Amazon makes public cloud more attractive to the enterprise

On Thursday Amazon announced three enhancements to its cloud computing offering. These include improvements to existing virtual private cloud and identity management solutions as well as a new option to directly connect enterprise networks to machines in Amazon’s Virginia data center, as Derrick Harris recounts and Amazon’s Jeff Barr details. By enhancing existing solutions such as its Virtual Private Cloud (VPC) and beginning to offer new capabilities in the form of Direct Connect, the company is continuing the gradual process of expanding, extending and enriching the Amazon Web Services proposition. But can the new AWS features give CIOs more of a reason to place their faith in Amazon and, in general, the public cloud?

Amazon is far from alone in seeking enterprise customers, and it needs to work hard to attract CIOs used to dedicated networks and physically secured racks of servers located in its own data centers or in carefully vetted co-location facilities.
The expansion of VPC sees Amazon offer its secure virtual networking capability in Amazon data centers outside the U.S. for the first time, enabling customers to securely move data between Amazon’s cloud and their own data centers, similar to VPN techniques. The enterprise gains access to Amazon file storage and Amazon computing resources without undermining the security of its existing network.

But more important is the new Direct Connect. Enterprise IT is used to dealing with IBM, HP, Microsoft and others. A degree of trust already exists, expectations are already managed and in many cases the enterprise may already be using an IBM or HP data center for co-location, disaster recovery or hosting. As these established providers of IT services extend their cloud ambitions, they are increasingly going to compete with Amazon for the attention of the same executives.

In these negotiations, the availability of traditional data centers, or the ability to connect securely and rapidly to existing IT assets, will play a role. In those situations where the customer needs or wants direct connections from cloud-based resources to infrastructure elsewhere, Direct Connect gives Amazon the means to match competitors with its own hosting and co-location solutions. A direct connection between Amazon’s cloud and equipment in an Equinix data center should be as capable of meeting most enterprise technical requirements for a hybrid solution as a combination of hosting and cloud from enterprise competitors such as HP.

It remains to be seen whether Amazon and Equinix can compete on price, especially as Amazon’s existing fixed-price model may be less amenable to negotiation and discounting than established enterprise providers’. Also, it’s worth noting that Thursday’s announcement is limited to customers with jobs running in Amazon’s US-EAST region and equipment in Equinix data centers in Virginia. But in the coming months Amazon plans to extend the reach of Direct Connect to San Jose, Los Angeles, London, Tokyo and Singapore, as well as to data center providers besides Equinix.

Direct Connect is not, by itself, the feature to send enterprise CIOs rushing to embrace Amazon Web Services. Nor are a VPN or some rudimentary access management controls. That’s not the point. Amazon doesn’t tend to release hugely compelling features very often. Instead, it increments gradually. It launches something, rolls it out to other geographies, then adds a few more features that we might have expected from the outset. It gradually improves, gradually attracting users and increasing the pressure on competitors.

Amazon didn’t change the world this week. But it certainly did remove some of the excuses that an enterprise CIO might use to avoid trusting Amazon’s public cloud. Next month, it will remove a few more. Amazon will continue to undermine objections to enterprise use of its cloud, and competitors will try to follow. In other words, the public cloud wins, and so does the customer.

Question of the week

Will the enterprise embrace AWS and the public cloud now that Amazon has enhanced its offering?
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Paul Miller

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  1. Yes, these incremental changes are a step (an important one for sure…) in the right direction – but the idea that large enterprise reluctance to embrace public cloud is based on technology short-comings (security, privacy, control, etc) is but a veil to the real obstacle, namely the culture change needed to make public cloud pay off.

    Culture eats strategy for breakfast.

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    1. I definitely agree that culture can be a huge barrier to change. But without good answers to the easy arguments “against” moving to the cloud, there’s little point beginning to challenge those cultural presumptions.

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  2. stevenroyster Monday, August 8, 2011

    Gradually, enterprise will embrace AWS & others – the economic benefits are too strong. Use cases will develop to be templates for public, private, colo, etc – driving the need for quick, smart & scalable orchestration of IT resources…this is the huge opportunity.

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    1. Some enterprises already embrace AWS and other public cloud providers wholeheartedly, and gain benefit from doing so. The use cases you mention, and optimized solutions from the cloud providers, will make that adoption much easier.

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