Re-examining Cisco’s Intercloud strategy

What’s behind Cisco’s $1B Intercloud bet

About a year ago a group of executives at a Cisco offsite meeting huddled to discuss a very serious issue: What was the company going to do about the cloud?

With service models such as IaaS and SaaS taking companies by storm, Cisco needed to define its role in this new world. The company’s networking and computing hardware is used as the basis for many cloud systems and has become an integral part of controlling private clouds and supporting public cloud vendors. But the Cisco executives wanted to aim higher. Going out and building data centers to compete with Amazon, Microsoft and Google didn’t seem like a prudent strategy.

So instead the company decided to take a different approach: “We’re going back to our roots,” says Nick Earle, senior vice president of Worldwide Service Sales at Cisco. “We’re going to provide connectivity to the clouds.”

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Intercloud is what Cisco came up with. Launched in 2014, it is designed to offer enterprise-class cloud IT services.

The core of the strategy boils down to two major components, both of which are internally-developed software: One is the Intercloud Fabric, which enables workload portability, and the other is the company’s Application Centric Infrastructure (ACI) software for automatically provisioning resources based on the needs of the workload.

At its most basic level, Intercloud Fabric is software that allows workloads to be migrated among various public clouds, and back and forth between the public cloud and customers’ own private clouds, across various hypervisors. This hybrid cloud connectivity software maintains dependencies and security parameters related to the workloads and allows traffic to be encrypted across the hybrid cloud environment. Various public cloud providers, including Amazon Web Services, Microsoft Azure and dozens of Cisco partnering clouds are Intercloud Fabric-compatible.

cisco intercloud graphic Cisco

Cisco’s Intercloud is meant to connect customers’ existing private clouds to a network or public cloud providers, creating a hybrid cloud.

The ACI software identifies an application’s network requirements and dependencies, and automatically provisions those in whatever environment that application will run in.

Combined, the Intercloud Fabric enables workload portability and the ACI software ensures the apps can run anywhere in the Fabric. The Intercloud Fabric is made up of two basic components: The Fabric Director - which provides an end-user and IT portal for managing workloads, and the Intercloud Fabric Secure Extender, which is based on the Cisco Virtual Security Gateway and Cisco Cloud Services Router products. It relies on Nexus 9000 switches, a controller and UCS gear to support a Level 2 network extension between the private and public cloud. Security controls can be maintained throughout VM migration from any part to Intercloud to another. There is a business and service provider edition of the Intercloud Fabric.

It’s an ambitious strategy, and one that takes a fairly unique approach in the industry. Amazon Web Services and Google Cloud Platform are all playing an IaaS-focused game of scale. IBM spent a reported $2 billion to buy SoftLayer for its cloud. Microsoft, VMware and HP also are highlighting their hybrid cloud capabilities but unlike Cisco, they’re hosting their own data centers to do it. Cisco is not spending the billion dollars it has committed to this effort on building brick and mortar cloud data centers or buying other companies though. It’s spending it on software platforms to power and connect the cloud.

“They’re not building up their own cloud, they’re giving service providers a reference architecture so that all the clouds (within Intercloud) will be built to the same specs,” says Zeus Kerravala of ZK Research. “Customers will have the ability to move workloads across these clouds. The common architecture gives the idea of interoperability a greater chance of actually working.”

Another important feature of Intercloud is the focus on partners. Cisco was initially hesitant in the cloud market because it didn’t want to disrupt partners. But Intercloud has a strong partner play, which Kerravala says will keep partners happy while providing customers many entry-points to use Intercloud. Cisco executives have said they want to have 1,000 partners on Intercloud by 2018. Already Amazon and Microsoft support Intercloud workloads. Other public cloud providers will either host Cisco owned and operated gear in their data centers to become a node in Intercloud, or they will deploy Cisco gear to reference architecture specs to ensure compatibility.

Other providers, like VCE, will enable their on-premises products (like Vblock) to be compatible with Intercloud Fabric, providing a gateway for on-premises systems at customer sites to link up with Intercloud. Already Cisco says it has 45 partners signed up for Intercloud and 350 data centers compatible with the Intercloud Fabric. Expect that number to increase this year.

Cisco sees many applications for Intercloud Fabric. One is “capacity augmentation,” which basically means when more computing resources are needed, they can be automatically spun up. This could be ideal in a test and development scenario, or for setting up a disaster recovery failover site, for example.

Still, Cisco has much work to do on Intercloud. Amazon, Microsoft and Google are far ahead of Cisco in terms of market presence for their cloud platforms. While Kerravala says it’s still the early days in the cloud market, 2015 will be a big year for Cisco to prove it is serious about Intercloud.

Copyright © 2015 IDG Communications, Inc.

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