- when you’re straddling global regions?

Burris: There are advantages and disadvantages to thinking cloud-first when you are thinking globalization first. The biggest advantage is that you are able to work in locations that don’t currently have the broad-based infrastructure that’s typically associated with a lot of traditional computing modes and models.

Burris

Burris

The downside of it is, at the end of the day, that the value in any computing system is not so much in the hardware per se; it’s in the data that’s the basis of how the system works. And because of the realities of working with data in a distributed way, globalization that is intended to more fully enfranchise data wherever it might be introduces a range of architectural implementation and legal complexities that can’t be discounted.

So, cloud and globalization can go together -- but it dramatically increases the need for smart and forward-thinking approaches to imagining, and then ultimately realizing, how those two go together, and what hybrid architecture is going to be required to make it work.

Gardner: If you need to then focus more on the data issues -- such as compliance, regulation, and data sovereignty -- how is that different from taking an applications-centric view of things?

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Burris: Most companies have historically taken an infrastructure-centric approach to things. They start by saying, “Where do I have infrastructure, where do I have servers and storage, do I have the capacity for this group of resources, and can I bring the applications up here?” And if the answer is yes, then you try to ultimately economize on those assets and build the application there.

That runs into problems when we start thinking about privacy, and in ensuring that local markets and local approaches to intellectual property management can be accommodated.

But the issue is more than just things like the General Data Protection Regulation (GDPR) in Europe, which is a series of regulations in the European Union (EU) that are intended to protect consumers from what the EU would regard as inappropriate leveraging and derivative use of their data.

It can be extremely expensive and sometimes impossible to even conceive of a global cloud strategy where the service is being consumed a few thousand miles away from where the data resides, if there is any dependency on time and how that works.

Ultimately, the globe is a big place. It’s 12,000 miles or so from point A to the farthest point B, and physics still matters. So, the first thing we have to worry about when we think about globalization is the cost of latency and the cost of bandwidth of moving data -- either small or very large -- across different regions. It can be extremely expensive and sometimes impossible to even conceive of a global cloud strategy where the service is being consumed a few thousand miles away from where the data resides, if there is any dependency on time and how that works.

So, the issues of privacy, the issues of local control of data are also very important, but the first and most important consideration for every business needs to be: Can I actually run the application where I want to, given the realities of latency? And number two: Can I run the application where I want to given the realities of bandwidth? This issue can completely overwhelm all other costs for data-rich, data-intensive applications over distance.

Gardner: As you are factoring your architecture, you need to take these local considerations into account, particularly when you are factoring costs. If you have to do some heavy lifting and make your bandwidth capable, it might be better to have a local closet-sized data center, because they are small and efficient these days, and you can stick with a private cloud or on-premises approach. At the least, you should factor the economic basis for comparison, with all these other variables you brought up.

Edge centers

Burris: That’s correct. In fact, we call them “edge centers.” For example, if the application features any familiarity with Internet of Things (IoT), then there will likely be some degree of latency considerations obtained, and the cost of doing a round trip message over a few thousand miles can be pretty significant when we consider the total cost of how fast computing can be done these days.

The first consideration is what are the impacts of latency for an application workload like IoT and is that intending to drive more automation into the system? Imagine, if you will, the businessperson who says, “I would like to enter into a new market expand my presence in the market in a cost-effective way. And to do that, I want to have the system be more fully automated as it serves that particular market or that particular group of customers. And perhaps it’s something that looks more process manufacturing-oriented or something along those lines that has IoT capabilities.”

The goal is to bring in the technology in a way that does not explode the administration, management, and labor cost associated with the implementation.

The goal, therefore, is to bring in the technology in a way that does not explode the administration, managements, and labor cost associated with the implementation.

The other way you are going to do that is if you do introduce a fair amount of automation and if, in fact, that automation is capable of operating within the time constraints required by those automated moments, as we call them.

If the round-trip cost of moving the data from a remote global location back to somewhere in North America -- independent of whether it’s legal or not – comes at a cost that exceeds the automation moment, then you just flat out can’t do it. Now, that is the most obvious and stringent consideration.

On top of that, these moments of automation necessitate significant amounts of data being generated and captured. We have done model studies where, for example, the cost of moving data out of a small wind farm can be 10 times as expensive. It can cost hundreds of thousands of dollars a year to do relatively simple and straightforward types of data analysis on the performance of that wind farm.

Process locally, act globally

It’s a lot better to have a local presence that can handle local processing requirements against models that are operating against locally derived data or locally generated data, and let that work be automated with only periodic visibility into how the overall system is working closely. And that’s where a lot of this kind of on-premise hybrid cloud thinking is starting.

It gets more complex than in a relatively simple environment like a wind farm, but nonetheless, the amount of processing power that’s necessary to run some of those kinds of models can get pretty significant. We are going to see a lot more of this kind of analytic work be pushed directly down to the devices themselves. So, the Sense, Infer, and Act loop will occur very, very closely in some of those devices. We will try to keep as much of that data as we can local.

But there are always going to be circumstances when we have to generate visibility across devices, we have to do local training of the data, we have to test the data or the models that we are developing locally, and all those things start to argue for sometimes much larger classes of systems.

Gardner: It’s a fascinating subject as to what to push down the edge given that the storage cost and processing costs are down and footprint is down and what to then use the public cloud environment or Infrastructure-as-a-Service (IaaS) environment for.

But before we go into any further, Peter, tell us about yourself, and your organization, Wikibon.

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Burris: Wikibon is a research firm that’s affiliated with something known as TheCUBE. TheCUBE conducts about 5,000 interviews per year with thought leaders at various locations, often on-site at large conferences.

I came to Wikibon from Forrester Research, and before that I had been a part of META Group, which was purchased by Gartner. I have a longstanding history in this business. I have also worked with IT organizations, and also worked inside technology marketing in a couple of different places. So, I have been around.

Wikibon's objective is to help mid-sized to large enterprises traverse the challenges of digital transformation. Our opinion is that digital transformation actually does mean something. It's not just a set of bromides about multichannel or omnichannel or being “uberized,” or anything along those lines.

The difference between a business and a digital business is the degree to which data is used as an asset. 

The difference between a business and a digital business is the degree to which data is used as an asset. In a digital business, data absolutely is used as a differentiating asset for creating and keeping customers.

We look at the challenges of what does it mean to use data differently, how to capture it differently, which is a lot of what IoT is about. We look at how to turn it into business value, which is a lot of what big data and these advanced analytics like artificial intelligence (AI), machine learning and deep learning are all about. And then finally, how to create the next generation of applications that actually act on behalf of the brand with a fair degree of autonomy, which is what we call “systems of agency” are all about. And then ultimately how cloud and historical infrastructure are going to come together and be optimized to support all those requirements.

We are looking at digital business transformation as a relatively holistic thing that includes IT leadership, business leadership, and, crucially, new classes of partnerships to ensure that the services that are required are appropriately contracted for and can be sustained as it becomes an increasing feature of any company’s value proposition. That's what we do.

Global risk and reward

Gardner: We have talked about the tension between public and private cloud in a global environment through speeds and feeds, and technology. I would like to elevate it to the issues of culture, politics and perception. Because in recent years, with offshoring and looking at intellectual property concerns in other countries, the fact is that all the major hyperscale cloud providers are US-based corporations. There is a wide ecosystem of other second tier providers, but certainly in the top tier.

Is that something that should concern people when it comes to risk to companies that are based outside of the US? What’s the level of risk when it comes to putting all your eggs in the basket of a company that's US-based?

Burris: There are two perspectives on that, but let me add one more just check on this. Alibaba clearly is one of the top-tier, and they are not based in the US and that may be one of the advantages that they have. So, I think we are starting to see some new hyperscalers emerge, and we will see whether or not one will emerge in Europe.

I had gotten into a significant argument with a group of people not too long ago on this, and I tend to think that the political environment almost guarantees that we will get some kind of scale in Europe for a major cloud provider.

If you are a US company, are you concerned about how intellectual property is treated elsewhere? Similarly, if you are a non-US company, are you concerned that the US companies are typically operating under US law, which increasingly is demanding that some of these hyperscale firms be relatively liberal, shall we say, in how they share their data with the government? This is going to be one of the key issues that influence choices of technology over the course of the next few years.

Cross-border compute concerns

We think there are three fundamental concerns that every firm is going to have to worry about.

I mentioned one, the physics of cloud computing. That includes latency and bandwidth. One computer science professor told me years ago, “Latency is the domain of God, and bandwidth is the domain of man.” We may see bandwidth costs come down over the next few years, but let's just lump those two things together because they are physical realities.

The second one, as we talked about, is the idea of privacy and the legal implications.

The third one is intellectual property control and concerns, and this is going to be an area that faces enormous change over the course of the next few years. It’s in conjunction with legal questions on contracting and business practices.

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From our perspective, a US firm that wants to operate in a location that features a more relaxed regime for intellectual property absolutely needs to be concerned. And the reason why they need to be concerned is data is unlike any other asset that businesses work with. Virtually every asset follows the laws of scarcity. 

Money, you can put it here or you can put it there. Time, people, you can put here or you can put there. That machine can be dedicated to this kind of wire or that kind of wire.

Data is weird, because data can be copied, data can be shared. The value of data appreciates as we us it more successfully, as we integrate it and share it across multiple applications.

Scarcity is a dominant feature of how we think about generating returns on assets. Data is weird, though, because data can be copied, data can be shared. Indeed, the value of data appreciates as we use it more successfully, as we use it more completely, as we integrate it and share it across multiple applications.

And that is where the concern is, because if I have data in one location, two things could possibly happen. One is if it gets copied and stolen, and there are a lot of implications to that. And two, if there are rules and regulations in place that restrict how I can combine that data with other sources of data. That means if, for example, my customer data in Germany may not appreciate, or may not be able to generate the same types of returns as my customer data in the US.

Now, that sets aside any moral question of whether or not Germany or the US has better privacy laws and protects the consumers better. But if you are basing investments on how you can use data in the US, and presuming a similar type of approach in most other places, you are absolutely right. On the one hand, you probably aren’t going to be able to generate the total value of your data because of restrictions on its use; and number two, you have to be very careful about concerns related to data leakage and the appropriation of your data by unintended third parties.

Gardner: There is the concern about the appropriation of the data by governments, including the United States with the PATRIOT Act. And there are ways in which governments can access hyperscalers’ infrastructure, assets, and data under certain circumstances. I suppose there’s a whole other topic there, but at least we should recognize that there's some added risk when it comes to governments and their access to this data.

Burris: It’s a double-edged sword that US companies may be worried about hyperscalers elsewhere, but companies that aren't necessarily located in the US may be concerned about using those hyperscalers because of the relationship between those hyperscalers and the US government.

These concerns have been suppressed in the grand regime of decision-making in a lot of businesses, but that doesn’t mean that it’s not a low-intensity concern that could bubble up, and perhaps, it’s one of the reasons why Alibaba is growing so fast right now.

All hyperscalers are going to have to be able to demonstrate that they can protect their clients, their customers’ data, utilizing the regime that is in place wherever the business is being operated.  

All hyperscalers are going to have to be able to demonstrate that they can, in fact, protect their clients, their customers’ data, utilizing the regime that is in place wherever the business is being operated. [The rationale] for basing your business in these types of services is really immature. We have made enormous progress, but there’s a long way yet to go here, and that’s something that businesses must factor as they make decisions about how they want to incorporate a cloud strategy.

Gardner: It’s difficult enough given the variables and complexity of deciding a hybrid cloud strategy when you’re only factoring the technical issues. But, of course, now there are legal issues around data sovereignty, privacy, and intellectual property concerns. It’s complex, and it’s something that an IT organization, on its own, cannot juggle. This is something that cuts across all the different parts of a global enterprise -- their legal, marketing, security, risk avoidance and governance units -- right up to the board of directors. It’s not just a willy-nilly decision to get out a credit card and start doing cloud computing on any sustainable basis.

Burris: Well, you’re right, and too frequently it is a willy-nilly decision where a developer or a business person says, “Oh, no sweat, I am just going to grab some resources and start building something in the cloud.”

I can remember back in the mid-1990s when I would go into large media companies to meet with IT people to talk about the web, and what it would mean technically to build applications on the web. I would encounter 30 people, and five of them would be in IT and 25 of them would be in legal. They were very concerned about what it meant to put intellectual property in a digital format up on the web, because of how it could be misappropriated or how it could lose value. So, that class of concern -- or that type of concern -- is minuscule relative to the broader questions of cloud computing, of the grabbing of your data and holding it a hostage, for example.

There are a lot of considerations that are not within the traditional purview of IT, but CIOs need to start thinking about them on their own and in conjunction with their peers within the business.

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Gardner: We’ve certainly underlined a lot of the challenges. What about solutions? What can organizations do to prevent going too far down an alley that’s dark and misunderstood, and therefore have a difficult time adjusting?

How do we better rationalize for cloud computing decisions? Do we need better management? Do we need better visibility into what our organizations are doing or not doing? How do we architect with foresight into the larger picture, the strategic situation? What do we need to start thinking about in terms of the solutions side of some of these issues?

Cloud to business, not business to cloud

Burris: That’s a huge question, Dana. I can go on for the next six hours, but let’s start here. The first thing we tell senior executives is, don’t think about bringing your business to the cloud -- think about bringing the cloud to your business. That’s the most important thing. A lot of companies start by saying, “Oh, I want to get rid of IT, I want to move my business to the cloud.”

It’s like many of the mistakes that were made in the 1990s regarding outsourcing. When I would go back and do research on outsourcing, I discovered that a lot of the outsourcing was not driven by business needs, but driven by executive compensation schemes, literally. So, where executives were told that they would be paid on the basis of return in net assets, there was a high likelihood that the business was going to go to outsourcers to get rid of the assets, so the executives could pay themselves an enormous amount of money.

Think about how to bring the cloud to your business, and to better manage your data assets, and don't automatically default to the notion that you're going to take your business to the cloud.

The same type of thinking pertains here -- the goal is not to get rid of IT assets since those assets, generally speaking, are becoming less important features of the overall proposition of digital businesses.

