Independent firm, BTC Logic, has named Amazon and IBM the top two positions in its Top Ten Cloud Platform rankings, which will be released tomorrow. The full report also reaffirms that enterprise and technology companies' concerns with security and other trust services in the cloud continue its slow adoption of cloud computing.

Amazon and IBM have emerged as the two clear champions of cloud computing as we enter the second half of 2010, according to the Report. They are closely followed by literally hundreds of both large and small technology vendors, seeking to offer both competing and complementary product offerings. One of the reasons the report was published is to bring some clarity about the fast-moving cloud marketplace to enterprise and technology decision-makers who are interested in this market and want to see past the hype.

Cloud computing offers a unique opportunity for enterprises and technology companies to generate new revenue by getting new applications built and deployed faster, and scaling these applications with greater ease and at a lower cost. Enterprises are also harnessing the processing flexibility of the cloud to reduce costs of existing data center activities.

However, the cloud computing marketplace still has a confusing array of vendors — each promoting its own solution — and a steady increase in the number of new cloud products and services. Enterprises have only slowly been embracing the cloud because of the need to evaluate multiple vendors, valid fears about security, privacy, data integrity, and governance, and a widely held belief that cloud computing is an IT opportunity more than a key business lever. In the past, vendors have focused mostly on the multi-tenant aspects of the cloud. However, as it is being developed, they must now also address the need for multi-landlord options and the issue of trust services in the cloud.

For a more meaningful way of looking at the cloud computing space beyond the traditional three-tier split, the Q2 BTC Logic Report provides a holistic framework. The Report gives an independent summary of the leading vendors in each of the key cloud segments and presents a shortlist of the top vendors in each segment that enterprise and technology companies should consider as they pursue their cloud initiatives. The Report also gives some structure and nuance to companies offering cloud products and alphabetically lists existing cloud companies. It is also designed to provide enterprise and technology company executives a more relevant and useful framework to evaluate cloud vendors.

One of the major trends in Q2 has been a broader recognition that enterprises are not yet significantly moving applications and data into the cloud. Instead, they are preferring to wait until issues related to security, privacy, and data location (trust services) are fully resolved. Another strong trend is that enterprises want to retain more control over governance and have the ability to oversee applications and data running in a broad hybrid cloud (i.e. in-house, private, and public clouds from more than one infrastructure or platform provider).

To better understand the cloud marketplace, it can be broken down into distinct, but complimentary segments that describe the different components of any major cloud project. By doing so, project leaders are able to build a cloud ecosystem that will best deliver the desired business performance. BTC Logic breaks down the cloud marketplace for enterprises into the following seven segments:

1. Cloud Foundation


2. Cloud Infrastructure


3. Cloud Network Services


4. Cloud Platform


5. Cloud Applications


6. Cloud Security


7. Cloud Management

A second trend in Q2 has been significant investment and commitment in cloud computing by major technology players and their resulting promotions to positions that look increasingly dominant going forward. From the Report's perspective, and looking across all segments, the most important vendors for enterprise customers in 2010 can now be divided into three groups (where each company is a top 5 contender in at least one segment):

Cloud Champions are those companies with a broad cloud offering for enterprises in multiple (but not all) segments. While many companies claim leadership in the cloud space, only two companies are delivering on that promise today with a broad offering: Amazon and IBM. Amazon is a cloud success story as they have been building on its consumer operations to build a cloud platform that continues to adapt to the needs of the enterprise. They have been rising to meet and overcome the bar that has been set by better known vendors such as Oracle, Red Hat, Microsoft, and Google. IBM's early focus on private and hybrid clouds as the starting point for any serious enterprise cloud initiative, coupled with its strong, existing relationships, has propelled it to the top of a crowded field.

Cloud Heavyweights are those companies who have made a significant resource commitment to cloud product offerings. They are usually coupled with strong existing relationships to position themselves as key vendors for consideration. They do not yet qualify to be Cloud Champions in Q2 because of a narrower range of product offerings, or because some are "late to the game" with meaningful complete enterprise offerings. This group contains virtualization leader VMware, cloud platform provider Force.com, security/trusted services leader Symantec, and the two obvious consumer cloud successes, Google and Microsoft, as well as established enterprise vendors like Citrix, EMC, Oracle, and Red Hat who are in fast pursuit of the leaders.

Cloud Contenders are those companies making a determined push to provide a significant part of any cloud solution set for enterprises and notably include AT&T, Rackspace, SAP, and Terremark. These companies are working hard to overtake the Cloud Heavyweight group and could do so soon.

Looking ahead, most major technology vendors now recognize that they need a significant cloud computing offering in order to remain competitive and, as a result, are rolling out more integrated solutions and consciously building cloud ecosystems. This has created a more crowded marketplace with well-funded "fast followers" devoting significant resources to improved product and service offerings and an uptick in vendors' marketing efforts.

However, enterprise customers still remain cautious about moving applications into the cloud for a number of reasons.

Enterprise Behavior
Cloud services have been fully embraced by many small businesses and by start-ups where investment in large numbers of servers would be extremely expensive and impede growth. Cloud computing has also allowed companies to experiment with alternative business models in ways that would not have been possible even five years ago.

However, smaller companies and start-ups rarely face the significant security requirements and legal constraints that are challenges for larger businesses with existing data centers. This has led to many enterprises continuing to take a "wait and see" approach for their applications and sticking to low risk trials as they consider the larger opportunity. Hence, there is no evidence of a sense of urgency yet in adoption amongst enterprise customers, however, there is urgency appearing amongst vendors as they position themselves for the future.

For enterprises, of all the factors involving a move to the cloud, security and governance have risen to the top. Increasingly frequent revelations of loss of customer data (e.g., AT&T/iPad) and privacy problems (e.g., Facebook, Google) have only heightened the need to get security and governance right.

One of the behaviors that became more apparent in Q2 is that enterprises are starting to become more interested in engaging at the Cloud Infrastructure or Cloud Applications level and less so at a restricted Cloud Platform level. This is because they require more control over their IT activities and are willing to spend more up-front time and money to get the cloud setup in a way that feels right for their business.

Enterprises also have a strong desire to implement established procurement and vendor best practices in their cloud relationships. They want the ability to buy cloud services from multiple vendors and to be able to switch cloud providers if necessary — this seems especially true for Cloud Infrastructure, Network Services, and Platform.

Currently, there is little to be perceived as a downside risk among enterprises in slowly engaging with the cloud. This implies we have not yet reached the inflexion point where enterprise CEOs and other key executives see cloud computing as a core part of their business and this seems reminiscent of the enterprise view of e-commerce in the mid-1990s and SaaS in the early-2000s. However, the push from Cloud vendors has increased dramatically in the last six months as they prepare for this inflexion point.

The full report is available free from July 15 at www.btclogic.com.



Paul Vatistas is Vice President of Business Development at www.btclogic.com.