It’s another survey about business/IT alignment. Who knows how accurate these leadgen PDFs are, but why not? This one is of “646 CIOs and other IT leaders and 200 line of business leaders.” Some summaries from Minda Zetlin:
When LOB leaders were asked about the role their companies’ CIOs play, 41 percent said the CIO is a strategic advisor who identifies business needs and opportunities and proposes technology to address them. Another 22 percent said the CIO is a consultant who provides advice about technology and service providers when asked.
But 10 percent said their CIO was a “roadblock” who raises so many obstacles and objections to new technology that projects are difficult to complete. And another 9 percent said the CIO was a “rogue player,” with IT making technology decisions on its own, and creating visibility and transparency challenges.
Meanwhile, 36 percent of LOB leaders and 31 percent of IT leaders believe other departments “see IT as an obstacle.” And 58 percent of IT leaders but only 13 percent of LOB leaders agreed with the statement, “IT gets scapegoated by other departments when they miss their own goals.”
There’s still, as ever, plenty of room to improve business/IT alignment.
Speaking of that, also in that IDG/CIO Magazine survey, there’s a weird mismatch between the perception of The Business and IT about what IT does:
What does The Business want anyway?
- Almost twice as many CEOs are intent on building up in-house technology and digital capabilities as those plan on outsourcing it (57 percent and 29 percent, respectively).
- Forty-seven percent of CEOs are directed by their board of directors to make rapid progress in digital business transformation, and 56 percent said that their digital improvements have already delivered profits.
- 33 percent of CEOs measure digital revenue.
Point being: The Business wants IT to matter and be core to how their organizations evolve. They want programmable businesses. Here’s some examples from another summary of that Gartner survey:
Although a significant number of CEOs still mention eCommerce, more of them align new IT infrastructure investments to advanced commercial activities – such as digital product and service innovation, exploring the Internet of Things (IoT), or adopting digital platforms and associated supplier ecosystems.
According to the Gartner assessment, some CEOs have already advanced their digital business agenda – 20 percent of CEOs are now taking a digital-first approach to business development. “This might mean, for example, creating the first version of a new business process or in the form of a mobile app,” said Mr. Raskino.
Furthermore, 22 percent are applying digital business technologies to their traditional processes. That’s where the product, service and business models are being changed, and the new digital capabilities that support those are becoming core competencies.
There’s demand there, the final result of “the consumerization of enterprise IT,” as we used to crow about. IT needs to catch-up on its abilities to do more than “just keep the lights” on or there’ll be a donkey apocalypse out there.
You seem people like Comcast doing this catching-up, very rapidly. The good news is that the software and hardware is easy. It’s the meatware that’s the problem.
One of the more common questions I’ve had over the years is: “but, surely, everyone is just in the public cloud, right?” I remember having a non-productive debate with a room full of Forrester analysts back in about 2012 where they were going on and on about on-premise IT being dead. There was much talk about electricity outlets. To be fair, the analysts were somewhat split, but the public cloud folks were adamant. You can see this same sentiment from analysts (including, before around 2011, myself!) in things like how long it’s taken to write about private PaaS, e.g., the PaaS magic quadrant has only covered public PaaS since inception).
Along these lines, the Uptime Institute has some survey numbers out. Here’s some highlights:
Some 65% of enterprise workloads reside in enterprise owned and operated data centers—a number that has remained stable since 2014, the report found. Meanwhile, 22% of such workloads are deployed in colocation or multi-tenant data center providers, and 13% are deployed in the cloud, the survey found….On-prem solutions remain dominant in the enterprise due to massive growth in business critical applications and data for digital transformation, Uptime Institute said
Some 95% of IT professionals said they had migrated critical applications and IT infrastructure to the cloud over the past year, according to another recent survey from SolarWinds.
That survey also found that nearly half of enterprises were still dedicating at least 70% of their yearly budget to traditional, on-premise applications, potentially pointing to growing demand for a hybrid infrastructure….
Nearly 75% of companies’ data center budgets increased or stayed consistent in 2017, compared to 2016, the survey found.
Metrics, KPIs, and what organizations are focusing on (uptime):
More than 90% of data center and IT professionals surveyed said they believe their corporate management is more concerned about outages now than they were a year ago. And while 90% of organizations conduct root cause analysis of an IT outage, only 60% said that they measure the cost of downtime as a business metric, the report found.
