Going Cloud-Native with David Linthicum
Deloitte Consulting Chief Cloud Strategy Officer David Linthicum deciphers the evolution of cloud computing; how it has changed the way enterprises deploy IT.
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Cloud computing has come a long, long way from the early days of mainframe timesharing technology and virtualization. Over the past decade alone, we’ve seen cloud computing experience tremendous growth, providing ubiquitous solutions for both consumers and enterprises. This trend is expected to continue with the rise of cloud-based services for machine learning, artificial intelligence, and edge computing.
However, the transformation to cloud computing remains a very challenging prospect for many enterprises. Enterprises need to consider factors such as cost, security, legacy and on-premise technologies, and the value of using cloud-native vs cloud-agnostic services.
In this round of Coding Over Cocktails, our David Linthicum sheds some light on the evolution of cloud computing; how it has changed the way enterprises deploy IT; how enterprises balance the demands of the cloud and legacy systems; analyzing your company’s capabilities of going cloud-native; and the future of the cloud.
Kevin Montalbo: Joining us today from Australia is TORO Cloud’s CEO and Founder, and Cocktails’ co-host, David Brown. Hi, David.
David Brown: Good day, Kevin.
KM: And today’s guest is an internationally recognized industry expert and thought leader, who is currently the Chief Cloud Strategy Officer for Deloitte Consulting. He has written more than 13 books on computing, published more than 7,000 tech articles, and spoken at more than 700 conferences. He is also a Gigaom research analyst, a cloud computing blogger for InfoWorld, and a frequent contributor to 'IEEE Cloud Computing,' Tech Target’s SearchCloud and SearchAWS. Joining us to share his knowledge and expertise is, well, we didn’t plan this, but another David! David Linthicum all the way from Virginia. Welcome to our podcast!
David Linthicum: It’s great to be here, lots of Davids in the world I found out.
DB: A fair share of David Browns as well.
KM: 13 books and 5,000 tech articles. That’s a lot of content. For someone who works on the content side of things, I’m just curious, how did you get into content publishing?
DL: Boy, I started way back when I was in my 20s. I used to publish articles for the local PC Sig, remember those days, special interest groups, days when the internet wasn’t around. We used to gather together once a month and exchange ideas pn how to build and deploy PCs. I used to publish wire diagrams and lots of technical articles then. A little challenging because I’m severely dyslexic, never spelled well, and barely made my way through college and high school. I started to train my brain in order to produce additional content.
Actually the use of a computer and word processor kind of changed the game for me because it could in essence go behind me and check my spelling and my grammar and things like that in the early days of stuff. I found out that it was a career enhancer. The more I published, the more people recognized my name, and more jobs I got, and the more money I made. When you’re in your 20s, you want to go out and have a good time, buy a car, things like that. That kind of meant a lot. It just progressed my career. In other words, I started writing books, the articles started to go to PC magazine. I was one of the editors there, it was a great amount of fun because it was testing and deployment.
In PC magazine’s editor’s choice, I was involved in that than any number of enterprise software books, database programming design, case trends which was computer software engineering trends. Just basically anything that came along that I thought was interesting as a topic and subject area. That’s kind of the way I learned how the subject area was. In other words, you can’t do everything. As a human being, I can’t be an expert in every programming language, in every architecture, in every database, but I can learn a lot about a lot of things just kind of basing the fact that I’m writing about them. I know a lot about a few things, I know a little about a lot of things and I do that through research and writing. It allows me to an essence, kind of figure out how things are shaping and working together. It allows me to identify emerging patterns and kind of what I do for a living now.
It’s figuring out where the balls are gonna be kicked and figuring out what the next generation technologies are gonna be. In my publishing history, last I published was in 2009, I’ve kind of fallen out of it right now, people are actually trying to get information was ultimately just revealing new concepts that didn’t exist before. EAI, Enterprise Application Integration, that was my term that was basically represented by the same book Cloud and Service Oriented Architecture, just basically building on those. Then I got writing into columns, I’ve been writing the cloud computing column for InfoWorld for the last 12 years and any number of other publications as well. I do a lot of radio and TV and podcasts like this. I just really enjoy it.
KM: You have witnessed the evolution of cloud computing over the last 20 years. How has the cloud changed the way enterprises provision and deploy IT?
