Mike Waas is the founder and CEO of Datometry, a pioneer in database system virtualization.

As the cloud wars heat up, industry clouds are becoming a focal point. Capturing entire enterprise workloads is the biggest challenge ahead for cloud vendors. It might very well decide the fate of hyperscalers’ cloud businesses. Surprisingly, data warehouse migrations are critical to an industry-cloud strategy.

Wait, what? How could a relatively small market segment of yesteryear be thrown in the limelight and become the lynchpin in high-stakes cloud poker? Startups have long derided data warehouses as the dinosaurs of the database business. However, the fact they not only survived all previous attacks but emerged even stronger is a giveaway.

In short, data warehousing, a 30-year-old discipline, is hot like never before. An increasing variety of offerings speak to an accelerating market trend. While customers have their own view on which data warehouse they prefer, cloud providers have set their sights on the incumbents for strategic reasons. Here’s why they play a pivotal role in the cloud wars:

Data warehouses ‘own’ the world’s most valuable data.

A large-scale data warehouse is the crown jewel of any enterprise. Typical data warehouses run up to hundreds of terabytes. Petabyte-sized data warehouses are still relatively rare, even in large enterprises. But size aside, these systems contain highly refined and curated economic data. Combined, the data warehouses of the Global 2000 may very well represent the most valuable portion of the world’s economic data. Let that sink in.

Much, if not most, of that data sits in data warehouse appliances today. By virtue of having been the first systems that could handle these massive amounts of data, these providers effectively built a monopoly. The high cost of these systems created a virtuous cycle. Customers try to wring every bit of value from their purchase, which in turn requires more and more data to be stored in these systems. And so it goes.

From a data perspective, data warehouse appliances are a true gold mine. Cloud vendors would love to get their hands on this data. Making it available to vertically integrated solutions is at the core of the idea of the industry cloud. Therefore, securing this data onto their cloud is the first order of business for all hyperscalers.

Data warehouses are at the center of the largest workloads.

In today’s analytics-driven enterprise, all departments are effectively connected to the data warehouse. Over time, just about every business unit started tapping into the central data warehouse appliance. This holds for both data producers as well as consumers. As the single source of truth, data warehouses are fed by a multitude of operational data systems. Downstream, reporting and analytics are the prime consumers.

High-end data warehouse appliances, like few other databases, are truly general-purpose technology. They handle a broad spectrum of workloads quite well. Singleton inserts from the feeders, transaction processing or complex analytics for the consumers — they do it all. The maturity of this technology is palpable. Many techniques for massively parallel processing were pioneered in this context.

Over time, the workloads and systems that are connected to the data warehouse have become the single largest combined workload in many enterprises. Data warehouses have emerged as central hubs with tentacles throughout entire organizations. This raises the stakes: Whoever takes out the data warehouse system will get all of these workloads too.

Are data warehouses the lynchpin in the cloud wars?

The cloud wars are increasingly about database technology. All cloud vendors, currently position their data warehousing offerings as the backbone of tomorrow’s enterprise in the cloud. Deep vertical integration promises enormous benefits for the customer and, not surprisingly, is a boon for the cloud vendors as the battle heats up.

But capturing the data is about much more than just selling database licenses. Data is heavy. A data warehouse in the cloud represents a massive center of gravity for the rest of the enterprise. Applications connected to the data warehouse will simply follow to the same cloud over time. And so will future applications. Where the database goes, there go the applications.

Because of its magnetism, an enterprise data warehouse estate should be valued significantly higher than just the license fees these vendors make on the account. Capturing that estate not only brings a substantial multiple of the actual database revenue. Instead, whoever captures these systems may win the entire account in the long run. Conversely, the cloud vendor that fails to capture the data warehouse may very well lose that account to their competitor.

What’s next?

For both sides, cloud vendors and data warehouse vendors, much is at stake. Cloud vendors must win over customers to get ahead in the cloud wars; for database vendors, it will be about survival. 

So, if data warehousing is the single most critical obstacle to cloud dominance, why have the hyperscalers not taken out these systems already? The answer is as simple as striking. Data warehouses wield an exceptionally strong vendor lock-in over their customer base. Migrations take years and quickly run into the tens of millions of dollars.

However, the energy with which cloud vendors are currently pursuing migrations appears to be fully in line with the above analysis. Migrations have become a critical building block in a cloud strategy. Yet, the means of conventional migrations are woefully inadequate, and too many migrations simply fail.

Whoever can execute migrations to their cloud the quickest and most efficiently stands to gain a significant advantage in the cloud wars. By the looks of it, the data warehouse is indeed the single highest prized obstacle on the way to industry-cloud dominance.

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