Postcards from the Hosting Transformation Summit

Right across the street from VMworld was Tier 1's Hosting Transformation Summit. Roughly 400 folks -- mostly from Managed Service Providers (MSPs) -- attended to get the lowdown on where that industry is going. It's changing fast, given some of the recent "cloudy" offerings from Amazon, Mosso, OpSource and others. And part of the driver was the technology offered from VMware itself.

But First: The industry, and its growth, is compelling. Managed services hosting is growing in the U.S. at about 30%/y, and it will be a $10 billion industry by the end of 2008. While about 20% of that amount is represented by 13 of the largest firms, the remainder of the market is represented by hundreds if not thousands of smaller entities.

Dan Golding of Tier 1 pointed out that the categories called "web hosting" and "managed hosting" are colliding, given that so many apps are being delivered over http. He also pointed out that small/medium businesses are expectted to outsource even more of their own IT, as operating it themselves becomes more complex and expensive... also good for MSPs. In particular he noted that CRM, HR, Accounting, fileservers, utility storage, email and project management were expected to be the top managed SaaS applications.

Next, John Zanni, Microsoft's GM of worldwide hosting, gave a talk called "cloud computing - is virtualization enough?" Having seen Paul Maritz' VMworld keynote hours before, I couldn' t help but compare the two. Zanni's a really smart guy -- but vision-wise, his talk was a let-down. While he absolutely identified the same requirements of the "cloud" (which were surprisingly in-agreement with VMware's) Microsoft's vision was elementary in comparison to VMware, referencing Microsoft party-lines and products - and was weak on vision. Granted, the audience was not as heavily-laden with technologists as the VMware conference, but the vision that was sketched-out just didn't seem too fully-baked. One interesting side-note: John explicitly mentioned Microsoft management tools that would someday manage 3rd-party VMs such as VMware. Hmmm....

On day 2, Antonio Piraino (also of Tier 1) gave a really great talk on "virtualization and cloud computing" -- the guy really gets it, with respect to the MSP industry. His message to MSPs was pretty clear: Cloud is coming, and you (the MSP) will need to learn about it and get on board. The definition of "cloud" he gave to MSPs was

• Server-based managed hosting
• Virtualized offerings
• Multi-O/S & DB support
• Automated scalablity
• Easy ordering of services
• On-demand provisioning
• Cross-service integration
• Bill-for-use
  
• SLAs were managed / managed-for

It's clear that the smaller MSPs out there will be jumping on the Utility Computing, Cloud, PaaS and SaaS bandwagon soon. That should begin to give folks like Mosso, Flexiscale, IronScale, OpSource etc. some competition. But i'm sure we're going to see the concept of abstracted-away hardware grow in popularity with frightening velocity.