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BlueLock Looks to Challenge Amazon with Custom Cloud Computing Infrastructure

By John Panagulias, submitted by John Panagulias, Sunday, March 28, 2010, 9:30PM

BlueLock may not be as well known as its competitors like Amazon and Rackspace for infrastructure as a service (IaaS), but the Indianapolis-based company thinks that if current trends hold, that may not be for long.

BlueLock continues to add customers, from Fortune 500 to small and mid-sized businesses, as it has seen its revenue grow to $9 million in 2009 when it crossed over into profitability on the back of a four-fold increase in revenue from the previous year. The privately held company expects to pull in $17 million in 2010.

Furthermore, they plan to expand their current data center by investing nearly $36 million, while adding up to 120 new employees.

That's not bad at all for a company that is relatively new to the cloud computing game, having switched gears from a hosting provider to a cloud provider in 2006.

Of course, that experience helped shape its knowledge and expertise about what customers need and how to deliver infrastructure services based on those needs. The big differentiators for BlueLock is that they don't believe in one-size-fits-all; they think in terms of customization. Need to spin up some servers right away? They've got you covered with their vCloud Express offering. Want to run a mission-critical application in the cloud? Their Virtual Cloud Enterprise solution is designed for such applications.

To learn more about BlueLock I sat down with Brian Wolff, co-founder and vice president of sales. Below is a condensed version of our conversation.

John Panagulias (JP): With me today is Brian Wolff, co-founder of BlueLock, an infrastructure as a service (IaaS) cloud computing provider. Hi Brian and welcome. Before we get to details, give our readers some background on BlueLock.

Brian Wolf (BW): BlueLock was formed in July of 2006. The core team came from a local co-location and managed services business that had been established in early 2000. So we were very well versed at running data centers. What we found time and again during our years running co-loccation business was that well-funded customers would either over-build their infrastructure or, under-funded companies, because of limited capital, would greatly underestimate their compute and storage needs. When we left our previous managed services business, we had 15,000 servers under management. BlueLock was launched as infrastructure as a service (IaaS). But, you know, even in 2006 the concept of IaaS was not that well understood. As an aside, we actually wrote the first Wikipedia entry for infrastructure as a service.

JP: So, let’s fast-forward to 2010. Describe you offerings and their value for customers.

BW: We recently introduced the BlueLock Cloud Suite because we recognize, and understand through our experience, that one size doesn't fit all and that different organizations and, more specifically, different applications need different things—some require greater availability and/or security than others.

So at one end you've got vCloud Express which is a do it yourself, self-service cloud offering. It's unmanaged. It looks just like Amazon in that you can come in and within 15 minutes you can have a server up and running. But you're on your own to back it up. The service levels are not nearly as stringent as they are in our other solutions. The bottom line is a quick, fast, no hassle offering.

The next step up is the Virtual Cloud Professional. It’s designed for somebody who wants a server in the cloud, but they don't have the staff to manage it and it needs to be up and v resilient. So it needs to have some services wrapped around it.

After that we have the Virtual Enterprise Cloud. The Enterprise Cloud is targeted toward and built for mission-critical applications. There has to be management both at the OS and, potentially, the middle-ware level. And there has to be four nines of up time. It has to be backed up. It requires a much more stringent, resilient environment.

The last service offering we have is the Virtual Private Cloud. It’s for customers who like the concept of infrastructure as a service, but with the requirement that it has to live either on the customer’s network or it has to be completely isolated within our data center. In essence, you can have a private cloud behind your firewall and your LAN or you can have a private cloud within the BlueLock Enterprise Cloud, which has you completely separated from everyone else in my environment.

JP: Brian, if you could, describe a typical client engagement. When you engage a customer, what is that like? Do you discuss, "Hey, here's a good application to offload to the cloud and then let's talk about the type of BlueLock cloud that's best for you, whether it's vCloud or the Private Cloud, or something in between.”

BW: Let me talk about two potential scenarios. In the first scenario I'll go with your lead around talking to an enterprise customer who has hundreds of applications running in their data center. In this instance, we start to talk about mission-critical applications versus important applications versus applications that they're stuck managing because they're part of IT. And so the ability to take the less critical, less risky servers off of their hands, know that they’re managed, know that they have all of the attributes that they would want in their own data center. But I'm managing it for them so that they can go focus on mission-critical applications, like, CRM, and delivering value to the business.

Or I've got a business unit who is attempting to put an application in place and they're having a hard time getting on the IT group’s priority. IT's telling them, "Yes, I understand it's important to you. But you're number 12 on a list of 10 priorities that we've set in the last business cycle. So you're going to have to get in line."

In our case what we'd like to say to them: BlueLock will take care of that application for you. You're going to be first in line with me and then if in the next business cycle if IT decides that that's a mission-critical or a business application that they want to take back to their own data center they can. Or they can continue to run it at BlueLock and the department knows that it's being taken care of and that it can grow and flourish in my BlueLock's infrastructure.

