Click here to close now.



Welcome!

Cloud Security Authors: Peter Galvin, Sanjay Zalavadia, Elizabeth White, Liz McMillan, Stefano Stabellini

Related Topics: @CloudExpo, Microservices Expo, Microsoft Cloud, Containers Expo Blog, Agile Computing, Cloud Security

@CloudExpo: Article

Licensed to Print Money (In the Cloud)

New approaches are emerging with the goal of minimizing upfront investments in both hardware and software

One of the major issues facing cloud service providers is the expense of building out infrastructure without knowing how or when revenues will follow. As a result, cloud providers are reevaluating their approach to hardware and software investments and engaging with technology and networking vendors to develop creative pricing models that are aligned with cloud business principles and engineered to reduce risks.

In a perfect world, cloud service providers would pay for infrastructure only after a customer has made a purchase - in order to maintain a tight correlation between revenues and expenses. In the real world, however, implementing this type of model is easier said than done. This was especially true during the ‘iron' age, when hardware and software were highly coupled and there were very few alternatives to big vendors that focused on selling high-dollar, high-performance networking gear.

Today, however, new approaches are emerging with the goal of minimizing upfront investments in both hardware and software. One of the most compelling new approaches takes advantage of performance improvements in server virtualization. Leveraging virtualization has several benefits, one of which is the ability to maximize the use of compute resources. Although specialized hardware can provide some performance advantages, the downside is that unused compute resources cannot be utilized or shared by other functions. For many service providers operating on thin margins, idle resources that cannot be monetized can mean the difference between profit and loss.

In contrast, virtualized server resources can be spun up and spun down to perform a wide range of functions and enable a wide selection of services. While hardware will always remain a large expense, standardizing on server virtualization generates savings in the form of volume discounts and also provides the flexibility to ensure maximum ROI is being extracted from the infrastructure. In other words, a virtual machine that ran load balancing yesterday for one customer could just as easily run application services today for a different customer.

The other major benefit of server virtualization is the ability to decouple expensive software and networking functionality from the underlying hardware. While hardware needs to be purchased up front to provide the foundation for services, software does not. Software can be purchased on demand. In fact, software can enable service providers to be real-time technology resellers - seamlessly making products from a range of technology vendors available to their customers. Or software may be purchased on demand in direct proportion to the provider's need to scale or support services purchased by their customers.

A notable example of this trend is software-based networking products - as exemplified by virtual load balancing, secure access and WAN optimization. Instead of focusing only on high-performance dedicated hardware, networking vendors now give cloud service providers the ability to run essential functions in virtualized environments on commodity servers. By giving service providers the ability to move application networking functions onto a common virtualized server infrastructure - and focusing on integration with orchestration and cloud management systems - networking vendors are giving service providers the ability to significantly lower the cost of service creation.

Although significant, this shift is only the beginning. Service providers are demanding even greater creativity from technology and networking vendors. Although virtualized solutions lower capex and opex and provide the ability to respond quickly to customer needs, they still require service providers to invest up front in costly perpetual licensing. Even with the advent of lower-cost and time-bound subscription models, service providers are still required to purchase licenses up front on the expectation of turning a profit as they resell services.

In response, some technology and networking vendors are breaking new ground and turning traditional pricing models on their heads. As an example, a vendor may charge service providers a nominal amount to run software load balancing in a virtualized environment and forgo traditional licensing schemes. In this new model, service providers pay nothing in the way of user licenses until such time as they ramp customers.

Whether the load balancing is used "under-the-cloud" to support and scale software services, or made available "over-the-cloud" as infrastructure services, these new models offer service providers "map-of-the-earth" pricing. In other words, the service provider pays the networking vendor in direct proportion to demand.

Customers simply purchase services on-demand and get charged by the service provider according to metrics such as time or bandwidth. As customers pay, the cloud service provider and application delivery networking vendor generate revenue simultaneously based upon a predetermined arrangement. Depending on the type of networking service being resold and depending on the nature of the service provider's business model, billing could be driven by throughput, users, connections or transactions per second or any variation that provides the most compelling offering to customers and the greatest margin to the service provider.

On the flip side, for these new business models to gain traction, billing and provisioning for customers, providers and vendors must be automated and integrated with service provider cloud management systems. For technology and networking vendors, that means putting as much effort into orchestration as they put into core capabilities - an effort that is well underway.

