Risk
12/11/2009
10:24 AM
Bob Evans
Bob Evans
Commentary
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Global CIO: Riverbed Sees Cloud Computing Boom In 2010

With CIOs looking to the cloud to help rekindle growth and CEOs dazzled by the economic promise, Riverbed is very bullish on cloud computing.

Few tech companies managed to grow in 2009, so it's interesting to take a closer look at those that did in hopes of understanding how they avoided the general tendency toward shrinkage. For Riverbed, whose 2009 revenue is up 18% year over year including the company's first $100-million quarter, two things stand out: first, the rise of cloud computing; and second, speed is once again cool.

"From 2004 through 2007, we sold speed," said senior vice president of marketing and business development Eric Wolford in an interview at Riverbed headquarters this week. Then came the global recession and for many companies speed became a luxury they couldn't afford, so for most of 2008 and 2009, Riverbed has sold efficiency as customers looked to consolidate data centers, remote offices, branches, servers, staff, and everything that wasn't nailed down along with some stuff that was.

But as 2009 mercifully draws to a close, and as CIOs and their teams awaken from suspended animation and prepare once more to innovate and grow, Riverbed has discovered that while those CIOs still crave efficiency, they've also rediscovered the need for speed.

And an even bigger impact for 2010, Wolford says, will be that the bosses of those CIOs—the CEOs—have discovered cloud computing and have fallen hopelessly and sometimes helplessly in love with the legend of the cloud.

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"CEOs read about it in a magazine: 'Cloud Computing cuts IT costs by a million percent,' " Wolford said, "so they call up their CIO and say, 'I want cloud computing—now!' And that's good that they're supporting new initiatives that can make a big difference at their companies, but in same cases the hype about cloud computing has put their expectations way out of whack."

To help get those CEO expectations back into the general realm of reality, Wolford suggests that CIOs offer their bosses a little Zen: "The cloud isn't the cloud; it's a data center." And for CEOs who prefer their IT strategy to be a little less existential, Wolford has this alternative: "Tell them it's a virtual data center."

And therein lies the opportunity for Riverbed. For one customer with a huge call-center operation, Riverbed gave it the speed that allowed it to cut its costs by millions of dollars per year by reducing the average call-handling time from 80 seconds across 60 seconds. That might not seem like much across a few people, but across thousands of employees handling calls for 8 hours a day five days a week, the impact is enormous.

"So we really believe 2010 is going to be a transition year because lots and lots of companies are going to look at their business processes and decide that while they were okay while we just tried to stay alive in 2008 and early in 2009, they're not good enough for where we need to go," Wolford said.

"The fundamental premise of cloud computing for CIOs and for CEOs is very powerful: the cloud lets you improve the yield on IT investments. Period. It lets you move faster, do more, and spend less."

So Riverbed recently introduced a product specifically for cloud environments called Virtual Steelhead, which Wolford said "isn't even a box like our traditional products—it's just software." The Virtual Steelhead helps CIOs overcome some of the hairballs that inevitably arise as they attempt to connect their existing and sometimes antiquated infrastructure and applications with the Web 2.0-oriented protocols and requirements of the cloud.

But those hairballs cannot be underestimated:

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