Another scenario might be to look at it from a software as a service (SaaS) approach. You've got a SaaS company that may or may not have dedicated infrastructure people. In many cases we’ve seen software companies that didn’t have the staff to support their infrastructure, let alone the skills to architect it. Often, the task of managing the infrastructure gets handed off to a developer, who’s real job is to create and improve the application itself.

But their second job—or their evening job, or their moonlighting job—is to run the infrastructure. In that case BlueLock is the perfect solution because we can focus on the infrastructure, and deliver it with high resiliency, high uptime, scalability, all those attributes that they need but don’t excel at. From a cost perspective it’s a no-brainer. We can do much more economically than they’ll ever be able to do when you factor in not just the capital costs but also the personnel costs.

JP: Let me throw a bit of curve ball at you. In the Twitter-verse some folks chimed in that moving legacy applications to the cloud isn't cloud computing. That is, you shouldn't be putting an app that hasn't been designed for cloud computing into the cloud. What's your feeling on this kind of mindset?

BW: There is this quickly forming bifurcation of the two camps. So the software company that's launching today or the software company that – that would never dream of even buying their own server anymore because they could get it just as fast at BlueLock or at Amazon – and so they'd never have to own the hardware is one level or is one side of the argument.

The other side of the argument is with enterprise clients that have all of these legacy applications that they've been supporting for a very long time. There may well be some legacy applications that will not run well in the cloud. Perhaps, something that's not x86 or doesn't run well with virtualization, that might not a great candidate for the cloud.

But I think the cloud ultimately is a metaphor for who does the work and who should own the hardware. And does it make sense? And, then who has to support all the underlying power, cooling, space? Plus, there are all the things that go into supporting the servers and applications in the data center. So somebody who says a legacy application doesn't belong in the cloud, I think, is missing the point of being efficient with the use of human resources and capital resources around where should that application live. Where's the most efficient place for that application to live irrespective of whether it needs to scale or it needs to be up five nines, or it needs to have all of the attributes that everybody talks about for cloud. Does that make sense?

JP: Absolutely. I think that's a really good way to express the counter to the argument that everything has to be purpose-built for the cloud. If I can summarize it: it's really about understanding your human and CAPEX resource equation and what's the best way to drive the equation most efficiently.

BW: I think that’s exactly right.

JP: If that means taking a legacy app and moving it out of the data center and putting it into, for example, a BlueLock Private Cloud then haven't I solved a big problem? Haven't I driven down my expenses and opened up resources to work on my core business. I mean my expertise most companies expertise is not managing a data center, right?

BW: Yeah, you got it. In fact, we have companies running mission-critical applications on the BlueLock Cloud. If you think about the enterprises, they've already made a huge investment in existing infrastructure and a staff to support it. But, I don't know any IT staff that has a list of 10 priorities with a capacity to get to 20. It's usually the other way around. It becomes a question of what is the best way to offload these apps.

We want to provide customers with the opportunity to focus on what's most important to their business with their infrastructure. For those things that are less critical to them, it makes more sense to let somebody else manage from an infrastructure point of view. We provide an avenue for customers to move applications off their own servers and into the cloud. In a sense, we provide the assurance that their apps will taken care of, so they can get to things that are more business-critical.

JP: Given that BlueLock has been in the cloud computing and infrastructure as a service business since 2006, talk a little about your customer base.

BW: Today we have 80 clients running on the BlueLock Professional and BlueLock Enterprise platforms. We also have 600 customers BlueLock vCloud Express solution..

JP: Are there any big names or names that you can share to bring a little more reality to the BlueLock business?

BW: Absolutely. We have many well-known companies using BlueLock. For example, we have a big life sciences company and a very large investment bank running on our infrastructure. Both of these clients are on the Enterprise Cloud platform and we've passed multiple security audits on both fronts to be able to run their apps on our infrastructure. But, let me also talk about a handful of our customers. We’ve got:

1) Weblink International, a SaaS company that serves a number of chambers of commerce all over the United States in with a very unique business model.

2) Right-On-Interactive is a company that leveraged our security and SAS 70 type II certification to gain acceptance for integration on the Force.com platform, Salesforce.com’s platform as a service (PaaS).

3) Projetech is a company that provides hosted Maximo, an IBM maintenance management software package. Projetech was able to lower their cost by 30% by migrating it to our cloud from physical servers.

4) Logiq3 is a company out of Canada that provides services to another large investment bank and chose to run their infrastructure in the cloud so that they could focus on their core business and not infrastructure.

5) LanCom is a New Zealand-based company that built a custom application for one of their clients and then needed to host it in the U.S. They wanted a VMware-based cloud because that’s what they use in New Zealand, so there were compatibility advantages with BlueLock.

JP: It appears you’ve had strong growth and success building your customer base. Do you want to talk about the competitive landscape? How would you describe your market position vis-à-vis your competitors? By the way, some people shy away from thaese question and that’s perfectly acceptable.