By standardizing on a common hardware architecture, leveraging virtualized to maximize ROI, decoupling hardware from software and evolving to new on-demand software business models, cloud providers gain a massive improvement in their ability to be profitable. With less risk and less outlay, service providers are better able to manage and grow their business and a rising tide lifts both service providers and technology and networking vendors. As business increases for the cloud provider, technology and networking vendors can also build automated volume discounts into the business model, which may be triggered to encourage growth and further control costs.

As cloud computing and cloud services continue to accelerate, cloud providers - whether offering software, platform or infrastructure services - are well advised to seek out technology and networking vendors with a broad suite of virtualized offerings and a willingness to work with providers on pricing strategies and business models that enhance profitability for both parties.

More Stories By Paul Andersen

Paul Andersen is the Marketing Manager at Array Networks. He has over 15 years’ experience in networking, and has served in various marketing capacities for Cisco Systems, Tasman Networks and Sun Microsystems. Mr. Andersen holds a Bachelor’s Degree in Marketing from San Jose State University.

Comments (0)

Share your thoughts on this story.

Add your comment
You must be signed in to add a comment. Sign-in | Register

In accordance with our Comment Policy, we encourage comments that are on topic, relevant and to-the-point. We will remove comments that include profanity, personal attacks, racial slurs, threats of violence, or other inappropriate material that violates our Terms and Conditions, and will block users who make repeated violations. We ask all readers to expect diversity of opinion and to treat one another with dignity and respect.