DL: Well, ultimately it provides a different consumption model at the end of the day. People always talk about the revolutionary nature of cloud. When you think about it, we’re still dealing with databases, storage, compute cycles, and many of the same platforms we leverage on-premise. If you look at what cloud computing is in the way it evolved to be, it’s an essence in the ability to configure a data center virtually. Certainly, the infrastructure is the service provider. I can put it in a storage, computer, database, or I can put it in platforms, I can put it in Linux, Windows, and C++, and anything I need to configure what infrastructure I need to support my application.
The great thing about a cloud is you can do it in about an hour versus if you’re a traditional enterprise, you have to go cycles. It’s gonna take six months to a year for the standard gold 2000 company. Revolution is really around the consumption model and how it’s gonna free us up from actually being innovative and creative and not necessarily putting IT as a limitation on the business. You talk to the CEOs out there, they’re gonna tell you that “it takes me two years to integrate a company I buy because IT is going to basically spin around on particular integration technologies that they need to make these things run”. Cloud computing is a matter of spending up what you need. It’s a matter of core integration technologies. It's a matter of layering in different security platforms and doing so you really kind of at the speed of need. So, that's the revolution of it. And the second generation of it that we're seeing now is the ability to leverage advanced technology that doesn't exist on-premise. I mean, some of the AI stuff you can't find on-premises, you know, some of the machine learning-based systems can't find on-premises, certainly the serverless computing stuff you can't find on-premises because that would be weird.
Ultimately we're able to weaponize technology that prior to this was unaffordable and obtainable. And right now, probably five years ago, the cloud kind of crossed the chasm where they have better technology than we do on-premise, whether it's security, governance, management, monitoring. And that's because if you look at the way the R&D dollars are being spent within the technology companies, they're investing in building cloud-based products, not necessarily on premise-based products. So, those two kinds of waves occurred. And I think the next wave will be the sync and migration of legacy systems moving forward and kind of dealing with that whole thing. But, the revolution I saw, certainly back in ‘99 when I got into the cloud game, was the fact that this consumption model is going to be more aligned with what business needs and business even understands what they need and that turned out to be the right thing. But of course, it took, you know, 11 years to do that.
DB: Many companies still have significant investments in IT infrastructure which is on-premise. How do companies balance the demands of cloud with legacy on-premise systems?
DL: I've been in cloud for a long time, and I live in Northern Virginia, and this is the data center capital that seems like, of the world. And I'm watching data centers go off, probably, there's probably 10 projects right now within five miles from me. And so what happened, suddenly the ability to leverage cloud and share resources would get us away from traditional data centers. Well, the reality is much different.
The reality is that there's a certain amount of infrastructure that we're going to have to own. Either that's going to be in managed service providers, colo providers, around private data centers. So we're going to hit a saturation point in cloud migration. Cloud guys don't like me to say this, typically between 70 and 75%, where the remaining 30% can't migrate anywhere. They're more valuable to the business. A lot of things we have in the cloud and therefore we have to make these things, cohabitate what I say, work, and play well together.
And right now we don't have a lot of very good middleware layers that are able to span on-premises in the cloud. We're getting to security, we're getting to governance, we're getting management monitoring, which have this duality of roles where they're able to in essence monitor systems that we own, monitor systems and managed service providers and CoLOS as well as in the public cloud. That's new to everybody. Everybody has a tendency to kind of want to leverage whatever native tools and technologies are there moving forward. I've been spouting for a long period of time and it's actually got me more ire than anything else is the fact that I don't think these legacy systems are going to completely go away more so than you think, they're going to be a big part of our infrastructure moving forward. I think we're going to be able to find analogs, other ways to run them.
CoLOS and managed service providers are good options for that right now. Everything's not going to be able to live in the cloud. Even if we have platform analogs that exist in the cloud, that doesn't necessarily mean that a data set or an application workload should exist in the cloud. We're finding that the economies are really kind of driving a lot of things back to the data centers. Some of the Silicon Valley-based companies where they're putting out a social media platform or they're putting out a gaming platform and they did so in the Amazon cloud or whatever public clouds that are out there, found that it's more cost-effective to basically move it back to their existing data center that they own. Because you think about it, it's really kind of a single pattern of workload.