BW: No, I'm happy to talk about my competitors because in the end I want to be compared to them because I have beaten all of these companies in some way, shape, or form. I've won business from all of them. First, Amazon is the obvious number one. That is really the standard when you talk about the cloud, right? At least they are the most recognizable. We have clients that started out on Amazon EC2 and then migrated to BlueLock because they need higher levels of security or they recognize that they don't want to manage the infrastructure themselves. They also recognize the level of effort that it takes to manage the infrastructure and they need to either write code or do something else that's more business critical to them. And then I know I'm in good company when I'm being compared to Terremark, when I'm being compared to Savvis, when I'm being compared to Rackspace, etcetera.

Now in terms of how we compete vis-à-vis each of these players, as I touched on regarding Amazon, the fact that we'll manage it – manage the infrastructure, monitor everything, plus SLAs based on the customer’s needs – and it is all resolution based versus just a response. For instance, we’re patching the infrastructure for them. We’re backing the infrastructure up for them. Those are things that you generally don't get from Amazon.

When you think about Terremark they have a very robust user interface, but in many cases they don’t handle the management of it (in the cloud). They won’t patch the OS for you. They're not going to do those things in the cloud for you.

In terms of Rackspace they're famous for world-class service. But you're just as likely to end up on a physical server as you are a virtual server at Rackspace. By contrast, at BlueLock its all-virtual infrastructure – that's all we do. And so we're wholly focused on delivering those attributes around scale, around resilience, backing it up, and all the things that somebody would want from a robust enterprise-level infrastructure.

I recognize that sometimes dedicated and virtual mean different things to different people. In the BlueLock environment the virtual machines are dedicated and the network is dedicated. So each of our clients have their own vLANs, their own firewall, and, thus, their own security. And they can dial that up and dial that down independent of all the other clients. In many ways it's absolutely dedicated infrastructure to them. The only difference is that I'm leveraging a much larger pool of resource at a macro level and then handing it off in smaller pieces to them.

JP: Let’s talk about the future of BlueLock. For example, many cloud computing pundits say that infrastructure providers need to evolve into platform players. What’s your take on that?

BW: That’s a great question and an interesting observation. Today vCloud Express is our only self-service offering. We plan to bring the same level of functionality to our Professional and Enterprise cloud offerings.

Another development effort that will go into Beta shortly is the ability via the vCloud API or the VMware API to see your BlueLock infrastructure from virtual center or console on the client side. We've developed a downloadable plug-in where the user can monitor their data center and they can see the BlueLock infrastructure running on their behalf.

As a matter of fact, this is where CloudSwitch and BlueLock see the world similarly. That is, where the customer can make conscious choices about pushing workloads to BlueLock's cloud and you can still see it and manage it. So you can still have control of the infrastructure and see it from a single pane of glass. We’ll be rolling that out very shortly.

As to your point about the shift from infrastructure as a service to platform as a service, this is really about being able to put an appliance in the market, where somebody will come in and they want a classic three-tiered architecture.

In other words, it’s an IaaS with an application tier and a SQL database on the back end. And we'll have a template so that customers can just come in and get the stack, provision it, load their application, and have it ready to go. In this sense, that is our platform play. It’s the ability to get more than just raw compute and have a running instance of an n-tier application from the get go.

JP: As we come to a close, let’s take a topic that always stirs strong opinion and debate. That would be the public cloud versus private cloud debate. I think I know where you stand, but for the record give me your take on it.

BW: I believe that if you are an enterprise customer you don’t have to make a binary, either-or choice. Customers don't need to send their entire data center to a public cloud tomorrow because they're still wrestling with the issues of security, control, and their staffs that manage these workloads everyday.

What I see happening over time is that enterprise customers will better understand these issues and how cloud providers are solving them. In turn, they’ll experiment with both public and private cloud offerings. Ultimately, companies will get more comfortable with cloud computing and figure out which applications and workloads are the better candidates for a public cloud and which are better for a private cloud.

Cloud computing is an opportunity for companies to be more efficient with their resources. It's not an all in or an all or nothing proposition.

But another interesting thing is to look at the startup world today. I don’t know of many—if any—startup today that is investing in infrastructure and building data centers. They would never dream of purchasing and provisioning their own physical server. From the get-go startups are moving to the cloud. They are taking one huge decision off the table and letting someone else worry about it while they focus on creating a better application or service. That’s pretty significant in my mind.

Look, any good businessperson is continually looking for a way to lower cost and go to market faster, in order to capture market share. I believe cloud computing is a great way for an open-minded executive, whether it's a CIO of a software company or a start-up or the CIO of a huge enterprise, to think about putting the resources in the most strategic place possible and getting things off of their plate that are less strategic. Maybe not less important but less strategic and know that it's being well taken care of and they're getting on with the business of delivering value to their shareholders.