Think instead about how to bring the cloud to your business, and to better manage your data assets, and don’t automatically default to the notion that you’re going to take your business to the cloud.

Every decision-maker needs to ask himself or herself, “How can I get the cloud experience wherever the data demands?” The goal of the cloud experience, which is a very, very powerful concept, ultimately needs to be able to get access to a very rich set of services associated with automation. We need visible pricing and metering, self-sufficiency, and self-service. These are all the experiences that we want out of cloud.

What we want, however, are those experiences wherever the data requires it, and that’s what’s driving hybrid cloud. We call it “true private cloud,” and the idea is of having a technology stack that provides a consistent cloud experience wherever the data has to run -- whether that’s because of IoT or because of privacy issues or because of intellectual property concerns. True private cloud is our concept for describing how the cloud experience is going to be enacted where the data requires, so that you don’t just have to move the data to get to the cloud experience.

Weaving IT all together

The third thing to note here is that ultimately this is going to lead to the most complex integration regime we’ve ever envisioned for IT. By that I mean, we are going to have applications that span Software-as-a-Service (SaaS), public cloud, IaaS services, true private cloud, legacy applications, and many other types of services that we haven’t even conceived of right now.

And understanding how to weave all of those different data sources, and all those different service sources, into coherent application framework that runs reliably and providers a continuous ongoing service to the business is essential. It must involve a degree of distribution that completely breaks most models. We’re thinking about infrastructure, architecture, but also, data management, system management, security management, and as I said earlier, all the way out to even contractual management, and vendor management.

The arrangement of resources for the classes of applications that we are going to be building in the future are going to require deep, deep, deep thinking.

That leads to the fourth thing, and that is defining the metric we’re going to use increasingly from a cost standpoint. And it is time. As the costs of computing and bandwidth continue to drop -- and they will continue to drop -- it means ultimately that the fundamental cost determinant will be, How long does it take an application to complete? How long does it take this transaction to complete? And that’s not so much a throughput question, as it is a question of, “I have all these multiple sources that each on their own are contributing some degree of time to how this piece of work finishes, and can I do that piece of work in less time if I bring some of the work, for example, in-house, and run it close to the event?”

This relationship between increasing distribution of work, increasing distribution of data, and the role that time is going to play when we think about the event that we need to manage is going to become a significant architectural concern.

The fifth issue, that really places an enormous strain on IT is how we think about backing up and restoring data. Backup/restore has been an afterthought for most of the history of the computing industry.

As we start to build these more complex applications that have more complex data sources and more complex services -- and as these applications increasingly are the basis for the business and the end-value that we’re creating -- we are not thinking about backing up devices or infrastructure or even subsystems.

We are thinking about what does it mean to backup, even more importantly, applications and even businesses. The issue becomes associated more with restoring. How do we restore applications in business across this incredibly complex arrangement of services and data locations and sources?

There's a new data regime that's emerging to support application development. How's that going to work -- the role the data scientists and analytics are going to play in working with application developers?

I listed five areas that are going to be very important. We haven’t even talked about the new regime that’s emerging to support application development and how that’s going to work. The role the data scientists and analytics are going to play in working with application developers – again, we could go on and on and on. There is a wide array of considerations, but I think all of them are going to come back to the five that I mentioned.

Gardner: That’s an excellent overview. One of the common themes that I keep hearing from you, Peter, is that there is a great unknown about the degree of complexity, the degree of risk, and a lack of maturity. We really are venturing into unknown territory in creating applications that draw on these resources, assets and data from these different clouds and deployment models.

When you have that degree of unknowns, that lack of maturity, there is a huge opportunity for a party to come in to bring in new types of management with maturity and with visibility. Who are some of the players that might fill that role? One that I am familiar with, and I think I have seen them on theCUBE is Hewlett Packard Enterprise (HPE) with what they call Project New Hybrid IT Stack. We still don’t know too much about it. I have also talked about Cloud28+, which is an ecosystem of global cloud environments that helps mitigate some of the concerns about a single hyperscaler or a handful of hyperscale providers. What’s the opportunity for a business to come in to this problem set and start to solve it? What do you think from what you’ve heard so far about Project New Hybrid IT Stack at HPE?

Key cloud players

Burris: That’s a great question, and I’m going to answer it in three parts. Part number one is, if we look back historically at the emergence of TCP/IP, TCP/IP killed the mini-computers. A lot of people like to claim it was microprocessors, and there is an element of truth to that, but many computer companies had their own proprietary networks. When companies wanted to put those networks together to build more distributed applications, the mini-computer companies said, “Yeah, just bridge our network.” That was an unsatisfyingly bad answer for the users. So along came Cisco, TCP/IP, and they flattened out all those mini-computer networks, and in the process flattened the mini-computer companies.

HPE was one of the few survivors because they embraced TCP/IP much earlier than anybody else.

We are going to need the infrastructure itself to use deep learning, machine learning, and advanced technology for determining how the infrastructure is managed, optimized, and economized.

The second thing is that to build the next generations of more complex applications -- and especially applications that involve capabilities like deep learning or machine learning with increased automation -- we are going to need the infrastructure itself to use deep learning, machine learning, and advanced technology for determining how the infrastructure is managed, optimized, and economized. That is an absolute requirement. We are not going to make progress by adding new levels of complexity and building increasingly rich applications if we don’t take full advantage of the technologies that we want to use in the applications -- inside how we run our infrastructures and run our subsystems, and do all the things we need to do from a hybrid cloud standpoint.

Ultimately, the companies are going to step up and start to flatten out some of these cloud options that are emerging. We will need companies that have significant experience with infrastructure, that really understand the problem. They need a lot of experience with a lot of different environments, not just one operating system or one cloud platform. They will need a lot of experience with these advanced applications, and have both the brainpower and the inclination to appropriately invest in those capabilities so they can build the type of platforms that we are talking about. There are not a lot of companies out there that can.

There are few out there, and certainly HPE with its New Stack initiative is one of them, and we at Wikibon are especially excited about it. It’s new, it’s immature, but HPE has a lot of piece parts that will be required to make a go of this technology. It’s going to be one of the most exciting areas of invention over the next few years. We really look forward to working with our user clients to introduce some of these technologies and innovate with them. It’s crucial to solve the next generation of problems that the world faces; we can’t move forward without some of these new classes of hybrid technologies that weave together fabrics that are capable of running any number of different application forms.

Listen to the podcast. Find it on iTunes. Get the mobile app. Read a full transcript or download a copy. Sponsor: Hewlett Packard Enterprise.

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How mounting complexity, multi-cloud sprawl, and need for maturity hinder hybrid IT’s ability to grow and thrive

The next BriefingsDirect Voice of the Analyst interview examines how the economics and risk management elements of hybrid IT factor into effective cloud adoption and choice.

We’ll now explore how mounting complexity and a lack of multi-cloud services management maturity must be solved in order to have businesses grow and thrive as digital enterprises.

Listen to the podcast. Find it on iTunes. Get the mobile app. Read a full transcript or  download a copy

Tim Crawford, CIO Strategic Advisor at AVOA in Los Angeles joins us to report on how companies are managing an increasingly complex transition to sustainable hybrid IT. The discussion is moderated by Dana Gardner, Principal Analyst at Interarbor Solutions.

Here are some excerpts:

Gardner: Tim, there’s a lot of evidence that businesses are adopting cloud models at a rapid pace. But there is also lingering concern about how to best determine the right mix of cloud, what kinds of cloud, and how to mitigate the risks and manage change over time.

As someone who regularly advises chief information officers (CIOs), who or which group is surfacing that is tasked with managing this cloud adoption and its complexity within these businesses? Who will be managing this dynamic complexity?

Crawford

Crawford

Crawford: For the short-term, I would say everyone. It’s not as simple as it has been in the past where we look to the IT organization as the end-all, be-all for all things technology. As we begin talking about different consumption models -- and cloud is a relatively new consumption model for technology -- it changes the dynamics of it. It’s the combination of changing that consumption model -- but then there’s another factor that comes into this. There is also the consumerization of technology, right? We are “democratizing” technology to the point where everyone can use it, and therefore everyone does use it, and they begin to get more comfortable with technology.

It’s not as it used to be, where we would say, “Okay, I'm not sure how to turn on a computer.” Now, businesses may be more familiar outside of the IT organization with certain technologies. Bringing that full-circle, the answer is that we have to look beyond just IT. Cloud is something that is consumed by IT organizations. It’s consumed by different lines of business, too. It’s consumed even by end-consumers of the products and services. I would say it’s all of the above.

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Gardner: The good news is that more and more people are able to -- on their own – innovate, to acquire cloud services, and they can factor those into how they obtain business objectives. But do you expect that we will get to the point where that becomes disjointed? Will the goodness of innovation become something that spins out of control, or becomes a negative over time?

Crawford: To some degree, we’ve already hit that inflection-point where technology is being used in inappropriate ways. A great example of this -- and it’s something that just kind of raises the hair on the back of my neck -- is when I hear that boards of directors of publicly traded companies are giving mandates to their organization to “Go cloud.”

The board should be very business-focused and instead they're dictating specific technology -- whether it’s the right technology or not. That’s really what this comes down to. 

What’s the right use of cloud – in all forms, public, private, software as a service (SaaS). What’s the right combination to use for any given application? 

Another example is folks that try and go all-in on cloud but aren’t necessarily thinking about what’s the right use of cloud – in all forms, public, private, software as a service (SaaS). What’s the right combination to use for any given application? It’s not a one-size-fits-all answer.

We in the enterprise IT space haven't really done enough work to truly understand how best to leverage these new sets of tools. We need to both wrap our head around it but also get in the right frame of mind and thought process around how to take advantage of them in the best way possible.

Another example that I've worked through from an economic standpoint is if you were to do the math, which I have done a number of times with clients -- you do the math to figure out what’s the comparative between the IT you're doing on-premises in your corporate data center with any given application -- versus doing it in a public cloud.

Think differently

If you do the math, taking an application from a corporate data center and moving it to public cloud will cost you four times as much money. Four times as much money to go to cloud! Yet we hear the cloud is a lot cheaper. Why is that?

When you begin to tease apart the pieces, the bottom line is that we get that four-times-as-much number because we’re using the same traditional mindset where we think about cloud as a solution, the delivery mechanism, and a tool. The reality is it’s a different delivery mechanism, and it’s a different kind of tool.

When used appropriately, in some cases, yes, it can be less expensive. The challenge is you have to get yourself out of your traditional thinking and think differently about the how and why of leveraging cloud. And when you do that, then things begin to fall into place and make a lot more sense both organizationally -- from a process standpoint, and from a delivery standpoint -- and also economically.

Gardner: That “appropriate use of cloud” is the key. Of course, that could be a moving target. What’s appropriate today might not be appropriate in a month or a quarter. But before we delve into more … Tim, tell us about your organization. What’s a typical day in the life for Tim Crawford like?

It’s not tech for tech’s sake, rather it’s best to say, “How do we use technology for business advantage?” 

Crawford: I love that question. AVOA stands for that position in which we sit between business and technology. If you think about the intersection of business and technology, of using technology for business advantage, that’s the space we spend our time thinking about. We think about how organizations across a myriad of different industries can leverage technology in a meaningful way. It’s not tech for tech’s sake, and I want to be really clear about that. But rather it’s best to say, “How do we use technology for business advantage?”

We spend a lot of time with large enterprises across the globe working through some of these challenges. It could be as simple as changing traditional mindsets to transformational, or it could be talking about tactical objectives. Most times, though, it’s strategic in nature. We spend quite a bit of time thinking about how to solve these big problems and to change the way that companies function, how they operate.

A day in a life of me could range from, if I'm lucky, being able to stay in my office and be on the phone with clients, working with folks and thinking through some of these big problems. But I do spend a lot of time on the road, on an airplane, getting out in the field, meeting with clients, understanding what people really are contending with.

I spent well over 20 years of my career before I began doing this within the IT organization, inside leading IT organizations. It’s incredibly important for me to stay relevant by being out with these folks and understanding what they're challenged by -- and then, of course, helping them through their challenges.

Any given day is something new and I love that diversity. I love hearing different ideas. I love hearing new ideas. I love people who challenge the way I think.

It’s an opportunity for me personally to learn and to grow, and I wish more of us would do that. So it does vary quite a bit, but I'm grateful that the opportunities that I've had to work with have been just fabulous, and the same goes for the people.

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Gardner: I've always enjoyed my conversations with you, Tim, because you always do challenge me to think a little bit differently -- and I find that very valuable.

Okay, let’s get back to this idea of “appropriate use of cloud.” I wonder if we should also expand that to be “appropriate use of IT and cloud.” So including that notion of hybrid IT, which includes cloud and hybrid cloud and even multi-cloud. And let’s not forget about the legacy IT services.

How do we know if we’re appropriately using cloud in the context of hybrid IT? Are there measurements? Is there a methodology that’s been established yet? Or are we still in the opening innings of how to even measure and gain visibility into how we consume and use cloud in the context of all IT -- to therefore know if we’re doing it appropriately?

The monkey-bread model

Crawford: The first thing we have to do is take a step back to provide the context of that visibility -- or a compass, as I usually refer to these things. You need to provide a compass to help understand where we need to go.

If we look back for a minute, and look at how IT operates -- traditionally, we did everything. We had our own data center, we built all the applications, we ran our own servers, our own storage, we had the network – we did it all. We did it all, because we had to. We, in IT, didn’t really have a reasonable alternative to running our own email systems, our own file storage systems. Those days have changed.

Fast-forward to today. Now, you have to pick apart the pieces and ask, “What is strategic?” When I say, “strategic,” it doesn’t mean critically important. Electrical power is an example. Is that strategic to your business? No. Is it important? Heck, yeah, because without it, we don’t run. But it’s not something where we’re going out and building power plants next to our office buildings just so we can have power, right? We rely on others to do it because there are mature infrastructures, mature solutions for that. The same is true with IT. We have now crossed the point where there are mature solutions at an enterprise level that we can capitalize on, or that we can leverage.