In other words, they're running a game, they're doing one thing. They're not running 10,000 applications like the typical enterprises. And if they're able to own the hardware and software and able to optimize that and optimize the network bandwidth as it goes between them and the user is able to do so at a decreased cost, that's where you're going to be. And I think we're going to see a lot of that. We're going to see normalization in the market where people moved out to cloud probably ill-advised and they're going to normalize back to the data centers, their private data centers, or CoLOS, things like that. And then we're going to see certain platforms move out the cloud. You know, one of the things that I tell my clients when I meet with them, it says, you know, I'm not a cloud bigot.
I'm here to basically mediate the best solution to the problem and the best architecture, which is going to be optimized in a certain way. And sometimes that's on-premise. Sometimes that's other platforms, sometimes it's cloud, private cloud, edge computing, IoT based computing, all of the above. It's really becoming that way and figuring out how we're going to look at this from an unpartisan way since we have an election coming up, where you're actually going to pick out the right solutions for the problems that we're looking to solve and not necessarily move in a certain way, what I call the managed by magazine crowd, just because everybody else thinks it's trending to move out in this direction.
DB: It has a lot of pain points associated with it. If you tried to make that move in and you're not ready for it, or it really wasn't designed to be made that move. Are there any sort of use cases that come to mind where people shouldn’t try to move on-premise to the cloud?
DL: Obviously, if you have a significant amount of security risks, that's there and you're worried about, for example, data sovereignty issues, in some of the countries out there have very strict data retention rates, auditing rates, things like that, where it's almost impossible to move it out in the cloud. If you have to audit these systems in a certain way, in many instances, the cloud providers just don't provide a way for you to do that. You can't walk through their data centers, for example, and take the serial numbers off of their servers. You don't know where their data centers are. And that's a good thing. You don't know what servers are running on. That's a good thing. You don't know who's maintaining the servers. So it's those kinds of restrictions are there, that immediately eliminates cloud.
The other thing I say, which is a little different and different than most people have an opinion if you're overly concerned about the control aspect of it. In other words, you're going to think that you're running a risk, even though I don't think you're going to be running a risk. Those are reasons to hold off for now because things are only going to get better in the cloud. Security is going to get better. Governance is going to get better, things like that. So you can have any kind of reservations of the fact that we're taking additional risk and moving into the cloud, which by the way, you are, any migration comes along with a risk, then make it something you shouldn't do moving forward. And then the cost justification, obviously it's changing from a really consumption efficiency or are basically cost efficiency to business agility kind of an argument, but you have to completely look at it in many instances, if it's a 10% increase in efficiency, don't do it. I mean, your constant risk is going to be way above 10%. Maybe it's worth the risk. And if there's other mitigating factors there, the ability to kind of leverage technology as a force multiplier for your business and agility and those sorts of things, and it's something you should probably do.
DB: I think you mentioned a saturation point of about 75/80% in them and we’re gonna see a contraction back to the private data centers or on-premise. Where do you think we are at that cycle at the moment? How far are we?
DL: Yeah, we’re in about 30-40% penetration right now and that’s considering SaaS as well. SaaS is a big beast into itself and no one seems to be paying attention to. As far as infrastructure as a service migrations, you know maybe 10-20% for most global 2000 enterprises out there. It’s fairly miniscule than what the press is talking about so when I see things out there, I still see data centers in play. I see people building net new applications. They may have moved a thousand applications out of the 10,000 applications within the particular enterprise. They are in the process of moving data, figuring out security, complexity, and all those sorts of things and that’s kind of hindering the movement right now. I think that people are trying to accelerate, but it’s stuck to itself.
DB: The interesting thing, you know you mentioned SaaS. It’s a fad, it’s a buzzword. In our business case which is application integration API management and data management. Most of our demand comes from on-premise related systems. Whilst there is this market demand in terms of the business case of driving into SaaS and providing a solution which is a cloud-based solution for really cloud-based integration iPaaS. Fortunately from the outset, we developed, both a hybrid solution of both on-premise and cloud. And we're finding still today, the vast majority of the demand from enterprise customers is for on-premise solution, which I think is partly because most of our new age competitors, at least are purely cloud-based. So it's interesting that perhaps the market was trying to service a demand, particularly in the enterprise space, which was maybe forecast to be, I guess they were forecasting the demand decrease for on-premise, an accelerated rate perhaps more than it actually will.
