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Elastra Gets $12M — Is It Amazon's Enterprise Play?

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Elastra, the San Francisco-based cloud configuration startup, says it has secured $12 million in Series B financing from investors including Bay Partners and Hummer Winblad — and Amazon. Elastra is the latest investment made by Amazon in the cloud computing sector. Last month, Amazon helped fund Rails cloud Engine Yard to get a foot in the Rails world.

Amazon — and Google — are, in many ways, acting like VCs. But unlike traditional investors, these companies are also giants in cloud computing. Each investment they make in the space sends ripples out across the industry. Relations between Amazon and EC2-based Heroku, for example, are undoubtedly a bit strained now that Amazon has invested in a big competitor of theirs (admittedly, Heroku is on the small end of the Rails space and Engine Yard focuses on bigger clients; Engine Yard also has promising IM-meets-management technology in the form of Vertebra.)

Amazon’s Intentions

By investing in Elastra Amazon sends a signal — intentional or otherwise — that it’s not neutral when it comes to cloud configuration. That’s cause for concern for other configuration software firms like 3Tera, Rightscale, and Enomalism who want people to choose them for provisioning on clouds like Amazon’s.

So why has Amazon invested, and in turn, risked losing its agnostic stance? Because its own, service-centric cloud offering isn’t a good fit for enterprises and its EC2 “bare metal” doesn’t scale automatically or support enterprise software well.

Amazon needs an enterprise-friendly cloud to woo corporate customers in order to compete with vendors like AT&T, Savvis or IBM (with its BPO-meets-cloud offering). Otherwise, the company may be left with only public web sites and startups as customers.

Amazon’s got a great cloud. But it’s based on next-generation services, not the traditional, component-centric data centers that enterprises like. If a company is building its IT and applications from scratch, it makes sense to embrace cloud architectures and use scalable services like SimpleDB, Bigtable, Mongo, CouchDB or Project Cassandra. These data services scale automatically, without administrators needing to provision new machines.

But these services also require different ways of building applications, and enterprises don’t want to change. As a result, enterprises can’t benefit from the lower cost, faster provisioning and built-in billing that comes from building their applications in these new ways.

Elastra’s Answer

Elastra lets enterprises use their legacy applications, in which they’ve invested heavily, and still reap many of the benefits of cloud computing. An IT administrator defines an application with components they know, such as databases and application servers. They then publish it into a cloud, where Elastra’s management servers handle provisioning and operation of the application, adding and removing servers as needed. “We’re supporting components that enterprises want, components they’re already using,” said Elastra CEO Kirill Sheynkman.

Simply putting traditional enterprise components into a cloud is just the beginning, however. Tracking and auditing software licenses will be the next big challenge. Commercial software companies have a hard time with a cloud model, according to Sheynkman, because, “[T]hey’re used to licensing on a per-CPU or named concurrent user basis. The challenge is the seller’s way of selling, not the buyer’s way of buying.” Elastra’s technology provides a variety of options for licensing.

Elastra now has more than 40 paying customers running databases on Amazon’s cloud using its technology, and plans to announce support for VMware and additional components such as application and web servers. It’s also planning to support clouds other than Amazon.

But Elastra’s plans to be cross-cloud-agnostic might be more difficult now that they have investment from one of the biggest clouds in the industry. Sheynkman claimed that the investment contains no conditions of exclusivity, but did say he expects Elastra will “benefit greatly from the technology and knowledge of what [Amazon] has done.”

So will a cloud that competes with Amazon, such as Rackspace’s Mosso, welcome Elastra’s configuration software with open arms now that Amazon has invested? “That’s a decision Rackspace has to make for themselves,” he said. “If Rackspace approaches us, we’ll consider that.”

image courtesy of Elastra

12 Responses to “Elastra Gets $12M — Is It Amazon's Enterprise Play?”

  1. Geoffrey Routledge

    Response from a manager of IT infrastructure at a $3B manufacturing company:

    It’s great to see this conversation start emphasizing the enterprise opportunity for cloud vendors. Up to now so much attention has been given to consumer services, or business apps delivered aaS. But there is a huge opportunity in servicing mid-sized enterprises whose myriad datacenters inefficiently utilize gigahertz and watts and, much more importantly, are ill-equipped to respond to business needs.

    On the first point, scaling way up is normally not an issue for these enterprises. That’s not to say that there isn’t a reason for the datacenter to scale way up; on the contrary, this is absolutely necessary to create the scale that can more easily be priced as a variable cost. But this is an internal issue whose benefits manifests only in the unit-costs of the megahertz and megabytes delivered. I don’t need to scale my applications up; we have a fixed number of users that may grow slowly over time but will never require “internet scale”. However, I would love to be able to avail myself of economies-of-scale that I cannot muster myself but are available because of a massively scaled up compute infrastructure (owned by someone else) that can be carved up and sold by the piece for much less than I can do it myself. The Interesting question would be “to what degree can an externally hosted infrastructure wrap up all of the fixed costs and pass them on as a variable, pay-as-you-go pricing that is cheaper per unit than I can provide myself?” (say, with a very well run virtualized infrastructure that I chargeback the business units for).

    Secondly, but much more importantly, lowering the unit costs of compute resources may not be the biggest win for pay-as-you-go infrastructure services. Being able to respond promptly to requests from the business units for new value-creating applications may be a much more lucrative reason for someone like me to buy compute resources from the cloud. For example, we have a new supply chain application coming along soon. No doubt a reporting/analysis system will follow shortly after that (unfunded by the original project, of course), and then new functionality will be added by our development staff and THAT will need a few servers, and by then a new financial system will be put on the radar which will need to run in parallel with the original for a year or so on its own set of servers, and then a few integration servers will pop up to shuttle data back and forth, and so on, and so on. We infrastructure managers cringe at requirements like these because we have this big fixed-cost beast from which variable demand must be serviced. Cloud computing allows me to buy the infrastructure when it is needed, provision it effortlessly (“frictionless IT” anyone?), and decommission it when no longer needed

    Bring it on!