Was 2014 the end of enterprise computing?

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It’s been just over a year since I left Netflix and joined Battery Ventures. So it seemed appropriate (if a couple of weeks late) to take a look back at some technology and cloud themes that bubbled up in 2014 and offer a few predictions for the coming year.

In 2015 I expect more hubbub over everything from the Docker/containerization craze to Netflix’s open-source cloud platform to — dare I say it? — the end of enterprise computing. Here are some thoughts about the recently ended year in tech, in no particular order:

The Netflix open source cloud platform got traction

The Netflix team continues to release projects (about ten new repos on GitHub during 2014) and get more traction.

Notable external use cases for the [company]Netflix[/company] platform include growth in interest in the Reactive programming model using Hystrix; the Spring Microservices architecture including [company]Netflix[/company]; IBM’s Watson services, built using NetflixOSS; and Nike’s online services using NetflixOSS described at the AWS Re:Invent conference. Some aspects of the NetflixOSS architecture have been more widely influential, as seen in the growth of interest in microservices and the immutable service model encouraged by

Docker

Docker wasn’t on anyone’s 2014 roadmap, but is on everyone’s 2015 roadmap. (There was even a New York Times story about it earlier this year.) The Docker open-source project—which automates the deployment of new applications inside software “containers” — is an excellent example of how to drive viral adoption of a developer product, and it combines four useful things in one. It’s portable, speeds up development, defines the configuration and is shared via Docker hub. It’s become a key ecosystem and will undoubtedly continue to grow in 2015.

The concept of anti-fragility took off

The ideas behind the Netflix Chaos Monkey, a Netflix service that helps test the automation that helps systems recover from problems, are that you have to prove you are resilient and exercise failure-recovery mechanisms by creating your own failures. This is now so prevalent that it’s being mentioned in unexpected places, such as a business discussion with Workday, and a talk by the CIO of the Department of Homeland Security Citizenship and Immigration Services at the DevOps Enterprise Summit. As enterprises re-architect their systems using principles from DevOps, micro-services and cloud native architectures, the trend is to bake in and automate recovery and resilience.

Cloud roundup: AWS moves on to a new phase

An interesting reversal occurred during 2014: Previously, clouds were seen as having missing features compared to data centers, but now there are many startups that are building products for data centers to provide features that already exist for AWS. It appears that the most sophisticated operations architectures are now on AWS, not on premise.

embarrassing Azure outages

AWS had a few zone-level, partial outages or network partitions, but nothing significant enough to cause widespread impacts. Notably, it’s now two years since the last big AWS outage. (Remember all the press those used to get?). While AWS has matured and made its services and operating practices more resilient, Azure has some work to do.

enterprise features in place Digital Ocean

Enterprise computing vendors

Bottom line: The big, traditional enterprise-computing vendors are failing to grow their customer bases. You can watch their revenue from new-product sales fade.

Services and support revenue will increase to compensate in the short term, but even that will eventually collapse as customers move on to low-cost, open-source solutions or outsource to cloud-based services. This is one of those times in which replacement technology revenue is an order of magnitude cheaper than the incumbent revenue.

For example, we could see market segments that currently generate $10 billion of revenue for traditional enterprise-computing vendors be entirely replaced by $1 billion of revenue for cloud vendors and open-source based startups. My friends Peter Magnusson and Marten Mickos joined Oracle Cloud and HP Cloud in 2014. I wish them well, but I’m not optimistic that they will be able to generate enough revenue to offset the losses elsewhere.

Adrian Cockcroft is technology fellow at Battery Ventures. Prior to that he was cloud architect at Netflix, but also spent time as distinguished engineer at eBay and Sun Microsystems.

8 Comments

ewalsh5

Docker was right behind OpenStack even in terms of production readiness in their Paris summit late last year, so it isn’t a surprise for cloud containers to gain traction. Solutions are definitely making it easier to phase out data center complexities, maintenance and OpEx benefits are obvious. Despite obvious embarrassment caused by outages, I’d say Nadella’s vision on Azure is still more hit than miss (compared to his phasing out strategies for W’03 and XP anyway!), and it has chalked out its own path (and definitely not missed this bus unlike the internet one). AWS will rule, but Azure is good second fiddle. Increasingly, companies are pitching for cloud to launch their test projects before actual live products – bit. ly/ 1NdhhhV – Eamon Walsh, commenting on behalf of IDG and Red Hat

OptimusSpime

Gotta love it when an article comes off as sounding line it was written by a character on Mike Judge’s “Silicon Valley”.

Erick Staal

The public cloud is still seen as dangerous territory for Enterprise companies. As a case in point: very recently, the employees of a company that shall remain nameless received a warning from the CISO of the firm where the usage of the mobile Microsoft Outlook apps was actively discouraged due that the Outlook maildata could not be guaranteed not to be stored in the USA.
Therefore the whole paradigm that enterprises would run to bring their IT to the cloud is highly exaggerated in my opinion.
However, I agree with the writer that the transition to open source models with a lower costbase for customers is definitely very much alive and kicking. Furthermore private clouds, where SLA’s and data privacy measures still have meaning, are far more prevalent in the policy making circles within enterprises than public cloud adepts are expecting.
‘XYZ is dead’ is therefore as I see it just a sell-side call to try to get people moving towards the next next thing. However, Enterprises are primarily interested in growing their business, which usually is not IT related. Therefore for enterprises IT ROI is still a real decision criterion. This leads almost automatically to slower adoption rates of new technologies than many Silicon Vally companies are expecting.

Andrew Hally

COMMENT ON BLOG: 2014 as the end of enterprise computing? maybe. We are certainly smack-dab in the middle of a shift in the way early-stage companies and project teams seek to build new products. However, companies have spent hundreds of billions in on-premise infrastructure and proces. That stuff is sticky because mission-critical business models and process rely on it. It won’t go away soon, even long after the technology exists to replace it. Just like big banks still use mainframes that could’ve been phased out decades ago. Companies will merge their on-premise business processess and technology with cloud technologies for truly hybrid solutions. I take your point though – that the growth and new revenue is going to come not from the traditional enterprise vendors, but in the cloud. That’s where the excitement is.

Paul Duke

This is the same old BS story people have been predicting for 25 years.
What about the cost and time to replacing legacy systems

drplokta

IP addresses aren’t much of a measure of AWS growth. Most of our instances are in VPCs and don’t have public IP addresses — I’d say we probably have only 20% as many IP addresses as we have instances, including addresses used by ELBs.

Gabriel Chapman

If you are in the delivery of content, or web services then I would tend to agree, but traditional Enterprises are still struggling in some respects with the more simple things like virtualization en-masse. The apps are the drivers of the direction that the enterprise in general, will move, and I just dont see the majority being able to benefit from the kind of agile/lean mindset let alone, a true DevOps/Private/HybridCloud shift that the above would assist.

Keith Townsend

I think Enterprise Tech may have an ended already in start ups but in traditional enterprises? I think you give enterprise companies too much credit for moving at the speed close to that of start-ups. In conversations with my peers, the business may ask for the agility of cloud technologies, but the processes aren’t in place. Even private cloud is a challenge to digest from an organization perspective. Organizations such as BofA have had to create a Cloud silo in an effort to overcome legacy silos.

Another challenge, enterprise companies don’t trust small vendors at scale. At least not yet. Customers may trust them for smaller implementations but migrating to Salesforce from SAP? This may change as enterprises embrace open source projects and don’t live and die by vendor support. But, to say that will happen within the next year? The enterprise tech market simply doesn’t morph that quickly.

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