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Thought Leaders in Cloud Computing: Jared Wray, Founder and CTO of Tier 3 (Part 4)

Posted on Thursday, Dec 1st 2011

Sramana Mitra: What other forecasts do you have in terms of what you see from where you sit? What other major trends do you see?

Jared Wray: I think hybrid clouds will start to become a standard in the next couple of years. Private clouds are going to look to use a public cloud, but it’s going to be based more on policies. I think CIOs are going to go past their security concerns move into using some of the public clouds for workloads. I also see platform as a service moving beyond what we would normally see as developer or QA testing workloads. I think there are a lot of small and mid-tier businesses that will start putting all of their enterprise-type mission-critical applications in public clouds. Of course, there will be security that goes along with it. But I think that’s going to be a big trend.

I also think developers who are focusing on enterprises will start using public clouds and be able to justify them. There are a lot of Web 2.0 companies out there, but the enterprise developers have always been behind the firewall. I think that’s going to change, especially in 2012. You’re going to start seeing the emergence of a situation where enterprises will allow their business units and developers to go outside the firewall.

Other things I see are, of course, the big data movement, data as a service. I think of that as three main layers. The database as a service [providers] are going to be immensely popular, especially for relational databases, for legacy applications, how to get those online, and how to self-manage them. It’s going to be big, the self-service aspect. Another thing that’s been going on is the no-sequel or some of the newer databases, and they’re going to keep growing in size. But a lot of the service providers out there – and even cloud infrastructures – are going to start relying on those as more high-quality or enterprise-type applications.

SM: I’ve been talking to a lot of CIOs of major enterprises, and one of the resounding points they have made is that there is serious cost cutting in deploying cloud strategies. For instance, I spoke with Diane Bryant, the CIO of Intel, and she gave me a number. That number is $650 million. They are going to cut $650 million by moving their environment to the cloud with their cloud strategy, which is a multi-faceted strategy. Six hundred and fifty million dollars is a significant amount of money.

JW: Absolutely, it is.

SM: You gave me this estimate of about 60% of the IT functions that can be automated. Obviously, some percentage of that budget is going to move into technology and away from human resources. What kind of cost savings are we talking about, over the decade, because of this movement?

JW: I think there are probably a couple aspects to it, but the cost savings that a lot of people are going to see, initially, are 30% pretty much across the board. People are going to save about 30%. That’s what we’re even seeing with our customers and the market itself. From going from an internal environment to an external environment, they’re usually seeing about 30%. I do think it’s going to keep on growing. That $650 million is a very large number. Of course, Intel has a very large IT budget also.

But I do see that it’s going to keep growing. I believe that infrastructure as a service is going to bring the cost to zero, where you’re going to have big numbers of storage and computing and things like that at little cost. Cloud computing has been able to commoditize that market a lot faster than anybody ever imagined. I’ll bet you that over the next 10 years, you’re going to see, what we do now as a 50% to 70% cost savings, that is, total cost of ownership, by moving to a public cloud. As they get better and more efficient at what they’re doing, the cost is just going to drop.

One thing I know – and you’ve probably read about this – I think it was JPMorgan, or possibly another bank, that said about 12% of their infrastructure is being used at any given time. If you think about that, clouds are running at 70% to 80% utilization, and they’re able to manage those resources a lot better. That’s where the cost [savings] are going to be. There’s always going to be the cost of hardware going down, but there’s also going to be the overall cost of utilization. Because clouds can be more efficient, I see them as a major way of saving money.

SM: Yes. So, this also has a huge human resources impact. The way the business world is set up today, there are tons of people who do commodity IT services. And you are saying that the cost of commodity IT services is moving toward zero and being automated over the decade. What do you see as the future of the IT workforce? How does that evolve?

JW: I think the IT workforce is going to go through a major change on two fronts. One, IT management of a company will change greatly over the next 10 years. One part of it is IT managers running their own private or even public clouds; they’re going to shift from saying that they own everything, and they’re running all their projects [from the perspective of] resource management orientation. So, they’re trying to be as efficient as possible, almost as though they’re becoming a service themselves. Businesses will look at them as services.

The second thing I think is going to shift is you’re going to have a second group that is going to be focused on the business unit and what they’re doing. What I [mean] by that is they’re going to focus more on business agility and less on how to maintain the applications. Applications over the next decade are going to drastically change and need less and less maintenance.

SM: Yes, absolutely. I understand what you’re doing, and I think it’s been a good discussion. Are there any other interesting points you want to explore?

JW: No, I think those are the main ones.

SM: This is good. Thank you, Jared.

JW: Thank you.

This segment is part 4 in the series : Thought Leaders in Cloud Computing: Jared Wray, Founder and CTO of Tier 3
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