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February 22, 2016updated 31 Aug 2016 5:00pm

Why data regulations & hybrid cloud is fuelling an OpenStack boom in Europe

C-level briefing: The cloud technology is quickly being viewed as the go-to solution for heavily regulated industries.

By James Nunns

OpenStack has been experiencing accelerated growth over the past 12 months as it continues to be seen as a cloud solution that is enterprise ready.

This growth has been highlighted by Mirantis, a pure-play OpenStack company that saw 2015 end with bumper sales and 127 enterprise customers in production.

This growth has led the company to open an office in Berlin, announce channel partnerships and commit to the training of 1,500 OpenStack engineers.

It has been widely reported that cost is one of the primary motivators for UK businesses as they join the cloud, which plays nicely into OpenStack’s wheelhouse as it is an open source solution – which typically helps to reduce costs and increase agility.

While cost is one of the appeals of the OpenStack cloud, meeting regulatory requirements is another.

In the early months of 2016, OpenStack customers have been revealed in some highly regulated areas such as with HMRC and the European Commission.

What links these is that both are in a highly regulated sector and deployments are based on regional public clouds. This is in addition to the obvious fact that both are in the public sector, so cost is a big factor.

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Jonathan Bryce, chief executive, OpenStack Foundation, told CBR: "When people think of public cloud today a lot of times they think of hyper scale public clouds like the Amazons, Microsoft and Google, but we have seen a lot of growth in this mid market area where there are providers that are building out either vertical offerings or regional offerings and we’re starting to see traction and serious users that we’ve been talking about.

"These are not just little websites – these are real use cases."

The deal with HMRC for example will see DataCentred provide an OpenStack public cloud that will support the multi-channel digital tax platform.

A driving force behind these kinds of deployments has to be attributed to the need to meet regulatory demands.

In two years time the EU General Data Protection Regulation will come into play. In a recent study only 21% of IT professionals in UK medium and large businesses are sure about their compliance, while 18% admitted that the matter "strikes fear into their hearts" according to a Netskope-YouGov study.

It can be argued that this is one of the big reasons why OpenStack is seeing success in high regulated industries, with the cloud project counting the likes of American Express, Visa and Barclays as its customers.

Essentially the reason why OpenStack can be seen as a more favourable offering is because it offers both public and private deployments. This means that businesses can choose where their data resides, with sensitive data staying in the private side and data that isn’t subject to regulations free to go to the public side.

While OpenStack has always been able to offer both public and private deployments, it’s complexity when it comes to deployment has been criticised in the past. This is one issue that Bryce feels it has now overcome.

"We have a top tier of users in Ebay, PayPal, Walmart, CERN and Bloomberg they run thousands of machines, Yahoo has something like 10,000 servers – those are very large but what’s cool is that the complexity has come down to a point where SMEs can deploy OpenStack on 10,20,30 machines and get benefit out of it, whereas three years ago it probably wouldn’t have been worth the effort."

Overcoming this has been a joint effort between operator meet-ups and the foundation funding a lot of community focused efforts, but also through the likes of Intel, HPE, Red Hat and other major OpenStack players reducing the complexity.

Bryce said that Intel has put a lot of resources into different working groups in the community that are aimed at improving usability and managing OpenStack cloud in the enterprise.

This is not just out of the kindness of its own heart, as a mature OpenStack is likely to lead to a sales boost.

The connection to numerous major cloud players and leading enterprise companies has seen OpenStack be deployed alongside other clouds such as AWS, Microsoft Azure or Google. Bryce said that people are putting together a cloud toolkit for what fits their needs and the market shift towards hybrid cloud is an area that OpenStack is able to compete.

Currently there are more private OpenStack deployments than public ones, but Bryce said that the public deployments often tend to be larger. For example, something like a public cloud may have many thousands of servers, whereas a private deployment might be dozens or hundreds of servers.

Taking on a hybrid cloud approach is another of those cloud strategies that is closely linked with meeting regulatory demands. The idea being that mission critical and sensitive data can stay on-premise and meet requirements, the data that is free to move around and can be deployed through the public cloud, reducing costs and increasing flexibility.

None of this is to say that OpenStack will have the run of the market, far from it, it has a lot of competition and the hyper scale cloud players would claim to be able to do almost everything that it can do.

Referencing HMRC, Bryce said that there remains a lot of reasons why companies may not want to use a public cloud.

Bryce said: "They’re going into public cloud built on OpenStack so they are getting access to the cloud resources without the overhead, but there are a lot of reasons why you may not want to use a public cloud; regulation, massive data sets."

While issues like this remain, hybrid cloud will continue to appeal to organisations, particularly those that operate in highly regulated industries. Combining the tense regulatory environment in Europe, a need to provide cheap cloud and a desire to be hybrid is giving OpenStack an advantage in the market.

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