Demographics: “responses from more than 1,000 data center and IT professionals worldwide.”
Pretty much all Pivotal Cloud Foundry customers run “private cloud.” Many of them want to move to public cloud in a “multi-cloud” (I can’t make myself say “hybrid cloud”) fashion or mostly public cloud over the next 5 to ten years. That’s why we support all the popular public clouds. Most of them are doing plenty of things in public cloud now – though, not anywhere near “a whole lotta” – and there are of course, outliers.
This does bring up a nuanced but important point: I didn’t check out the types of workloads in the survey. I’d suspect that much of the on-premises workloads are packaged software. There’s no doubt plenty of custom written application run on-premises – even the majority of them per my experience with the Pivotal customer base. However, I’d still suspect that more custom written applications were running in the public cloud than other workloads. Just think of all the mobile apps and marketing apps out there.
Also, see some qualitative statements from CIO types.
So, the idea that it’s all public cloud in enterprise IT, thus far, is sort of like, you know: ¯_(ツ)_/¯
There’s lots of opinions on Cloudera’s IPO today. Here’s some that I’ve collected in my notebook.
Not valued high enough?
The chipmaker paid up for the privilege, putting a ‘quadra unicorn’ valuation of $4.1bn on Cloudera. Altogether, Cloudera raised more than $1bn from private market investors, making the $225m raised from public market investors seem almost like lunch money.
And then there’s the small matter of valuation. In its debut, Cloudera is only worth about half of what Intel thought it was worth when it made its bet.
“Much has been made of the huge valuation of that Intel-led round, but that’s all misguided noise,” according to IPO Candy, a website founded by Kris Tuttle, the director of research at Soundview Technology Group. “Intel didn’t make the investment for a financial return so the valuation isn’t relevant.”
Back in 2014, Intel was still smarting from missing the shift to mobile computing and Big Data was a favorite as the next big thing. The Santa Clara chip giant’s bet was placed chasing a strategic return, not so much banking a direct return on investment.
You know, all of this is a little bit of ¯_(ツ)_/¯. As I recall, Facebook’s IPO was all wiggly-woggly. If Cloudera makes a lot of money, gets bought for a lot of money, etc., no one will care to remember, just like with Facebook. Success is the best deodorant.
Their business, finances
Also from 451, earlier this month, a profile of their business:
Cloudera is nearly one-third bigger than Hortonworks, recording $261m in sales in its most recent fiscal year compared with $184m for Hortonworks. Both are growing at roughly 50%.
Since 2008, the company has grown steadily. As of January 31, it reports more than 1,000 customers. However, Cloudera is currently emphasizing and banking its success on what it calls the Global 8,000, which are the largest enterprises worldwide. The company notes that its number of Global 8,000 customers increased from 255 as of January 31, 2015, to 381 as of January 31, 2016, and 495 as of January 31. For the year ended January 31, the Global 8,000 represented 73% of Cloudera’s total revenue, while a further 10% of total sales came from the public sector. The company reports 1,470 fulltime employees as of January 31, a slight increase from its headcount of 1,140 the prior year.
More from Katie Roof at TechCrunch:
Cloudera’s market cap is now about $2.3 billion, significantly less than the $4.1 billion valuation Intel gave in 2014. This increasingly common phenomenon is now nicknamed a “down round IPO.”
In an interview with TechCrunch, CEO Tom Riley insisted that this was not a problem for the company because of the “growth prospects ahead of us.” If it performs well in the stock market, it could ultimately achieve the $4 billion-plus value. Square, which went public in 2015 at half its private market valuation, has since seen its share prices more than double.
(Side-note: comparisons of companies, Square and Cloudera, that have nothing to do with each other except being “tech” – and Square is payment processing, not “pure tech,” at that! – drive me a bit crazy, as listeners know.)
And a quick revenue/spend write-up from her:
Cloudera’s revenue is growing, totaling $261 million for the fiscal year that ended in January. The company brought in $166 million at the same time last year.
Losses were $186.32 million, down from $203 million in the same period the year before.
And, according to Jonathan Vanian: “Cloudera spent $203 million on sales and marketing in its latest fiscal year, up 26% from the previous year.”
