A wise person once said: The only thing that is constant is change. Open source cloud solutions like OpenStack are challenging companies to come up with new business models to innovate. It was high time for pure play OpenStack company Mirantis to make the right move in the right direction, at the right time.
In September, Mirantis announced that they acquired TCP Cloud, a company that specializes in managed services for OpenStack. The news stirred the beehive as Mirantis was stepping on some partner toes and it was also moving away from the ‘pure play OpenStack company’ model.
The real value lies in people and not technology
As OpenStack and other such open source technologies are disrupting the cloud, the real value doesn’t come from technology alone. The actual value comes from deep understanding and experience about those technologies. It’s about how these solutions solve real world problems, how they enable companies to take advantage of it. All of that comes from people. You can’t package that immense knowledge in a container and ship around.
“One of the most precious resources is people, specifically operations people, so how can you have as few operations people as possible to run as large of an infrastructure footprint as possible,” Boris Renski, co-founder and CMO of Mirantis told me during the OpenStack Summit in Barcelona.
If we look at the bigger players, the hyper scale people like Amazon, Google, Microsoft Azure…they follow a particular set of patterns for doing operations. Taking that set of patterns and injecting that into the enterprise is really where most of the value comes out, not from the software itself.
That’s the kind of value Mirantis is bringing with the TCP Cloud acquisition. “We started evolving to also help organizations with operations in a structured fashion. This has spawned across multiple things that’s been happening in a company,” said Renski. “First of all we are evolving the architecture behind our whole distribution, containerizing OpenStack and using Kubernetes to orchestrate it among many other things.”
In addition to that, the company is extending the support offerings beyond just 8×5 and 24/7 support for software. “Mirantis is now offering proactive support where we monitor the infrastructure. We are offering managed support where we give customers an SLA on the uptime. We patch and upgrade everything. In a nutshell we take care of everything behind the scenes,” said Renski.
Not a pure play OpenStack company anymore
No wonder Mirantis has moved away from their tagline: a pure play OpenStack company. Renski explained that they have specifically removed the pure play reference because that could become confusing for people, they are no longer shipping only OpenStack, but a lot of other things. However, despite moving away from the slogan, Mirantis is still very much OpenStack centric. “We see OpenStack as the core of our business; we are not abandoning OpenStack,” Renski said. “What we are doing is embracing a lot of the adjacent things around OpenStack that we believe are necessary to do operations in a particular prescriptive and in an opinionated way.”
It didn’t happen overnight. “This is a transition that we started about a year ago, and the whole idea is to evolve our technology and value proposition to actually help customers solve the problems around OpenStack operations,” explained Renski.
Mirantis had to change , “I think the whole notion of public cloud adoption that’s happening in the enterprise completely changes the buying and usage patterns around infrastructure. The value of just the software just for distribution is very marginal,” Renski said.
Money doesn’t rain from clouds
It’s a well established fact that ‘open source’ is not a business model. It’s a model to develop software in the most efficient way. You have to build a business ‘around’ open source. Whether it’s Linux or OpenStack, vendors have to find ways to monetize from the software that’s being created as a commodity. It demands innovation at both sides of the equation: development as well as business. The ancient, legacy model of charging per license or per box is not going to work in modern IT world.
“The problem that every single vendor in the space has had, actually, is effectively monetizing just the software part of an OpenStack distribution,” pointed out Renski. One of the reasons Mirantis has been so successful as an OpenStack player was that in addition to shipping the distribution, they had some services that we were effectively able to do these operations in an unstructured way for the customers. “That’s why we’re able to trump a lot of the other guys. It’s not because our distribution was so great and so much better than anybody else’s, it’s because we complemented it with something that would get the customer to the final outcome,” Renski said.
Mirantis is complementing that with the acquisition of TCP Cloud and partnering with NTT. Mirantis needed someone who could manage the datacenter part of the cloud equation. Mirantis can manage the software, but that software is running somewhere. If it’s running on premises, which is the case in private cloud, then the customer manages it. But if they don’t run their own datacenter, they need to run it somewhere and at times they look at Mirantis for recommendations and help.
