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What's Amazon's enterprise strategy for the cloud?

Amazon is making a push to gain traction in the enterprise market

By , Network World
December 04, 2012 01:12 PM ET

Network World - Roaming the floor of Amazon Web Services' first user conference last week, it didn't look like a traditional tech show. Many of the 6,000 attendees at AWS re: Invent were with startups or midsize businesses looking to learn more about AWS services or the public cloud.

Light on attendance were major enterprise IT shops.

AWS has been making moves in recent months targeting the enterprise market, with the release of services such its Glacier storage service, its Redshift data warehousing product and others. But it begs the question: What is Amazon's enterprise play right now?

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Amazon wants you to leave this conference thinking that anything can be done on its cloud, says Gordon Haff, a cloud evangelist for Red Hat who attended the show. "Public cloud will be a part of enterprise IT, it will not be all of enterprise IT," he says. CIOs are still trying to figure out what workloads make sense for running in the cloud and which still are best for on-premise applications. Many specialized applications, he says, are still best to run yourself in your own data center.

James Staten, a Forrester analyst, predicts that 30% to 50% of enterprise workloads and applications could one day run in the public cloud. "It's rare I talk to an enterprise today that isn't doing something in AWS's cloud," he says. The biggest factor holding the industry back, Staten says, is culture.

Customers are used to running their systems on-premise. The cloud is a completely new model with a new pricing structure of pay as you go (PAYG), new operations management and new use cases. "Enterprises aren't used to the PAYG model," says Michael Wasser, of cloud cost management startup Apptio. "They want to know how much they'll pay and they want the bulk discounts. That hasn't seemed to be AWS's sales model so far."

In fact, at the conference, AWS Senior Vice President Andy Jassy highlighted the opposite point: The public cloud, he says, is ideal for businesses because there are no upfront costs and businesses only pay for what they use.

Pricing structure isn't the only concern, though. There are perceived risks around security, certifications and privacy, which is why so many of the AWS use cases start as small test and development projects with non-sensitive data. "Shadow IT," when employees or business units within an organization use IT resources such as AWS cloud services without informing their IT department, is an entry point for many organizations that lead to more formalized uses of AWS resources. "As soon as those cloud projects start producing revenue, or start impacting the bottom line, that's when IT gets involved," says Peder Ulander of Citrix, whose cloud management platform integrates with AWS services.

AWS says despite many enterprises not being willing to jump fully into the public cloud, adoption has "accelerated rapidly" in the enterprise market, says Adam Selipsky, VP of marketing, sales and support for AWS.

Jeff Bezos, the founder of AWS's partner company Amazon.com, said when asked that what surprised him most about AWS has been the adoption by enterprises, government and education institutions despite the service being only six and a half years old.

"For enterprises it's a process," to move to the cloud, Selipsky says, adding that even Amazon.com, one of AWS's biggest users, has taken a multi-year migrations strategy to using cloud resources. "We think a significant majority of workloads will move to the cloud," he says.

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Gartner analyst Lydia Leong says many enterprise deployments of AWS services are still driven by specific use cases. There are notable exceptions, such as Netflix, one of AWS's poster customers, which runs almost its entire business on Amazon's cloud. But a more common enterprise use case is for public cloud to run IT workloads beyond the scope of their internal resources. Perhaps no company better exemplifies that than Cycle Computing.

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