I don’t really follow this space well enough anymore to quickly figure out the TAM: I suspect Cloudera operates in several data and BI related ones.
Cloudera isn’t only Hadoop, but 451 put the Hadoop market at $1.3b in 2016, growing to $4.4b in 2020, with a CAGR of 38.3% between 2015 & 2020.
If you throw data warehousing, BI, analytics, and an injection of the mega-databases TAM together, you get a really big TAM, anyhow. Keep in mind though that one of the traps of (definitionally orthodox) disruptors in this space is lowering the TAM of their respective markets, a la Red Hat in operating systems. I don’t get the sense that Cloudera is on that game plan, but others in the market might be.
Buyers’ plans & needs
With respect to what people would do with Cloudera and others in this space (including Pivotal), here’s a good ranking of the information infrastructure priorities Gartner recently found in enterprises:
Also of public/private cloud interest from the summary of that survey: “Based on survey responses, plans for on-premises deployments for production uses of data will drop from today’s 45% to 14% in 2018.”
People in the tech industry care a great deal about IPO’s like this. We’re all curious what The Market’s read on valuation of enterprise IT business models is for our own benefit, and just a general sense of the health of the sector. There’s also usually people you know at the company, so “yay” for people you know.
One day isn’t long enough to tell anything, though, cf., in a completely different space, that Facebook debut weirdness. People got all excited about Cisco buying AppDynamics because that seemed to show some “healthy” signs that money valued this kind of software/SaaS.
At any rate, people still seem to love the Big Data and such. From Cloudera’s CEO, Tom Reilly: “We’re competing with IBM and Watson, so our customers seeing the strength of our finances allows us to do more.” Think of all the free marketing!
The ensuing years have been remarkable. Our company has grown with the market. The original technology has morphed almost beyond recognition, adding real-time, SQL, streaming, machine learning capabilities and more. That’s driven adoption among some of the very biggest enterprises on the planet. They’re running a huge variety of applications, solving a wide variety of critical business problems.
Our early bet has proven correct: Data is changing the world. In applications like fraud detection and prevention, securing networks against cyberattacks and optimizing fleet performance in logistics and trucking, we’re delivering value. We’re helping to address big social challenges, improving patient outcomes in healthcare and helping law enforcement find and shut down human trafficking networks.
Against that background, an IPO takes on a more appropriate scale. We started Cloudera because we believe that data makes things that are impossible today, possible tomorrow. There’s more data coming, and there are plenty of impossible things to work on. Our journey is only well begun.
I admittedly don’t know Cloudera’s business model too well, but my sense is that they align well with the “have something to sell” model that many open source companies in the enterprise space forget to put in place.
Over the decades, the number of H-1B workers allowed into the US each year has grown. With the 1998 update, the visa cap lifted to 115,000. In 2000, the limit was boosted again, this time up to 195,000. That year, the law was also tweaked so that renewals no longer counted toward the cap. In 2004, the cap was reset to 65,000, but an exemption was added for 20,000 students graduating from US institutions with master’s degrees. Exemptions were also added for workers affiliated with academic institutions, which can include schools and teaching hospitals. According to Ron Hira, a professor of Public Policy at Howard University who has studied the H-1B issue and testified about it before the Senate, the actual number of visas handed out each year has been around 135,000 over the last five years. Link
There’s a good rant on the relative importance of all of this in last week’s Political Gabfest. While us “on-shore” workers in the tech industry may see that 135,000 as a threat to our cashflow, it’s a drop in the bucket of employment in America. As Adam Davidson argues well, therefore, worrying about H1-B visas should be pretty low on the list of how to setup up more people with good jobs:
The question of H-1B visas has rhetorical importance far beyond its actual economic relevance. The unemployment rate for computer and mathematical occupations is, currently, 2.1 per cent. This is what economists consider full employment, meaning that pretty much everyone who wants a job has a job or is in a brief hiatus between positions. The number of jobs in those fields is growing fast—by about twelve per cent a year—and the number of qualified workers is not growing enough to catch up. In short, the plight of computer professionals is on few people’s list of urgent concerns…. According to the Bureau of Labor Statistics, ten thousand computer professionals start a new job every working day. In this context, the eighty-five thousand foreigners given H-1B visas each year represent little more than statistical noise.