DL: I’ve been a CTO five times and you always have to predict the platform utilization where people are going to be. The reality is that people have a tendency to be more reactionary in organizations that are building products. If they see people moving to a SaaS, which has been that way for the last 15, even 20 years, if you look at the application service providers that we had way back when it seems like you're going to be all-in on creating a SaaS-based version of your system. I think you did it the right way.
In other words, you're creating a hybrid version and you consume the technology, however, you want to consume the technology. But many people have just, we're all in on SaaS and in essence, trying to sell it that way. And then they throw out a medic limitation on consuming the technology. And I wouldn't do that as a CTO, certainly looking at the ability to do duality and deployment and the ability to kind of deploy to two different systems and basically having one being multi-tenant and basically using the same code base for those sorts of things. And that's all possible if you're a smart developer, smart programmer, a smart product manager.
KM: You mentioned that you were talking to a lot of clients. When you talk to clients, do you see right away some of the success factors or some of the variables that are present currently with their organization? Who has a more positive success rate when adopting a cloud strategy or going for digital transformation projects with the cloud?
DL: There’s two-point factors. Number one, people who have vision as to where they’re looking to take this stuff. In other words, they know where they’re going one or two or even 10 years down the road. What they need to be is a business and what IT needs to be to support the business. Second would be folks with resources to make it happen.
I think the biggest hindrance to moving to cloud is people underestimate the amount of money it’s gonna take to make these moves. Reality is it’s gonna be binary. You’re gonna hit the threshold of resources and it'll actually make the move successfully. Or you’re gonna fall short and waste the money you’re gonna spend even though you’re spending less money than other folks in the peer group. When I hear people say we're going to basically fund this cloud migration by savings, we're going to get from cloud, that will never work. Your ability to be all in on migrating these various systems and getting the right talent and tools and technology, you need to make it happen. It's going to be a lubrication to success. And then also the ability to kind of understand where you're going.
If you could, you could spend lots of money. And I see this all the time too, without having a good vision as to where the commonalities are and how you're going to create a common architecture and move stuff forward where it's just going to fall short because you're going to build too much complexity because everybody has too many choices. They're selecting what they think is best to breed. And you're going to end up with a big complex mess that you spend a lot of money to get to, they're going to have to fix.
DB: I was thinking about the enterprise software solutions which are typically sold in a day as highly customizable frameworks. I used to get frustrated when dealing as a customer enterprise vendor and being told it was a framework rather than a product which meant that I have to spend exponential amounts of dollars in the implementation of the software not just on the product licensing fees.
The upside was as a customer was it could be tailored to my unique requirements. I can do what I need with it. That differentiates an enterprise business requirement to a small business requirement. One of the downsides was that it could also result in lock-in to that vendor and all the systems integrator for that matter who was implementing for you because they knew the customizations that were being implemented. So it wasn't often easy to migrate away from these solutions. Do you think in the cloud space something similar is happening, that the cloud-native solutions that public cloud providers are providing such as cloud-native databases or systems like that? Are they providing the equivalent of the vendor lock-in of the traditional software model?
DL: For the most part, they are. When I hear cloud-native I always tell my clients we’re really walking down the aisle with that particular vendor. However, the other side of the coin if you’re trying to be too generic and too open and try at least a common denominator approach, you're gonna find that you’re not able to satisfy the needs of your applications on any platform you run on so that’s the trade-off. Ultimately most people aren't going to migrate off of, they're looking to go, they're going to leverage the technology for the life of the system, not always, but most of the time.
And so I tell people to kind of take a look at that. And if you are anticipating migration off of particular cloud provider, and you're leveraging their secure native security system, their native databases and object database system, and AWS, their particular platforms, which are native to it, and you can't find in other systems or other clouds, then the trade-off is going to be, it's going to be, um, almost an economically viable for you to move off that stuff ever. If they do jack up the price and start charging them more, you're kind of in trouble.
However, the other trade-off just mentioned is, okay let's do everything generic. And let's leverage open source databases and let's leverage open source Linux systems and all these open systems on the cloud. There'll be a cost of transferring the system. It's not going to be as a hindrance as you leveraging the cloud-native features, but actually, in many instances, that's going to cost you more because you're building systems that are really kind of built to run on multiple clouds. And therefore they're going to be wasteful in terms of resources everywhere.
