Evgeny Kolbin: “Those who put off migration to the cloud changed their plans”

Despite the general decline in revenue of IT companies in 2020, the cloud market continues to show growth of tens of percent. And the need for these services will increase, SberCloud CEO Evgeny Kolbin expects

This will happen thanks to start-ups, new technologies (such as artificial intelligence, 5G, the Internet of things) and the migration to the cloud of large companies. In an interview, the expert spoke about why clouds began to dominate IT, about the role of SberCloud in the Sber ecosystem and how artificial intelligence and cloud technologies are connected

“Thanks to the clouds, the Internet industry has successfully passed the stress test”

— What are the main changes and trends in the cloud market?

— The market of cloud services is growing, and at a very high pace. Research companies Gartner and IDC estimate this growth at 27-30% yoy. But it grows in different segments very unevenly. In our opinion, traditional cloud providers that provide basic infrastructure services, such as a virtual data center, will grow slightly more slowly. This is very clearly seen in the example of such a service as collocation (placing client equipment in a data center or renting such equipment in a data center). And those who offer advanced platform cloud services, for which demand is constantly increasing, will show very rapid growth, well above the market average. Examples of such companies include Mail.Ru, Yandex, MTS. And, of course, SberCloud, which belongs to this group of cloud service providers.

In general, the trend of transition from using your own infrastructure to the cloud will continue. This process is underway, it is not as fast as the growth of the cloud market itself, because many new businesses are immediately built on cloud platforms. But here, too, positive dynamics are visible. According to the latest data, the world has spent approximately $180 billion on its own infrastructure, but this figure is declining by 10% annually.

The COVID-19 factor has also triggered the growth of the cloud provider business. Many consumer services are now built on top of cloud infrastructure and solutions. And if demand grows for them, then more cloud infrastructure is utilized. For example, the number of Zoom users amid the pandemic has grown tenfold. The same thing happened with online stores, teamwork services and online entertainment services, including Russian ones. If it were not for the cloud architecture, then many popular Internet resources that received a sharp influx of users during the pandemic would simply “lay down”. Largely thanks to the clouds, the global Internet industry has successfully passed the spring stress test. This made a strong impression on the business and greatly spurred our area to growth. Those who put off migrating to the cloud until later changed their plans. Now, as I said, the growth rate of the cloud industry is much higher than in most other sectors of the economy.

— That is, the fastest growing and most demanded segment is platform services?

– Yes, and the further, the more it will manifest itself. If you look at the structure of clients, then there are large businesses, small companies and start-ups. What is important for big businesses? They have a certain legacy of software products that cost a lot of money and have been working for many years. At the same time, these systems are often in a cloud ready state (readiness to move to the cloud. — Trends) because large companies have internal clouds, which is the industry standard for most of them. That is, you can take everything they have and simply transfer it to the infrastructure of the cloud provider.

Of course, companies do not need to move to the cloud for the sake of the transition itself. For them, such a transition is needed so that their IT systems become more scalable and the “headache” of updating and maintaining the infrastructure is removed.

– Internal corporate clouds, which many large companies have, can be easily combined with the provider’s infrastructure?

“You can create hybrid clouds, there are already suitable technical solutions and migration strategies for this. The complexity or simplicity of creating a hybrid cloud is determined by the architecture of the company’s IT systems, the number of legacy components in them, and, of course, the capabilities of the cloud provider.

What are the needs of startups?

– Startups and other young companies do not have a legacy in the form of their own hardware and software infrastructure. They can immediately use advanced cloud services – managed databases, automatic scaling, infrastructure as code, etc. We also have a wide range of such services, we call this platform SberCloud.Advanced. It presents more than 40 different cloud products that make it possible to facilitate the tasks of developers, engineers responsible for the creation and operation of the IT system of business units. Often we are far ahead of market needs.

— Even startups?

— Yes, and it gives them a certain planning horizon. If they start with some simple products, and then want to use, for example, services for building and analyzing graphs, then they will not need to come up with new business processes.

“There is more synergy in the clouds than direct competition”

— Many technology startups are targeting Western markets. What can providers offer them?

— For startups, especially technology startups, it is important to control their costs. If a company sees the US or EU market as the main consumer of services, then it needs to place its IT infrastructure there, because in many countries there are restrictions in terms of legislation on the processing of personal data. But, for example, development and testing stands – and they often require no less than IT resources – can be placed where it will be cheaper.

If you compare us with the same Amazon, then comparable services are cheaper by 1,5–3 times. A few months ago, our platform grew significantly, and this allowed us to reduce prices by approximately 40%.

In our country, as in other countries, there are also restrictions on personal data. By law, the data of Russian consumers must be placed on the territory of the Russian Federation. Some companies – about 20% of the Russian cloud market – are foreign providers, but their consumers are in our country. They need to bring the whole story with personal data here in order to comply with the requirements of Russian regulators. We see this as a business opportunity for ourselves: such companies can become our clients.

