No. 2 cloud provider Rackspace tries harder

Rackspace is the second largest provider of IaaS (infrastructure as a service) after Amazon Web Services. On track to make $100 million in revenue this fiscal year, Rackspace’s IaaS business is roughly one-tenth of Amazon’s, a number that does not count the revenue Rackspace accrues from its more traditional hosting business — where the company began and from which it derives its differentiation in the cloud space.

Last week, InfoWorld Executive Editor Doug Dineley and I interviewed Lew Moorman, the chief strategy officer of Rackspace and the president of its cloud division.

[ Also read “How to be a modern CIO” by Eric Knorr. | Get the no-nonsense explanations and advice you need to take real advantage of cloud computing in InfoWorld editors’ 21-page Cloud Computing Deep Dive PDF special report. ]

Moorman was in the San Francisco area for a conference on OpenStack, a new open standard for cloud computing that Rackspace developed with NASA that has generated considerable industry excitement. We began by talking about how Rackspace’s array of services differs from that offered by the No. 1 IaaS provider.

InfoWorld: What it’s like to be No. 2? How would you differentiate the services that you offer from Amazon’s?

Lew Moorman: I think Amazon has been a catalyst to this industry and has been a great pioneer in this space. But I think that we have a very different approach than Amazon has.

First of all, we are a hosting company, and we think our hosting roots are actually very powerful. It’s going to be very difficult to tell the difference between hosting and cloud because I think every big customer is going to have some of each over time. So that portfolio [of hosting services] really matters.

Also, we are very committed to open standards. I’m actually here this week for the OpenStack Design Conference down in Santa Clara, Calif. There are 500 folks down there working on OpenStack, and we just couldn’t be more pleased with how that’s going. The idea is that you can run a Rackspace cloud through our public cloud. You can run it privately in our hosting environment, or you can run it on premise. And in the future you’re going to be able to run it with our competitors.

And the last part, of course, is service. I think that when most people hear the name Rackspace, they think “service” and “customer support,” and I think that the cloud needs support as much as the physical world did. In some cases, more so, because there’s this explosion of applications that IT departments can’t keep up with. They need some help keeping these applications up and running, responding to monitoring alerts, doing those kinds of things. So the idea that we log in to boxes and help you fix things is just a whole different kind of approach than Amazon has.

InfoWorld: You wouldn’t say there is any significant difference in technology support?

Moorman: I think there is. We really want to build our cloud products to look and feel and act like traditional infrastructure. So we have persistent storage, we have static IPs, we are going to use VHDs, not a proprietary standard of disk format. So we are committed to having things look and feel and run very much like traditional infrastructure, which makes it very easy for people to use our cloud products. I think that Amazon has had just a different approach. It’s not better or worse, it’s just different.

InfoWorld: So in a nutshell, high availability and disaster recovery is cheaper under your model?

Moorman: No, I wouldn’t agree with that.

InfoWorld: It’s more familiar?

Moorman: It’s simpler. It’s more familiar — there aren’t new concepts to learn to use our cloud. We want to eliminate this need to re-architect for the cloud as much as possible, and we want things to work like you’re used to them working.

InfoWorld: Could you give me a breakdown of applications on your cloud?

Moorman: I can give you a general sense. We have a lot of our enterprise customers who are using our cloud for dev and test, and so it’s a great option for that. But I would say the predominant is public, bursty websites. So if you look at big media companies … any company …

InfoWorld: E-commerce?

Moorman: … yeah, e-commerce, running promotional websites, public websites, the cloud is just such a better fit for it. Because many times you run promotions or run new initiatives and you have no idea how big they’re going to be. So the ability to be able to sort of fine-tune that over time is something that really makes a big difference for customers.

InfoWorld: So you spoke about having your roots in hosting. To me, the lines between hosting and enterprise-class IaaS have never been crystal clear. You offer both. Talk to me about where you see the real points of differentiation.

Moorman: We draw a distinction around our cloud products, which are really software-powered infrastructure. And because of that, they’re highly productized. With our cloud servers, you can get small, medium, large — we have eight sizes — but the components of what is in that server are identical across the board and you cannot change it. So the way the disk is configured, the way the network works, these are all productized options. Same with our storage offerings, our load-balancing options. You can do some configuration, but it’s within a tight range of things, because it’s software-powered. It’s not something that’s done through operations; you have to consume the products as they exist.