Part of the methodology I use is the monkey bread example. If you're not familiar with monkey bread, it’s kind of a crazy thing where you have these balls of dough. When you bake it, the balls of dough congeal together and meld. What you're essentially doing is using that as representative of, or an analogue to, your IT portfolio of services and applications. You have to pick apart the pieces of those balls of dough and figure out, “Okay. Well, these systems that support email, those could go off to Google or Microsoft 365. And these applications, well, they could go off to this SaaS-based offering. And these other applications, well, they could go off to this platform.”

And then, what you're left with is this really squishy -- but much smaller -- footprint that you have to contend with. That problem in the center is much more specific -- and arguably that’s what differentiates your company from your competition.

Whether you run email [on-premises] or in a cloud, that’s not differentiating to a business. It’s incredibly important, but not differentiating. When you get to that gooey center, that’s the core piece, that’s where you put your resources in, that’s what you focus on.

This example helps you work through determining what’s critical, and -- more importantly -- what’s strategic and differentiating to my business, and what is not. And when you start to pick apart these pieces, it actually is incredibly liberating. At first, it’s a little scary, but once you get the hang of it, you realize how liberating it is. It brings focus to the things that are most critical for your business.

Identify opportunities where cloud makes sense – and where it doesn’t. It definitely is one of the most significant opportunities for most IT organizations today. 

That’s what we have to do more of. When we do that, we identify opportunities where cloud makes sense -- and where it doesn’t. Cloud is not the end-all, be-all for everything. It definitely is one of the most significant opportunities for most IT organizations today.

So it’s important: Understand what is appropriate, how you leverage the right solutions for the right application or service.

Gardner: IT in many organizations is still responsible for everything around technology. And that now includes higher-level strategic undertakings of how all this technology and the businesses come together. It includes how we help our businesses transform to be more agile in new and competitive environments.

So is IT itself going to rise to this challenge, of not doing everything, but instead becoming more of that strategic broker between in IT functions and business outcomes? Or will those decisions get ceded over to another group? Maybe enterprise architects, business architects, business process management (BPM) analysts? Do you think it’s important for IT to both stay in and elevate to the bigger game?

Changing IT roles and responsibilities

Crawford: It’s a great question. For every organization, the answer is going to be different. IT needs to take on a very different role and sensibility. IT needs to look different than how it looks today. Instead of being a technology-centric organization, IT really needs to be a business organization that leverages technology.

The CIO of today and moving forward is not the tech-centric CIO. There are traditional CIOs and transformational CIOs. The transformational CIO is the business leader first who happens to have responsibility for technology. IT, as a whole, needs to follow the same vein.

For example, if you were to go into a traditional IT organization today and ask them what’s the nature of their business, ask them to tell you what they do as an administrator, as a developer, to help you understand how that’s going to impact the company and the business -- unfortunately, most of them would have a really hard time doing that.

The IT organization of the future, will articulate clearly the work they’re doing and how that impacts their customers and their business, and how making different changes and tweaks will impact their business. They will have an intimate knowledge of how their business functions much more than how the technology functions. That’s a very different mindset, that’s the place we have to get to for IT on the whole. IT can’t just be this technology organization that sits in a room, separate from the rest of the company. It has to be integral, absolutely integral to the business.

Gardner: If we recognize that cloud is here to stay -- but that the consumption of it needs to be appropriate, and if we’re at some sort of inflection point, we’re also at the risk of consuming cloud inappropriately. If IT and leadership within IT are elevating themselves, and upping their game to be that strategic player, isn’t IT then in the best position to be managing cloud, hybrid cloud and hybrid IT? What tools and what mechanisms will they need in order to make that possible?

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Crawford: Theoretically, the answer is that they really need to get to that level. We’re not there, on the whole, yet. Many organizations are not prepared to adopt cloud. I don’t want to be a naysayer of IT, but I think in terms of where IT needs to go on the whole, on the sum, we need to move into that position where we can manage the different types of delivery mechanisms -- whether it’s public cloud, SaaS, private cloud, appropriate data centers -- those are all just different levers we can pull depending on the business type.

Businesses change, customers change, demand changes and revenue comes from different places. IT needs to be able to shift gears just as fast and in anticipation of where the company goes. 

As you mentioned earlier, businesses change, customers change, demand changes, and revenue comes from different places. In IT, we need to be able to shift gears just as fast and be prepared to shift those gears in anticipation of where the company goes. That’s a very different mindset. It’s a very different way of thinking, but it also means we have to think of clever ways to bring these tools together so that we’re well-prepared to leverage things like cloud.

The challenge is many folks are still in that classic mindset, which unfortunately holds back companies from being able to take advantage of some of these new technologies and methodologies. But getting there is key.

Gardner: Some boards of directors, as you mentioned, are saying, “Go cloud,” or be cloud-first. People are taking them at that, and so we are facing a sort of cloud sprawl. People are doing micro services and as developers spinning up cloud instances and object storage instances. Sometimes they’ll keep those running into production; sometimes they’ll shut them down. We have line of business (LOB) managers going out and acquiring services like SaaS applications, running them for a while, perhaps making them a part of their standard operating procedures. But, in many organizations, one hand doesn’t really know what the other is doing.

Are we at the inflection point now where it’s simply a matter of measurement? Would we stifle innovation if we required people to at least mention what it is that they’re doing with their credit cards or petty cash when it comes to IT and cloud services? How important is it to understand what’s going on in your organization so that you can begin a journey toward better management of this overall hybrid IT?

Why, oh why, oh why, cloud?

Crawford: It depends on how you approach it. If you’re doing it from an IT command-and-control perspective, where you want to control everything in cloud -- full stop, that’s failure right out of the gate. But if you’re doing it from a position of -- I’m trying to use it as an opportunity to understand why are these folks leveraging cloud, and why are they not coming to IT, and how can I as CIO be better positioned to be able to support them, then great! Go forth and conquer.

The reality is that different parts of the organization are consuming cloud-based services today. I think there’s an opportunity to bring those together where appropriate. But at the end of the day, you have to ask yourself a very important question. It’s a very simple question, but you have to ask it, and it has to do with each of the different ways that you might leverage cloud. Even when you go beyond cloud and talk about just traditional corporate data assets -- especially as you start thinking about Internet of things (IoT) and start thinking about edge computing -- you know that public cloud becomes problematic for some of those things.

The important question you have to ask yourself is, “Why?” A very simple question, but it can have a really complicated answer. Why are you using public cloud? Why are you using three different forms of public cloud? Why are you using private cloud and public cloud together?

Once you begin to ask yourself those questions, and you keep asking yourself that question … it’s like that old adage. Ask yourself why three times and you kind of get to the core as the true reason why. You’ll bring greater clarity as to the reasons, and typically the business reasons, of why you’re actually going down that path. When you start to understand that, it brings clarity to what decisions are smart decisions -- and what decisions maybe you might want to think about doing differently.

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Gardner: Of course, you may begin doing something with cloud for a very good reason. It could be a business reason, a technology reason. You’ll recognize it, you gain value from it -- but then over time you have to step back with maturity and ask, “Am I consuming this in such a way that I’m getting it at the best price-point?” You mentioned a little earlier that sometimes going to public cloud could be four times as expensive.

So even though you may have an organization where you want to foster innovation, you want people to spread their wings, try out proofs of concept, be agile and democratic in terms of their ability to use myriad IT services, at what point do you say, “Okay, we’re doing the business, but we’re not running it like a good business should be run.” How are the economic factors driven into cloud decision-making after you’ve done it for a period of time?

Cloud’s good, but is it good for business?

Crawford: That’s a tough question. You have to look at the services that you’re leveraging and how that ties into business outcomes. If you tie it back to a business outcome, it will provide greater clarity on the sourcing decisions you should make.

For example, if you’re spending $5 to make $6 in a specialty industry, that’s probably not a wise move. But if you’re spending $5 to make $500, okay, that’s a pretty good move, right? There is a trade-off that you have to understand from an economic standpoint. But you have to understand what the true cost is and whether there’s sufficient value. I don’t mean technological value, I mean business value, which is measured in dollars.

If you begin to understand the business value of the actions you take -- how you leverage public cloud versus private cloud versus your corporate data center assets -- and you match that against the strategic decisions of what is differentiating versus what’s not, then you get clarity around these decisions. You can properly leverage different resources and gain them at the price points that make sense. If that gets above a certain amount, well, you know that’s not necessarily the right decision to make.

Economics plays a very significant role -- but let’s not kid ourselves. IT organizations haven’t exactly been the best at economics in the past. We need to be moving forward. And so it’s just one more thing on that overflowing plate that we call demand and requirements for IT, but we have to be prepared for that.

Gardner: There might be one other big item on that plate. We can allow people to pursue business outcomes using any technology that they can get their hands on -- perhaps at any price – and we can then mature that process over time by looking at price, by finding the best options.

But the other item that we need to consider at all times is risk. Sometimes we need to consider whether getting too far into a model like a public cloud, for example, that we can’t get back out of, is part of that risk. Maybe we have to consider that being completely dependent on external cloud networks across a global supply chain, for example, has inherent cyber security risks. Isn’t it up to IT also to help organizations factor some of these risks -- along with compliance, regulation, data sovereignty issues? It’s a big barrel of monkeys.

Before we sign off, as we’re almost out of time, please address for me, Tim, the idea of IT being a risk factor mitigator for a business.

Safety in numbers

Crawford: You bring up a great point, Dana. Risk -- whether it is risk from a cyber security standpoint or it could be data sovereignty issues, as well as regulatory compliance -- the reality is that nobody across the organization truly understands all of these pieces together.

It really is a team effort to bring it all together -- where you have the privacy folks, the information security folks, and the compliance folks -- that can become a united team. 

It really is a team effort to bring it all together -- where you have the privacy folks, the information security folks, and the compliance folks -- that can become a united team. I don’t think IT is the only component of that. I really think this is a team sport. In any organization that I’ve worked with, across the industry it’s a team sport. It’s not just one group.

It’s complicated, and frankly, it’s getting more complicated every single day. When you have these huge breaches that sit on the front page of The Wall Street Journal and other publications, it’s really hard to get clarity around risk when you’re always trying to fight against the fear factor. So that’s another balancing act that these groups are going to have to contend with moving forward. You can’t ignore it. You absolutely shouldn’t. You should get proactive about it, but it is complicated and it is a team sport.

Gardner: Some take-aways for me today are that IT needs to raise its game. Yet again, they need to get more strategic, to develop some of the tools that they’ll need to address issues of sprawl, complexity, cost, and simply gaining visibility into what everyone in the organization is – or isn’t -- doing appropriately with hybrid cloud and hybrid IT.

Listen to the podcast. Find it on iTunes. Get the mobile app. Read a full transcript or  download a copy. Sponsor: Hewlett Packard Enterprise.

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Case study: How HCI-powered private clouds accelerate efficient digital transformation

The next BriefingsDirect cloud efficiency case study examines how a world-class private cloud project evolved in the financial sector.

We’ll now learn how public cloud-like experiences, agility, and cost structures are being delivered via a strictly on-premises model built on hyper-converged infrastructure for a risk-sensitive financial services company.

Listen to the podcast. Find it on iTunes. Get the mobile app. Read a full transcript or download a copy.

Jim McKittrick joins to help explore the potential for cloud benefits when retaining control over the data center is a critical requirement. He is Senior Account Manager at Applied Computer Solutions (ACS) in Huntington Beach, California. The discussion is moderated by Dana Gardner, Principal Analyst at Interarbor Solutions.

Here are some excerpts:

Gardner: Many enterprises want a private cloud for security and control reasons. They want an OpEx-like public cloud model, and that total on-premises control. Can you have it both ways?

McKittrick: We are showing that you can. People are learning that the public cloud isn't necessarily all it has been hyped up to be, which is what happens with newer technologies as they come out.

Gardner: What are the drivers for keeping it all private?

McKittrick

McKittrick

McKittrick: Security, of course. But if somebody actually analyzes it, a lot of times it will be about cost and data access, and the ease of data egress because getting your data back can sometimes be a challenge.

Also, there is a realization that even though I may have strict service-level agreements (SLAs), if something goes wrong they are not going to save my business. If that thing tanks, do I want to give that business away? I have some clients who absolutely will not.

Gardner: Control, and so being able to sleep well at night.

McKittrick: Absolutely. I have other clients that we can speak about who have HIPAA requirements, and they are privately held and privately owned. And literally the CEO says, “I am not doing it.” And he doesn’t care what it costs.

Gardner: If there were a huge delta between the price of going with a public cloud or staying private, sure. But that deltais closing. So you can have the best of both worlds -- and not pay a very high penalty nowadays.

McKittrick: If done properly, certainly from my experience. We have been able to prove that you can run an agile, cloud-like infrastructure or private cloud as cost-effectively -- or even more cost effectively -- than you can in the public clouds. There are certainly places for both in the market.

Gardner: It's going to vary, of course, from company to company -- and even department to department within a company -- but the fact is that that choice is there.

McKittrick: No doubt about it, it absolutely is.

Gardner: Tell us about ACS, your role there, and how the company is defining what you consider the best of hybrid cloud environments.

McKittrick: We are a relatively large reseller, about $600 million. We have specialized in data center practices for 27 years. So we have been in business quite some time and have had to evolve with the IT industry.

We have a head start on what's really coming down the pipe -- we are one to two years ahead of the general marketplace.

Structurally, we are fairly conventional from the standpoint that we are a typical reseller, but we pride ourselves on our technical acumen. Because we have some very, very large clients and have worked with them to get on their technology boards, we feel like we have a head start on what's really coming down the pipe --  we are maybe one to two years ahead of the general marketplace. We feel that we have a thought leadership edge there, and we use that as well as very senior engineering leadership in our organization to tell us what we are supposed to be doing.

Gardner: I know you probably can't mention the company by name, but tell us about a recent project that seems a harbinger of things to come.

Hyper-convergent control 

McKittrick: It began as a proof of concept (POC), but it’s in production, it’s live globally.

I have been with ACS for 18 years, and I have had this client for 17 of those years. We have been through multiple data center iterations.

When this last one came up, three things happened. Number one, they were under tremendous cost pressure -- but public cloud was not an option for them.

The second thing was that they had grown by acquisition, and so they had dozens of IT fiefdoms. You can imagine culturally and technologically the challenges involved there. Nonetheless, we were told to consolidate and globalize all these operations.

