Serverless Computing is Changing IT Consumption Models

With the rapid adoption of cloud computing by organizations globally, IT workloads that were previously done by infrastructure found in the customers premises were moved off premises to the cloud. The shift to the cloud from on-premise was informed by the advantages that cloud infrastructure had over on-premise with lowered operating costs and hyper-scalability being at the top.

As time went on, the mere shift of existing IT workloads to the cloud wasn’t optimal and many applications and systems have now been redesigned to take advantage of cloud architectures. This is because traditionally, applications were designed in a monolithic way that never considered the added efficiencies of deconstructing the various functions and runtimes as separate processes that if well managed, can lead to lower TCO.

Runtime as a cost

On-premise, powering a server to run an application was a fixed cost. The server would run 24/7 consuming power and being cooled and managed by someone even if the application its hosting isn’t used often. The cost of running at high and low loads was nearly equal and scalability was limited by the time it took to deploy new hardware which was often measured in number of weeks or months.
With the advent of cloud, consumers moved their workloads to Virtual machines (VMs) which sort of mimicked physical servers in their premises and the cost model was similar, in that; low and high traffic periods cost nearly the same per runtime. The only advantage now is that scalability to expand capacity was reduced from number of weeks to a matter of minutes or seconds if well automated. The per-runtime cost however remained mostly unchanged. This made owning and running and application and expensive affair.

Function as a Service (FaaS)

What if cloud providers cloud charge customers, not based on how many servers and their computing and storage capacity they lease from them, but charge them only when their application runs or is accessed? For example, instead of leasing a VM to host a website and pay for the VM lease on a website that is accessed say 10 times a month, why not just pay for the 10 instances the website is accessed and not pay for the entire month when the VM was idle? This approach is known as serverless computing because in this instance, you are not paying for a VM in which you host the website, but only paying for when the website is serving pages to users. This therefore means as the website owner, your concern now shifts from managing the VM (Operating system, web server software, databases, AAA, memory. cache etc) to only managing the website contents. The preceding example is simplistic but if you look at a large organization running several servers that host their business applications, then removing the task of managing servers from such an organization creates more time and money for them to focus on what really matters i.e. the efficiency of the application. The customer is now running their applications in a serverless environment. Serverless does not mean the total absence of servers, it means that the headache of managing the underlying infrastructure and platform is removed from the customer and a new billing method that charges on when the application runs as opposed to the power and size of servers is adopted.

This approach is cost effective in the long run as organizations can significantly lower their computing costs by only paying for computing power they actually use (when the application runs) and not pay for the CPU, memory and storage they chronologically lease in a VM. This new billing approach is becoming very attractive because of the benefit of lowered IT costs if the system is well designed and optimized for the cloud environment in which it is hosted in. The rise and demand for cloud DevOps engineers and cloud architects is fueled by many organizations desire to re-architecture their applications for the cloud. As many CIO’s are realizing the hard way, legacy systems simply ported to the cloud do not derive much benefit of being in the cloud and could sometimes even cost more to run in the cloud if not well architectured. The re-design of systems is a big part of moving to the cloud and serverless architectures have provided a new and efficient way to run applications on the cloud.

Some common serverless computing services include AWS Lambda, Microsoft Azure Functions, Google’s Cloud Run and others. These services enable organizations to focus their talent and resources on designing and writing better applications by using the FaaS capability to run applications that are cost effective to run and can scale in real-time with high availability globally. The pay-per-use approach has shifted IT costs from being predominantly fixed to highly variable costs and this as any bean counter will tell you, is accounting nirvana.

What’s attracting Microsoft to Nokia again?

There is a prediction by CSS Insights; a market research company, that Microsoft might buy Nokia Networks in 2021. This is because of the former’s new found appetite in acquiring Telecom gear companies as it reposition itself as a highly vertically integrated operation. Microsoft recently acquired Affirmed Networks and Metaswitch in a drive seen by many as positioning itself as the dominant cloud player. In 2013, Microsoft bought Nokia’s devices division for $7B in a largely failed deal that was seen as Microsoft’s attempt to catch up on the mobile space which it had lagged to innovate/invest into for some years.

With the telco network going to the cloud, it is now possible to host in the cloud, RF and other equipment traditionally found in a base station, on the cloud and share these resources across the entire network. With this change, telcos can roll out services with lightning speed and lower network costs significantly as resources are cross-shared on the cloud and can therefore be purchased as-a-service and not as equipment. Telcos will also enjoy a pay-per-use model which will significantly lower their capex on network roll-out and maintenance. The role of the telco equipment manufacturer is also changing as they now move from sale and maintenance of network equipment to the sale of full scale telco services from the cloud. This means that manufacturers such as Nokia, Huawei and Ericsson will run massive cloud based telco networks and lease these as a service to operators. This possibility of running large parts of mobile networks on the cloud is what is I believe is what the market analysts see as attracting Microsoft to Nokia. The reverse is also true, for Nokia to offer telco on the cloud, it will need robust cloud infrastructure and services which it currently lacks, pairing up with a large cloud player such as Microsoft will give it access to an already existing cloud platform run by Microsoft.

The other factor that I think is giving this prediction higher chances of coming to pass is that Over The Top (OTT) content providers market reach is being slowed down by telcos who levy a fee to subscribers for them to access the internet/content. By eliminating them from the content supply chain, OTT content providers such as Facebook, Netflix, Google and and cloud platforms will reach more customers who are currently unable to enjoy their services due to data costs. At the moment in many countries including Kenya, Facebook Inc is already working with telcos to zero rate access to Facebook page and WhatsApp on many data plans. Facebook does not believe you should pay your mobile provider to use their services, same for Google, Netflix, Microsoft who also fortunately or unfortunately have deep pockets and research and development teams to roll out far superior networks. These players will soon start taking up shareholding telcos as is the case of Facebook’s recent $5.7B investment in India’s Relliance-Jio. I discussed this developing trend of OTT content providers investment in telecommunication services in detail in a previous post here.

The ongoing trade war between China and the US which saw Huawei network gear and software being banned in US network could also be a factor. I discussed this trade war in detail here. With no major US based telco equipment manufacturer (after Nokia absorbed Alcatel-Lucent), Microsoft sees an opportunity to build an image of a US-owned supplier with the acquisition of Nokia as it will position Microsoft/Nokia as the preferred supplier to US networks. With 5G being heavily dependent on the cloud and edge computing, Nokia’s experience at the edge will enable Microsoft dominate the 5G space from the cloud to the edge with ease.