And they're going to be more expensive to run overtime. It depends on the answers as a consultant as to what you're looking at. And so you have to kind of take it on a case by case basis. So, I can't stand in front of me and say, cloud-native is the way to go. Even though lots of people are doing that now where cloud-native is not the way to go because it's going to cost lock-in. The reality you have to consider all alternatives and figure out your best path in terms of cost and efficiency through those alternatives.
DB: One of the counter-arguments of pro-cloud-native is also the maintenance of the application itself. Some of the vendors now of these open-source applications like MongoDB are providing the maintenance services whether they’re effectively doing that same remote management of the database that you were getting in a native solution, a public cloud-native solution so I guess the argument for a lower maintenance can be somewhat mitigated by some of the services being offered by these open-source solution providers as well. What would you recommend to a company to mitigate this risk if they’re looking at going the open-source route versus the cloud-native route?
DL: You have to take applications on workload by workload basis. I know that's a question that people don’t want to hear because they want the easy answer. The reality is I can have an application that’s running on a lump stack that’s been running in the enterprise for the last ten years and I can find platform and analogs for an open-source analogs for it in the public cloud provider where I am not leveraging any cloud-native features. It’s almost a lift and shift work from one to the other.
That’s the cheapest way to migrate into the cloud. The downside could be that that application is gonna leverage those resources in a much less efficient way therefore my cloud bill is gonna be 20-30% higher over the 10-year lifespan of the application. It’s gonna run in a diminished way because not leveraging native APIs, leveraging the native security systems, things like that were running in an abstraction layer above those systems.
If you go down to the native system, you're going to be able to hopefully get a lower cloud bill, you should and ultimately run faster therefore people are gonna be happy for the performance which is gonna be a step in the right direction. However, if for some reason the cloud provider raises the rates or something occurs or we have to move up that system, you’re gonna pay a hefty fee to an essence reconvert down to an open-source standard is gonna run on-premises and move into another cloud-native system, another public cloud provider.
These are the risks you need to talk through. My advice sounds almost like an attorney, we’re going to court. We’re gonna figure out what the vision is for this application, purpose is gonna be, the importance of the business, how much money we’re willing to spend. Then really talk about the trade-offs in making it happen. Many instances, about 60-70% of the time, people go cloud-native just because they almost have a religious belief around that just because some other people are talking about it. In another instance, is looking for the least common denominator approach which is scary into itself because in essence you’re gonna run for everyone versus just one system.
DB: Over the last ten years, we’ve seen public cloud with a lot of costs go down. It may well be another reason for the migration it could some fundamental reason, vendor affiliation, or whatever it may be that’s driving the change but so far cost probably isn’t the major driving factor to wanting to change to google versus AWS for example.
DL: In many instances, they’re looking for the strategic advantage of leveraging cloud bringing value to business in some other ways. I always tell my clients, people came to me for cost reduction in terms of migrating to the cloud but they stay for the business agility and the ability to enhance the business using this technology. If you’re looking at some of the disruptors out there, they’re able to weaponize cloud computing, you know Netflix and other folks out there.
There’s many others you just don’t hear about any more in essence allow them to disrupt their business. So they’re able to become a better business because they’ll operate faster, able to move into the market, get products out and running, able to expand their business faster than any of traditional business this thing that sit on-premise. Moving forward, we have pharmaceuticals, we have banking systems, things like that are in the works now. They’re gonna be huge disruptors in 2021 and 2022. The weapons that they’re able to use is leveraging cloud computing as the ability to just basically move a lot faster. Car companies like Tesla versus traditional Detroit based companies would be instances of it. They’re born in the cloud and therefore they have a huge advantage.
DB: Where do you think is this all gonna end up? What’s your prediction for the next 20 years? What are the major innovations we’re gonna see in the public cloud providers over the years?
DL: I think ultimately we're going to hit a saturation point on the feature function stuff in the next five years because right now you can go to some of the big cloud, cloud shows, the kind of stretching the limits or building things that we didn't think we needed. Ultimately, they're going to have so much money and so much technology that's able to play. And so many more resources than the traditional software providers that it's almost like the way I describe it as almost like Word for Windows. I use Microsoft Word, but I keep getting a new version of that but I don't use any of the new features. You don't have to pay for it. I basically use the same version of the Word I used 10 years ago and I think of it perfectly fine.