Thirdly, I was brought in by a client who had run the US presence for this company. We had created a single IT infrastructure in the US for them. He said, “Do it again for the whole world, but save us a bunch of money.” The gauntlet was thrown down. The customer was put in the position of having to make some very aggressive choices. And so he effectively asked me bring them “cool stuff.”

You could give control to anybody in the organization across the globe and they would be able to manage it.

They asked, “What's new out there? How can we do this?” Our senior engineering staff brought a couple of ideas to the table, and hyper-converged infrastructure (HCI) was central to that. HCI provided the ability to simplify the organization, as well as the IT management for the organization. You could give control of it to anybody in the organization across the globe and they would be able to manage it, working with partners in other parts of the world.

Gardner: Remote management being very important for this.

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McKittrick: Absolutely, yes. We also gained failover capabilities, and disaster recovery within these regional data centers. We ended going from -- depending on whom you spoke to -- somewhere between seven to 19 data centers globally, down to three. We were able to consolidate down to three. The data center footprint shrank massively. Just in the US, we went to one data center; we got rid of the other data center completely. We went from 34 racks down to 3.5.

Gardner: Hyper-convergence being a big part of that?

McKittrick: Correct, that was really the key, hyper-convergence and virtualization.

The other key enabling technology was data de-duplication, so the ability to shrink the data and then be able to move it from place to place without crushing bandwidth requirements, because you were only moving the changes, the change blocks.

Gardner: So more of a modern data lifecycle approach?

McKittrick: Absolutely. The backup and recovery approach was built in to the solution itself. So we also deployed a separate data archive, but that's different than backup and recovery. Backup and recovery were essentially handled by VMware and the capability to have the same machine exist in multiple places at the same time.

Gardner: Now, there is more than just the physical approach to IT, as you described it, there is the budgetary financial approach. So how do they maybe get the benefit of the  OpEx approach that people are fond of with public cloud models and apply that in a private cloud setting?

Budget benefits 

McKittrick: They didn't really take that approach. I mean we looked at it. We looked at essentially leasing. We looked at the pay-as-you-go models and it didn't work for them. We ended up doing essentially a purchase of the equipment with a depreciation schedule and traditional support. It was analyzed, and they essentially said, “No, we are just going to buy it.”

Gardner: So total cost of ownership (TCO) is a better metric to look at. Did you have the ability to measure that? What were some of the metrics of success other than this massive consolidation of footprint and better control over management?

McKittrick: We had to justify TCO relative to what a traditional IT refresh would have cost. That's what I was working on for the client until the cost pressure came to bear. We then needed to change our thinking. That's when hyper-convergence came through.

What we would have spent on just hardware and infrastructure costs, not including network and bandwidth -- would have been $55 million over five years, and we ended up doing it for $15 million.

The cost analysis was already done, because I was already costing it with a refresh, including compute and traditional SAN storage. The numbers I had over a five-year period – just what we would have spent on hardware and infrastructure costs, and not including network and bandwidth – would have been $55 million over five years, and we ended up doing it for $15 million.

Gardner: We have mentioned HCI several times, but you were specifically using SimpliVity, which is now part of Hewlett Packard Enterprise (HPE). Tell us about why SimpliVity was a proof-point for you, and why you think that’s going to strengthen HPE's portfolio.

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McKittrick: This thing is now built and running, and it's been two years since inception. So that's a long time in technology, of course. The major factors involved were the cost savings.

As for HPE going forward, the way the client looked at it -- and he is a very forward-thinking technologist -- he always liked to say, “It’s just VMware.” So the beauty of it from their perspective – was that they could just deploy on VMware virtualization. Everyone in our organization knows how to work with VMware, we just deploy that, and they move things around. Everything is managed in that fashion, as virtual machines, as opposed to traditional storage, and all the other layers of things that have to be involved in traditional data centers.

The HCI-based data centers also included built-in WAN optimization, built-in backup and recovery, and were largely on solid-state disks (SSDs). All of the other pieces of the hardware stack that you would traditionally have -- from the server on down -- folded into a little box, so to speak, a physical box. With HCI, you get all of that functionality in a much simpler and much easier to manage fashion. It just makes everything easier.

Gardner: When you bring all those HCI elements together, it really creates a solution. Are there any other aspects of HPE’s portfolio, in addition now to SimpliVity, that would be of interest for future projects?

McKittrick: HPE is able to take this further. You have to remember, at the time, SimpliVity was a widget, and they would partner with the server vendors. That was really it, and with VMware.

Now with HPE, SimpliVity can really build out their roadmap. There is all kinds of innovation that's going to come.

Now with HPE, SimpliVity has behind them one of the largest technology companies in the world. They can really build out their roadmap. There is all kinds of innovation that’s going to come. When you then pair that with things like Microsoft Azure Stack and HPE Synergy and its composable architecture -- yes, all of that is going to be folded right in there.

I give HPE credit for having seen what HCI technology can bring to them and can help them springboard forward, and then also apply it back into things that they are already developing. Am I going to have more opportunity with this infrastructure now because of the SimpliVity acquisition? Yes.

Gardner:  For those organizations that want to take advantage of public cloud options, also having HCI-powered hybrid clouds, and composable and automated-bursting and scale-out -- and soon combining that multi-cloud options via HPE New Stack – this gives them the best of all worlds.

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To A Hybrid IT

Environment

McKittrick: Exactly. There you are. You have your hybrid cloud right there. And certainly one could do that with traditional IT, and still have that capability that HPE has been working on. But now, [with SimpliVity HCI] you have just consolidated all of that down to a relatively simple hardware approach. You can now quickly deploy and gain all those hybrid capabilities along with it. And you have the mobility of your applications and workloads, and all of that goodness, so that you can decide where you want to put this stuff.

Gardner: Before we sign off, let's revisit this notion of those organizations that have to have a private cloud. What words of advice might you give them as they pursue such dramatic re-architecting of their entire IT systems?

A people-first process 

McKittrick: Great question. The technology was the easy part. This was my first global HCI roll out, and I have been in the business well over 20 years. The differences come when you are messing with people -- moving their cheese, and messing with their rice bowl. It’s profound. It always comes back to people.

The people and process were the hardest things to deal with, and quite frankly, still are. Make sure that everybody is on-board. They must understand what's happening, why it's happening, and then you try to get all those people pulling in the same direction. Otherwise, you end up in a massive morass and things don't get done, or they become almost unmanageable.

Listen to the podcast. Find it on iTunes. Get the mobile app. Read a full transcript or download a copy. Sponsor: Hewlett Packard Enterprise.

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How Nokia refactors the video delivery business with new time-managed IT financing models

The next BriefingsDirect IT financing and technology acquisition strategies interview examines how Nokia is refactoring the video delivery business. Learn both about new video delivery architectures and the creative ways media companies are paying for the technology that supports them.

Listen to the podcast. Find it on iTunes. Get the mobile app. Read a full transcript or download a copy.

Here to describe new models of Internet Protocol (IP) video and time-managed IT financing is Paul Larbey, Head of the Video Business Unit at Nokia, based in Cambridge, UK. The discussion is moderated by Dana Gardner, Principal Analyst at Interarbor Solutions.

Here are some excerpts:

Gardner: It seems that the video-delivery business is in upheaval. How are video delivery trends coming together to make it necessary for rethinking architectures? How are pricing models and business models changing, too? 

Larbey: We sit here in 2017, but let’s look back 10 years to 2007. There were a couple key events in 2007 that dramatically shaped how we all consume video today and how, as a company, we use technology to go to market.

Larbey

Larbey

It’s been 10 years since the creation of the Apple iPhone. The iPhone sparked whole new device-types, moving eventually into the iPad. Not only that, Apple underneath developed a lot of technology in terms of how you stream video, how you protect video over IP, and the technology underneath that, which we still use today. Not only did they create a new device-type and avenue for us to watch video, they also created new underlying protocols.

It was also 10 years ago that Netflix began to first offer a video streaming service. So if you look back, I see one year in which how we all consume our video today was dramatically changed by a couple of events.

If we fast-forward, and look to where that goes to in the future, there are two trends we see today that will create challenges tomorrow. Video has become truly mobile. When we talk about mobile video, we mean watching some films on our iPad or on our iPhone -- so not on a big TV screen, that is what most people mean by mobile video today.

The future is personalized 

When you can take your video with you, you want to take all your content with you. You can’t do that today. That has to happen in the future. When you are on an airplane, you can’t take your content with you. You need connectivity to extend so that you can take your content with you no matter where you are.

Take the simple example of a driverless car. Now, you are driving along and you are watching the satellite-navigation feed, watching the traffic, and keeping the kids quiet in the back. When driverless cars come, what you are going to be doing? You are still going to be keeping the kids quiet, but there is a void, a space that needs to be filled with activity, and clearly extending the content into the car is the natural next step.

And the final challenge is around personalization. TV will become a lot more personalized. Today we all get the same user experience. If we are all on the same service provider, it looks the same -- it’s the same color, it’s the same grid. There is no reason why that should all be the same. There is no reason why my kids shouldn’t have a different user interface.

There is no reason why I should have 10 pages of channels that I have to through to find something that I want to watch.

The user interface presented to me in the morning may be different than the user interface presented to me in the evening. There is no reason why I should have 10 pages of channels that I have to go through to find something that I want to watch. Why aren’t all those channels specifically curated for me? That’s what we mean by personalization. So if you put those all together and extrapolate those 10 years into the future, then 2027 will be a very different place for video.

Gardner: It sounds like a few things need to change between the original content’s location and those mobile screens and those customized user scenarios you just described. What underlying architecture needs to change in order to get us to 2027 safely?

Larbey: It’s a journey; this is not a step-change. This is something that’s going to happen gradually.

But if you step back and look at the fundamental changes -- all video will be streamed. Today, the majority of what we view is via broadcasting, from cable TV, or from a satellite. It’s a signal that’s going to everybody at the same time.

If you think about the mobile video concept, if you think about personalization, that is not going be the case. Today we watch a portion of our video streamed over IP. In the future, it will all be streamed over IP.

And that clearly creates challenges for operators in terms of how to architect the network, how to optimize the delivery, and how to recreate that broadcast experience using streaming video. This is where a lot of our innovation is focused today.

Gardner: You also mentioned in the case of an airplane, where it's not just streaming but also bringing a video object down to the device. What will be different in terms of the boundary between the stream and a download?

IT’s all about intelligence

Larbey: It’s all about intelligence. Firstly, connectivity has to extend and become really ubiquitous via technology such as 5G. The increase in fiber technology will dramatically enable truly ubiquitous connectivity, which we don’t really have today. That will resolve some of the problems, but not all.

But, by the fact that television will be personalized, the network will know what’s in my schedule. If I have an upcoming flight, machine learning can automatically predict what I’m going to do and make sure it suggests the right content in context. It may download the content because it knows I am going to be sitting in a flight for the next 12 hours.

Gardner: We are putting intelligence into the network to be beneficial to the user experience. But it sounds like it’s also going to give you the opportunity to be more efficient, with just-in-time utilization -- minimal viable streaming, if you will.

How does the network becoming more intelligent also benefit the carriers, the deliverers of the content, and even the content creators and owners? There must be an increased benefit for them on utility as well as in the user experience?

Larbey: Absolutely. We think everything moves into the network, and the intelligence becomes the network. So what does that do immediately? That means the operators don’t have to buy set-top boxes. They are expensive. They are very costly to maintain. They stay in the network a long time. They can have a much lighter client capability, which basically just renders the user interface.

The first obvious example of all this, that we are heavily focused on, is the storage. So taking the hard drive out of the set-top box and putting that data back into the network. Some huge deployments are going on at the moment in collaboration with Hewlett Packard Enterprise (HPE) using the HPE Apollo platform to deploy high-density storage systems that remove the need to ship a set-top box with a hard drive in it.

HPE Rethinks

How to Acquire, Pay For

And Use IT

Now, what are the advantages of that? Everybody thinks it’s costly, so you’ve taken the hard drive out, you have the storage in the network, and that’s clearly one element. But actually if you talk to any operator, their biggest cause of subscriber churn is when somebody’s set-top box fails and they lose their personalized recordings.

The personal connection you had with your service isn’t there any longer. It’s a lot easier to then look at competing services. So if that content is in the network, then clearly you don’t have that churn issue. Not only can you access your content from any mobile device, it’s protected and it will always be with you.

Taking the CDN private

Gardner: For the past few decades, part of the solution to this problem was to employ a content delivery network (CDN) and use that in a variety of ways. It started with web pages and the downloading of flat graphic files. Now that's extended into all sorts of objects and content. Are we going to do away with the CDN? Are we going to refactor it, is it going to evolve? How does that pan out over the next decade?

Larbey: The CDN will still exist. That still becomes the key way of optimizing video delivery -- but it changes. If you go back 10 years, the only CDNs available were CDNs in the Internet. So it was a shared service, you bought capacity on the shared service.

Even today that's how a lot of video from the content owners and broadcasters is streamed. For the past seven years, we have been taking that technology and deploying it in private network -- with both telcos and cable operators -- so they can have their own private CDN, and there are a lot of advantages to having your own private CDN.
You get complete control of the roadmap. You can start to introduce advanced features such as targeted ad insertion, blackout, and features like that to generate more revenue. You have complete control over the quality of experience, which you don't if you outsource to a shared service.

There are a lot of advantages to having your own private CDN. You have complete control over the quality of experience which you don't if you outsource to a shared service.

What we’re seeing now is both the programmers and broadcasters taking an interest in that private CDN because they want the control. Video is their business, so the quality they deliver is even more important to them. We’re seeing a lot of the programmers and broadcasters starting to look at adopting the private CDN model as well.

The challenge is how do you build that? You have to build for peak. Peak is generally driven by live sporting events and one-off news events. So that leaves you with a lot of capacity that’s sitting idle a lot of the time. With cloud and orchestration, we have solved that technically -- we can add servers in very quickly, we can take them out very quickly, react to the traffic demands and we can technically move things around.

But the commercial model has lagged behind. So we have been working with HPE Financial Services to understand how we can innovate on that commercial model as well and get that flexibility -- not just from an IT perspective, but also from a commercial perspective.

