HP helps the European Commission plan a federated Cloud

HP Cloud Highlights

• HP understands the EU cloud ecosystem must enable an open market, addressing barriers to adoption and meeting regulatory, legal, geographic, trust and performance constraints
• Active participants in EC programmes to build secure, trusted, federated clouds fit for purpose that produce societal benefits – GDP growth, employment and efficiency
• With European partners addresses critical issues of confidentiality, compliance, accountability and federation
• Targets to increase proportion of IT revenues kept in Europe among Managed Service Providers, resellers and ISVs
• Focusses on widely adopted industry standards, like OpenStack, to drive adoption while avoiding proprietary solutions
• Wants to help federate public cloud – not dominate and therefore has limited time given the rise of Amazon and other public Clouds in Europe
• Drives an open market place based on federation and not dominated by default providers who provide ‘lowest common denominator’ solutions that will prevent the market reaching predicted levels
• HP’s European Cloud activities are led by well-known cloud thought leader Xavier Poisson

I’ve always been a supporter of the European industry myself – way back at the beginning of the 1990s I was an Esprit project reviewer. I also gave presentations on the positive effects the opening of borders in the Europe 1992 plan – these went down particularly badly in the US. Neither had a strong effect on our industry.
Jumping to 2014 we’re not the only ones trying to rethink the definitions of Cloud Computing – regionally HP is too. Executive Xavier Poisson has a new vision for EMEA – a federated Cloud for business users, ISVs and Managed Service Providers to address the need for compliance, confidentiality, and accountability linking regional data centres together. In the process it will add positively to employment, revenue and the economy, while beating back the domineering approaches of today’s public ‘lowest common denominator’ Cloud suppliers from outside the region. I know you’ll enjoy thinking about a radically different approach, while I try to forget the parallels with the past.

Cloud Computing – Another Internet Bubble?

The Americas have taken a significant lead in the adoption of SaaS (see Figure) in sharp contrast to mobile devices or printers where Asia Pacific leads, or Implementation services where EMEA’s in front. Xaxier believes a bubble is forming like the Internet in 2000, citing Google’s big price reduction in Cloud storage to mark Cisco’s market entry – and the expectation that Amazon is likely to react.
US enterprises are less reticent than those in Europe in adopting Cloud services partially because culturally stronger common interests develop in single large countries. This dissimilarity also affects system vendor investments in Cloud data centres. NetApp has none anywhere, Dell has pulled back from building its own and HP has 2 in the US, but none in EMEA. IBM on the other hand has gone the other way; acquiring SoftLayer has added London, Amsterdam and Frankfurt to IBM’s 4 existing Smart Cloud Enterprise sites in Europe.
Each year there’s a shift in the channel’s fear of disintermediation by suppliers: it goes up when the supplier launches major SaaS offerings and down when they learn how vital their close ties to the end customer are. Business changes in our industry all the time and none of the current abstainers – HP included – can promise they will never offer public Cloud services from their own European data centres in future.

The Dominance of US Public Clouds

Our Figure shows the main public Cloud businesses. Most vendors started by offering free-to-use consumer apps, driven by the proliferation of smart devices, before turning to ‘advertising’, which is now typically over 90% of their revenues . There’s big money being made in trading information about your social and commercial interactions, however hard you try to protect your privacy.
But businesses as well as consumers are affected by Internet nationalism. American government email surveillance and its Patriot Act shows it believes it has a de facto – if not de iure – ownership. Very recently Microsoft referred to an American courts’ insistence that it can subpoena European customer data even if it resides in an Irish data centre.
Beyond profiting from exploiting consumer data through advertising, many public Cloud companies have launched their own services for businesses – benefiting from their growing experiences in supporting 100s of millions of consumers from hyperscale data centres. Amazon has been the most successful, with AWS and associated Cloud services leading the $27 Billion IaaS/PaaS market with a 9.9% share.
‘Build a better mouse trap and the world will beat a path to your door’ said Ralph Waldo Emerson in the 19th century – but it isn’t the world, but nations which do the running. The larger your country the more successful your invention is likely to be, which is why America (250 million) and China (2 billion) are so much better than European countries for business innovators to live. In recent years the Internet has been a great leveller – nowadays programmers develop code on the largest – usually American – IaaS/PaaS sites to guarantee worldwide relevancy.
For resellers succeeding in moving from physical hardware to virtual service sales the big recent reductions in Google and other prices for Cloud storage demonstrate that their business is as much about absolutes as it is about margins: hardware margins may be slim, but the price of a box doesn’t suddenly drop by 40%.
There are 50k Managed Service Providers in Europe – IT suppliers providing services from maintenance to full outsourcing to customers of all sizes. They are being encouraged to adopt AWS and other Cloud services as an alternative to building their own data centres and purchasing hardware: but can they make money using the new business model? If they’re not careful the profit will go to a handful of big suppliers as it has in the PC market and music industry.