Well, it's beyond some of the resources that are there now. And so instead of storage and compute and all the bread and butter things that cloud computing does, it's really kind of the feature functions around that. So it's IoT edge-based computing, digital twins, machine learning-based systems. That's where they're looking to make their money because all that stuff by definition is going to be cloud-native, the most part and some are not. Your ability to kind of get people on that technology and leveraging the value of that technology is really going to be the big win for them, that makes them technology incredibly sticky. So people are going to definitely go to multi-cloud.
We're seeing that now almost 90% of the folks that are out there, that's going to expand. I think the cloud companies are going to basically enhance a lot of their existing stuff, but they're going to reach a saturation point of themselves where people, they're going to start building stuff people aren't asking for. They're going to realize the folly in doing that. And in essence, trying to get back to the essence of what they're able to do and manage these systems better. One of the things I do seeing happen is a lot of the public cloud providers kind of accepting the fact that it's going to be a multi-cloud world and the ability to kind of manage and monitor and work and play well with other public cloud providers that right now they don't like and hate. They're doing that for the value to the client, the client sees them really they're supporting my multi-cloud and leveraging features and functions within their cloud that are native to the systems. They can talk to Google and Amazon and Microsoft to make all these things work and play well together. We're going to start moving in those directions.
We haven't seen that a lot yet. And I actually made a prediction that I was absolutely wrong about for reinvent last year, I thought that we were going to see some of these things start coming out of the public cloud providers, but I haven't seen it yet, other than some stuff maybe that's shown up from Google. That's going to be a big thing. I think the cost reduction is going to occur as well. The ability to kind of get down to a commoditized cost, even though it's scary because we can't sign up to an enterprise license agreement where the costs are going to be held down in perpetuity. They're not signing those deals. They could raise the cost and the fees there's utility service, you know, very much like our water bills and electricity bills got up in the last few years and they're doing the same thing in the cloud space.
And it's even more scary if we're going to get down to three major cloud providers or five metered cloud providers. Ten years ago, we had 15 and their price is a reason to control. I see commonalities in security systems. The ability to kind of mediate complexity is going to be the big thing to solve. Obviously, I've been focusing on that as kind of a discipline for the last few years, because a lot of my clients are mediating their complexity moving forward. The cloud provider is going to help on that journey. I think we're going to have to start helping on that journey. I think that if we're going to look at the next 10 years, the theme is going to be, you know, back to the bread and butter of what cloud does and really kind of focusing on doing that even better and better and cheaper and cheaper.
Certainly, everybody's going to leverage these advanced very cool kit technologies like machine learning and edge computing and IoT and all these things like that. That's going to be part of it. I think businesses want to focus on the fundamental, there's not as much interest in that moving forward. I think that’s cloud providers’ thing. Even since the COVID stuff hit six months ago, I noticed a direct shift in people not necessarily focusing on analytics and AI technology and IoT and edge-based system, they're just focused on getting their stuff out of their data centers into the cloud because they interviewed the data centers as being the risky aspect of moving into a pandemic.
DB: If we’re gonna reach a saturation point, in a relatively short amount of time, it’s gonna become a commodity item, like you say like a utility. It’s gonna be price compressed. We have very significant businesses we still need to justify here in the public cloud provider, say consolidating that into a few major ones. I’m wondering where they go next. Do they put on an application layer on top of the infrastructure as a service? Do they become software-as-a-service providers? Leveraging their own infrastructure?
DL: We’ve been trying that for years maybe look at some of the stuff public cloud providers are putting out. They’re all SaaS providers as well. They may not be business applications per se but they’re putting out 3D modeling systems, virtual reality systems, software as a service, design systems, things like that. We’ll see more and more of that moving forward but I think their better play would be to allow third parties to build that infrastructure on their systems which is what we’re doing now.
Therefore they get the money from the equalization of the system without taking the risk of building the wrong IP that’s gonna tank in the market. They're playing those games as well. All the major cloud providers are SaaS providers. Certainly, the office products with Microsoft and Google, and 3D modeling and design engineering, and some things that AWS is putting forward. It's just going to be integrated into their business.
