For retailers the buy-or-build cloud decision looms large

5 Comments

Credit: Fosforix

If you need proof that cloud deployment stories can touch off religious disputes, my recent report about @Walmartlabs deploying 100K cores of OpenStack to run the retail giant’s e-commerce operations is Exhibit A.

This is, by any measure, a massive private cloud, and some readers were incredulous that [company]Walmart[/company] would go this route instead of plying public cloud services. It’s the old build versus buy discussion all over again, with many of the participants weighing in on the “buy” side.

One reader, termed this decision “ridiculous,” pointing out that @walmartlabs has hired on 1,000 or so engineers over the past year — although no one said all those people were dedicated to building or maintaining the aforementioned OpenStack private cloud. Still the argument is, if you go with public cloud, you won’t need to bring that much expensive talent in house. Engineering talent is pricey, especially in Silicon Valley. @walmartlabs is headquartered in San Bruno, Calif.

Wal-Mart StoreHis opinion is that a big retail outfit is far better off using “out of the box” public cloud capabilities for much of its work rather than reinventing the wheel (or building its own cloud.) For this camp, Walmart’s decision to build a customizable and flexible cloud with OpenStack makes no sense.

On the other hand, private cloud (and OpenStack) proponents noted joyously that Walmart’s work proves “private cloud deniers” wrong. (Does anyone else find that phrase disturbing? It brings to mind thought of climate change and holocaust deniers and seems to lack a sense of proportionality but back to the topic.)

Server Density CEO David Mytton, a buy sider, wrote about the Walmart private cloud here. Bottom line, he said Walmart is:

dedicating significant resources to building their own “private cloud” and although it’s true there is no specific vendor lock-in, they are locked into their own development. They’re competing in resources, talent and innovation against the public cloud providers (who have more resources to dedicate to engineering both product features and efficiency at scale).

Anybody but AWS?

Remember, given the competitive retail landscape, Walmart was hardly likely to run Amazon Web Services public cloud seeing as how Amazon.com is seen as Darth Vader by many of the rest of the retail universe. Target used Amazon.com (not AWS) for infrastructure but left the fold in 2011.

AWS would likely point out, if it were prone to comment on such things, that its cloud business is run as a separate entity than [company]Amazon.com[/company] — [company]Netflix[/company] is a huge customer after all and Amazon also runs Amazon instant video. But I’ve talked to other retailers who, off the record, will point to the political incorrectness of turning over key retail functions to Darth, er AWS.

Jeff Aden, co-founder of 2nd Watch, a systems integrator that works with customers to deploy AWS, said his company has several retail customers running on AWS, including Diane Von Furstenberg. Other AWS retail users include Gilt.com and Nordstrom Rack.

Mytton, conceded that AWS might be a tough sell for a big reseller to use, but why not throw in with [company]Google[/company] Cloud Platform or [company]Microsoft[/company] Azure? He points out that Ocado, the big British retailer is a Google cloud customer.

Last week I spoke with Sudhir Hasbe, director of software engineering BI and data services for Zulily, a members-only online fashion retailer that has fully embraced Google cloud services — BigQuery, Google Storage and Google Compute Engine. In this, Zulily is sort of a counter-narrative to the @Walmartlabs story.

Zulilly puts 9,000 new items on its site daily but wants to make sure it displays only the items that are relevant an potentially of interest to a given shopper. If you’re a woman who shops for herself and maybe a 6 year old boy, then she’ll see options for those demographics and not have to wade through the rest. “Search doesn’t work well in retail,” Hisbe said.

“For this we need the full big data platform so we can perform maximum data processing– what preferences do they have, what do they like. It also means when you have that much data, the whole supply chain side needs to consume it to make decisions,” he noted.

What’s nice about deploying Hadoop clusters on GCE, is that once the processing has run, the data is pushed into BigQuery where it’s available to all the business units and analysts, and the bill for Hadoop processing stops. The data is all stored in inexpensive Google Storage.

Anyway, feel free to comment on when and in what circumstances it makes sense to deploy public cloud or BYO private cloud. But please keep it polite.

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5 Comments

ewalsh5

You would have to say, given the talent crunch and plethora of other issues like speed, platform privacy service issues and legacy data center maintenance (often driven by management’s cloud wary approach), means it is probably a good idea to test out first projects in “buy” mode. However, the flip side is your enterprise dev architecture bit.ly/1NdhhhV might be stuck in a vendor-specific solution, less adaptable to your business logic. – Eamon Walsh, commenting on behalf of IDG and Red Hat

rob

Look, I know AWS has a 10 year lead on anybody ramping up on OpenStack now, and they’ve obviously got a ton of efficiency advantages at play in their public offerings and even their “here giant customer 83, we built this datacenter just for your private/public option and if you don’t take it someone else will” option starts off cheaper for the first decade.

But if wally world is serious about this, there’s nothing stopping them from catching up to AWS and passing them by. There’s nothing stopping them from getting operations so smooth that they decide to open a wal-mart branded public cloud option, competing directly with AWS/Azure/Google and the others.

AWS has not created a panacea for public cloud. It’s simply a good robust option at present. Everybody should remember that fact, because I’m pretty sure private cloud is going to continue being a thing from any company interested in making money over the next decade, either by adding it on as a value-add to new/current clients purchasing a related product OR by transitioning into a niche public option that caters more specifically to their customers’ needs than a big programmable datacenter can do.

Madlyb

There have many articles written that show a clear and consistent cost savings for private cloud versus public cloud…when you cross certain thresholds.

The challenge is those thresholds are a moving target as public cloud is constantly getting cheaper, but for someone with Walmart’s footprint, this must have been a no-brainer, especially with Openstack as a foundation.

Karl Richards

It is tough to really say what specifically is driving Walmart in this direction. I can see an organization like Walmart wanting to drive down operational costs with OpenStack and it may not be a slam dunk for them to just toss everything in the public cloud. I think many will agree that the public cloud works best when apps are designed and optimized to run in it. Given the huge inventory of apps that Walmart has, they may not have been in a position to make a big public cloud move. Many others like GE for some of the big federal agencies for example have made the public cloud leap though and with very good economics. Although we are still in the early phases of cloud adoption, public cloud will continue to gain ground, probably faster than most of us realize.

David Mytton

If your competitor is offering utility services, the fact that they’re your competitor is a bad reason not to use them. Especially if the alternative is wasting a huge amount of resources on building your own, inferior capability. When it’s not part of your core differentiator, it should be provided by the best utility offering.

There are plenty of examples of this. Netflix differentiates on the user experience, catalogue and unique shows. It leverages the efficiency of the AWS public cloud to do that. Apple differentiates on the integrated experience of high quality hardware + software. It leverages the best components to do that, which include parts from Samsung and others.

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