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AWS draws on startup appeal to win over the enterprise

The startup community has keenly adopted the cloud technologies of Amazon Web Services to disrupt the enterprise market, and now enterprises are fighting back

The startup community has keenly taken to Amazon Web Services (AWS) and its portfolio of infrastructure-as-a-service (IaaS) offerings since the company’s inception in 2006, while the enterprise has adopted a more cautious approach to its technology.

The reasons for that are well documented, and can be largely traced back to the fact that it is easier for startups to go faster and further into the AWS cloud because they are not weighed down by the legacy hardware of their enterprise counterparts.

This has given rise to numerous cautionary tales from AWS (and others) about how the startups powered by its technology have gone on to out-innovate their larger, older enterprise rivals and disrupt the markets on which they had previously had an assured handle.

While it would be easy to dismiss such stories as scare-mongering, the success and sheer impact that born-in-the-cloud companies such as AirBnB have had in a relatively short time would be difficult for even the hardiest cloud sceptics to dispute.

Word-of-mouth and high-profile success stories are all well and good, but AWS has also made a concerted effort in recent years to address directly some of the other issues holding up the enterprise’s adoption of its cloud platform.

For example, skill shortages, budgetary shortfalls, data sovereignty issues and security concerns have all conspired to make an enterprise move to the AWS cloud an altogether more staid affair.

From a product strategy point of view, democratisation is the name of the game for AWS, with its forays into machine learning, database management and big data analytics, for example, geared towards lowering the enterprise cost and skills barriers for such technologies.

Obviously conscious of the fact that the move to cloud is often a multi-year and multi-stage process for many enterprises, AWS recently announced a partnership with consultancy firm Accenture to help ease them through the transition.

New UK datacentre region

For European enterprises wary of using public cloud because of data sovereignty concerns, AWS has set out plans to open a new UK datacentre region, in addition to those it operates in Frankfurt and Dublin, in 2016.

The move has been interpreted by many as a direct response to the European Court of Justice’s recent abolition of the Safe Harbour data-sharing agreement, which was previously used by firms to transfer the data of European citizens back to the US.

Either way, the announcement has been welcomed by various parts of the UK public sector, which have previously been prevented (or simply wary of) using the public clouds powered by overseas datacentres.

Teresa Carlson, AWS’s vice-president for worldwide public sector, told Computer Weekly that the company is already seeing strong demand in this area, with the Ministry of Justice, Peterborough city council and the Driving Standards Agency often lauded as reference customers.

However, the public sector’s cost-cutting agenda has prompted many organisations to move greater volumes of their data much more quickly than some may have expected. The opening of AWS’s new UK datacentres in 2016 should serve to both accelerate and accommodate this trend, Carlson adds.  

“The public sector business started five years ago and we started it in the US because we said, if we can’t get the US to use it, no one else will,” she says.

“It’s been phenomenally successful. And what started in the US, and we saw it in the UK too, is that our government customers started to utilise the cloud with mission-critical workloads where they didn’t have budget to continue.

“They had mission-critical workloads that they really need to continue, but their budgets have been cut, their IT budgets have been lowered and they need to find a new way to deliver them.”

Do more with less drives cloud demand

This “do more with less” attitude has been instrumental in driving cloud adoption within the wider enterprise market for years, but there is often a limit to how far and how much large firms can move to the public cloud.

For example, they may have to keep certain types of data on-premise for regulatory purposes, or their continued operations are too reliant on legacy applications to move everything over.

For this reason, most industry watchers think the majority of enterprises will take a hybrid approach to cloud consumption, with apps and workloads shared between private and public clouds, as well as on-premise environments.

AWS could be accused of being something of a latecomer to this way of thinking, having previously suggested that customers will shut down their datacentres and shift everything to the public cloud because the cost and scalability benefits are too compelling to do otherwise.

The reality is there are going to be some workloads that just aren’t going to move or be able to integrate with AWS
Chris Wegmann, Accenture

As the hype around cloud computing has subsided, and the reality of what it involves has set in, AWS has conceded that hybrid will be the IT consumption model of choice for most enterprises – at least until they are ready to move everything to the public cloud.

