Lydia Leong

A member of the Gartner Blog Network

Lydia Leong
Research VP
11 years at Gartner
19 years IT industry

Lydia Leong is a research vice president in the Technology and Service Providers group at Gartner. Her primary research focus is cloud computing, together with Internet infrastructure services, such as Web hosting, content delivery networks…Read Full Bio

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The cloud and customized contracts

by Lydia Leong  |  January 12, 2011  |  1 Comment

Continuing the ongoing debate about the Cloud IaaS and Web Hosting Magic Quadrant, Bob Warfield has made a blog post called “Gartner: The Cloud is Not a Contract“. I want to address a number of points he made in his post. I’m going to address them out of order, starting with the points that I think are of more general interest, and then going into some of the MQ-quibble-specific stuff.

Bob goes into detail about why customized contracts can destroy what a customer was hoping to get out of the cloud in the first place. Bob writes something that I agree with but want to nuance in a number of ways. He says: How do we avoid having a contract destroy Cloudness? This is simple: Never sign a contract with your Cloud provider that interferes with their ability to commoditize through scale, sharing, and automation of operations.

I think that a cloud provider has to make decisions about how much they’re willing to compromise the purity of their model — what that costs them versus what that gains them. This is a business decision; a provider is not wrong for compromising purity, any more than a provider is right for being totally pure. It’s a question of what you want your business to be, and you can obtain success along the full spectrum. A provider has to ensure that their stance on customization is consistent with who and what they are, and they may also have to consider the trade off between short-term sales and long-term success.

Customers have to be educated that customization costs them more and may actually lower their quality of the service they receive, because part of the way that cloud providers drive availability is by driving repeatability. Similarly, the less you share, the more you pay. (These points are usually called out in gigantic bold caps in my conference presentations.) The cloud creates some harder choices for customers, because the cloud forces IT buyers to confront what “having it your way” is costing them, and will cost them in the future. The cloud is not, as it were, Burger King. The ability to take advantage of commodity cloud services will be a key factor in IT efficiency going forward.

But I believe that customers will continue to make choices along that spectrum. Most of them will walk into decisions with open eyes, and some will decide to sacrifice cost for customization. They are doing this today, and they will continue to do it. Importantly, they are segmenting their IT portfolios and consciously deciding what they can commoditize and what they can’t. Some will be better at embracing Smart Control than others, but ultimately, the most successful IT managers will be the ones who be the ones that manage IT to business goals. They are looking for cloud solutions that fit those goals, and many of those solutions are impure.

A significant percentage of my job is helping an IT buyer client talk through his requirements, challenging the reasoning for those requirements, explaining to him what his options are, and what vendors are likely to be good shortlist candidates — but also noting explicitly where his choices are preventing him from deriving greater value. I want him to consciously understand the trade-offs that he’s making, both short-term and long-term. And it’s also critical to understand their expectations of the future, so they can be advised on how to get there from here. Most organizations will transform gradually, not immediately or radically.

Bob wrote: The easy thing is to cave to your clients since they’re paying the bills and concoct a scenario where the clients get what they think they want. The hard thing is to show some leadership, earn your fees, and explain to the client, or at least to the vendors slighted, why your recommendation is right.

It is critical to understand that the MQ shows how vendors map in an overall market, which, as this MQ is titled, is, “Cloud IaaS and Web Hosting”, an impure market. As we repeatedly tell people, you should choose a solution that fits your use case — your technical and business needs. You should not read the MQ as saying that we don’t recommend Amazon (or other pure-plays) to clients. We recommend them plenty. And in fact, the MQ strengths text for Amazon is highly complimentary. (It starts with “Amazon is a thought leader; it is extraordinarily innovative, exceptionally agile and very responsive to the market. It has the richest cloud IaaS product portfolio, and is constantly expanding its service offerings and reducing its prices.” When I presented that bit of writing to my peers, some people thought it sounded too effusive for the usual Gartner tone of neutral objectivity!)

Any Gartner client trying to make a decision about the cloud is entitled to make an inquiry, and we’re happy to dive into the details of what they’re looking for, tease out what they need, and help them choose something that will be right for them. I did more than a thousand client phone inquiries during 2010. That’s a lot of people; each one represents a sourcing decision, and that number doesn’t include my conference one-on-ones, roundtables, sales visits, email exchanges, and so forth. I’m pretty confident about what our clients want to buy because I’ve talked to an awful lot of them. Most of those conversations are conducted without reference to the MQ, although many clients do look at the MQ first, and come prepared with questions about specific vendors.

But my job isn’t to tell clients the benefits of an “objectively right” decision. I’m not in the business of telling him what he should want, although I can tell him what other companies do as a best practice. And frankly, clients don’t need me to tell them to go be more innovative. In most cases, they want to be able to venture boldly into the benefits of cloud computing, but there are many business and technical circumstances that they need to factor into their decision-making, and most have serious needs for risk mitigation. Ihave to help a client come to a decision that will work for him. He’s going to pay for it, he’s going to be the one defending it to his management, and he’s going to be the one who pays the price if it goes all pear-shaped. I wrote previously about our IT buyer audience, and my belief that my formal research writing should highly pragmatic for their needs, not a reflection of what I think the market should want, so I won’t go into that again here — see that post instead.

By the way, on Bob’s “you ought to explain to the vendors slighted” gripe: Every single vendor on the MQ was entitled to a phone call with me — it’s a mandatory Gartner courtesy extended to all participants, regardless of client status, when they receive a draft for their review. I had long conversations on the phone, as well as in email, with many vendors (regardless of placement), about the MQ, their own placements, and the placements of other vendors. I assure you that they understand why things are the way they are (even if they don’t necessarily agree).

Bob wrote: It is obvious and absurd not to rank Amazon Web Services at least among the leaders. If youre going to take that step, it’s a bold one, and needs to be expressed up front with no ambiguity and leading with a willingness to have a big discussion about it. Gartner didn’t do that either. They just presented their typical blah, blah, blah report.

As I explained in my earlier post about the MQ process, we don’t position vendors arbitrarily. We decide scoring criteria, and we score vendors on those criteria, and they come out where they come out. In this case, we looked at the resulting MQ and the placement of the pure-plays and decided we should do a mid-year update that focused on purely self-managed cloud IaaS, in addition to the Critical Capabilities note due to be published soon, which is also pure-play focused. (I think much will become clearer once the Critical Capabilities is out, and I wish we’d been able to publish them near-simultaneously.)

We do not call out commentary about specific vendors in a Magic Quadrant, as a matter of policy; the document follows a very strict format. However, we’re always happy to discuss anything we write with our clients. Moreover, even though Gartner considers social media engagement (whether blogging or otherwise) for analysts to be personal time and not actual work, I think I’ve been pretty thoroughly engaged with people in discussing the MQ both in the blogosphere and on Twitter (@cloudpundit). I’m not sure how Bob is concluding that there’s not a willingness to have a big discussion about it (although I am specifically refraining from going into detail on Amazon’s rating on my blog, since it is against Gartner policy to do so).

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