Gardner:  Tell me about Private CDN technology. Is that a Nokia product? Tell us about your business unit and the commercial models.

Larbey: We basically help as a business unit. Anyone who has content -- be that broadcasters or programmers – they pay the operators to stream the content over IP, and to launch new services. We have a product focused on video networking: How to optimize a video, how it’s delivered, how it’s streamed, and how it’s personalized.

It can be a private CDN product, which we have deployed for the last seven years, and we have a cloud digital video recorder (DVR) product, which is all about moving the storage capacity into the network. We also have a systems integration part, which brings a lot of technology together and allows operators to combine vendors and partners from the ecosystem into a complete end-to-end solution.

HPE Rethinks

How to Acquire, Pay For

And Use IT

Gardner: With HPE being a major supplier for a lot of the hardware and infrastructure, how does the new cost model change from the old model of pay up-front?

Flexible financial formats

Larbey: I would not classify HPE as a supplier; I think they are our partner. We work very closely together. We use HPE ProLiant DL380 Gen9 Servers, the HPE Apollo platform, and the HPE Moonshot platform, which are, as you know, world-leading compute-storage platforms that deliver these services cost-effectively. We have had a long-term technical relationship.

We are now moving toward how we advance the commercial relationship. We are working with the HPE Financial Services team to look at how we can get additional flexibility. There are a lot of pay-as-you-go-type financial IT models that have been in existence for some time -- but these don’t necessarily work for my applications from a financial perspective.

 Our goal is to use 100 percent of the storage all of the time to maximize the cache hit-rate.

In the private CDN and the video applications, our goal is to use 100 percent of the storage all of the time to maximize the cache hit-rate. With the traditional IT payment model for storage, my application fundamentally breaks that. So having a partner like HPE that was flexible and could understand the application is really important.

We also needed flexibility of compute scaling. We needed to be able to deploy for the peak, but not pay for that peak at all times. That’s easy from the software technology side, but we needed it from the commercial side as well.

And thirdly, we have been trying to enter a new market and be focused on the programmers and broadcasters, which is not our traditional segment. We have been deploying our CDN to the largest telcos and cable operators in the world, but now, selling to that programmers and broadcasters segment -- they are used to buying a service from the Internet and they work in a different way and they have different requirements.

So we needed a financial model that allowed us to address that, but also a partner who would take some of the risk, too, because we didn’t know if it was going to be successful. Thankfully it has, and we have grown incredibly well, but it was a risk at the start. Finding a partner like HPE Financial Services who could share some of that risk was really important. 

Gardner: These video delivery organizations are increasingly operating on subscription basis, so they would like to have their costs be incurred on a similar basis, so it all makes sense across the services ecosystem.

Our tolerance just doesn't exist anymore for buffering and we demand and expect the highest-quality video.

Larbey: Yes, absolutely. That is becoming more and more important. If you go back to the very first the Internet video, you watched of a cat falling off a chair on YouTube. It didn’t matter if it was buffering, that wasn't relevant. Now, our tolerance just doesn’t exist anymore for buffering and we demand and expect the highest-quality video.

If TV in 2027 is going to be purely IP, then clearly that has to deliver exactly the same quality of experience as the broadcasting technologies. And that creates challenges. The biggest obvious example is if you go to any IP TV operator and look at their streamed video channel that is live versus the one on broadcast, there is a big delay.

So there is a lag between the live event and what you are seeing on your IP stream, which is 30 to 40 seconds. If you are in an apartment block, watching a live sporting event, and your neighbor sees it 30 to 40 seconds before you, that creates a big issue. A lot of the innovations we’re now doing with streaming technologies are to deliver that same broadcast experience.

HPE Rethinks

How to Acquire, Pay For

And Use IT

Gardner: We now also have to think about 4K resolution, the intelligent edge, no latency, and all with managed costs. Fortunately at this time HPE is also working on a lot of edge technologies, like Edgeline and Universal IoT, and so forth. There’s a lot more technology being driven to the edge for storage, for large memory processing, and so forth. How are these advances affecting your organization? 

Optimal edge: functionality and storage

Larbey: There are two elements. The compute, the edge, is absolutely critical. We are going to move all the intelligence into the network, and clearly you need to reduce the latency, and you need to able to scale that functionality. This functionality was scaled in millions of households, and now it has to be done in the network. The only way you can effectively build the network to handle that scale is to put as much functionality as you can at the edge of the network.

The HPE platforms will allow you to deploy that computer storage deep into the network, and they are absolutely critical for our success. We will run our CDN, our ad insertion, and all that capability as deeply into the network as an operator wants to go -- and certainly the deeper, the better.

The other thing we try to optimize all of the time is storage. One of the challenges with network-based recording -- especially in the US due to the content-use regulations compliance -- is that you have to store a copy per user. If, for example, both of us record the same program, there are two versions of that program in the cloud. That’s clearly very inefficient.

The question is how do you optimize that, and also support just-in-time transcoding techniques that have been talked about for some time. That would create the right quality of bitrate on the fly, so you don’t have to store all the different formats. It would dramatically reduce storage costs.

The challenge has always been that the computing processing units (CPUs) needed to do that, and that’s where HPE and the Moonshot platform, which has great compute density, come in. We have the Intel media library for doing the transcoding. It’s a really nice storage platform. But we still wanted to get even more out of it, so at our Bell Labs research facility we developed a capability called skim storage, which for a slight increase in storage, allows us to double the number of transcodes we can do on a single CPU.

That approach takes a really, really efficient hardware platform with nice technology and doubles the density we can get from it -- and that’s a big change for the business case.

Gardner: It’s astonishing to think that that much encoding would need to happen on the fly for a mass market; that’s a tremendous amount of compute, and an intense compute requirement. 

Content popularity

Larbey: Absolutely, and you have to be intelligent about it. At the end of the day, human behavior works in our favor. If you look at most programs that people record, if they do not watch within the first seven days, they are probably not going to watch that recording. That content in particular then can be optimized from a storage perspective. You still need the ability to recreate it on the fly, but it improves the scale model.

Gardner: So the more intelligent you can be about what the users’ behavior and/or their use patterns, the more efficient you can be. Intelligence seems to be the real key here.

Larbey: Yes, we have a number of algorithms even within the CDN itself today that predict content popularity. We want to maximize the disk usage. We want the popular content on the disk, so what’s the point of us deleting a piece of a popular content just because a piece of long-tail content has been requested. We do a lot of algorithms looking at and trying to predict the content popularity so that we can make sure we are optimizing the hardware platform accordingly.

Gardner: Perhaps we can deepen our knowledge about this all through some examples. Do have some examples that demonstrate how your clients and customers are taking these new technologies and making better business decisions that help them in their cost structure -- but also deliver a far better user experience?

In-house control

Larbey: One of our largest customers is Liberty Global, with a large number of cable operators in a variety of countries across Europe. They were enhancing an IP service. They started with an Internet-based CDN and that’s how they were delivering their service. But recognizing the importance of gaining more control over costs and the quality experience, they wanted to take that in-house and put the content on a private CDN.

We worked with them to deliver that technology. One of things that they noticed very quickly, which I don’t think they were expecting, was a dramatic reduction in the number of people calling in to complain because the stream had stopped or buffered. They enjoyed a big decrease in call-center calls as soon as they switched on our new CDN technology, which is quite an interesting use-case benefit.

When they deployed a private CDN, they reached costs payback in less than 12 months.

We do a lot with Sky in the UK, which was also looking to migrate away from an Internet-based CDN service into something in-house so they could take more control over it and improve the users’ quality of experience. 

One of our customers in Canada, TELUS, when they deployed a private CDN, they reached costs payback in less than 12 months in terms of both the network savings and the Internet CDN costs savings.

Gardner: Before we close out, perhaps a look to the future and thinking about some of the requirements on business models as we leverage edge intelligence. What about personalization services, or even inserting ads in different ways? Can there be more of a two-way relationship, or a one-to-one interaction with the end consumers? What are the increased benefits from that high-performing, high-efficiency edge architecture? 

VR vision and beyond

Larbey: All of that generates more traffic -- moving from standard-definition to high-definition to 4K, to beyond 4K -- it all generates more network traffic. You then take into account a 360-degree-video capability and virtual reality (VR) services, which is a focus for Nokia with our Ozo camera, and it’s clear that the data is just going to explode.

So being able to optimize, and continue to optimize that, in terms of new codec technology and new streaming technologies -- to be able to constrain the growth of video demands on the network – is essential, otherwise the traffic would just explode.

There is lot of innovation going on to optimize the content experience. People may not want to watch all their TV through VR headsets. That may not become the way you want to watch the latest episode of Game of Thrones. However, maybe there will be a uniquely created piece of content that’s an add-on in 360, and the real serious fans can go and look for it. I think we will see new types of content being created to address these different use-cases.

Listen to the podcast. Find it on iTunes. Get the mobile app. Read a full transcript or download a copy. Sponsor: Hewlett Packard Enterprise.

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How Imagine Communications leverages edge computing and HPC for live multiscreen IP video

The next BriefingsDirect Voice of the Customer HPC and edge computing strategies interview explores how a video delivery and customization capability has moved to the network edge -- and closer to consumers -- to support live, multi-screen Internet Protocol (IP) entertainment delivery. 

Listen to the podcast. Find it on iTunes. Get the mobile app. Read a full transcript or download a copy.

We’ll learn how hybrid technology and new workflows for IP-delivered digital video are being re-architected -- with significant benefits to the end-user experience, as well as with new monetization values to the content providers.

Our guest is Glodina Connan-Lostanlen, Chief Marketing Officer at Imagine Communications in Frisco, Texas. The discussion is moderated by Dana Gardner, Principal Analyst at Interarbor Solutions.

Here are some excerpts:

Gardner: Your organization has many major media clients. What are the pressures they are facing as they look to the new world of multi-screen video and media?

Connan-Lostanlen: The number-one concern of the media and entertainment industry is the fragmentation of their audience. We live with a model supported by advertising and subscriptions that rely primarily on linear programming, with people watching TV at home.

Connan-Lostanlen

Connan-Lostanlen

And guess what? Now they are watching it on the go -- on their telephones, on their iPads, on their laptops, anywhere. So they have to find the way to capture that audience, justify the value of that audience to their advertisers, and deliver video content that is relevant to them. And that means meeting consumer demand for several types of content, delivered at the very time that people want to consume it.  So it brings a whole range of technology and business challenges that our media and entertainment customers have to overcome. But addressing these challenges with new technology that increases agility and velocity to market also creates opportunities.

For example, they can now try new content. That means they can try new programs, new channels, and they don’t have to keep them forever if they don’t work. The new models create opportunities to be more creative, to focus on what they are good at, which is creating valuable content. At the same time, they have to make sure that they cater to all these different audiences that are either static or on the go.

Gardner: The media industry has faced so much change over the past 20 years, but this is a major, perhaps once-in-a-generation, level of change -- when you go to fully digital, IP-delivered content.

As you say, the audience is pulling the providers to multi-screen support, but there is also the capability now -- with the new technology on the back-end -- to have much more of a relationship with the customer, a one-to-one relationship and even customization, rather than one-to-many. Tell us about the drivers on the personalization level.

Connan-Lostanlen: That’s another big upside of the fragmentation, and the advent of IP technology -- all the way from content creation to making a program and distributing it. It gives the content creators access to the unique viewers, and the ability to really engage with them -- knowing what they like -- and then to potentially target advertising to them. The technology is there. The challenge remains about how to justify the business model, how to value the targeted advertising; there are different opinions on this, and there is also the unknown or the willingness of several generations of viewers to accept good advertising.

That is a great topic right now, and very relevant when we talk about linear advertising and dynamic ad insertion (DAI). Now we are able to -- at the very edge of the signal distribution, the video signal distribution -- insert an ad that is relevant to each viewer, because you know their preferences, you know who they are, and you know what they are watching, and so you can determine that an ad is going to be relevant to them.

But that means media and entertainment customers have to revisit the whole infrastructure. It’s not necessary rebuilding, they can put in add-ons. They don’t have to throw away what they had, but they can maintain the legacy infrastructure and add on top of it the IP-enabled infrastructure to let them take advantage of these capabilities.

Gardner: This change has happened from the web now all the way to multi-screen. With the web there was a model where you would use a content delivery network (CDN) to take the object, the media object, and place it as close to the edge as you could. What’s changed and why doesn’t that model work as well?

Connan-Lostanlen: I don’t know yet if I want to say that model doesn’t work anymore. Let’s let the CDN providers enhance their technology. But for sure, the volume of videos that we are consuming everyday is exponentially growing. That definitely creates pressure in the pipe. Our role at the front-end and the back-end is to make sure that videos are being created in different formats, with different ads, and everything else, in the most effective way so that it doesn’t put an undue strain on the pipe that is distributing the videos.

We are being pushed to innovate further on the type of workflows that we are implementing at our customers’ sites today, to make it efficient, to not leave storage at the edge and not centrally, and to do transcoding just-in-time. These are the things that are being worked on. It’s a balance between available capacity and the number of programs that you want to send across to your viewers – and how big your target market is.

The task for us on the back-end is to rethink the workflows in a much more efficient way. So, for example, this is what we call the digital-first approach, or unified distribution. Instead of planning a linear channel that goes the traditional way and then adding another infrastructure for multi-screen, on all those different platforms and then cable, and satellite, and IPTV, etc. -- why not design the whole workflow digital-first. This frees the content distributor or provider to hold off on committing to specific platforms until the video has reached the edge. And it’s there that the end-user requirements determine how they get the signal.

This is where we are going -- to see the efficiencies happen and so remove the pressure on the CDNs and other distribution mechanisms, like over-the-air.

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Gardner: It means an intelligent edge capability, whereas we had an intelligent core up until now. We’ll also seek a hybrid capability between them, growing more sophisticated over time.

We have a whole new generation of technology for video delivery. Tell us about Imagine Communications. How do you go to market? How do you help your customers?