— Are you not afraid of competition from foreign technology giants?

— It’s not always competition, you can work in partnership. For example, we created the SberCloud.Advanced platform in partnership with Huawei, and the Christofari supercomputer in partnership with NVIDIA and other major technology companies.

I think that foreign players in the cloud market, when planning to expand their business, comprehensively assess the risks. Our market is attractive for these providers, but for various reasons, some of them work in our country, and some do not. From our point of view, there are more opportunities for synergy than direct competition. We are interested in the fact that people who live and work in our country, use the Amazon cloud infrastructure, begin to use our services. We offer world-class cloud services at very affordable prices.

— How do prices for cloud services change as the market develops? Can there be such a situation that our country will have the most convenient and cheapest clouds in the world?

– Why not? The same mobile Internet in our country is now both fast and cheap. In terms of price / quality ratio – one of the most attractive in the world. In terms of clouds, AWS (Amazon Web Services) has cut its prices approximately 2006 times since 60. In our country, we see the same trend.

The possibility of price reduction depends on two things. The first is the size of your business. The larger it is, the easier it is to manage its profitability and marginality. The second is having value-added services in your portfolio. Because as soon as you become a PaaS (platform-as-a-service) service provider, the margin increases significantly. Prices for basic infrastructure are already behaving almost like commodities markets. For most cloud providers, they will be very close, the difference will depend only on the volume of business.

Changes in exchange rates also leave their mark. Everyone who sells their services for rubles is now becoming more competitive.

– Can foreign consumers begin to massively use low-cost clouds?

— As I said, foreign companies operating in our country often use cloud services to comply with the requirements of the law on personal data.

In addition, our country is strong enough in general, which is associated with artificial intelligence. We have excellent practical developments in this area, we have a strong scientific school, universities that train excellent mathematicians and big data specialists.

In this segment, we can also offer highly competitive products. Our cloud platform for working with artificial intelligence AI Cloud is based on the most productive Russian supercomputer Christofari. This is the most powerful computing complex, which is now in the top 40 of all supercomputers in the world. It is available from the cloud and is unique in its kind. Typically, supercomputers are built for a single task, for a particular company or organization. We give our clients the opportunity to use its resources to calculate AI models.

In early December, at the AI ​​Journey conference on artificial intelligence, we presented a completely new, innovative product – ML Space. This is a cloud platform for the full cycle of development and implementation of AI services. It gives data scientists completely new opportunities, and also reduces and simplifies the use of AI technologies by orders of magnitude in business. We at SberCloud are confident that ML Space is competitive not only in the Russian but also in the global market.

Of course, you need to take into account the restrictions regarding the processing of personal data. But there are a huge number of tasks that do not carry any personal data. And such tasks are the majority. For example, everything related to the real sector of the economy, industrial data, predictive analytics.

“An ecosystem is not a monolith or a set of identical business units”

“Companies around the world are creating their own ecosystems en masse. What role do clouds play in this?

— An ecosystem differs from a holding company in that it involves deep integration of brands, products, and processes. All this should be built on some single technological platform, and the optimal foundation for it is the cloud. Until they come up with another way to unite everything at this level – everything should be interconnected in the clouds. Today it is the dominant technology for solving such problems.

At the same time, some part of the ecosystem may be in a private cloud, some in a public one. But the main thing is that the transition to the provider’s cloud allows the company to exchange data on a single platform. For example, Data Science is more about preparing and cleaning data than training the model itself. And the use of cloud services greatly facilitates this work. And it allows different companies in the ecosystem to use exactly what they need to increase revenue and efficiency. After all, this is the two main business objectives of any company – to earn more money and spend less.

— What role does the Sber ecosystem play in the development of SberCloud?

– The core of our ecosystem is Sberbank, it has 2,7 million consumers – legal entities, and we work in b2b business. Many companies in the ecosystem are developing very dynamically. For example, Okko and Delivery Club show multiple growth in short periods of time. For most companies in the ecosystem, the use of cloud services is a natural process, but for us it is both current and potential consumers of our cloud services.

— How difficult was the transition to the cloud for the Sber ecosystem and what did it bring?

— An ecosystem is not a monolith or a set of identical business units. It’s a lot of different companies with different needs and products. But they need a universal set of tools to solve basic technological problems. For someone just starting out, migrating to the cloud wasn’t a problem at all. For someone more mature, the move to the cloud is not yet complete. So far, it is impossible to take and state that the entire system is already in the cloud. This is a process that will continue. Now there is a common understanding among ecosystem companies that cloud migration is necessary. And this is no longer a marketing hypothesis, but a conscious internal business need of each company.

Most of the successful ecosystems have followed this path, including Chinese e-commerce companies that have evolved into huge ecosystems with financial, logistics, entertainment and business services based on a single platform.

“Our business unites the right people”

– In some countries, primarily government organizations migrate to the clouds. Do government organizations in our country understand what they also need in the clouds?