With physical hosting and our traditional hosting, we can custom-configure servers any way you want them. We can build out a network any way you want it. We can set up storage any way you want it. There’s a lot more ability to customize and tailor; it makes it easier to get security. I think the cloud is extremely secure, but you have to go through more hoops and you have to do more to use this productized service set to get it as secure as you’re used to in the physical world.

InfoWorld: What about encryption?

Moorman: Encryption is not a problem. I mean, you can encrypt across any of these technologies pretty easily. It’s more about, how do you deal with a big flat open network in the cloud and how do you secure around where you don’t have to do that? In the physical world we set up a private network for you with VLANing capabilities, and so you literally are in an out-of-the-box, very secure environment that is very easy to get set up. In the productized, scalable world, you just have to do other things. It can be extremely secure, there’s just more work that has to be done because it’s in this highly productized model.

So that’s really the distinction we draw. And our general belief is that everyone should be using the cloud — they just shouldn’t run everything on it, and they should figure out where it’s a better fit. And so many, many of our customers will run databases. There are I/O issues in the cloud because of the hypervisor layer, and they don’t want those performance hits. So they run their database tier in the physical world and then they run their application in a Web tier cloud in this combination. And we have ways to securely tie this together so it’s all on one network and works seamlessly. This is a very, very common model. They’re using the best of both worlds.

InfoWorld: It’s interesting listening to you talk about these very well-defined commercial cloud services. I think CIOs are still thinking: private cloud, private cloud, private cloud. The public cloud is either too risky or they’re going to have to cede too much power, like control over availability. These kinds of showstoppers still seem to be in place in larger companies. Are you seeing some movement there?

Moorman: I think if you look at the small and medium business world, they are moving to cloud rapidly because they’re not going to run data centers anyway. But if you look at the Fortune 500, where they’re running data centers, I think that actually CIOs believe the cloud is real, but it’s just not for everything.

They’re going to have their own assets and their own data centers, and they want to make them more agile and more effective and more efficient. And so they want to build cloud-like capabilities inside the firewall, but they’re very interested in having their internal systems talk to their external systems.

We’re getting just incredible interest around OpenStack, in terms of big Fortune 500 companies wanting to transform their internal data centers and have all their predictable workloads run in-house on their own cloud, but have all the unpredictable (and in many cases new) applications run in cloud environments like ours.

So I think you’re going to see legacy infrastructure in data centers — they’re going to continue to be in-house for some time. But I think that many new applications and much of the unpredictable workloads are going to go in public clouds. And I think the CIOs are more open to it than everyone’s letting on. I would bet the vast majority of Fortune 500 companies are using either us or Amazon in some sense. It might be very small, but they are experimenting with it, they’re dabbling with it, they’re running some applications. They’re doing some test dev, and they’re seeing the power of it.

InfoWorld: And how much is that going through lines of business and how much does the CIO know about?

Moorman: Well, I think you’re right. There is a lot of … so-called rogue IT that is happening out there. But this is a fact of life for CIOs.

InfoWorld: But lines of business didn’t have this particular option before.

Moorman: They did not. But there’s no stopping that, and the long tail of applications that exist in a business are going to explode. And IT departments are really built to run five core applications that run a company. There are going to be hundreds of applications in businesses that run those companies, and IT departments are going to have to respond to that. And there’s no question in my mind that public services are going to be part of it.

InfoWorld: What are you hearing from CIOs in how they manage “rogue IT” with this cloud option? And do you have any recommendation for CIOs in how they should look at that?

Moorman: I actually think CIOs are just now getting on top of it. A lot of them know what’s happening and they’re trying to get their arms around it, but they’re not succeeding. I think they need to get proactive. They need to realize that it’s real and it’s happening and they need to view themselves as enablers to allow the company to get that extra productivity that’s coming from all these applications that are getting built.

InfoWorld: What sort of controls can a CIO put in place to make sure no one is duplicating effort or creating security problems, that sort of thing?

Moorman: I think what they need to figure out is — how do we handle all the requests around the most sensitive data so no one is compelled to put that on cloud service? But otherwise, let people run. A public promotional website creates no corporate risk. If you’re going to run a Super Bowl ad and want to put a complementary website up, there’s really no corporate risk in doing something like that, and they should let business units go get that done and not wait in a big long queue with the IT department to make that happen.

But what they should say is — if you want to do something with critical data, we will be very responsive to you and we will help you get that done in a way that makes sense. So people aren’t compelled to do it with the most critical data. So they’ve got to start thinking about being a service provider.

InfoWorld: What about applications that may be more core to the business, but they want to use a public cloud provider?