Education for future generations

Connan-Lostanlen: Two months ago we were in Las Vegas for our biggest tradeshow of the year, the NAB Show. At the event, our customers first wanted to understand what it takes to move to IP -- so the “how.” They understand the need to move to IP, to take advantage of the benefits that it brings. But how do they do this, while they are still navigating the traditional world?

It’s not only the “how,” it’s needing examples of best practices. So we instructed them in a panel discussion, for example, on Over the Top Technology (OTT), which is another way of saying IP-delivered, and what it takes to create a successful multi-screen service. Part of the panel explained what OTT is, so there’s a lot of education.

There is also another level of education that we have to provide, which is moving from the traditional world of serial digital interfaces (SDIs) in the broadcast industry to IP. It’s basically saying analog video signals can be moved into digital. Then not only is there a digitally sharp signal, it’s an IP stream. The whole knowledge about how to handle IP is new to our own industry, to our own engineers, to our own customers. We also have to educate on what it takes to do this properly.

One of the key things in the media and entertainment industry is that there’s a little bit of fear about IP, because no one really believed that IP could handle live signals. And you know how important live television is in this industry – real-time sports and news -- this is where the money comes from. That’s why the most expensive ads are run during the Super Bowl.

It’s essential to be able to do live with IP – it’s critical. That’s why we are sharing with our customers the real-life implementations that we are doing today.

We are also pushing multiple standards forward. We work with our competitors on these standards. We have set up a trade association to accelerate the standards work. We did all of that. And as we do this, it forces us to innovate in partnership with customers and bring them on board. They are part of that trade association, they are part of the proof-of-concept trials, and they are gladly sharing their experiences with others so that the transition can be accelerated.

Gardner: Imagine Communications is then a technology and solutions provider to the media content companies, and you provide the means to do this. You are also doing a lot with ad insertion, billing, in understanding more about the end-user and allowing that data flow from the edge back to the core, and then back to the edge to happen.

At the heart of it all

Connan-Lostanlen: We do everything that happens behind the camera -- from content creation all the way to making a program and distributing it. And also, to your point, on monetizing all that with a management system. We have a long history of powering all the key customers in the world for their advertising system. It’s basically an automated system that allows the selling of advertising spots, and then to bill them -- and this is the engine of where our customers make money. So we are at the heart of this.

We are in the prime position to help them take advantage of the new advertising solutions that exist today, including dynamic ad insertion. In other words, how you target ads to the single viewer. And the challenge for them is now that they have a campaign, how do they design it to cater both to the linear traditional advertising system as well as the multi-screen or web mobile application? That's what we are working on. We have a whole set of next-generation platforms that allow them to take advantage of both in a more effective manner.

Gardner: The technology is there, you are a solutions provider. You need to find the best ways of storing and crunching data, close to the edge, and optimizing networks. Tell us why you choose certain partners and what are the some of the major concerns you have when you go to the technology marketplace?

Connan-Lostanlen: One fundamental driver here, as we drive the transition to IP in this industry, is in being able to rely on consumer-off-the-shelf (COTS) platforms. But even so, not all COTS platforms are born equal, right?

For compute, for storage, for networking, you need to rely on top-scale hardware platforms, and that’s why about two years ago we started to work very closely with Hewlett Packard Enterprise (HPE) for both our compute and storage technology.

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Solutions from HPE

We develop the software appliances that run on those platforms, and we sell this as a package with HPE. It’s been a key value proposition of ours as we began this journey to move to IP. We can say, by the way, our solutions run on HPE hardware. That's very important because having high-performance compute (HPC) that scales is critical to the broadcast and media industry. Having storage that is highly reliable is fundamental because going off the air is not acceptable. So it's 99.9999 percent reliable, and that’s what we want, right?

It’s a fundamental part of our message to our customers to say, “In your network, put Imagine solutions, which are powered by one of the top compute and storage technologies.”

Gardner: Another part of the change in the marketplace is this move to the edge. It’s auspicious that just as you need to have more storage and compute efficiency at the edge of the network, close to the consumer, the infrastructure providers are also designing new hardware and solutions to do just that. That's also for the Internet of Things (IoT) requirements, and there are other drivers. Nonetheless, it's an industry standard approach.

What is it about HPE Edgeline, for example, and the architecture that HPE is using, that makes that edge more powerful for your requirements? How do you view this architectural shift from core data center to the edge?

Optimize the global edge

Connan-Lostanlen: It's a big deal because we are going to be in a hybrid world. Most of our customers, when they hear about cloud, we have to explain it to them. We explain that they can have their private cloud where they can run virtualized applications on-premises, or they can take advantage of public clouds.

Being able to have a hybrid model of deployment for their applications is critical, especially for large customers who have operations in several places around the globe. For example, such big names as Disney, Turner –- they have operations everywhere. For them, being able to optimize at the edge means that you have to create an architecture that is geographically distributed -- but is highly efficient where they have those operations. This type of technology helps us deliver more value to the key customers.

Gardner: The other part of that intelligent edge technology is that it has the ability to be adaptive and customized. Each region has its own networks, its own regulation, and its own compliance, security, and privacy issues. When you can be programmatic as to how you design your edge infrastructure, then a custom-applications-orientation becomes possible.

Is there something about the edge architecture that you would like to see more of? Where do you see this going in terms of the capabilities of customization added-on to your services?

Connan-Lostanlen: One of the typical use-cases that we see for those big customers who have distributed operations is that they like to try and run their disaster recovery (DR) site in a more cost-effective manner. So the flexibility that an edge architecture provides to them is that they don’t have to rely on central operations running DR for everybody. They can do it on their own, and they can do it cost-effectively. They don't have to recreate the entire infrastructure, and so they do DR at the edge as well.

We especially see this a lot in the process of putting the pieces of the program together, what we call “play out,” before it's distributed. When you create a TV channel, if you will, it’s important to have end-to-end redundancy -- and DR is a key driver for this type of application.

Gardner: Are there some examples of your cutting-edge clients that have adopted these solutions? What are the outcomes? What are they able to do with it?

Pop-up power

Connan-Lostanlen: Well, it’s always sensitive to name those big brand names. They are very protective of their brands. However, one of the top ones in the world of media and entertainment has decided to move all of their operations -- from content creation, planning, and distribution -- to their own cloud, to their own data center.

They are at the forefront of playing live and recorded material on TV -- all from their cloud. They needed strong partners in data centers. So obviously we work with them closely, and the reason why they do this is simply to really take advantage of the flexibility. They don't want to be tied to a restricted channel count; they want to try new things. They want to try pop-up channels. For the Oscars, for example, it’s one night. Are you going to recreate the whole infrastructure if you can just check it on and off, if you will, out of their data center capacity? So that's the key application, the pop-up channels and ability to easily try new programs.

Gardner: It sounds like they are thinking of themselves as an IT company, rather than a media and entertainment company that consumes IT. Is that shift happening?

Connan-Lostanlen: Oh yes, that's an interesting topic, because I think you cannot really do this successfully if you don’t start to think IT a little bit. What we are seeing, interestingly, is that our customers typically used to have the IT department on one side, the broadcast engineers on the other side -- these were two groups that didn't speak the same language. Now they get together, and they have to, because they have to design together the solution that will make them more successful. We are seeing this happening.

I wouldn't say yet that they are IT companies. The core strength is content, that is their brand, that's what they are good at -- creating amazing content and making it available to as many people as possible.

They have to understand IT, but they can't lose concentration on their core business. I think the IT providers still have a very strong play there. It's always happening that way.

In addition to disaster recovery being a key application, multi-screen delivery is taking advantage of that technology, for sure.

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High-Performance Computing

Solutions from HPE

Gardner: These companies are making this cultural shift to being much more technically oriented. They think about standard processes across all of what they do, and they have their own core data center that's dynamic, flexible, agile and cost-efficient. What does that get for them? Is it too soon, or do we have some metrics of success for companies that make this move toward a full digitally transformed organization?

Connan-Lostanlen: They are very protective about the math. It is fair to say that the up-front investments may be higher, but when you do the math over time, you do the total cost of ownership for the next 5 to 10 years -- because that’s typically the life cycle of those infrastructures – then definitely they do save money. On the operational expenditure (OPEX) side [of private cloud economics] it’s much more efficient, but they also have upside on additional revenue. So net-net, the return on investment (ROI) is much better. But it’s kind of hard to say now because we are still in the early days, but it’s bound to be a much greater ROI.

Another specific DR example is in the Middle East. We have a customer there who decided to operate the DR and IP in the cloud, instead of having a replicated system with satellite links in between. They were able to save $2 million worth of satellite links, and that data center investment, trust me, was not that high. So it shows that the ROI is there.

My satellite customers might say, “Well, what are you trying to do?” The good news is that they are looking at us to help them transform their businesses, too. So big satellite providers are thinking broadly about how this world of IP is changing their game. They are examining what they need to do differently. I think it’s going to create even more opportunities to reduce costs for all of our customers.

IT enters a hybrid world

Gardner: That's one of the intrinsic values of a hybrid IT approach -- you can use many different ways to do something, and then optimize which of those methods works best, and also alternate between them for best economics. That’s a very powerful concept.

Connan-Lostanlen: The world will be a hybrid IT world, and we will take advantage of that. But, of course, that will come with some challenges. What I think is next is the number-one question that I get asked.

Three years ago costumers would ask us, “Hey, IP is not going to work for live TV.” We convinced them otherwise, and now they know it’s working, it’s happening for real.

Secondly, they are thinking, “Okay, now I get it, so how do I do this?” We showed them, this is how you do it, the education piece.

Now, this year, the number-one question is security. “Okay, this is my content, the most valuable asset I have in my company. I am not putting this in the cloud,” they say. And this is where another piece of education has to start, which is: Actually, as you put stuff on your cloud, it’s more secure.

And we are working with our technology providers. As I said earlier, the COTS providers are not equal. We take it seriously. The cyber attacks on content and media is critical, and it’s bound to happen more often.

Initially there was a lack of understanding that you need to separate your corporate network, such as emails and VPNs, from you broadcast operations network. Okay, that’s easy to explain and that can be implemented, and that's where most of the attacks over the last five years have happened. This is solved.

They are going to get right into the servers, into the storage, and try to mess with it over there. So I think it’s super important to be able to say, “Not only at the software level, but at the hardware firmware level, we are adding protection against your number-one issue, security, which everybody can see is so important.”

However, the cyber attackers are becoming more clever, so they will overcome these initial defenses.They are going to get right into the servers, into the storage, and try to mess with it over there. So I think it’s super important to be able to say, “Not only at the software level, but at the hardware firmware level, we are adding protection against your number-one issue, security, which everybody can see is so important.”

Gardner: Sure, the next domino to fall after you have the data center concept, the implementation, the execution, even the optimization, is then to remove risk, whether it's disaster recovery, security, right down to the silicon and so forth. So that’s the next thing we will look for, and I hope I can get a chance to talk to you about how you are all lowering risk for your clients the next time we speak.

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High-Performance Computing

Solutions from HPE

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Hybrid cloud ecosystem readies for impact from arrival of Microsoft Azure Stack

The next BriefingsDirect cloud deployment strategies interview explores how hybrid cloud ecosystem players such as PwC and Hewlett Packard Enterprise (HPE) are gearing up to support the Microsoft Azure Stack private-public cloud continuum.

We’ll now learn what enterprises can do to make the most of hybrid cloud models and be ready specifically for Microsoft’s solutions for balancing the boundaries between public and private cloud deployments.

Listen to the podcast. Find it on iTunes. Get the mobile app. Read a full transcript or download a copy.

Here to explore the latest approaches for successful hybrid IT, we’re joined by Rohit “Ro” Antao, a Partner at PwC, and Ken Won, Director of Cloud Solutions Marketing at HPE. The discussion is moderated by Dana Gardner, Principal Analyst at Interarbor Solutions.

Here are some excerpts:

Gardner: Ro, what are the trends driving adoption of hybrid cloud models, specifically Microsoft Azure Stack? Why are people interested in doing this?

Antao: What we have observed in the last 18 months is that a lot of our clients are now aggressively pushing toward the public cloud. In that journey there are a couple of things that are becoming really loud and clear to them.

Journey to the cloud

Number one is that there will always be some sort of a private data center footprint. There are certain workloads that are not appropriate for the public cloud; there are certain workloads that perform better in the private data center. And so the first acknowledgment is that there is going to be that private, as well as public, side of how they deliver IT services.

Now, that being said, they have to begin building the capabilities and the mechanisms to be able to manage these different environments seamlessly. As they go down this path, that's where we are seeing a lot of traction and focus.

The other trend in conjunction with that is in the public cloud space where we see a lot of traction around Azure. They have come on strong. They have been aggressively going after the public cloud market. Being able to have that seamless environment between private and public with Azure Stack is what’s driving a lot of the demand.

Won: We at HPE are seeing that very similarly, as well. We call that “hybrid IT,” and we talk about how customers need to find the right mix of private and public -- and managed services -- to fit their businesses. They may put some services in a public cloud, some services in a private cloud, and some in a managed cloud. Depending on their company strategy, they need to figure out which workloads go where.

Won

Won

We have these conversations with many of our customers about how do you determine the right placement for these different workloads -- taking into account things like security, performance, compliance, and cost -- and helping them evaluate this hybrid IT environment that they now need to manage.

Gardner: Ro, a lot of what people have used public cloud for is greenfield apps -- beginning in the cloud, developing in the cloud, deploying in the cloud -- but there's also an interest in many enterprises about legacy applications and datasets. Is Azure Stack and hybrid cloud an opportunity for them to rethink where their older apps and data should reside?

Antao: Absolutely. When you look at the broader market, a lot of these businesses are competing today in very dynamic markets. When companies today think about strategy, it's no longer the 5- and 10-year strategy. They are thinking about how to be relevant in the market this year, today, this quarter. That requires a lot of flexibility in their business model; that requires a lot of variability in their cost structure.

Antao

Antao

When you look at it from that viewpoint, a lot of our clients look at the public cloud as more than, “Is the app suitable for the public cloud?” They are also seeking certain cost advantages in terms of variability in that cost structure that they can take advantage of. And that’s where we are seeing them look at the public cloud beyond just applications in terms that are suitable for public cloud.