My advice to them if I was CTO of these companies would be, limit your ability to do this because of the saturation underlying capability to build this thing infrastructure moving forward. In the case of two of them, they had existing businesses, 15 plus years old. So I understand why they're doing it and really just kind of focus on what people need and that's reliable storage systems, things like that. You start putting your resources on building SaaS systems on top of it. You're diluting the resources that are basically focused on building a better cloud provider. We haven't gone through a downturn yet. I suspect we will, at some point in the future. Those sorts of resources are going to be tougher to allocate. Those sorts of things will go away. It's not a big PR move, by the way, to put out something that you lose faith in, five years down the road and you sunset it and pull it off the market. Then the press goes nuts about it, things like that. I see a lot of that happening coming forward. I think the normalization in the market is going to be a lot of these feature functions. Even these SaaS products that are built by the public cloud providers, not being profitable into themselves, disappearing and not getting big reliability points or trust points from doing that.
DB: It does make a lot more sense to earn a cut from someone else’s effort through a marketplace type play like an Apple or Google play store. I guess all the providers have a marketplace to provision software on their platforms but it’s not the exclusive distribution point for their software platform. Vendors can still provision EC2 instances in Amazon and install their software directly or customers can do it directly. You’re not forced to go through the marketplace. It’d be interesting to see if that place becomes more so the 30% cut in the revenue stream gets pulled to the marketplace at some point in time in the future. Might be an additional revenue stream that those guys can take a look at.
DL: I will. I have technology providers that make their entire marketing through the marketplace. They have no salespeople, they have no marketing people and they're close to half a billion to a billion-dollar company. They're living within the marketplace of the big three, Google, Microsoft, and AWS. The only way they do it, that the risk is there to the point you just made was your act, in essence, depending on somebody else to make you sales. If I was CEO of the company, I would diversify fairly quickly, even if it took a bit of a loss to make that happen because we're assets exposed. If those marketplaces go away or somehow they decided to drop us or whatever can happen. If you're depending on somebody else for your business, as some place I never liked to be. A couple of times I was a CEO and five times I was CTO. I balked away from doing that each and every time I did it, it was the right decision.
DB: Those are big numbers. I’m surprised you’ve got customers doing those kinds of revenue numbers as an exclusive play through a marketplace.
DL: It’s what I call an invisible economy that’s out there. People are able to in essence get very wiggy with how they solve things and they're avoiding human beings doing it. If you're born in the cloud and everything's going to be on-demand, you're leveraging the cloud provider as a place where you're building, deploying your systems. In other words, they're your infrastructure on your behalf. They basically use it to sell your software as well.
And so open-source systems, believe it or not, they still make a lot of money on those things in providing services and extensions. Those in the marketplace, proprietary monitoring, management, software, security software, you know, things like that. Many of those folks haven't invested in marketing and certainly don't have a sales staff in making it happen. They become electronic order takers. I think that's the best of the world that you can get. It could be that just going away and pulling the rug right out from under me or someone's stealing my idea and me not having a very valid way to protect it.
We're competing, we're in Essex, it's sitting in the list in the same marketplace in a way to differentiate my technology and all those sorts of things are risks and moving forward. If you're starting a software company these days, those are fundamental decisions you have to make in terms of what business model are you going to leverage. I mean, one's an investment, a lot of money in time and hiring human beings to go off and sell it, uh, even your own existing distribution system that sits online.
And the other is basically doing the marketplace stuff where you're paying homage to somebody else to sell your stuff. You have to pay a fee to make that happen. They actually take a fee on each and every time you sell a product. What do you do? I think those are interesting questions that quite frankly were easier to answer 10 years ago, but not as easy to answer today. Ten years ago, I just said no, all the time. Right now I'd have to take a look at the model and look at the viability of the system in order to be what CEOs or CTOs do. That's basically maximizing shareholder value, what's the best path to value.
DB: David, we covered lots of ground today and solved the world’s problems in the public cloud, taking your SaaS solution on the market as well. Thank you for your time today, really interesting conversation. I enjoyed it a lot.
DL: Yeah, me as well. You can ask me back anytime.
KM: Thank you very much, David Linthicum. Before we end this podcast, can you tell us where people find you, listen to your podcast, and learn more about your work?
DL: Go out to iTunes and search the On Cloud podcast. I publish there about once a week. Twice a week on InfoWorld, I have a column there, a blog, I had that for the last 12 years. I publish a lot on TechTarget, I also publish on gigaom.com, I have a number of reports there where I do the research and really dive deeper into different technology spaces, things like that. I do a lot of this and I love talking to people about technology and they can always reach out to me at firstname.lastname@example.org.
KM: Thank you very much for being with us!
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