Over the past twelve months, the watchword in the Canadian hosting industry has been "consolidation." Since last October, we have seen Q9 Networks, PEER 1, BLACKIRON Data, Pivot Data Centres and Granite Networks acquired by larger telecom/cable operators.
Clearly, there’s a current trend towards large suppliers getting even bigger, and reducing customers’ operational risk by expanding the service delivery footprint. It seems likely, though, that customers — especially those whose providers have been snapped up through the acquisition phase — are now asking, "what should we look for in 2014, as we evaluate potential IaaS suppliers?"
Savvis — which, with more than three data centres including facilities in Vancouver, Toronto and Montreal, is a major supplier both in Canada and in the global sense — believes that basic provision of reliable colo-type services is becoming a commodity, an ‘ante’ to competing in the IaaS market. Instead, the company believes, customers will increasingly focus on how providers can help them to use cloud to deliver new types of service to the enterprise.
One fascinating example of how this trend might play out is found in Savvis’s hosted SAP HANA service. HANA is recognized as a leading analytics platform for Big Data — an in-memory database which, in the words of Wikibon analyst Jeff Kelly, delivers "a massively parallel processing data store that melds row-based, column-based, and object-based storage techniques." This is important because, as Kelly notes, the traditional approach to corporate data analysis — enterprise data warehouses, or EDWs — rely on an extract-transform-load process that "is time-consuming and requires significant investment in related proprietary hardware…[and often] provides little more than backward-looking views of company data." By contrast, "SAP HANA offers enterprises a new approach to harnessing the value of all that corporate data…applications on top of HANA can access data in near-real time, meaning end-users can gain meaningful insight while there is still time to take meaningful action. HANA can also perform predictive analytics to help organizations plan for future market developments." The technology is used to extract insight from very large data sets, and is being deployed in many industries; use cases cited by Wikibon include profitability reporting and forecasting, supply-chain optimization, security and fraud detection, and industry-specific monitoring and optimization systems in data-intensive industries like energy, telecommunications; the technology is also deployed to support "horizontal use-cases such as human capital management."
As is clear from Wikibon’s commentary, Big Data analytics (and SAP HANA specifically, as a delivery platform for Big Data analytics capabilities) can provide compelling benefit to a customer. However, this capability comes at a cost of both complexity and infrastructure investment. The storage and processing power needed to get started with a system capable of performing real-time analytics on petabytes of data is substantial — and given both the nature of Big Data and the utility of the insights it provides, buyers can expect demands for both data and processing power to continue to increase over time. As a result, customers may well choose to use a cloud supplier to deploy and maintain the underlying infrastructure, and to manage that infrastructure to meet evolving requirements. This will require a level of expertise beyond the provision of "bare metal" compute capacity; SAP HANA requires a tailored platform, and suppliers of "HANA as a Service" need to understand how to provide management of the software environment and the data itself.
Savvis’s support of HANA provides a clear example of how a cloud provider can differentiate itself by building the expertise that customers require as they tap into the business benefits offered by cloud’s scale and unique capabilities. Savvis has established a strategic alliance with SAP, and works in conjunction with the software vendor to deliver "big data computing and real-time analytics through a managed, scalable, analytics solution built around the SAP HANA platform, implemented on Savvis dedicated server infrastructure and hosted in a world-class Savvis data center."
This level of service delivery won’t be available from all cloud suppliers: it requires a combination of technical expertise and up-front investment that will separate capacity-only providers from enterprise-grade IaaS partners. In the case of SAP and Savvis, Savvis reports that "SAP HANA is delivered on the Savvis Foundation Hosting platform. Savvis Foundation Hosting offers a unique server management model, certified by SAP for HANA implementations giving Savvis hosting clients full control over the OS and application layers, while removing the burden of owning and maintaining server hardware. Savvis procures and provisions the server hardware that are certified for SAP HANA implementations… we configure memory and onboard storage, rack and stack servers and deliver conditioned power in a secure, tightly controlled environmental data center space…[and] Savvis owns the full management of hardware from procurement to resolving server issues including repair and replacement – all protected under a Service Level Agreement that ensures maximum uptime."
This diagram demonstrates the way that Savvis addresses the many layers of support required to successfully deploy HANA in a cloud environment. (click on figure to enlarge.)
InsightaaS summary: The consolidation of smaller IaaS/colo providers provides all participants in the market — buyers and suppliers alike — with cause to reflect on what is needed to be successful in cloud relationships. Certainly, scale and access to networks are two important issues; the fact that the Canadian acquirers are telco/cable companies (and that Savvis itself is owned by a global telco, CenturyLink, the third largest carrier in the U.S.) underscores the notion that ultimately, cloud infrastructure will be supplied on a utility model.
Once the shakeout is complete, though, how will suppliers differentiate themselves? It seems likely that the market will stratify into low-cost suppliers of basic compute and connectivity services, and higher-value suppliers that add enterprise-level support to the core platform. In this light, Savvis’s investment in SAP HANA providers an intriguing example of how we might expect the IaaS market to evolve — with suppliers providing differentiated services to help customers take advantage of applications, like Big Data analytics, that deliver net-new, cloud-centric business capabilities to enterprise customers.