Public and/or private power

Won: We help a lot of companies think about where the best place is for their traditional apps. Often they don’t want to restructure them, they don’t want to rewrite them, because they are already an investment; they don’t want to spend a lot of time refactoring them.

If you look at these traditional applications, a lot of times when they are dealing with data – especially if they are dealing with sensitive data -- those are better placed in a private cloud.

Antao: One of the great things about Microsoft Azure Stack is it gives the data center that public cloud experience -- where developers have the similar experience as they would in a public cloud. The only difference is that you are now controlling the costs as well. So that's another big advantage we see.

Hybrid Cloud Solutions

for Microsoft Azure Stack

Won: Yeah, absolutely, it's giving the developers the experience of a public cloud, but from the IT standpoint of also providing the compliance, the control, and the security of a private cloud. Allowing applications to be deployed in either a public or private cloud -- depending on its requirements -- is incredibly powerful. There's no other environment out there that provides that API-compatibility between private and public cloud deployments like Azure Stack does. 

Gardner: Clearly Microsoft is interested in recognizing that skill sets, platform affinity, and processes are all really important. If they are able to provide a private cloud and public cloud experience that’s common to the IT operators that are used to using Microsoft platforms and frameworks -- that's a boon. It's also important for enterprises to be able to continue with the skills they have.

Ro, is such a commonality of skills and processes not top of mind for many organizations? 

Antao: Absolutely! I think there is always the risk when you have different environments having that “swivel chair” approach. You have a certain set of skills and processes for your private data center. Then you now have a certain set of skills and processes to manage your public cloud footprint.

One of the big problems and challenges that this solves is being able to drive more of that commonality across consistent sets of processes. You can have a similar talent pool, and you have similar kinds of training and awareness that you are trying to drive within the organization -- because you now can have similar stacks on both ends.

Won: That's a great point. We know that the biggest challenge to adopting new concepts is not the technology; it's really the people and process issues. So if you can address that, which is what Azure Stack does, it makes it so much easier for enterprises to bring on new capabilities, because they are leveraging the experience that they already have using Azure public cloud.

Gardner: Many IT organizations are familiar with Microsoft Azure Stack. It's been in technical preview for quite some time. As it hits the market in September 2017, in seeking that total-solution, people-and-process approach, what is PwC bringing to the table to help organizations get the best value and advantage out of Azure Stack?

Hybrid: a tectonic IT shift

Antao: Ken made the point earlier in this discussion about hybrid IT. When you look at IT pivoting to more of the hybrid delivery mode, it's a tectonic shift in IT's operating model, in their architecture, their culture, in their roles and responsibilities – in the fundamental value proposition of IT to the enterprise.

When we partner with HPE in helping organizations drive through this transformation, we work with HPE in rethinking the operating model, in understanding the new kinds of roles and skills, of being able to apply these changes in the context of the business drivers that are leading it. That's one of the typical ways that we work with HPE in this space.

Won: It's a great complement. HPE understands the technology, understands the infrastructure, combined with the business processes, and then the higher level of thinking and the strategy knowledge that PwC has. It's a great partnership.

Gardner: Attaining hybrid IT efficiency and doing it with security and control is not something you buy off the shelf. It's not a license. It seems to me that an ecosystem is essential. But how do IT organizations manage that ecosystem? Are there ways that you all are working together, HPE in this case with PwC, and with Microsoft to make that consumption of an ecosystem solution much more attainable?

Won: One of the things that we are doing is working with Microsoft on their partnerships so that we can look at all these companies that have their offerings running on Azure public cloud and ensuring that those are all available and supported in Azure Stack, as well as running in the data center.

We are spending a lot of time with Microsoft on their ecosystem to make sure those services, those companies, or those products are available on Azure Stack -- as well fully supported on Azure Stack that’s running on HPE gear.

Gardner: They might not be concerned about the hardware, but they are concerned about the total value -- and the total solution. If the hardware players aren't collaborating well with the service providers and with the cloud providers -- then that's not going to work.

Quick collaboration is key

Won: Exactly! I think of it like a washing machine. No one wants to own a washing machine, but everyone wants clean clothes. So it's the necessary evil, it’s super important, but you just as soon not have to do it.

Gardner: I just don’t know what to take to the dry cleaner or not, right?

Won: Yeah, there you go!

Hybrid Cloud Solutions

for Microsoft Azure Stack

Antao: From a consulting standpoint, clients no longer have the appetite for these five- to six-year transformations. Their businesses are changing at a much faster pace. One of the ways that we are working the ecosystem-level solution -- again much like the deep and longstanding relationship we have had with HPE – is we have also been working with Microsoft in the same context.

And in a three-way fashion, we have focused on being able to define accelerators to deploying these solutions. So codifying a lot of our experiences, the lessons learned, a deep understanding of both the public and the private stack to be able to accelerate value for our customers -- because that’s what they expect today.

Won: One of the things, Ro, that you brought up, and I think is very relevant here, is these three-way relationships. Customers don't want to have to deal with all of these different vendors, these different pieces of stack or different aspects of the value chain. They instead expect us as vendors to be working together. So HPE, PwC, Microsoft are all working together to make it easier for the customers to ultimately deliver the services they need to drive their business.

Low risk, all reward

Gardner: So speed-to-value, super important; common solution cooperation and collaboration synergy among the partners, super important. But another part of this is doing it at low risk, because no one wants to be in a transition from a public to private or a full hybrid spectrum -- and then suffer performance issues, lost data, with end customers not happy.

PwC has been focused on governance, risk management and compliance (GRC) in trying to bring about better end-to-end hybrid IT control. What is it that you bring to this particular problem that is unique? It seems that each enterprise is doing this anew, but you have done it for a lot of others and experience can be very powerful that way.

Antao: Absolutely! The move to hybrid IT is a fundamental shift in governance models, in how you address certain risks, the emergence of new risks, and new security challenges. A lot of what we have been doing in this space has been in helping that IT organizations accelerate that shift -- that paradigm shift -- that they have to make.

In that context, we have been working very closely with HPE to understand what the requirements of that new world are going to look like. We can build and bring to the table solutions that support those needs.

Won: It’s absolutely critical -- this experience that PwC has is huge. We always come up with new technologies; every few years you have something new. But it’s that experience that PwC has to bring to the table that's incredibly helpful to our customer base.

Antao: So often when we think of governance, it’s more in terms of the steady state and the runtime. But there's this whole journey between getting from where we today to that hybrid IT state -- and having the governing mechanisms around it -- so that they can do it in a way that doesn't expose their business to too much risk. There is always risk involved in these large-scale transformations, but how do you manage and govern that process through getting to that hybrid IT state? That’s where we also spend a lot of time as we help clients through this transformation.

Gardner: For IT shops that are heavily Microsoft-focused, is there a way for them to master Azure Stack, the people, process and technology that will then be an accelerant for them to go to a broader hybrid IT capability? I’m thinking of multi-cloud, and even being able to develop with DevOps and SecOps across a multiple cloud continuum as a core competency.

Is Azure Stack for many companies a stepping-stone to a wider hybrid capability, Ro?

Managed multi-cloud continuum

Antao: Yes. And I think in many cases that’s inevitable. When you look at most organizations today, generally speaking, they have at least two public cloud providers that they use. They consume several Software as a service (SaaS) applications. They have multiple data center locations.  The role of IT now is to become the broker and integrator of multi-cloud environments, among and between on-premise and in the public cloud. That's where we see a lot of them evolve their management practices, their processes, the talent -- to be able to abstract these different pools and focus on the business. That's where we see a lot of the talent development.

Hybrid Cloud Solutions

for Microsoft Azure Stack

Won: We see that as well at HPE as this whole multi-cloud strategy is being implemented. More and more, the challenge that organizations are having is that they have these multiple clouds, each of which is managed by a different team or via different technologies with different processes.

So as a way to bring these together, there is huge value to the customer, by bringing together, for example, Azure Stack and Azure [public cloud] together. They may have multiple Azure Stack environments, perhaps in different data centers, in different countries, in different locales. We need to help them align their processes to run much more efficiently and more effectively. We need to engage with them not only from an IT standpoint, but also from the developer standpoint. They can use those common services to develop that application and deploy it in multiple places in the same way.

Antao: What's making this whole environment even more complex these days is that a couple of years ago, when we talked about multi-cloud, it was really the capability to either deploy in one public cloud versus another.

Few years later, it evolved into being able to port workloads seamlessly from one cloud to another. Today, as we look at the multi-cloud strategy that a lot of our clients are exploring this: Within a given business workflow, depending on the unique characteristics of different parts of that business process, how do you leverage different clouds given their unique strengths and weaknesses?

There might be portions of a business process that, to your point earlier, Ken, are highly confidential. You are dealing with a lot of compliance requirements. You may want to consume from an internal private cloud. There are other parts of it that you are looking for, such as immense scale, to deal with the peaks when that particular business process gets impacted. How do you go back to where the public cloud has a history with that? In a third case, it might be enterprise-grades workloads.

So that’s where we are seeing multi-cloud evolve, into where in one business process could have multiple sources, and so how does an IT organization manage that in a seamless way?

Gardner: It certainly seems inevitable that the choice of such a cloud continuum configuration model will vary and change. It could be one definition in one country or region, another definition in another country and region. It could even be contextual, such as by the type of end user who's banging on the app. As the Internet of Things (IoT) kicks in, we might be thinking about not just individuals, but machine-to-machine (M2M), app-to-app types of interactions.

So quite a bit of complexity, but dealt with in such a way that the payoff could be monumental. If you do hybrid cloud and hybrid IT well, what could that mean for your business in three to five years, Ro?

Nimble, quick and cost-efficient

Antao: Clearly there is the agility aspect, of being able to seamlessly leverage these different clouds to allow IT organizations to be much more nimble in how they respond to the business.

From a cost standpoint, and this is actually a great example we had for a large-scale migration that we are currently doing to the public cloud. What the IT organization found was they consumed close to 70 percent of their migration budget for only 30 percent of the progress that they made.

And a larger part of that was because the minute you have your workloads sitting on a public cloud -- whether it is a development workload or you are still working your way through it, but technically it’s not yet providing value -- the clock is ticking. Being able to allow for a hybrid environment, where you a do a lot of that development, get it ready -- almost production-ready -- and then when the time is right to drive value from that application -- that’s when you move to a public cloud. Those are huge cost savings right there.

Clients that have managed to balance those two paradigms are the ones who are also seeing a lot of economic efficiencies.

Won: The most important thing that people see value in is that agility. The ability to respond much faster to competitive actions or to new changes in the market, the ability to bring applications out faster, to be able to update applications in months -- or sometimes even weeks -- rather than the two years that it used to take.

It's that agility to allow people to move faster and to shift their capabilities so much quicker than they have ever been able to do – that is the top reason why we're seeing people moving to this hybrid model. The cost factor is also really critical as they look at whether they are doing CAPEX or OPEX and private cloud or public cloud.

One of the things that we have been doing at HPE through our Flexible Capacity program is that we enable our customers who were getting hardware to run these private clouds to actually pay for it on a pay-as-you-go basis. This allows them to better align their usage -- the cost to their usage. So taking that whole concept of pay-as-you-go that we see in the public cloud and bringing that into a private cloud environment.

Hybrid Cloud Solutions

for Microsoft Azure Stack

Antao: That’s a great point. From a cost standpoint, there is an efficiency discussion. But we are also seeing in today's world that we are depending on edge computing a lot more. I was talking to the CIO of a large park the other day, and his comment to me was, yes, they would love to use the public cloud but they cannot afford for any kind of latency or disruption of services because that means he’s got thousands of visitors and guests in his park, because of the amount of dependency on technology he can afford that kind of latency.

And so part of it is also the revenue impact discussion, and using public cloud in a way that allows you to manage some of those risks in terms of that analytical power and that computing power you need closer to the edge -- closer to your internal systems.

Gardner: Microsoft Azure Stack is reinforcing the power and capability of hybrid cloud models, but Azure Stack is not going to be the same for each individual enterprise. How they differentiate, how they use and take advantage of a hybrid continuum will give them competitive advantages and give them a one-up in terms of skills.

It seems to me that the continuum of Azure Stack, of a hybrid cloud, is super-important. But how your organization specifically takes advantage of that is going to be the key differentiator. And that's where an ecosystem solutions approach can be a huge benefit.

Let's look at what comes next. What might we be talking about a year from now when we think about Microsoft Azure Stack in the market and the impact of hybrid cloud on businesses, Ken?

Look at clouds from both sides now

Won: You will see organizations shifting from a world of using multiple clouds and having different applications or services on clouds to having an environment where services are based on multiple clouds. With the new cloud-native applications you'll be running different aspects of those services in different locations based on what are the requirements of that particular microservice

So a service may be partially running in Azure, part of it may be running in Azure Stack. You will certainly see that as a kind of break in the boundary of private cloud versus public cloud, and so think of it as a continuum, if you will, of different environments able to support whatever applications they need.

Gardner: Ro, as people get more into the weeds with hybrid cloud, maybe using Azure Stack, how will the market adjust?

Antao: I completely agree with Ken in terms of how organizations are going to evolve their architecture. At PwC we have this term called the Configurable Enterprise, which essentially focuses on how the IT organization consumes services from all of these different sources to be able to ultimately solve business problems.

To that point, where we see the market trends is in the hybrid IT space, the adoption of that continuum. One of the big pressures IT organizations face is how they are going to evolve their operating model to be successful in this new world. CIOs, especially the forward-thinking ones, are starting to ask that question. We are going to see in the next 12 months a lot more pressure in that space.

Gardner: These are, after all, still early days of hybrid cloud and hybrid IT. Before we sign off, how should organizations that might not yet be deep into this prepare themselves? Are there some operations, culture, and skills? How might you want to be in a good position to take advantage of this when you do take the plunge?

Plan to succeed with IT on board

Won: One of the things we recommend is a workshop where we sit down with the customer and think through their company strategy. What is their IT strategy? How does that relate or map to the infrastructure that they need in order to be successful?

This makes the connection between the value they want to offer as a company, as a business, to the infrastructure. It puts a plan in place so that they can see that direct linkage. That workshop is one of the things that we help a lot of customers with.

