Skytap angling for 'big three' public cloud partnership

Goldman Sachs-backed cloud service provider Skytap will soon be integrated with at least one of the 'big three' public cloud vendors, according to chief executive Thor Culverhouse.

Tamlin Magee Oct 08th 2018
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Goldman Sachs-backed cloud service provider Skytap will soon be integrated with at least one of the 'big three' public cloud vendors, according to chief executive Thor Culverhouse.

Skytap promises to help enterprises modernise their infrastructure by being able to lift and shift their existing legacy applications onto the cloud, where they can then take a slow and steady approach to modernisation without disrupting operations and engaging in painful rearchitecting processes.

Its main customers are in the Fortune 1000, global 2000 sphere, big businesses that might have old or lagging infrastructure across their estates or are in the early phases of moving their operations out of their own data centres and into the public cloud.

"These are large applications that have been designed over the course of the last five, 15, some cases 20 years," says Culverhouse, meeting with Computerworld UK at the WeWork shared office space in Paddington. "Given their architecture, it's hard to lift and shift those to hyperscale cloud providers like Azure, Google, and AWS, so we developed some unique intellectual property that allows you to move those applications into Skytap."

So a particular target is for those enterprises that need a hybrid model that melds the new and old, for example building cloud-native new applications but still need somewhere to put their legacy applications while still leveraging the benefits of the cloud.

Although the company has been around for 12 years, only in the last five years or so did it move from 'transactional' relationships with smaller businesses, to targeting large enterprises. Its latest Series E funding round for $45 million (£35 million) was led by Goldman Sachs in August 2017, bringing total funding to over $100 million (£77 million) and opening the path for a potential IPO. Many years ago Amazon founder Jeff Bezos also invested.

Those businesses that are stuck with ageing infrastructure are faced with tricky questions regarding how to modernise. Re-architecting entire applications can be extremely costly, and if the in-house experience is lacking, projects might need to be outsourced to major consultancies like Accenture or Deloitte, also a pricey endeavour.

"It's one thing to make some minor architecture adjustments so they can live in some of those cloud targets, it's yet another when you need to rewrite that entire application," says Culverhouse. "Typically, they've never even budgeted for it - and these applications are fully functioning, they're very mature, they don't have many bugs, so to re-architect them in some cases will create a degree of risk in the application itself."

Indeed, some of the company's "best customers" are those that tried to rewrite their applications alone.

Customers include, for example, those still running technologies like IBM Power AIX on their estates. A prudent use of the technology Culverhouse points to was when a healthcare company with a large imaging portfolio joined up with AWS for all net-new application development, but quickly realised that it could not rewrite all of its existing apps overnight.

"They had a data centre consolidation plan - we see this all the time - where CIOs are fundamentally trying to get out of their data centre, and they have a choice to re-host it or actually put it in the cloud," he says. "This particular case they chose to put it in Skytap to speed up their development process."

But is there a limited lifespan to such a business? For example, what happens when the most lucrative customers are out of the data centre and well and truly digitised?

The CEO is convinced that big-money modernisation strategies will be with us "long after" he's "dead and gone".

"If you take a look at total IT spend it's quoted somewhere in the neighbourhood of $1.5 to $2 trillion dollars a year," says Culverhouse. "Gartner will tell you that by 2020 on-prem IT spend is going to be about 80 percent of that number, so the trend to modernise those applications is going to be here for a lifetime.

"CIOs are pretty smart but often they haven't thought through their entire strategy. We had one customer recently that had a desire to get out of their data centres by 2020 and they went in and triaged all of their applications, they realised some of them they were going to move to a SaaS platform that already existed, some of them they were going to rewrite.... But what we typically find is that about 50 or 60 percent of their estate, it's not economical to rewrite these things, but they do want to take advantage of the cloud."

While IBM is a current cloud partner, Culverhouse says that the company is working with "some of the other usual suspects" to have Skytap sitting in their infrastructure - "it's gonna be one of the big three, or two of the big three," he says.

Along with another round of hiring to bring the business at "over 300" employees by the end of the year, it plans to continue investing in technologies to improve the modernisation process, especially in making areas like containerisation more smooth.

At the same "there's also a bunch of legacy hardware that those hyperscale cloud providers don't support," he says, so Skytap will target more traditional hardware architectures that are not currently supported by the main public cloud vendors.