Cloud Services are Eating the World

Shlomo Kramer is the Co-Founder and CEO of Cato Networks.

The cloud revolution is impacting the technology sector. You can clearly see it in the business results of companies like HP and IBM. For sure, legacy technology providers are embracing the cloud. They are transforming their businesses from building and running on-premise infrastructures to delivering cloud-based services. The harsh reality is that this is a destructive transformation. For every dollar that exits legacy environments, only a fraction comes back through cloud services. This is the great promise of the cloud – maximizing economies of scale, efficient resource utilization and smart sharing of scarce capabilities.

It is just the latest phase of the destructive force that technology applies to all parts of our economy. Traditionally, technology vendors touted benefits such as personnel efficiencies and operational savings as part of the justification for purchasing new technologies - a politically correct way to refer to fewer people, offices and the support systems around them. This has now inevitably impacted the technology vendors themselves. Early indicators were abundant: Salesforce.com has displaced Siebel systems, reducing the need for costly and customized implementations; and Amazon AWS is increasingly displacing physical servers, reducing the need for processors, cabinets, cabling, power and cooling.

Cloud is Eating the World

Marc Andreseen argued in his 2011 Wall Street Journal article that, “software is eating the world.” In my view, this observation is now obsolete. Today, cloud services are eating the world. Cloud services encapsulate and commoditizes the entire technology stack (software, hardware, platforms and professional services). This model is so impactful and irresistible that even capturing only a part of the value is a big win. This is how cloud services now include platforms – including Google, Microsoft, Salesforce.com; and infrastructure, provided by such vendors as Amazon AWS, Microsoft Azure and IBM/Softlayer.

Making IT Simple Again

Customer focus is increasingly shifting into simplification of complex business and IT infrastructure because complexity is both a technical and business risk. It was a simpler world in the past: One provider delivered a total solution for all IT needs. This paradigm was deemed too rigid, so it was replaced by horizontal integration of best-of-breed components. Complexity was a side effect of this change, as customers had to integrate and then run these heterogeneous environments.

We are now seeing the pendulum shift again. Cloud services now offer a vertically integrated solution to multiple business problems. Choice is reduced in the sense that customers can’t dictate the compute, storage or software cloud services will use, but complexity and cost is eliminated en mass. Ultimately, the proof is in the pudding, and if the business value is delivered in a consistent fashion with the right third party validation for quality of service, the details don’t really matter.

Changing of the Guard

The era of cloud requires a new type of company that is agile and lean, like the cloud itself. Very few companies have the courage or the will to cannibalize their legacy revenue streams and embrace a new reality where there is simply less money and resources available to get things done. Building a startup company for the cloud era requires that the company must be designed for the cloud economic model. That means investing in a high-quality software stack, customer support and success teams and self-service/low friction service delivery models. The modern cloud startup must do more with less, because its customers are doing the same.

The Future of Cloud: Security

Network security has yet to be extensively impacted by the cloud. Security technology is considered sensitive by large enterprises, limiting sharing of data in the cloud, and regulations place constraint around customer data handling in the cloud. These forces may slow down the adoption of cloud technologies, but will ultimately give way to the immense value they offer to businesses.

Security will uniquely benefit from vertical integration with distinct domains, such as networking. Here is how: If you can monitor all networking activity (for example, in cloud-based networks), you can more easily detect anomalous activity within the infrastructure (i.e., DNS queries, session initiation and authentication, data exchange) and create a complete profile of the threat. The agility of the cloud enables a rapid deployment of countermeasures without the need to perform slow and risky software updates for on-premise equipment.

Thanks to the innovations and elasticity of the modern cloud, network security can finally become less of a burden on staff and budgets, while the quality of service and the customer experience can dramatically improve. This is not a shot across the bow at network security incumbents. It is a recognition that the transformative power of the cloud will ultimately reach every business in the world, and IT security vendors, like all other IT vendors, will have to make a choice – embrace it or wither.

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