Moorman: I would say the more likely scenario is that those core applications start to get disassembled. So instead of having a monolithic ERP system with ten modules, companies are moving more to service-oriented architecture and are saying, look, we might use Salesforce for CRM, we might use Service-Now for ticketing. These big monolithic stacks are getting disassembled and piece by piece they’re going to move to the cloud.

InfoWorld: Talk to me about OpenStack. The Holy Grail is the idea that when you need to you can burst and you can manage that external resource as if it were of a piece with internal resources. Would you say OpenStack is part of that journey?

Moorman: We launched OpenStack about nine months ago, and I truly believe it’s one of the fastest, most successful open source projects in history. The amount of interest, the amount of corporate sponsorship, the amount of enterprise interest is just unbelievable. The idea of an open source project that allows them to increase the agility of their own internal infrastructure, but then also have the promise of a cloud that looks and acts and feels and can be federated in Rackspace, in Internap, in Korea Telecom, you know, this is a very exciting prospect for companies — the ability to go find capacity around the world. It’s early days. The code is in good shape, but it’s got a long way to go to be out-of-the-box turnkey for people and really simple to get going, but it’s getting there.

InfoWorld: Give me a quick sort of technical overview, high-level technical overview of OpenStack.

Moorman: OpenStack has really three core components out of the gate. It has a compute orchestration layer, so the ability to sort of provision virtual machines, turn them off and on, move them, back them up, all those kinds of things. It has an object storage system similar to our cloud files. And then it has an image service called “Glance,” which allows you to manage your images and use them to sort of control workloads.

So those are the three core components, which form the core of any cloud: the workload management, the compute, and the storage. Lots of new projects are emerging around it, including our load balancing service that we’ve donated. We have a block storage effort that’s ongoing. We have a database service that we’re sort of working on. So a lot of these things will start to show up in the code as well, but the core elements are there to really run a cloud.

And today we run the object storage and we are in the process of moving to the compute. The compute is really the next generation of our cloud, and we collaborated with NASA on that code. So we are in the process of moving to that code because it’s a whole new code base. We were going to re-factor our core code base anyway — and now we’re doing it in the open and we have an active project. We really believe that this year will be completely on the OpenStack code.

InfoWorld: And doesn’t this require close collaboration with virtualization software providers?

Moorman: OpenStack supports — gosh, I don’t know, we’re up to five hypervisors — five or six, so Hyper-V, Xen, KVM, ESX, VMware, Oracle’s virtualization. So you can run multiple virtualizations. We are a Xen server shop in terms of running our cloud, and for the time being we’re pretty committed to that. But the truth of the matter is it is meant to be hypervisor-agnostic, platform-agnostic.

So over time, if it makes sense for us to use VMware or use Hyper-V, we’ll have an option to do that. And certainly companies that want to run these technologies in-house can choose their hypervisor. We’re getting great support from those players, and Microsoft has contributed to the project, Citrix is a major contributor to the project. These are open platforms that have open APIs that you can interact with. So OpenStack is meant to work well with all of them.

InfoWorld: Do you think the distinction between IaaS and PaaS (platform as a service) is blurring? Right now it’s kind of hard to argue that Amazon is just IaaS, since they’ve incorporated so many extra services in there.

Moorman: I think it’s absolutely blurring and I think it’s going to continue to blur. So our load balancing service is out, our database service is coming, so these raw components are going to be there in every major cloud. And then, when you put orchestration around it, you really have platform as a service on the fly. And I think that is a model that we believe in. I think the integrated platforms, like Heroku and others have a place, and we love those guys and we hope they build on top of us.

InfoWorld: By a “place,” you mean they’re for experimenting and you’re for the real deal?

Moorman: Well, here’s the difficulty. I think the “magic platform” is what’s very appealing to people. But these integrated platforms constrict you to using their stack in the end. And I think what ends up happening is we have a number of customers who have started on Heroku and have sort of moved over to a model where they can tweak it, adjust things, and get exactly the version of Rails they want and sort of add these modules. So the magic comes at a cost, which is it’s a very prescribed stack, end to end, and I think that ends up causing issues. Whereas if you have an orchestration system, where you rope in this new technology, rope in that new technology, and make it all work seamlessly, that ends up providing a lot of flexibility. And I think that’s a model that is very appealing.

But let me tell you something: I think Heroku and PHP Fog and some of these guys have done some really brilliant things and I think it’s something to keep an eye on, and something that we’re certainly watching closely. We want them to partner with us and build on top of us.

InfoWorld: What other development environments might you host?

