Data Center Disruption

Breaking the boundaries in a hybrid and multi-cloud world.

If I gave you these three numbers: 81%, 51%, and 5%

And then I asked you to match them to the following:

  • % of enterprises with a strategy to use multiple clouds
  • % of enterprises with a strategy to use hybrid clouds
  • % of enterprises with no cloud strategy at all

What would you say?

81% of enterprises has a strategy to use multiple clouds.

51% of enterprises has a strategy to use hybrid clouds.

5%: That’s the percentage of enterprises with no cloud strategy. 

In other words, cloud as an essential component of modern enterprise is no longer a promise. It’s reality. 

Cloud as a megatrend has resulted in the following six big trends that are impacting the data center today:

  • The fragmentation of IT infrastructure
  • Transition towards SW-defined DCs
  • Value in breadth of offerings
  • Shift to OPEX/subscription-based IT spend
  • Developers are the new kingmakers
  • Rise of open source software

Today, applications are being deployed across the extended enterprise and generating data everywhere — from branch and field locations to the edge of the network and to the cloud. This results in a massive fragmentation of IT infrastructure across both locations as well as modern/legacy architecture. This ultimately means the data center needs to transition to SW-defined in order to operate without boundaries and expand to wherever your apps and data live. 

As customers look to modernize their data centers, they are looking for IT partners with a breadth of offerings to help them through this transition. Their IT spending preference has also shifted from the traditional CAPEX-centric model to OPEX, subscription-based models, giving rise to land-and-expand business model.

Perhaps the trend I’m most interested in is the developer-centric mentality. Software is eating the world, and developers are driving continuous innovation and disrupting virtually every market. You may have heard the phase “developers are the new kingmakers” describing this phenomenon. This developer-centric culture has driven demand for open source software, which has an impact on not only the SW stack but rather the entire IT infrastructure stack. 

 

The future of the data center

Now, we get to the thesis – the future of the data center will be developer-centric and, thus, driven by a desire to abstract more and more of the hardware layer while providing a unified, horizontal view into all data.

A developer-centric mentality doesn’t simply have an impact on the software stack. It has an impact on the underlying hardware stack, too. Developers don’t want to look under the hood and see what’s going on with the hardware. They just want hardware to support what they’re trying to do, and they want it in an automated way with a few clicks of a button. 

If we look at what’s going on in the hardware stack, it really is a tale of two cities. You have undifferentiated hardware that continues to become more and more commoditized — and faces competitive and margin pressures. On the other hand, you have differentiated hardware that continues to become more and more specialized. You’ve probably heard the term “end of Moore’s Law” and “domain-specific architecture”. These all refer back to differentiated hardware, and they’re capturing functions from other parts of the hardware stack. 

Smart NICs are an example of specialized hardware. They are a smart network interface card that sits at the edge of your network and effectively offloads network functions away from switches and runs them at the edge of your network, freeing up CPU capacity. This really matters a lot to public cloud vendors and hyperscalers, which is where the adoption started. But among the enterprise, it remains to be seen if the adoption trend will hold. 

That’s just an example of a differentiated hardware that continues to play an important role in the data center of the future. 

 

Ultimately, SW enables a horizontal stack that stretches across the entire IT infrastructure

The transition to a world where the storage layer is SW-defined will ultimately create a horizontal data platform that stretches across your entire IT infrastructure. It’s will be a world where the specific location where you store your data matters less and less. What will matter more is how you leverage your data as an asset and be able to run different use cases.

Cohesity is doing this in the secondary storage market where, in the past, there is a number of data silos and a lot of inefficiencies coming from multiple data being stored for different use cases. Now it’s one of the fastest growing companies in our portfolio. 

At the network and security layer, the software-defined transition ultimately leads to a horizontal stack that stretches across your entire IT infrastructure and delivers a uniform experience, whether it’s in the data center, campus or the edge. 

The transition taking place at the infrastructure stack drives a need for multi-cloud automation where the market is still very early and fragmented. What I’m observing is that many companies have been attacking what I call the provision part of the life cycle, which is really more around the initial setup & configuration and a more procedure-based automation.

The focus is trending more and more towards what I call the operational part of the automation lifecycle, which includes monitoring, maintaining, and troubleshooting your infrastructure. Now, there are not as many players that can automate that part of the lifecycle. This is because it requires a deep knowledge of the underlying infrastructure you’re automating. This is really where we’re focused on. And I believe somebody who’s able to create a platform that addresses the entire automation lifecycle from provision, monitor, to maintain — will have a strong value. 

Lastly, this developer-centric mentality. You know, developers are sitting on this power, and they are a new persona being targeted by many business models. Business models like infrastructure as code is a good example. Developers don’t really care about what’s going on under the hood; they just want things to work in an automated way with a few clicks of a button. 

The picture I’m depicting here is that regardless of how fragmented your IT infrastructure is, if you fast forward 5 to 10 years from now, every stack will be a horizontal layer that stretches all the way across to give you a uniform experience, regardless of where you’re operating, whether it’s on prem or public cloud, or private cloud.

 

 

About the author: Mike Lim joined the Cisco Investments in 2017 as a Senior Manager and focuses on investments and acquisitions in the Data Center space.

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