Chris Wegmann, managing director of Accenture’s AWS business group, says: “They have definitely realised that while they would like to have all their customers go all-in, we are going to be in the hybrid world for a while.

“That’s because the reality is there are going to be some workloads that just aren’t going to move or be able to integrate with AWS.”

That has certainly been the case for online fund-raising platform Just Giving, which is currently shifting its hosted IT infrastructure into the AWS cloud, with one notable exception.

Managed datacentre

The company’s original website, excluding the members-only area, is sat on an infrastructure stack – dubbed the monolith – that is hosted within a managed datacentre and will remain there for some time, company CIO Richard Atkinson tells Computer Weekly.

“It could move to AWS, but there are, for data sovereignty and privacy purposes, some use cases that are very difficult to move to AWS at the moment,” he says.

“They have been saying some very positive things of late about data privacy, but I don’t want to predict that we won’t have a datacentre any time soon.

“We are comfortable with our journey to AWS in terms of where it takes us, and the immense benefit it brings in terms of the cost of compute and sheer elasticity, but there are some areas where we are quite happy knowing it is in a particular datacentre and in a particular place.”

However, there are some enterprises that are prepared and determined to go all-in on AWS, having successfully dabbled with the technology in some areas before deciding that the platform would be a good fit for all their IT functions.

Netflix is one example, and international telecoms firm Lebara aims to become another, as it sets about achieving its goal of having one billion customers by 2020.

The company has cultivated a sizeable, migrant-heavy customer base over 14 years through sales of its SIM cards, which enable users to make cheap international calls.

Risk of being outmanoeuvred

With the rise of free online messaging tools and low-cost voice over internet protocol (VoIP) services, the company was at high risk of being outmanoeuvred by a faster, nimbler startup, before it took pre-emptive action a year ago.

“We set ourselves a vision of becoming the brand of choice for the migrant community around the world, and that meant changing the company and changing what we do,” says Richard Bastin, Lebra’s chief technology officer.

“So we wanted to go from a single product to a multi-product, and expand our geography from being a company that predominantly operates in Europe to establish a global reach.”

Read more about AWS

With that in mind, the company decided to expand its product portfolio to include a new video-on-demand service, so customers could watch their favourite films and TV shows many miles from home.

Lebara also created a new smartphone-only digital VoIP offering, which is now used by 500,000 people in 11 countries where the firm previously had no presence.

“Our brand is recognisable and trusted by the migrant community, and they have really driven the adoption in those new areas for us,” says Bastin.

All these services have been built on AWS because, says Bastin, they would have taken far longer to get to market and, in turn, build the brand overseas if the firm had had to invest in on-premise tools and technologies first.  

“It required a big investment to make this happen, but one of the things we didn’t want to spend money on was the huge physical infrastructure to be able to deliver all this streaming content, for example,” he says.

“We needed a platform that was cost-effective, but also flexible and scalable and adjusted itself in response to demand from our customers. So when we see an increase in demand from our customers, it automatically scales up.”

Enterprise on the rise

AWS’s parent company has only recently begun to separate out the cloud firm’s financial results from those of its wider online retail operations. As such, it is currently difficult to get a firm handle on how its customer base is split between startups and enterprises.

Even so, Accenture’s Wegmann is in no doubt that the bets AWS has placed, in terms of new products and how it is positioning them to the enterprise, are paying off.

“A lot of customers are looking at how to get to AWS faster,” he says. “They have all dipped their toes in, and now it’s all about the enterprise workloads and how they get them there. We’ve seen a big uptake over the past two years, going from marketing apps to the core IT stuff.

“When you look at Re:Invent [AWS’s annual partner and customer conference], that was very developer and start-up focused in the early days, with lots of jeans and T-shirts on show, but this year’s was more suit coats and jackets. So we’ve definitely seen a shift in interest.”

Read more on Infrastructure-as-a-Service (IaaS)

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