Moorman: We’re going to keep our options open. We want to make it easy to host all those applications. And once we have this full complement of platform services, like database and load balancing, it’s going to make these platforms easier to host. There are people who are getting Cloud Foundry up and running on our cloud and making it happen, so we’re going to learn a lot over the next couple months. We’re talking to Microsoft — they’re eager to get Azure running with their partners.

InfoWorld: So maybe you could offer Microsoft’s 1,000-server, private cloud Azure offering as a public cloud?

Moorman: Possibly. We’ll see. Azure has been an interesting development. But it seems to me that it has not captured the imagination in terms of the market. And I think part of that is just the platform as a service is a hard concept for folks to sort of get their heads around. People are used to thinking in terms of servers and sort of traditional concepts.

InfoWorld: Well, you’re not going to consider Azure unless you’re a .Net shop.

Moorman: To me, that’s the interesting part. I actually think Microsoft has a platform problem, not a cloud problem. They’ve invested heavily in the cloud side of it, but what they really need to do is make .Net more relevant to everyone building startups around here. The startup community is not using .Net, and that is the problem they’ve got to solve — and I think by just having a cloud they’re not going to solve that problem. They need to make it a platform that people are gravitating towards.

And I think that their bigger issue is .Net and the toolsets that they have. And actually, in some ways, Azure is complicated because they now have introduced SQL Azure, which is a whole new platform you have to get your arms around. Why is the world building on Rails and Python? That is, I think, the problem that Microsoft has to solve.

InfoWorld: Well said. So talk to me a little about compliance issues as they relate to the public cloud. There’s a sense that some of some compliance regulations are a barrier and need to be revisited, It’s even inhibiting [federal CIO] Vivek Kundra’s cloud initiative for the federal government.

Moorman: Well, I am on the Cloud Commission Vivek has started, and I have to say the government has done a great job — Vivek in particular — leading on this with its Cloud-First policy for the government. I think they are moving faster than corporate America today in many cases. And they have a strong interest in making America the leader in cloud computing and advancing very, very quickly.

But absolutely there are issues. The ones that I am most interested in are data flows and natural sovereignty issues around data. There is a lot of fear around the Patriot Act and the ability of the government to get data if it’s hosted in America. These are things that I think do slow down cloud computing in America. And I think the government is very open to listening to it and understanding it.

But for me, that is one of the bigger issues, making it very clear that if you put your data in the cloud, what control are you losing? Or if you put the data in America, what control are you losing over the access of that data by governmental authorities? I think there’s probably more FUD than there is reality, but there are issues, and we’ve got to get clarity on it. And the way we interact with government agencies has got to become very standardized and clear.

InfoWorld: So there’s no real pending legislation yet?

Moorman: There’s not. The commission is really charged with coming up with three or four very concrete recomendations to then go advocate legislatively.

InfoWorld: One last question. In the old days, ASPs [application service providers], which were the first wave of cloud computing, had a problem — they tried to do too much for too many different customers and couldn’t scale. With all the different services you offer — particularly managed services — isn’t there a danger that may happen to you?

Moorman: In terms of scale, I think we’re at scale. Amazon is a much bigger company than we are, but in terms of running infrastructure, we’re a pretty big company. I think if you’re a $50 million hosting company, you’ve got scale issues.

InfoWorld: I’m not talking about infrastructure. I’m talking about your really broad range of services.

Moorman: To me cloud computing is hosting version 2. And it is very much within our wheelhouse. I actually think that you will see a lot of these offers get standardized. I don’t think there’s an infinite number of solutions. I mean, if you look at our managed hosting offering, it’s been pretty stable for the last five years as it has matured. I think cloud computing will hit a maturity curve — and it doesn’t mean there won’t be innovations on the margins — there absolutely will be. But there will be a set of standard types of offerings. Once you have computing and storage and networking, the rest of it is important, but that core is really at the heart of what we do, and our services on top of it are pretty productized and consistent.

I also think that our commitment to open source is going to allow us to have a velocity that does not depend on us doing everything alone. And the amount of code [being] contributed from the rest of the world, and the standards that are going to exist because of that, is something that gives us an advantage that no one else will have — unless they decide to get on board with OpenStack — then everyone will have it. What we want to do is get to a world where these things are standardized and the experience is what the difference is. And we think that we’re the best in delivering a great experience and a great support model. That’s what we’re trying to accelerate and I think that’s actually happening.

This article, “No. 2 cloud provider Rackspace tries harder,” originally appeared at InfoWorld.com. Read more of Eric Knorr’s Modernizing IT blog, and for the latest business technology news, follow InfoWorld on Twitter.