Citrix – A Pragmatic, Customer-Driven Approach To Cloud Computing

Last weekend CEO Mark Templeton, Wes Wasson (Chief Marketing Officer) and other senior Citrix managers headed for Edinburgh for its regional i-Forum show. Alongside this major user event it held its annual industry analyst meeting. As always it was a great opportunity to catch up with the company, discuss and think about ITC from its unique point of view.

Citrix 2009 Backgrounder

Citrix – a software company with revenues of $1.6b in the year to the end of Q109 – has a differentiated strategy, specialising in application delivery. Its customers are mainly large company software developers and CIOs – whether end-user organisations or other vendors and service providers. It aims to cover everything you would ever need to deliver applications from data centres to any kind of client device. It is a pioneer (and has linked products) in security, virtualisation, caching, load balancing and other techniques.
Citrix has been enhanced by a number of key acquisitions over the years, the biggest of which were Netscaler in 2005 and XenSource in 2007. A view of its revenues and acquisitions is shown in Figure 2.

Citrix is not immune from the ITC market downturn and has done a number of things to weather the unprecedented economic climate. For instance it:

• Announced that it was buying back $300m of its own shares at the time of its Q109 results
• Introduced a cost reduction programme at the beginning of the year, laying off around 10% (c.500) of its staff
• Admits to bringing forward new product announcements to the beginning of 2009

It has noticed a shift to subscription buying from large customers who appear reluctant to sign major project contracts in the currently challenging economic environment.

Citrix Has Deep technical Expertise For Cloud Computing

As part of my on-going investigation into Cloud Computing’s potential to help users and vendors beat the recession, I took the opportunity of talking to John Fanelli (Head of Solutions & Community Marketing) about how Citrix participates in this area.
Citrix claims to have a pragmatic, customer-driven approach to Cloud Computing. It doesn’t push a particular agenda – thinking of any ‘delivery center’ customers in the same way.
It defines Cloud Computing as:

‘Services-based, elastic, scalable applications accessed via Internet technologies* and including self-service, metered interactions which could result in some (internal or external) charge’.

Notes: *In an internal Cloud you wouldn’t necessarily go over the Internet, but you would use TCP, Browser, Web 2.0 technologies and the like.

When pressed on which of these aspects are most defining John indicated its elasticity – the ability to scale applications up and down. Citrix has looked at what Cloud Computing means across all of its business units over the last two months and has come to the conclusion that (as a private activity) it needs to be thought about in 4 phases of IT development and sophistication. It should be noted that phases are not necessarily linear (example, many data centers today are cloud connected via Citrix Online, Salesforce.com, etc). In particular:

• Server Consolidation – many organisations have increased server utilization, making substantial improvements in efficiency and reducing costs in the process. The UK Co-Op’s food division, who’s IT Manager Dave Murrell presented to us at the conference, is a great example. It is a natural thing for successful project leaders to think about what to do next.
• Dynamic Data Centre – users can achieve dramatic improvements in service by introducing automation and virtualisation across server, storage, network devices, applications and desktops. Citrix offerings include XenServer virtualisation, its new Storage Link approach (which attached its software to the arrays of numerous storage vendors) and the load-balancing in its Netscaler products.
• Self-Service Data Centre – IT managers are beginning to be able to offer users choice in the types of applications they use. Citrix’s Dazzle (reminiscent of Apple’s i-Tunes) has drop-down menus of pre-selected options. Self-service will include a mix of legacy and newly-developed applications – the latter typically written using force.com or Amazon services. By developing appropriate templates IT staff will be able to reduce ‘time to deployment’ significantly (Sharepoint developments from scratch which can take a number of weeks to deliver, can be automated as a configuration of virtual machines and delivered in days instead). When a company has both consolidated servers, developed a dynamic self-service data centre John believes it can be said to have built an Internal Cloud.
• Connect To The Cloud – actually there are many examples of existing Cloud-based applications – Hotmail and Citrix’s GoToMeeting for instance. It is attractive (but more complicated) to accommodate subscription-based applications such as Adobe’s Photoshop alongside in-house applications. There are of course many issues in how to mix and match in-house and out-house, legacy and Web 2.0 written applications. To address these complexity challenges Citrix has published blueprints on Amazon on subjects such as ‘How do I publish an application in the Cloud, but keep my data on premises?’ John thinks that eventually IT organisations will start to think in terms of VPCs (Virtual Private Clouds).

In terms of how Cloud developments are appropriate in the current ITC downturn John pointed to the cost advantages of server consolidation and the time and cost advantages of developing new applications using Amazon EC2 and other services.
Of course whether or not you use a public Cloud service or develop your own VPC, it’s almost certain that there will be Citrix components in there. In my view it is an ‘OS and Middleware’ supplier helping develop the vital infrastructure of Cloud Computing.
Citrix is offering customers subscription based models via its channel partners – not directly as – say – IBM does. This is driving ‘new new’ business to the company in the Small and Medium Business (SMB) space where Cloud Computing economics remove the barriers that buying and managing servers and buying perpetual software licenses put up. To the extent that it and other vendors are participating in helping large companies set up internal private Clouds, the move to subscription models has to be taken carefully. Subscription models – if cheaper – will negatively affect traditional software revenues. Of course there’s another big debate to be had about how software companies charge for their products – in his presentation Dave Murrell said the Co-Op removed some software companies, unprepared to offer alternatives to perpetual licenses, from its list of suppliers.
Overall I believe Citrix will more than off-set negative shifts in large organisational software spending by continuing to provide its deep technical expertise to other ITC suppliers and service providers intent on setting up their own public Clouds and in the revenues it brings in from the move to Cloud Computing by SMBs.