He goes off an a political jag after this saying that the H1-B discussion is a proxy for “fear of brown people,” which certainly has appeal to leftist people like myself. There’s a business question here, too, though: are H1-B visas a good idea and why? Are they ethical and effective?
What types of jobs?
Also, some interesting analysis of the types of jobs H1-B visas are used for. Mostly for jobs at outsourcing firms:
But it’s how H1-B visas are being used by applicants that’s really changed. Data from the 2016 batch of H-1B petitions show that the top 10 sponsors of H-1B visa workers in the US are all corporations with large outsourcing businesses: Indian companies like Infosys, Tata, and Wipro, which pioneered the business, and US-based firms like IBM, Accenture, and Cognizant, which saw the success of the Indian contractors and began offing their own competing outsourcing programs. Those 10 firms have more workers currently employed through the program than the next 90 companies combined, a group that includes all of America’s largest tech companies and banks.
So, the discussion about H1-B visas in tech ii, by bulk, about the 60,000+ jobs in IT outsourcing. This is in addition to the estimated 1.7m off-shore jobs in outsourcing already.
In theory, most of these are “lower value” jobs where you’re more operating IT (help-desks, managing the daily operations of enterprise applications) rather than creating it (like programming). Anecdotally, there’s still programming running around in there, esp. when it comes to modernizing applications. The going theory is that you can’t just slot in workers on higher-value IT work like writing custom software.
How do you think about all this?
There’s an odd ethical vs. business-sense argument scurrying about as well that I’ve never seen addressed. One, you’d seem to be happy that the H1-B visa worker was getting work. By nature of accepting the job and up-rooting themselves, it must be good for them: or, at least, better than other alternatives. Also, if it’s actually cheaper to get the same services/output from an H1-B visa worker, why would you pay more for “native” worker? On the other hand, it’s equally confusing to figure out what companies “owe” workers that they’re firing in favor of the H1-B visa workers.
Tech companies like to skirt all that by talking about “we have to hire from a global pool,” which is fine if you’re hiring for an individual with unique skills. However, the divide between outsourcing firms and tech companies suggests that the bulk of H1-B visa hires in tech are not for all the super unique, AI experts that may not live on-shore. Then again, it’s insulting to even think that: why do I value one set of people over another in any context?
Businesses say they’re not satisfied
However we figure out talking about this, it’s clear from surveys that companies are dodgy on the value of outsourcing. As I summarizing some HfS work recently:
Outsourcers too often do exactly what the contract (from five to ten years ago) says instead of helping you innovate and keep the business growing. Itʼs little wonder that in a recent study, more than 75% of senior executives said they want to replace their legacy outsourcers because those providers are so unwilling to change to new models.
If we take Adam Davidson’s perspective, it’s not really even a problem worth thinking about (versus all the other hair-on-fire issue we have). However, when it comes to outsourcing (which I’ve shifted to because so many H1-B visa workers end up at outsourcing firms), it’s clear that we could be doing much better.
In 2015, an estimated 300,000 full-time employees in computer science jobs worked from home in the US. (This figure also includes related professions such as actuaries and statisticians, but the vast majority are programmers.) Although not the largest group of remote employees in absolute numbers, that’s about 8% of all programmers, which is a significantly larger share than in any other job category, and well above the average for all jobs of just under 3%.
8% is not really that much, but the proportion versus other jobs is large, “more than double.” Of course, doubling, even tripling, small numbers doesn’t really get you that far.
There’s always some good year/year stuff in this survey. I’ll have to check it out soon.
Meanwhile, some coverage from Serdar Yegulalp:
This category is going to be increasingly weird to cover. Here, what they really mean are “containers and container orchestration tools…oh, and configuration management tools.”
Arguably, you’d put something like Cloud Foundry in there if you have a gumbo of three different software categories, each used by people who want to follow DevOps practices and get the benefits of improving software. We haven’t put public numbers recently, but back in September of 2015 Pivotal Cloud Foundry had $100m in annual bookings, and the growth has continued.
While Pivotal Labs’ early success was among startups, PCF was designed for organizations needing to increase velocity and change their application delivery process, which appeals to large enterprises. About 90% of Pivotal’s revenue comes from enterprise customers today. The company reports that its number of paying customers is in the hundreds, with average deal sizes in the high six-figure range. It also says most of its customers are using PCF on top of VMware’s IaaS offering. AWS is currently in second place among PCF deployments with Azure as a close third that is gaining momentum among the Fortune 100.
