Open Source Strategy

CIOs can generate a sustainable business value with OpenStack! Here’s how it works.

OpenStack is on everyone’s lips and is slowly working it’s way forward into the IT infrastructure of German companies. 58 percent of German CIOs see in OpenStack a true alternative to commercial cloud management solutions. However, IT decision makers should look closely what they are holding in their hands. OpenStack is basically just an infrastructure management solution and accomplishes no direct value to the business success. However, this is exactly what CIOs have to deal with in order to position themselves as a business enabler. This raises the question how OpenStack is able to create a significant added value, stepping out of the shade of a simple open source cloud management software.

CIOs have to state the fundamental question, how OpenStack can provide a strategic advantage. This is only the case if they use OpenStack different from their competition and thus not only restrict oneself to operational excellence. It is rather about to understand the OpenStack technology as part of their IT strategy using it to create a real value for the company.

Playground: Enablement Platform for Developers

CIOs who want to achieve a business value with OpenStack need to see more potential in OpenStack than just a pure management solution for their cloud infrastructure. In this case it is much more than just cost savings and running an IT infrastructure. CIOs have to understand OpenStack as an enablement platform for their developers and use the open source solution exactly in this way. CIOs, who only want to focus on operational excellence, can use one of the several standard OpenStack distributions. However, these ones should consider, that they are just one of many. For those, who see a strategic vehicle in OpenStack, a distribution is a good foundation to extend OpenStack and expand it to an enablement platform.

OpenStack as enablement platform means that developers are provided with much more than just compute (virtual machines), storage or databases. It is about providing higher-value services, which can be found in the portfolios of Amazon Web Services and Microsoft Azure. This is about microservices that support the application development. These are ready building blocks whose functionalities don’t have to be developed again. Instead they can be used directly as a “brick” within the own source code. The OpenStack community has recognized the importance and slowly tries to take parts of the AWS respectively Azure service portfolio over to OpenStack. First services are Sahara (Elastic Map Reduce) and Zaqar (Multiple Tenant Cloud Messaging). Of course, this is by far not enough and further microservices are needed to make OpenStack to a powerful enablement platform.

However, one thing shouldn’t be underestimated for this scenario: the significant investments that are necessary. Building a massive scalable and globally available cloud infrastructure respectively enablement platform like the ones of Amazon Web Services or Microsoft Azure is complex as well as costly. However, this must not prevent CIOs from running an own OpenStack based platform. For this purpose e.g. partnerships with hosting providers suit to run OpenStack in different deployment models. The German research paper “Managing OpenStack: Heimwerker vs. Smarte Cloudsourcer” describes what kinds of variants are suitable.

Despite the high complexity of OpenStack it is possible for CIOs to make use of its openness and flexibility to build custom solutions based on the various sub-projects.

Innovation: Leave the Community

The common work within a community is important to push a project like OpenStack successfully forward. In addition, all involved parties benefit from the ideas other community members. However, the big disadvantage is that one member is just as good as the community itself. The community concept neither works to diversify towards the competition. In the end the focus is again completely on operational excellence. A technological or strategic advantage cannot be achieved.

The cloud market shows that solo efforts are part of a concept for success. Providers like Amazon Web Services (AWS), Microsoft Azure, ProfitBricks in Germany or CloudSigma in Switzerland have built individual infrastructure environments. This strategy has helped AWS to achieve a massive advantage in technology within the cloud market.

Another paragon in the open source space is Canonical. The Linux distributor is well-known for using the Linux open source code but only giving back a little (e.g. patches). It is the same behavior for the OpenStack project, proven by numbers (see Idealists my have a problem to understand Mark Shuttleworth’s (Founder of Canonical) attitude. However, in the end it is about the business and thus to operate in the black.

OpenStack is perfect for CIOs to serve as a foundation for their cloud infrastructure. For this purpose, standard OpenStack services like compute, storage or identity management can be used. However, in the end it is about one thing: individuality! This means that a CIO should say good-bye to the community concept in order to focus on innovation. The strategy is about to look what the OpenStack community has to offer, adopt the necessary services and develop individual enablement services and solutions on top of it. The use of standard OpenStack is not sufficient to differentiate from the competition neither to create a serious value for the company.

Business Value: Applications and Services support new Business Models

The Internet of Things (IoT) is the next megatrend rolling towards companies forcing them to finally start with their individual digital transformation. OpenStack is a powerful tool and a global standard CIOs can use to support this individuality. However, OpenStack is just a means to an end and only offers the basic functionality so far. But, based on the open source approach OpenStack can be completely customized for the own necessities and thus is the perfect foundation for individual backend solutions to support mobile and IoT applications.

For this purpose, CIOs should stand back from standard OpenStack, use a distribution as a foundation and extend it with individual functionalities. This means that they have to get used to OpenStack’s complexity. However, it is exactly this technological excellence that will pay off over time to differentiate from the competition in order to obtain a technical advantage and thus create an added value.

By Rene Buest

Rene Buest is Gartner Analyst covering Infrastructure Services & Digital Operations. Prior to that he was Director of Technology Research at Arago, Senior Analyst and Cloud Practice Lead at Crisp Research, Principal Analyst at New Age Disruption and member of the worldwide Gigaom Research Analyst Network. Rene is considered as top cloud computing analyst in Germany and one of the worldwide top analysts in this area. In addition, he is one of the world’s top cloud computing influencers and belongs to the top 100 cloud computing experts on Twitter and Google+. Since the mid-90s he is focused on the strategic use of information technology in businesses and the IT impact on our society as well as disruptive technologies.

Rene Buest is the author of numerous professional technology articles. He regularly writes for well-known IT publications like Computerwoche, CIO Magazin, LANline as well as and is cited in German and international media – including New York Times, Forbes Magazin, Handelsblatt, Frankfurter Allgemeine Zeitung, Wirtschaftswoche, Computerwoche, CIO, Manager Magazin and Harvard Business Manager. Furthermore Rene Buest is speaker and participant of experts rounds. He is founder of and writes about cloud computing, IT infrastructure, technologies, management and strategies. He holds a diploma in computer engineering from the Hochschule Bremen (Dipl.-Informatiker (FH)) as well as a M.Sc. in IT-Management and Information Systems from the FHDW Paderborn.