It’s no secret that shadow IT has been turbo-charged by public cloud providers like Amazon Web Services, Microsoft Azure, Google Cloud Platform and SoftLayer. However, shadow IT does not just blow up swim-lanes inside companies that keep their systems in-house; it’s rampant within the outsourcing customer ecosystem as well.
So, what happens when you have a mountain of low-friction, highly elastic computing supply mixed with a significant levels of ITO outsourcing spend up for renewal? You get cloud multi-sourcing, powered by cloud brokerage, which, according to Gravitant CEO Mohammed Farooq, will cause massive disruption to the sourcing industry over the next five years.
Hi Mohammed, thanks for taking time to talk with me. Can you tell us a little bit about your background?
I am a co-founder and CEO of Gravitant. I’ve been in the IT industry for more than 18 years, with experience as both a customer and a provider of enterprise software. I was an early employee at Exterprise, a startup company here in Austin which had a successful exit, and then I went on to be an executive at Commerce One/SAP. Prior to starting Gravitant, I spent seven years as CTO for the Texas Health and Human Services agency, a $4 billion IT organization.
We hear a lot about cloud brokerage in the market, but see very few real examples. Can you give us your view on what this term actually means, as well as the difference between cloud brokerage software and cloud brokerage services?
Cloud brokerage is an emerging but very exciting technology. Analysts such as Gartner believe it is a critical trend in cloud computing and they predict that by 2016, almost 25% of cloud services will be consumed through a cloud brokerage. This is because an effective cloud brokerage can simplify the selection, procurement and consumption of cloud services. Some enterprises will turn to external cloud brokers or use cloud brokerage software to run internal cloud brokers. Gravitant provides software that enables cloud brokerage. We pioneered the first production cloud brokerage in the world at the State of Texas.
As a startup, you likely spend a lot of your time with investors. What are the primary reasons they invest in Gravitant?
Our investors are excited by the vision of Gravitant, as a key enabler of next generation IT. They believe in our team, our technology and our potential to become a major player as the secular shift to cloud computing plays out.
As you know, there is a significant amount of ITO renewal spend up for grabs in the near future. I’m interested how to see both clients and providers addressing this. Are enterprises ready to build or buy cloud brokerage capabilities? Are service providers embracing the cloud multi-sourcing concept? If so, who do you think really gets it?
Customers cite lack of innovation as the greatest challenge with their ITO vendor and many say that their ITO agreements often fail to provide flexibility for unforeseen changes in volumes or services. As a result of this, many clients are going directly to cloud service providers and are looking for cloud brokerage services as a means of managing ITO and cloud. We are seeing an increasing number of RFPs for this type of solution from Fortune 500 companies that are planning ITO re-competes.
Providers understand they are at risk because customers are directly going to cloud. So many providers are thinking of adding cloud to their portfolio of services. Many providers want to be multi-cloud to take advantage of best of breed offerings and pricing. An example of a company that really gets it is Capgemini, which recently launched a global cloud brokerage service.
What’s the key difference for existing ITO buyers if they choose to embrace a cloud multi-sourcing approach? Is it primarily about continuing to drive down cost by using standardized platforms, or is there something else in terms of added value?
There are three key benefits to cloud multi-sourcing for ITO buyers. The first is a reduction in cost because they can easily find the lowest cost infrastructure provider for a given application, the second is agility in that they can route demand to providers as needed and the third is that they can access a broader range of services (for example mobile services, Big Data services, etc.) than if they just stuck to an ITO or a single cloud provider.
As public cloud proliferates, we see a lot of interest in Cloud Management Platforms (CMPs) to try to create the proverbial “single pane of glass”. What’s the difference between a CMP and a cloud brokerage platform?
Cloud Management platforms come from an infrastructure and systems management perspective so they focus on multi-cloud provisioning, orchestration and resource administration (i.e., the “back office”). Cloud brokerage platforms come from a sourcing and business perspective so they focus on planning, procurement, contract management, and consumption management (i.e., the “front office”).
I’m really interested in the idea that you all have created a proprietary way to create a way to create an apples-to-apples comparison between IaaS services – the Gravitant Capacity Unit (GCU). Can you tell us a little bit more about this? Is this your secret sauce?
Each cloud provider uses a different way to measure resources so we had to come up with a normalization mechanism. That’s why we developed the GCU. It took us a lot of work to figure out an effective capacity unit across compute, storage and networking and it was important and novel enough that we were awarded a U.S. patent. The definition of GCU is: 1 GCU (Gravitant Capacity Unit) = the capacity to compute at a speed of 4.0 GHz with random access memory of 4 GB and local storage of 100 GB through 1Mbps of bandwidth.
We continue to see a trend of clients embracing standardized, automated platforms. As this trend continues, it would seem to lend itself to your platform and services — the more standardized, transparent and API driven they are, the easier they are to evaluate in an automated way. Is this an example of automation starting to disrupt the labor intensive sourcing process for buyers, sellers and even advisors?
Yes it is. Standardization helps in the selection and sourcing process but even then it can still be a labor intensive process because you have to source at the solution level and different providers have rapidly changing features and prices, so our tool set including cloud compare and dynamic catalog really help users quickly select best-fit providers.
In our discussions you’ve mentioned several times the idea of using a supply chain approach to sourcing future IT services. Can you provide some more background on this concept — and — do you think IT organizations are ready (and able) to make this shift?
I have a supply chain background, with experience at companies like SAP and CommerceOne. Supply chain management was very effective in squeezing out cost and time inefficiency while at the same time reducing risk. I have long wondered why the IT market could not be managed efficiently like a supply chain. With the advent of cloud services, it is possible to realize this vision as demand can now be routed to best fit providers just as in a supply chain model. Gravitant’s software enables customers to maximize agility and at the same time minimize cost and risk.
What do you think the broader outsourcing industry will look like in five years? Who will be the winners and losers?
Public cloud computing is the biggest disruption the outsourcing industry is going to see over the next five years. Even the up and coming Indian outsourcing companies will be disrupted. The outsourcing industry will increasingly incorporate cloud computing. The winners will be the ones who most effectively incorporate and become synergistic with the public cloud providers.
And lastly, Gravitant’s headquarters are located in Austin, so I have to ask. What’s up with the Longhorns?
I’m the wrong person to be asking that, being an OU (Oklahoma) graduate! But, I guess I have torn loyalties since Longhorn burnt orange is the official color of Gravitant.
Thanks for your time Mohammed.About the author
Stanton helps enterprise IT and sourcing leaders rationalize and capitalize on emerging technology opportunities in the context of the global sourcing industry. He brings extensive knowledge of today’s cloud and automation ecosystems, as well as other disruptive trends that are helping to shape and disrupt the business computing landscape. Stanton has been with ISG for more over a decade. During his tenure he has helped clients develop, negotiate and implement cloud infrastructure sourcing strategies, evaluate and select software-as-a-service platforms, identify and implement best-in-class service brokerage models, and assess how the emerging cloud master architecture can be leveraged for competitive advantage. Stanton has also guided a number of leading service providers in the development of next-generation cloud strategies. Stanton is a recognized industry expert, and has been quoted in CIO, Forbes and The Times of London. You can follow Stanton on Twitter: @stantonmjones.