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John Treadway Talks About the Cloud

John Treadway of Boston, MA in the United States may be the new CEO of Symphony Solutions, a Netherlands-based IT company, but he is certainly not new to cloud adoption, cloud strategy and migration, and cloud application work.

His recent career was at Cloud Technology Partners (CTP), bought by Hewlett Packard in September of 2017, where he came square in the path of Theo Schnitfink, Owner and Founder of Symphony Solutions.  There, CTP was a client. Now, CTP (HPE) is still a client, but John Treadway is on the other side of the table, learning as much as he can about the company he is charged with scaling to the next level of growth.  His cloud experience is valuable, as is his earlier career experience in management and finance.

Wolfe Research, a premiere research boutique in the U.S., was first to grab time with Treadway to ask him about his experience with enterprise adoptions and what lies ahead in the clouds.

Excerpts of his interview follow:

Wolfe Research

Public cloud growth is slowing slightly but still impressive. AWS slowed from about 41% last quarter to 37% in 2Q, Microsoft from 73% to 64%. At the same time, some of the legacy vendors claim that there’s significant repatriation of workloads back on-prem. Could you give us a 30,000-foot view of what you see going on in terms of cloud adoption?

Treadway

It’s natural that it’s going to slow given the size of the overall market. The 2019 estimate for the big guys is nearing $70 billion of revenue. Don’t forget, it’s recurring revenue, highly profitable, and growing still at a good clip. AWS is not growing as fast as it was, being the big dog that it is, coming in somewhere in the $35 billion range at the end of this year. At that figure, putting 40% on top of $25 billion is really adding another $10 billion in revenue, which they’re going to get close to doing. But next year, putting another 40% on top would be a pretty big pull, something like an additional $14 billion.

Microsoft is growing faster than Amazon. I think Google is growing faster than both of them, but Google has the most amount of ground to make up after having so badly missed the market for the last several years. Now under new leadership they’re putting some muscle back into the growth engine.

Wolfe

How are customers finding cloud now that we have a number of years of experience? In previous calls you’ve talked about 30-40% expected savings from cloud. Has that happened? Are they in fact moving some work back on-premise? What do you hear from large customers?

Treadway

It really has never been about a cost play. Cost matters, and the CFO has to be engaged in the conversation of a $1 billion commitment and needs to understand the cost difference, but the cloud model has always had the most amount of value when it comes to agility and the ability to innovate at scale. If people focus only on the cost side, saving 30-40% is really hard to achieve. It is not about things being less expensive, but cost being offset by being able to do so much more in less time.

It’s a complicated topic. At the core, why large companies like Capital One have publicly said that they are investing so strongly in public cloud is that they are able to out innovate the competitors in the market. They are a digital organization that happens to do banking. That is a very different opinion of themselves than how Citigroup looks at themselves. They are also in very different businesses. Capital One’s got a much simpler business than Citi by far.

Now to discuss repatriation. I can tell you that in the work that we did at CTP, we never once saw a workload that we migrated over moved back from the cloud.

If I move everything on-prem and I move it exactly as it is, and I don’t take advantage or do anything to try to make it a better environment in the cloud, I may not get the savings that I want, but I also may not get the stability, performance, or agility either. This is because there are differences in the way that these things operate.

Wolfe

A lot has changed at Google since we last talked. They’re now claiming to be at about a $2 billion quarterly run rate for the Google Cloud. Thomas Kurian is there and talking about expanding the sales force, providing more industry expertise. What’s your perception of Google?

Treadway

Tom Kurian is a very different personality – he’s considered to be relatively direct. I’m going to be politically correct and say he’s very direct. He has very high standards. He has Oracle-level standards when it comes to sales and marketing and aggressiveness and going after the business. Now, that is antithetical to the culture of Google, but as long as he has Sundar Pichai and the board’s support he can do very well, and he should be given a lot of rein. I would urge anybody that is in contact with Google’s executive and board to encourage them to let him run, because he’s the right kind of personality to make a change there. Investment in sales is huge. As you pointed out, $2 billion a quarter, that combines Google Apps and the G Suite. It’s hard to break out what is actually Google Cloud. I think the big thing that I have yet to see them turn the corner on, but I think it’s coming, is becoming a credible third player for enterprise cloud adoption. I expect given his background in traditional IT and large enterprise that he’s working very hard to change that. That was the word out of Google GCP Next.

Wolfe

There was an interview with Andy Jassy of AWS in which he was asked what percentage of workloads have moved to the public cloud. He said 3%. I think the average investor would say 15-20%. Are we in a world where 3% could be the right number?

Treadway

It’s really hard to get at that. It depends on the client segment that you’re talking about. The firms with the largest number of total applications are the global financial services firms, the global industrials, including a lot outside of the US, and government. A bank has 5-10x more applications running than a similarly sized tech company. The penetration is still very low outside of a few big players like Capital One, who are very visible, but a lot of the larger global money center banks and particularly those in Europe are still very early. Less than 1% of their workloads are running in public cloud in a lot of cases.

Another way to look at it, and Andy Jassy may be right on the money on this one, is IT spend. Some 3% of IT spend on application infrastructure might be what’s in the cloud versus what’s spent off the cloud. That’s probably a more realistic number.

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