@ThingsExpo Stories
In his keynote at 18th Cloud Expo, Andrew Keys, Co-Founder of ConsenSys Enterprise, provided an overview of the evolution of the Internet and the Database and the future of their combination – the Blockchain. Andrew Keys is Co-Founder of ConsenSys Enterprise. He comes to ConsenSys Enterprise with capital markets, technology and entrepreneurial experience. Previously, he worked for UBS investment bank in equities analysis. Later, he was responsible for the creation and distribution of life sett...
There are several IoTs: the Industrial Internet, Consumer Wearables, Wearables and Healthcare, Supply Chains, and the movement toward Smart Grids, Cities, Regions, and Nations. There are competing communications standards every step of the way, a bewildering array of sensors and devices, and an entire world of competing data analytics platforms. To some this appears to be chaos. In this power panel at @ThingsExpo, moderated by Conference Chair Roger Strukhoff, Bradley Holt, Developer Advocate a...
Cognitive Computing is becoming the foundation for a new generation of solutions that have the potential to transform business. Unlike traditional approaches to building solutions, a cognitive computing approach allows the data to help determine the way applications are designed. This contrasts with conventional software development that begins with defining logic based on the current way a business operates. In her session at 18th Cloud Expo, Judith S. Hurwitz, President and CEO of Hurwitz & ...
In his general session at 18th Cloud Expo, Lee Atchison, Principal Cloud Architect and Advocate at New Relic, discussed cloud as a ‘better data center’ and how it adds new capacity (faster) and improves application availability (redundancy). The cloud is a ‘Dynamic Tool for Dynamic Apps’ and resource allocation is an integral part of your application architecture, so use only the resources you need and allocate /de-allocate resources on the fly.
A strange thing is happening along the way to the Internet of Things, namely far too many devices to work with and manage. It has become clear that we'll need much higher efficiency user experiences that can allow us to more easily and scalably work with the thousands of devices that will soon be in each of our lives. Enter the conversational interface revolution, combining bots we can literally talk with, gesture to, and even direct with our thoughts, with embedded artificial intelligence, wh...
19th Cloud Expo, taking place November 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA, will feature technical sessions from a rock star conference faculty and the leading industry players in the world. Cloud computing is now being embraced by a majority of enterprises of all sizes. Yesterday's debate about public vs. private has transformed into the reality of hybrid cloud: a recent survey shows that 74% of enterprises have a hybrid cloud strategy. Meanwhile, 94% of enterpri...
SYS-CON Events announced today that Bsquare has been named “Silver Sponsor” of SYS-CON's @ThingsExpo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. For more than two decades, Bsquare has helped its customers extract business value from a broad array of physical assets by making them intelligent, connecting them, and using the data they generate to optimize business processes.
Internet of @ThingsExpo, taking place November 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA, is co-located with 19th Cloud Expo and will feature technical sessions from a rock star conference faculty and the leading industry players in the world. The Internet of Things (IoT) is the most profound change in personal and enterprise IT since the creation of the Worldwide Web more than 20 years ago. All major researchers estimate there will be tens of billions devices - comp...
Machine Learning helps make complex systems more efficient. By applying advanced Machine Learning techniques such as Cognitive Fingerprinting, wind project operators can utilize these tools to learn from collected data, detect regular patterns, and optimize their own operations. In his session at 18th Cloud Expo, Stuart Gillen, Director of Business Development at SparkCognition, discussed how research has demonstrated the value of Machine Learning in delivering next generation analytics to imp...
There is little doubt that Big Data solutions will have an increasing role in the Enterprise IT mainstream over time. Big Data at Cloud Expo - to be held November 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA - has announced its Call for Papers is open. Cloud computing is being adopted in one form or another by 94% of enterprises today. Tens of billions of new devices are being connected to The Internet of Things. And Big Data is driving this bus. An exponential increase is...
The 19th International Cloud Expo has announced that its Call for Papers is open. Cloud Expo, to be held November 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA, brings together Cloud Computing, Big Data, Internet of Things, DevOps, Digital Transformation, Microservices and WebRTC to one location. With cloud computing driving a higher percentage of enterprise IT budgets every year, it becomes increasingly important to plant your flag in this fast-expanding business opportuni...
Cloud computing is being adopted in one form or another by 94% of enterprises today. Tens of billions of new devices are being connected to The Internet of Things. And Big Data is driving this bus. An exponential increase is expected in the amount of information being processed, managed, analyzed, and acted upon by enterprise IT. This amazing is not part of some distant future - it is happening today. One report shows a 650% increase in enterprise data by 2020. Other estimates are even higher....
The cloud market growth today is largely in public clouds. While there is a lot of spend in IT departments in virtualization, these aren’t yet translating into a true “cloud” experience within the enterprise. What is stopping the growth of the “private cloud” market? In his general session at 18th Cloud Expo, Nara Rajagopalan, CEO of Accelerite, explored the challenges in deploying, managing, and getting adoption for a private cloud within an enterprise. What are the key differences between wh...
Internet of @ThingsExpo, taking place November 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA, is co-located with the 19th International Cloud Expo and will feature technical sessions from a rock star conference faculty and the leading industry players in the world and ThingsExpo Silicon Valley Call for Papers is now open.
It is one thing to build single industrial IoT applications, but what will it take to build the Smart Cities and truly society changing applications of the future? The technology won’t be the problem, it will be the number of parties that need to work together and be aligned in their motivation to succeed. In his Day 2 Keynote at @ThingsExpo, Henrik Kenani Dahlgren, Portfolio Marketing Manager at Ericsson, discussed how to plan to cooperate, partner, and form lasting all-star teams to change t...
Connected devices and the industrial internet are growing exponentially every year with Cisco expecting 50 billion devices to be in operation by 2020. In this period of growth, location-based insights are becoming invaluable to many businesses as they adopt new connected technologies. Knowing when and where these devices connect from is critical for a number of scenarios in supply chain management, disaster management, emergency response, M2M, location marketing and more. In his session at @Th...
SYS-CON Events announced today that ReadyTalk, a leading provider of online conferencing and webinar services, has been named Vendor Presentation Sponsor at the 19th International Cloud Expo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. ReadyTalk delivers audio and web conferencing services that inspire collaboration and enable the Future of Work for today’s increasingly digital and mobile workforce. By combining intuitive, innovative tec...
Amazon has gradually rolled out parts of its IoT offerings, but these are just the tip of the iceberg. In addition to optimizing their backend AWS offerings, Amazon is laying the ground work to be a major force in IoT - especially in the connected home and office. In his session at @ThingsExpo, Chris Kocher, founder and managing director of Grey Heron, explained how Amazon is extending its reach to become a major force in IoT by building on its dominant cloud IoT platform, its Dash Button strat...
industrial company for a multi-year contract initially valued at over $4.0 million. In addition to DataV software, Bsquare will also provide comprehensive systems integration, support and maintenance services. DataV leverages advanced data analytics, predictive reasoning, data-driven diagnostics, and automated orchestration of remediation actions in order to improve asset uptime while reducing service and warranty costs.
Vidyo, Inc., has joined the Alliance for Open Media. The Alliance for Open Media is a non-profit organization working to define and develop media technologies that address the need for an open standard for video compression and delivery over the web. As a member of the Alliance, Vidyo will collaborate with industry leaders in pursuit of an open and royalty-free AOMedia Video codec, AV1. Vidyo’s contributions to the organization will bring to bear its long history of expertise in codec technolo...