All of that means: Pivotal Cloud Foundry has many customers running in production (with the resulting revenue) and, I’d argue, much market share. If you throw in IBM and MicroFocus/HPE’s Cloud Foundry distro revenue, plus OSS use (like at 18F), you’ve got a large chunk of Cloud Foundry usage out there, which should translate into a large chunk of “doing software better (with DevOps)” marketshare for all of Cloud Foundry.
Like I said, coverage will be weird for awhile as people sort it out. Kind of like “cloud” was in 2009, and pretty much every “PaaS” category now, though it’s getting better. I’m looking forward to what they sort out in the new(ish?) DevOps practice at IDC.
More coverage of the survey:
Private, public, hybrid:
One key trend RightScale’s tracked over 2014, 2015, and 2016 has been the use of private cloud through OpenStack, VMware, and related products. This time around, while private cloud adoption hasn’t fallen off a cliff, it’s edged down: 72 percent of respondents this year run a private cloud, versus 77 percent last year and 63 percent the prior year. Hybrid cloud has shown a similar trajectory of 67 percent in 2017, 71 percent in 2016, and 58 percent in 2015.
After margin of error, pretty slow, but a good enough pace I guess.
Make no mistake: AWS is cloud king, and it’ll safely remain that way for a long time. But Microsoft Azure has made remarkable amount of progress in the last year. In 2016, only 20 percent of respondents were running apps there; this year, it’s 34 percent. With enterprise users specifically, the growth was even more dramatic, from 26 percent to 43 percent.
And, Oracle and DigitalOcean:
Azure’s growth isn’t coming at the expense of business from other cloud providers. Oracle Cloud and DigitalOcean, the two decliners on the list, didn’t have enough business to lose in the first place to constitute Azure’s jump: respectively, 4 and 5 percent in 2016, and 3 and 2 percent this year.
Now, of course all this hinges on what exactly they mean by cloud, what the sample base is (just RightScale customers?), etc. But, anything that’s multi-year is useful.
See also Barb’s brief coverage, e.g.: “Azure, meanwhile, saw a bigger jump with 43% of respondents on Azure now, compared to 26% last year.”
It’s a sore point for many shoppers, who are ready and eager to spend more on designer clothes if only they were available: 78% of respondents in a recent survey of plus-size shoppers said that they’d be willing to spend more money if designers offered more options, and 80% said they’d likely purchase an item from their favorite designer if that designer made plus sizes.
File under “if anything, more money. Plus, bonus: morals!”:
More and more designers and retailers seem to be waking up to that fact. The market for plus-size women’s clothing is over $20 billion, by some measures
Less than 5% of white men surveyed said they considered a lack of diversity a top problem. Three-out-of-four respondents were unaware of any initiatives to make their companies or portfolios more diverse. And 40% of male respondents were sick of the media going on and on about it.
Meanwhile, in political land:
the more privileged you are, the less that oppression personally affects you, the less urgency you perhaps have to get involved in the fight.
According to Shireen Mitchell, activist and founder of Digitalsista, much of the reason women of color are so often on the front lines is because it’s work that needs to be done, and they don’t see anyone else stepping up. “Women of color are always taught to build community to get things done, and in my opinion, most white men are taught that they can only succeed if they are the ‘savior’ for the community. With this mindset, they know they can’t really do that job when it comes to inclusivity because of their inherent bias.”
As those stats on hiring above show, there’s plenty of room for white men to try new ideas out, e.g.:
That leads to white people, especially white men, waiting to act until they feel they will be acknowledged and congratulated for their work. “What we need is for them to take initiative, grow from being uncomfortable and making mistakes. Use their privilege to elevate those who are taking the lead and not add to taxing or using their labor,” says Mitchell.
From a 451 report on outsourcing in cloud-land:
From our Voice of the Enterprise research, we can see that about two-thirds of organizations are operating with moderate transformation, while a fifth describe themselves as undertaking significant transformation.
And what do these new projects look like?
In the manufacturing sector and in transaction-heavy back-office process areas, automation continues to improve the top line for businesses. In banking, financial services and insurance, the main challenge is how to manage compliance cost-effectively so that productivity is not impacted.