— There is understanding, but the public sector has a more complex IT legacy than the commercial one. There are still specific software systems that are unable to work in the cloud. All this complicates the process, but I am sure that the active use of cloud technologies in the public sector is a matter of time.

Quite a lot of departments both at the federal and regional levels use cloud services, including SberCloud. I note that government organizations themselves are already coming to understand the effectiveness of using clouds.

– So, technological obstacles are surmountable for them?

— Yes, but there are still certain difficulties with the procurement system in the legislation. All restrictions, of course, are justified from the point of view of the fight against corruption. But from the point of view of technological progress, it would be great if the state learned to buy services according to the pay-as-you-go model, that is, as you consume. This would be primarily beneficial to the state itself. Now the law requires that the amount of payment kopeck to kopeck coincides with the amount of the contract.

— SberCloud has been on the market for two years. What was the main result of this work for you?

E.K. Almost two years ago we started almost from scratch. We are growing much faster than the market, we now have three main platforms launched. First, these are cloud services for large businesses. Very reliable, with a high SLA (failure tolerance level. — Trends), the possibility of disaster recovery, including in our cloud, and the whole set of attributes required by the enterprise business.

The second story we launched is SberCloud.Advanced. This cloud platform contains a very large number of services aimed not only at large businesses, but also at SMEs and startups. These are companies that are ready to create their products on the platform, using all the advantages of cloud technologies, such as cost-effectiveness, the possibility of simple and fast business scaling, high speed of bringing products and services to the market.

We also built the Christofari supercomputer and independently developed the unique AI Cloud platform for working with artificial intelligence, which allows us to use Christofari in the most efficient and convenient way from anywhere in the world with an Internet connection.

Once again I will mention our new product ML Space – a unique cloud platform for working with AI and the only cloud service in the world that allows you to organize distributed training of software models (neural networks) on 1000+ GPUs (graphic processors).

SberCloud started with a team of three people, now there are almost four hundred of us. And it seems to us that our business is very promising, fast-growing and technologically advanced. It unites the right people around the company.

“SberCloud has very ambitious plans”

What misconceptions or stereotypes about clouds irritate you the most?

– There are several outdated stereotypes, for example – never touch what works. Many IT professionals within companies are not yet ready for change because they see threats to their role in the organization when moving to the cloud. This is still a barrier. It happens that management wants to move to the clouds, allocates money for this, but in the end, at the level of performers, the process stops.

It used to be a popular belief that migrating to the cloud was generally dangerous. Control over the IT infrastructure will be lost, the IT system will fall, “we will all die”, etc. This is now a minority view of the IT and business community, but it still exists.

There is another stereotype associated with the collocation service. For some reason, this service is still considered part of the cloud business. Yes, you can create a private cloud in rented or hosted servers and even combine it into a hybrid one, but, in fact, this is not the provision of cloud services, but a banal rental of hardware or racks in a data center. In my understanding, cloud business is high-tech cloud services, with the help of which our clients create new cool products, improve their business processes and, of course, use their financial and labor resources more efficiently.

How long will it take to shift this paradigm?

— The shift has already taken place in Western markets. There, moving to the cloud is an attempt to get on the last car. I think that in our country it will not take a very long period of time. Success stories are of great importance. If your colleagues and business competitors use the cloud, then it’s probably not just that.

Much will depend on the position of the state. If it sets an example, goes to the clouds, then the process will accelerate.

— How will the cloud market and SberCloud develop in the next five years?

— I think that the cloud market will grow much faster than most IT sectors, especially the advanced services market.

Now we are witnessing the launch of several important technologies, such as artificial intelligence, 5G, IoT, unmanned vehicles. All these technologies generate a huge amount of data that you need to be able to work with, process them, and build various models.

Get IT systems that can handle such a volume of data, business and the state will be able only in the cloud. There is simply no reasonable, economically justified alternative to cloud technologies for solving such problems.

In addition, there are many new tools in e-commerce. Where there used to be a photo, now there is a video. Or, for example, the user can look into the camera and virtually try on some of the clothes. This is all the result of the work of technologies that need to look at a person online, digitize his image, put a dress on him and make a picture in 3D.

It is extremely difficult to independently develop such technologies within companies. You need to invest in software, equipment that quickly becomes obsolete: you just bought it, and it’s time to buy new. And the cloud provider can dispose of this equipment more efficiently and give it to some other tasks that are less resource-intensive.

Now I have named only a few technologies. But there are much more of them. I think there will be a demand for all these technologies in our country. If it is, then our cloud market will continue to grow in a dramatic way.

SberCloud has very ambitious plans. We still intend to grow significantly faster than the market in terms of revenue and launch new cloud services. PaaS and AIaaS, that is, platform services and cloud tools for working with artificial intelligence, will become a special priority.

We are already offering our users the best products in these areas, but we are not going to stop there.

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