HPE CEO Whitman: High Cost Of Checking Out Of 'Hotel California' Public Clouds, Especially AWS, Boosts Hybrid IT

HPE CEO Meg Whitman on Wednesday said inflexibility, security issues and the high cost of getting out of public clouds – particularly Amazon Web Services (AWS) – is helping to slow the movement to the public cloud and boosting hybrid IT.

"What we all know is whatever data you put into the public cloud – particularly AWS – it is a bit like Hotel California you check in and you do not check out and if you try to check out it is immensely expensive and takes a long period of time," said Whitman, during a question and answer session with press and analysts at HPE Discover 2017.

Whitman continued: "So our view is that the world is going to be hybrid. There are applications that absolutely will go to the public cloud. But there are also a lot of applications that as we create the ability to have private cloud on-prem, at public cloud economics, both from a total cost of ownership as well as a consumption-based pricing model many organizations are going to choose to have those same economics with the same agility on-prem, as opposed to moving to the public cloud."

[Related: CEO Whitman: HPE's Hybrid IT Innovation Is Saving Customers Staring Into Public Cloud 'Abyss']

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HPE, in fact, highlighted a host of those cases at Discover including a decision by $40 billion pharmaceutical maker Merck to opt for an HPE hybrid IT solution instead of a public cloud deployment. Also, cloud collaboration workspace provider Smartsheet and online gaming company LiquidSky both moved from public cloud deployments to private, HPE-powered hybrid IT solutions.

Whitman said she is not "denying" there are workloads moving to the public cloud as is evident from AWS's quarterly results, but there is clearly a "slow down" in that movement as a result of companies hitting what she called the "cloud cliff" facing serious "security, control, cost" and "flexibility" issues. "People are rethinking what the right mix is for their company," she said.

CRN reached out to AWS for comment but had not received a reply at press time.

Whitman said the gap between private cloud and public cloud has narrowed over the last several years with a slew of private cloud infrastructure and cloud consumption innovation from the likes of HPE that was simply not available four years ago."That is the way we see the world," she said."Obviously, this will be proven out over time."

HPE partners said they are regularly delivering private clouds at 30 to 50 percent cost savings with offerings that are more secure and flexible than public cloud.

LiquidSky, a cloud service which allows gamers to install and play any game, embraced the Cloud@scale offering from CB Technologies, an Orange, Calif. HPE Platinum partner, because it provided better performance and economics in a more robust managed cloud environment, said LiquidSky CEO Ian McLoughlin, in a video testimonial at the show.

"We started the company on a public cloud infrastructure, but over time as we grew we needed to move towards a private cloud solution," said McLoughlin. "Cloud@scale was great for us because it gave us the speed and drove in the ease of use that we had with public cloud. HPE gave us more bang for the buck. We can actually fit double the amount of users per server which gives us much better economics.''

CB Technologies President Jason Mendenhall said there are more than two dozen customers in the Cloud@scale sales pipeline that moved aggressively to the public cloud and are now looking for a more economical and secure managed cloud offering.

Cloud@scale is resonating with customers who are being hit by public cloud bills as high as several hundred thousand dollars to even $1 million a month, said Mendenhall.

"These big companies have been in public cloud, they are seeing the challenges and now they are looking at coming back," he said. "We're also seeing lot of opportunities from late adopters who are now thinking they don't need to go to public cloud. It's not the end of public cloud. Let's be very clear about that. It is not an 'either–or' story. It is hybrid."

Clark Golestani, president of the emerging business and global CIO for Merck told HPE Discover attendees that his company did a comprehensive analysis of the public cloud versus hybrid IT and selected HPE hybrid IT. "With regulatory constraints, privacy and also cost – which is very important for us – it really drove us to a converged (HPE) infrastructure solution on premises," he said.

More importantly than even regulatory and privacy issues were the operational issues associated with public cloud versus an HPE hybrid IT solution, said Golestani. "The idea that we could be down for a day is unacceptable," he said.

"The idea that we would not deliver medicines potentially around the globe to patients that require that is something that we just can't conceive of," said Golestani."So putting it in the cloud really is not an option for us. We need to be up all the time every day."

The flexibility with the HPE hybrid IT infrastructure and "tremendous cost savings" – which ultimately drives more Merck R&D – was critical in the decision adopt an HPE hybrid IT solution, said Golestani.

Rich Baldwin, chief strategy officer at Nth Generation Computing, a San Diego-based HPE partner, said his company is also seeing customers that went to public cloud looking to move back to hybrid IT HPE solution. "We lost a fairly large account several years ago to public cloud and right now we are about to bring them back to an (HPE) Synergy solution," he said.

Customers are having security, reliability and cost issues with public cloud, said Baldwin. "Everybody over-hypes the public cloud," he said. "They think it is be all and end all and it is anything but that. I have seen too many CIOs ,and IT managers who come in with this everything-is-going-to-the-public-cloud, without a plan, and they find out it is not what it is cracked up to be."

HPE has the "right story with the right mix" of both private and public cloud, said Baldwin. "Not everything is meant for the public cloud," he said. "It depends on what you are trying to do. For some companies, it may be 60 to 80 percent public, and for other companies, it may be 20 percent. It depends on what industry you are in and what software you are using."

HPE's "hybrid IT – right mix" story is resonating with customers, said Baldwin. "We are doing assessments for customers looking at what belongs in the public cloud and what doesn't," he said. "We look at the economics. It is one thing to be in a public cloud if it is predictable, but if you are in continual growth mode the public cloud costs are more expensive."

Worth Davis, vice president and chief technology officer for Computex Technology Solutions, which has its own managed private cloud offering, said he is seeing a number of customers that went to public cloud making the move back to private cloud.

"Customers are moving back," Davis said "The prices are not that good (for public cloud). Unless you have a massively variable workload of more than 10x it does not make a lot of financial sense to pay a 40 percent mark up for something you can build yourself. A lot of it is coming back because frankly we can take the stack from HPE and build the same thing and save the customer 40 percent. Customers are taking that 40 percent savings and keeping it for themselves or using it on other project."