Welcome to Mostly Cloudy! Today: now that the Pentagon has finally made a decision about modernizing its tech infrastructure, what comes next? Plus, why enterprise-tech shopper Thoma Bravo isn’t going anywhere.
Credit: Wikimedia Foundation/Touch of Light. This file is licensed under the Creative Commons Attribution-Share Alike 4.0 International license.
The great multicloud experiment
After years of lawsuits, politics, unhinged flow charts, and false starts, the Department of Defense has finally picked a cloud vendor to help it overhaul the military’s information technology strategy. And just to make things a little more interesting, it actually picked four of them.
When they all set out to conquer the Pentagon’s data centers, this is probably not the outcome that AWS, Microsoft, Google Cloud, and Oracle had in mind. One important motivation behind the pursuit of the original single-vendor, ten-year, $10 billion contract was gaining the ability to say “the military trusts us with its data; why can’t you?” to potential customers on the fence about cloud computing.
Landing a cloud contract with the CIA in 2013 put AWS on the map as a government supplier and helped it win countless other contracts with run-of-the-mill companies who figured if AWS was good enough for Langley, it was good enough for them. And after winning the first bake-off, it was very clear to visitors at Microsoft’s Redmond headquarters that the DoD was about to become its most important customer, until those plans were derailed.
Instead, they’ll all have to share the glory, as the Pentagon embarks on what will be one of the most arduous and most closely watched multicloud deployments ever attempted. And now begins a potentially more interesting parlor game: how will the military divvy up the enormous number of workloads spread across the armed forces — from battlefield response to payroll — among the four vendors?
According to Federal News Network:
…the companies competing for that work will never actually submit bids for each discrete chunk of DoD’s enterprise cloud. Instead, a computer system and a centralized program office will be in charge of deciding precisely which firm is best suited for each piece of JWCC, and issue orders accordingly.
Each award could be worth as much as $9 billion to each vendor, but that doesn’t mean they’re all getting $9 billion worth of business: Pentagon IT leaders could choose AWS for compute and storage, Microsoft for analytics, Google Cloud for AI, and Oracle for databases; or any other combination therein you can think of.
Hopefully — speaking as a taxpayer and a nosy journalist — the DoD will release more details on exactly which cloud services it chooses for which workloads, because that process could set off a fascinating scramble for positioning across the cloud infrastructure market. Also, the approach it takes to manage the long-standing drawbacks of multicloud deployments, such as skills training, will also be worth watching for IT departments struggling to implement multicloud on a much smaller scale.
Enterprise tech war chest
There are going to be a lot of buying opportunities for Thoma Bravo over the next year or so, now that it has raised more than $32 billion for new investments in tech companies.
Thoma Bravo has dominated the private equity game in enterprise tech over the last few years, especially in SaaS. And there are so many enterprise tech companies reeling from the collapse of their stock prices now that it’s clear the pandemic did not, in fact, accelerate enterprise tech spending to new levels.
It’s pretty clear there’s a a broad reckoning taking place in enterprise software as the year comes to a close, with pullbacks across tech companies signaling that software budgets could be tighter than they have been in more than a decade in 2023. It starts at the top: Breaking with a long tradition, last week Salesforce refused to give guidance for the next year, as it seems pretty clear that the company has failed to convince customers that its pricey acquisitions are worth expanding the amount of money they spend across Salesforce.
The January earnings report cycle will be one of the most closely watched earnings season in enterprise tech in a long time.
Around the enterprise
CircleCI laid off 17% of its workforce, because as CEO Jim Rose put it in an email to employees, “right now, however, there is a ripple effect of uncertainty in our sector.”
Equinix plans to let its data centers run a little hotter in hopes of saving some money on cooling costs.
GitHub introduced a $19-a-month “Copilot for Business” service, which includes a feature similar to one in AWS CodeWhisperer described to Mostly Cloudy last week in Las Vegas by AWS’s Vasi Philomin that allows administrators to block Copilot from suggesting public code to their developers.
Tweet that made me laugh or cry or think
Thanks for reading — see you next week!