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What to do when the cloud eats your hardware vendor

Brandon Butler | Sept. 7, 2016
How Dell, HPE and IBM are dealing with cloud disruptors Amazon, Microsoft and Salesforce

Smaller cloud service providers will continue to buy up enterprise infrastructure that they will host for customers. These vendors favor time-to-market and are therefore willing to pay for potentially high-margin capital expenditures.

In an era of cloud, pundits can lose track of the reality of infrastructure spending. “Despite cloud uptake, owned infrastructure is and will remain the largest portion of enterprise infrastructure through the end of this decade,” Forrester says; managed, outsourced and cloud environments will make up a minority of infrastructure spending. While enterprises are growing their spend on cloud, half of infrastructure decision makers plan to increase spending on non-cloud hardware through 2016 too.

Legacy hardware vendors are taking varying approaches to dealing with the issues. Some, like Hewlett Packard Enterprise, Fujitsu and Hitachi Data Systems, are entrenching in their legacy positions. Hewlett Packard’s decision to split up the company amounted to a doubling-down on its enterprise hardware strategy; its exiting of the public IaaS cloud market was further evidence.

Other vendors are expanding to adjacent markets. Dell buying EMC in the largest technology acquisition in history is a prime example of a server company expanding into the storage market. Cisco has expanded from its networking core to selling servers with its UCS brand.

Other companies are going all in on transformation. IBM and Oracle have repositioned themselves to be cloud-first companies, re-aligning their products to be offered via the cloud.

What you need to do

For enterprise end users, Forrester has some advice: Embrace technology innovation and make future buying decisions based on the best vendor for your need.

Buyers beware though: Many new technologies come with tradeoffs. Tightly integrated out of the box capabilities of hyperconerged systems remove the complexity of integrating systems during setup but can be hard to standardize on for all workloads. The more services you deploy to a public cloud vendor like Amazon, the more difficult it will be to get them out, increasing your lock in with the vendor.

A key consideration is that applications should be built technology-agnostic, Bartoletti and Rymer contend. Enterprise architects should have a vision for how infrastructure works, regardless of who the vendor is supplying it. “In a truly technology-agnostic architecture, you should be able to rip and replace any component without breaking the functionality of the whole system,” they write. “Such an approach can be frightening after decades with a particular strategic vendor, but you must develop your future based on capabilities, not vendors.”


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