“Ideally, whoever provides that data center should know the reference architectures for building the racks that would work for Mirantis OpenStack, for instance,” said Renski. If something breaks in hardware Mirantis should be able to pinpoint the problem so that they can fix it. That’s why Mirantis is partnering with NTT, one of the largest players with over 140 data centers. “That’s the first global partnership of this sort that we’re doing in the context of our move to managed services and helping customers more with operations,” he added.
The new direction: where is Mirantis heading?
It’s abundantly clear that Mirantis is approaching the problem with a manifold solution. It’s changing its business model from being a pure play OpenStack company, it’s acquiring other companies and it’s partnering with other companies to enter the support market. Which also means there will be some reshuffling within Mirantis. It means the company is changing tracks and moving in a new direction.
“The new direction is really about delivering what we refer to as an operation-centered distribution, and actually doing structured operations as one of the core offerings,” said Renski.
But he also admitted that this is the bar that the public cloud sets, and if we look around, pretty much everybody in the infrastructure industry has to evolve and adapt to that. “To some extent, it’s painful, and we’ve been going through that pain internally, because it means doing a lot of things differently, but I think that unless you go there, pretty much everybody’s fate is short-lived in the infrastructure space. We’d rather go through this transition now than hit a dead-end,” he said.
Traditionally Mirantis was competing with Red Hat, but after this transition they are not effectively competing with the likes of Rackspace and even AWS (Amazon Web Services). “Earlier, we were fighting battles with Red Hat which was around the best OpenStack distribution. We won some fights and we lost some. But ultimately, the battles that are really hard, and the battles that I think the industry has been losing is the battles against the public cloud.”
Mirantis’s response is to become more operations-centric. “I think that our model, our differentiations around build-operate-transfer clouds so that not only do we operate it, we give the customer an option to completely take it under their control when they’re operationally ready to run it following the same hyper-scale paradigms that will inject into those organizations. This build-operate-transfer model is really the new direction,” Renski explained.
Refactoring Mirantis post acquisition
Post TCP Cloud acquisition, a lot of restructuring is going on within Mirantis. They have split the company into two crisp business units. One business unit is focused primarily on services around cloud. The second business unit is exclusively focused on actually shipping the product and monetizing it through four subscription offerings. Two are on software, and two are on operations, proactive and managed.
B***s*** as a Service
Recently Mark Shuttleworth, the founder of Canonical, criticized the OpenStack vendor community for losing their sight from core components of OpenStack — compute, storage and networking — and focussing on service components that he called ‘B***s*** as a service.”
When I asked Renski about it, he agreed with Shuttleworth and said that we must give credit to Mark Shuttleworth where he said that focusing on the core is absolutely right. “Historically, we’ve been quite focused on the core, actually,” said Renski. But over time Mirantis drifted away from the main course and started doing many other things like trying to build a PaaS (platform as a service) competitor and invested in projects like Murano or Sahara. But they woke up in time and now they’re no longer going to be doing all those things. “The biggest thing that we’ve really stopped doing is trying to productize the so-called workloads. We’ve just completely did away with all initiatives that are not related to just core compute storage and network for OpenStack,” said Renski.
One pain point of that decision was that Mirantis had to let go of some people who were working on such projects. The silver lining here is that there is dearth of cloud talent in the market. There are many companies who do focus on those areas and if these engineers have commits on GitHub, it won’t be hard for them to find jobs.
Outsource with care
Today every company is a software company, whether you are a giant like AT&T, emerging start-up like Uber or a bank you have to be a software company; you can’t rely on outsourcing firms to do the whole cloud for you anymore. Yes you can outsource mobile app development or some chunks of your cloud, but not the entire cloud. “If you look at the traditional large scale managed service providers, like Wipro or Infosys, where you’d outsource all of your stuff. Very few of them have actual competence around doing managed services specifically for cloud,” said Renski.
That’s another area where companies like Red Hat, Rackspace, and Mirantis are evolving. Looking at the demand for such services, these companies are adding capabilities to manage cloud. This translates into an interesting fact: Cloud is changing the outsourcing industry as well. Only those outsourcing players will survive that can offer expertise in managing cloud and Mirantis is already moving into that market.
Whether Mirantis will succeed with their new direction or not, time will tell.