We also have innovation centers that we've built with Microsoft where customers can come in and experience Azure Stack firsthand. They can see the latest versions of Azure Stack, they can see the hardware, and they can meet with experts. We bring in partners such as PwC to have a conversation in these innovation centers with experts.

Gardner: Ro, how to get ready when you want to take the plunge and make the best and most of it?

Hybrid Cloud Solutions

for Microsoft Azure Stack

Antao: We are at a stage right now where these transformations can no longer be done to the IT organization; the IT organization has to come along on this journey. What we have seen is, especially in the early stages, the running of pilot projects, of being able to involve the developers, the infrastructure architects, and the operations folks in pilot workloads, and learn how to manage it going forward in this new model.

You want to create that from a top-down perspective, being able to tie in to where this adds the most value to the business. From a grassroots effort, you need to also create champions within the trenches that are going to be able to manage this new environment. Combining those two efforts has been very successful for organizations as they embark on this journey.

Listen to the podcast. Find it on iTunes. Get the mobile app. Read a full transcript or download a copy. Sponsor: Hewlett Packard Enterprise.

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Advanced IoT systems provide analysis catalyst for the petrochemical refinery of the future

The next BriefingsDirect Voice of the Customer Internet-of-Things (IoT) technology trends interview explores how IT combines with IoT to help create the refinery of the future

We’ll now learn how a leading-edge petrochemical company in Texas is rethinking data gathering and analysis to foster safer environments and greater overall efficiency.

Listen to the podcast. Find it on iTunes. Get the mobile app. Read a full transcript or download a copy. 

To help us define the best of the refinery of the future vision is Doug Smith, CEO of Texmark Chemicals in Galena Park, Texas, and JR Fuller, Worldwide Business Development Manager for Edgeline IoT at Hewlett Packard Enterprise (HPE). The discussion is moderated by Dana Gardner, principal analyst at Interarbor Solutions.

Here are some excerpts:

Gardner: What are the top trends driving this need for a new refinery of the future? Doug, why aren’t the refinery practices of the past good enough?

Smith: First of all, I want to talk about people. People are the catalysts who make this refinery of the future possible. At Texmark Chemicals, we spent the last 20 years making capital investments in our infrastructure, in our physical plant, and in the last four years we have put together a roadmap for our IT needs.

Through our introduction to HPE, we have entered into a partnership that is not just a client-customer relationship. It’s more than that, and it allows us to work together to discover IoT solutions that we can bring to bear on our IT challenges at Texmark. So, we are on the voyage of discovery together -- and we are sailing out to sea. It’s going great.

Gardner: JR, it’s always impressive when a new technology trend aids and abets a traditional business, and then that business can show through innovation what should then come next in the technology. How is that back and forth working? Where should we expect IoT to go in terms of business benefits in the not-to-distant future?

Fuller

Fuller

Fuller: One of powerful things about the partnership and relationship we have is that we each respect and understand each other's “swim lanes.” I’m not trying to be a chemical company. I’m trying to understand what they do and how I can help them.

And they’re not trying to become an IT or IoT company. Their job is to make chemicals; our job is to figure out the IT. We’re seeing in Texmark the transformation from an Old World economy-type business to a New World economy-type business.

This is huge, this is transformational. As Doug said, they’ve made huge investments in their physical assets and what we call Operational Technology (OT). They have done that for the past 20 years. The people they have at Texmark who are using these assets are phenomenal. They possess decades of experience.

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Yet IoT is really new for them. How to leverage that? They have said, “You know what? We squeezed as much as we can out of OT technology, out of our people, and our processes. Now, let’s see what else is out there.”

And through introductions to us and our ecosystem partners, we’ve been able to show them how we can help squeeze even more out of those OT assets using this new technology. So, it’s really exciting.

Gardner: Doug, let’s level-set this a little bit for our audience. They might not all be familiar with the refinery business, or even the petrochemical industry. You’re in the process of processing. You’re making one material into another and you’re doing that in bulk, and you need to do it on a just-in-time basis, given the demands of supply chains these days.

You need to make your business processes and your IT network mesh, to reach every corner. How does a wireless network become an enabler for your requirements?

The heart of IT 

Smith: In a large plant facility, we have different pieces of equipment. One piece of equipment is a pump -- the analogy would be the heart of the process facility of the plant.

Smith

Smith

So your question regarding the wireless network, if we can sensor a pump and tie it into a mesh network, there are incredible cost savings for us. The physical wiring of a pump runs anywhere from $3,000 to $5,000 per pump. So, we see a savings in that.

Being able to have the information wirelessly right away -- that gives us knowledge immediately that we wouldn’t have otherwise. We have workers and millwrights at the plant that physically go out and inspect every single pump in our plant, and we have 133 pumps. If we can utilize our sensors through the wireless network, our millwrights can concentrate on the pumps that they know are having problems.

Gardner: You’re also able to track those individuals, those workers, so if there’s a need to communicate, to locate, to make sure that they hearing the policy, that’s another big part of IoT and people coming together.

Safety is good business

Smith: The tracking of workers is more of a safety issue -- and safety is critical, absolutely critical in a petrochemical facility. We must account for all our people and know where they are in the event of any type of emergency situation.

Gardner: We have the sensors, we can link things up, we can begin to analyze devices and bring that data analytics to the edge, perhaps within a mini data center facility, something that’s ruggedized and tough and able to handle a plant environment.

Given this scenario, JR, what sorts of efficiencies are organizations like Texmark seeing? I know in some businesses, they talk about double digit increases, but in a mature industry, how does this all translate into dollars?

Fuller: We talk about the power of one percent. A one percent improvement in one of the major companies is multi-billions of dollars saved. A one percent change is huge, and, yes, at Texmark we’re able to see some larger percentage-wise efficiency, because they’re actually very nimble.

It’s hard to turn a big titanic ship, but the smaller boat is actually much better at it. We’re able to do things at Texmark that we are not able to do at other places, but we’re then able to create that blueprint of how they do it. 

You’re absolutely right, doing edge computing, with our HPE Edgeline products, and gathering the micro-data from the extra compute power we have installed, provides a lot of opportunities for us to go into the predictive part of this. It’s really where you see the new efficiencies.

Recently I was with the engineers out there, and we’re walking through the facility, and they’re showing us all the equipment that we’re looking at sensoring up, and adding all these analytics. I noticed something on one of the pumps. I’ve been around pumps, I know pumps very well.

I saw this thing, and I said, “What is that?”

“So that’s a filter,” they said.

I said, “What happens if the filter gets clogged?”

“It shuts down the whole pump,” they said.

“What happens if you lose this pump?” I asked.

“We lose the whole chemical process,” they explained.

“Okay, are there sensors on this filter?”

“No, there are only sensors on the pump,” they said.

There weren’t any sensors on the filter. Now, that’s just something that we haven’t thought of, right? But again, I’m not a chemical guy. So I can ask questions that maybe they didn’t ask before.

So I said, “How do you solve this problem today?”

“Well, we have a scheduled maintenance plan,” they said.

They don’t have a problem, but based on the scheduled maintenance plan that filter gets changed whether it needs to or not. It just gets changed on a regular basis. Using IoT technology, we can tell them exactly when to change that filter. Therefore IoT saves on the cost of the filter and the cost of the manpower -- and those types of potential efficiencies and savings are just one small example of the things that we’re trying to accomplish.

Continuous functionality

Smith: It points to the uniqueness of the people-level relationship between the HPE team, our partners, and the Texmark team. We are able to have these conversations to identify things that we haven’t even thought of before. I could give you 25 examples of things just like this, where we say, “Oh, wow, I hadn’t thought about that.” And yet it makes people safer and it all becomes more efficient.

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Gardner: You don’t know until you have that network in place and the data analytics to utilize what the potential use-cases can be. The name of the game is utilization efficiency, but also continuous operations.

How do you increase your likelihood or reduce the risk of disruption and enhance your continuous operations using these analytics?

Smith: To answer, I’m going to use the example of toll processing. Toll processing is when we would have a customer come to us and ask us to run a process on the equipment that we have at Texmark.

Normally, they would give us a recipe, and we would process a material. We take samples throughout the process, the production, and deliver a finished product to them. With this new level of analytics, with the sensoring of all these components in the refinery of the future vision, we can provide a value-add to the customers by giving them more data than they could ever want. We can document and verify the manufacture and production of the particular chemical that we’re toll processing for them.

Fuller: To add to that, as part of the process, sometimes you may have to do multiple runs when you're tolling, because of your feed stock and the way it works.

By usingadvanced analytics, and some of the predictive benefits of having all of that data available, we're looking to gain efficiencies to cut down the number of additional runs needed. If you take a process that would have taken three runs and we can knock that down to two runs -- that's a 30 percent decrease in total cost and expense. It also allows them produce more products, and to get it out to people a lot faster

Smith: Exactly. Exactly!

Gardner: Of course, the more insight that you can obtain from a pump, and the more resulting data analysis, that gives you insight into the larger processes. You can extend that data and information back into your supply chain. So there's no guesswork. There's no gap. You have complete visibility -- and that's a big plus when it comes to reducing risk in any large, complex, multi-supplier undertaking.

Beyond data gathering, data sharing

Smith: It goes back to relationships at Texmark. We have relationships with our neighbors that are unique in the industry, and so we would be able to share the data that we have.

Fuller: With suppliers.

Smith: Exactly, with suppliers and vendors. It's transformational.

Gardner: So you're extending a common standard industry-accepted platform approach locally into an extended process benefit. And you can share that because you are using common, IT-industry-wide infrastructurefrom HPE.

Fuller: And that's very important. We have a three-phase project, and we've just finished the first two phases. Phase 1 was to put ubiquitous WiFi infrastructure in there, with the location-based services, and all of the things to enable that. The second phase was to upgrade the compute infrastructure with our Edgeline compute and put in our HPE Micro Datacenter in there. So now they have some very robust compute.

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With that infrastructure in place, it now allows us to do that third phase, where we're bringing in additional IoT projects. We will create a data infrastructure with data storage, and application programming interfaces (APIs), and things like that. That will allow us to bring in a specialty video analytic capability that will overlay on top of the physical and logical infrastructure. And it makes it so much easier to integrate all that.

Gardner: You get a chance to customize the apps much better when you have a standard IT architecture underneath that, right?

Trailblazing standards for a new workforce

Smith: Well, exactly. What are you saying, Dana is – and it gives me chills when I start thinking about what we're doing at Texmark within our industry – is the setting of standards, blazing a new trail. When we talk to our customers and our suppliers and we tell them about this refinery of the future project that we're initiating, all other business goes out the window. They want to know more about what we're doing with the IoT -- and that's incredibly encouraging.

Gardner: I imagine that there are competitive advantages when you can get out in front and you're blazing that trail. If you have the experience, the skills of understanding how to leverage an IoT environment, and an edge computing capability, then you're going to continue to be a step ahead of the competition on many levels: efficiency, safety, ability to customize, and supply chain visibility.

Smith: It surely allows our Texmark team to do their jobs better. I use the example of the millwrights going out and inspecting pumps, and they do that everyday. They do it very well. If we can give them the tools, where they can focus on what they do best over a lifetime of working with pumps, and only work on the pumps that they need to, that's a great example.

I am extremely excited about the opportunities at the refinery of the future to bring new workers into the petrochemical industry. We have a large number of people within our industry who are retiring; they’re taking intellectual capital with them. So to be able to show young people that we are using advanced technology in new and exciting ways is a real draw and it would bring more young people into our industry.

Gardner: By empowering that facilities edge and standardizing IT around it, that also gives us an opportunity to think about the other part of this spectrum -- and that's the cloud. There are cloud services and larger data sets that could be brought to bear.

How does the linking of the edge to the cloud have a benefit?

Cloud watching

Fuller: Texmark Chemicals has one location, and they service the world from that location as a global leader in dicyclopentadiene (DCPD) production. So the cloud doesn't have the same impact as it would for maybe one of the other big oil or big petrochemical companies. But there are ways that we're going to use the cloud at Texmark and rally around it for safety and security.

Utilizing our location-based services, and our compute, if there is an emergency -- whether it's at Texmark or a neighbor -- using cloud-based information like weather, humidity, and wind direction -- and all of these other things that are constantly changing -- we can provide better directed responses. That's one way we would be using cloud at Texmark.

When we start talking about the larger industry -- and connecting multiple refineries together or upstream, downstream and midstream kinds of assets together with a petrochemical company -- cloud becomes critical. And you have to have hybrid infrastructure support.

You don't want to send all your video to the cloud to get analyzed. You want to do that at the edge. You don't want to send all of your vibration data to the cloud, you want to do that at the edge. But, yes, you do want to know when a pump fails, or when something happens so you can educate and train and learn and share that information and institutional knowledge throughout the rest of the organization.

Gardner: Before we sign off, let’s take a quick look into the crystal ball. Refinery of the future, five years from now, Doug, where do you see this going?

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Smith: The crystal ball is often kind of foggy, but it’s fun to look into it. I had mentioned earlier opportunities for education of a new workforce. Certainly, I am focused on the solutions that IoT brings to efficiencies, safety, and profitability of Texmark as a company. But I am definitely interested in giving people opportunities to find a job to work in a good industry that can be a career.

Gardner: JR, I know HPE has a lot going on with edge computing, making these data centers more efficient, more capable, and more rugged. Where do you see the potential here for IoT capability in refineries of the future?

Future forecast: safe, efficient edge

Fuller: You're going to see the pace pick up. I have to give kudos to Doug. He is a visionary. Whether he admits that or not, he is actually showing an industry that has been around for many years how to do this and be successful at it. So that's incredible. In that crystal ball look, that five-year look, he's going to be recognized as someone who helped really transform this industry from old to new economy.

As far as edge-computing goes, what we're seeing with our converged Edgeline systems, which are our first generation, and we've created this market space for converged edge systems with the hardening of it. Now, we’re working on generation 2. We're going to get faster, smaller, cheaper, and become more ubiquitous. I see our IoT infrastructure as having a dramatic impact on what we can actually accomplish and the workforce in five years. It will be more virtual and augmented and have all of these capabilities. It’s going to be a lot safer for people, and it’s going to be a lot more efficient.

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