For Cloud Providers, Market Dominance is Now a Race to Multi-Cloud

    April 3, 2017

    By Per Bauer

    With multi-cloud emerging as the dominant enterprise IT paradigm, businesses should place a premium on flexibility, both in terms of provider payment structures and cloud management software compatibility.

    According to RightScale’s 2017 State of the Cloud Report, 85% of enterprises that employ more than 1,000 people deploy or have a plan to deploy a multi-cloud strategy. This figure only confirms what IT professionals have understood for quite some time: the era of single-source cloud computing is waning. More pointedly, with one in five enterprises already working with multiple providers, competition in the enterprise cloud market is set to expand and intensify in the months and years to come.

    During the recent Google Cloud Next conference, Google leadership unveiled a diverse palette of initiatives and upgrades signaling their intent to move in on Amazon’s 40% public cloud services market share. Current estimates suggest that, taken together, Google, IBM, and Microsoft account for 23% of the market, and while that fraction is growing quickly (5% in the last year) the majority of growth is coming at the expense of smaller providers, not Amazon Web Services (AWS).

    Google Turns to Financial and Functional Flexibility

    In order to rise above its competitors and destabilize Amazon’s market dominance, Google announced a Committed Use Discount for Google Compute Engine (GCE) users. In tandem with the preexisting Sustained Use Discount, the offer gives enterprises a significant amount of payment flexibility, all while preserving Google’s signature cloud elasticity.

    Provided an enterprise sits high enough on the IT Service Optimization Maturity Model and can confidently project future capacity usage, the new Committed Use Discount delivers a package comparable to AWS’ Reserved Instances (RIs) that is both cheaper and more flexible. A separate study by RightScale found that under a one-year contract, using GCE with the Committed Use and Sustained Use Discounts was 28% less expensive than using AWS with Standard RIs. Similarly, the fully-discounted GCE was 35% less expensive than the AWS with Convertible RIs over a three-year commitment.

    As mentioned above, the Google Cloud Platform also offers a level of functional flexibility with which AWS struggles to compete. AWS only offers convertible RIs on its three-year contracts, meaning an enterprise has to commit to a specific instance type — that is, a specific set of combinations of CPU, memory, storage, and networking capacity — at the outset of any one-year AWS agreement. All contracts within the purview of the Committed Use Discount include convertible instances, resulting in highly customizable computing capacity and, consequently, a reduction in cloud resource waste.

    By keeping its prices low without sacrificing operational flexibility, Google has eliminated many of the dangers of vendor lock-in and secured a tentatively advantageous position over its competitors. In the overwhelmingly multi-cloud environment that has emerged, enterprises necessarily place a premium on flexibility, and any competitor of Google’s that is incapable of working seamlessly alongside other IT infrastructures has little upside.

    IT Optimization Takes More than IaaS

    As compelling as Google’s new offerings may be, selecting the ideal combination of cloud computing services is only the first step in an enterprise’s pursuit of IT optimization. In addition to the many benefits of operating within a multi-cloud environment, there are a number of endemic challenges as well, and an enterprise needs the proper cloud management software to help optimize its infrastructure and mitigate risk. For example, the Vityl software suite from TeamQuest enables IT teams to collect, analyze, and monitor information across on-premises servers, private clouds, and public clouds, regardless of complicating factors like multi-tenancy or virtualization.

    A new age of cloud computing calls for a new approach to monitoring optimizing IT performance. TeamQuest offers exactly the tools you need to maintain the flexibility and cost advantages afforded by offers like Google’s.

    Category: cloud