HP with the European Commission develop Federated Business Networks

While the adoption of Cloud computing has been slowed by security issues everywhere, in Europe there’s an understandable concern that widespread adoption will siphon revenues and profits out of the region into the pockets of the dominant American suppliers. Since ICT is a big part of the European Commissions Horizon 2020 Project, which includes funding €80 billion in research and development between 2014 and 2020, it’s beginning to look at alternative futures for Cloud Computing which involve greater regional vision and commitment.
There are 3 specific projects HP drives or is involved in. In particular:

• Contrail – a 3-year Cloud Federation computing project ended in January 2014; it helped develop ‘an integrated runtime environment for elastic Clouds’, acting as a middleman for SMEs wanting to adopt Cloud Computing but with limited IT resources; components included Xteemfs, VEP, ConPaaS and Contec, while the consortium included Inria, Tiscali, Genias, XLAB and SFTC alongside HP
• A4Cloud is a 3-year project begun in October 2012, focusing on ‘accountability as a critical prerequisite for effective governance and control of corporate and personal data processed by cloud-based IT services’; consortium members include HP, SAP, the Athens Technology Center, the Cloud Security Alliance and a number of Universities
• CoCo – a new project announced in March 2014 with HP as coordinator, the ‘Confidential and Compliant’ Cloud project aims to ensure that users can share data securely in the Cloud and privately; the consortium also includes SAP, Oslo University and Atos and including both technical and legal investigations

Xavier also talked about Cloud28+, an Open Stack based network for Service Providers, governments and ISVs. He doesn’t aim to make HP a Cloud broker like the Deutsche Börse Cloud Exchange we met at a recent NetApp event ; rather than aim to be a dominant player, it’s engaging in non-profit work to help coordinate existing European data centre offerings into a federation of services which respects the different local regulations in place. ‘You need technology to make this happen’, he added. Hence why HP aims at producing a Single European cloud service catalogue for data centres based in the EU, which would work with the variations in data location standards and regulations in each of the 28 member states.

Some Conclusion – Good Chances of Success

Why have so few non-US suppliers ever been successful on the Internet, despite it’s being a super-national service? Partially it’s because the US has been a bigger and easier place to develop new business ideas; it’s also because we often still think at a national, rather than European, level. HP shows that there’s no point in complaining about American dominance; rather we need to come up with something better – in this case by addressing the issues of confidentiality, trust, accountability and the like.

The chances of success are limited by HP’s own nationality, the traditional sluggishness of the European Commission and the rapid spread of Amazon and others into the region. So let’s look at each of them:

• HP’s corporate and strong social responsibility policies and past history count in its favour, but it’s also a pragmatic company – try telling the printing industry that it’s not interested in market dominance!
• Decision-making and organisation of these European Commission projects is more effective than Xavier’s experience of them 20 years ago – especially where HP takes the helm, but the projects need to make a louder noise about their achievements and industry analysts and journalists need to pay more attention
• The window of opportunity is closing as Amazon and others build regional data centres and acceptance of their proprietary approaches grow; however we’ll also need an alternative if Xavier is right about the bubble bursting soon

Europe has powerful regional strength – our Telcos will be natural supporters of a richer regional Cloud and, as the EC suggests, our governments could save billions by not having to create the same applications in each country and through giving more business to regional SMBs rather than global – typically US – suppliers. As we’ve noted there are also European suppliers such as SAP and Atos in these consortia.

In Xavier we have a natural guru to spread the news about an alternative federated European Cloud. Personally I’m not going to sit on the fence – roll on the federated Cloud! It will lead to far more openness than we got in 1992!

[1] European Strategic Program on Research in Information Technology – the previous generation of IT projects sponsored and partially paid for by the European Commission

[2] Ehningen (Germany), Winterthur (Switzerland), Montpellier (France) and Barcelona (Spain)

[3] Microsoft is the exception, as its status as a public Cloud is the result of a transformation from software supplier