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When it comes to IT, there are two types of companies:  A top-three cloud service provider and everyone else.  Red Hat is everyone else, and it is doing its best to maintain is mindshare and relevance with enterprises.  They get a solid A for strategy; judging from their previous performance, they are also likely to score well when it comes to execution.

Red Hat’s strategy is predicated on the hybrid cloud.  They know that:

  1. Red Hat has a strong presence in enterprises today;
  2. Although the traditional data center is not going anywhere anytime soon, its architecture is changing;
  3. Most enterprise IT growth is happening inside the public cloud.

Therefore, Red Hat has put all its chips behind linking the changing nature of the traditional data center and rapid growth inside the public cloud.  They are leveraging their strong enterprise presence and hitching their wagon to the hyper-growing Kubernetes train.  Having purchased Core OS earlier this year, Red Hat has bolstered their version of Kubernetes offering – Open Shift – and they are using it as a mechanism to execute on their strategy.

Hybrid-cloud is a thing.  Enterprises are starting to connect their private cloud environment with their public cloud infrastructures for distributed applications.  For instance, an enterprise may host their data in their private data center but have their business logic and web front-end in the public cloud.  Assuming that containers and microservices will be the core building block for new applications – a sage and safe bet – Open Shift would be the common orchestration platform for the application regardless of where its components are deployed.

To make this vision possible, Red Hat has partnered with two of the top three cloud service providers, Azure and IBM Cloud, to offer managed Open Shift services.  As such, a customer could use Open Shift orchestrate the database backend on premise, say a MongoDB cluster, and the business logic and web front-end layers on a public infrastructure.

It’s a win-win-win scenario. (1) Red Hat wins because they sell more support for Open Shift (otherwise “free” open source software).  (2) The cloud partner wins because they sell capacity to the end customer.  (3) And the customer wins because they get to have a familiar operating model despite the underlying infrastructure as well has having the ability to roll out application changes quickly, thereby becoming more competitive through a consistent operational model and faster feature delivery capability.

Red Hat has been very clairvoyant and forward-looking when it comes to open source software.  They track all major open source projects and throw their weight behind the winners once the winners become clear (Kubernetes, in this case).  Their business model is to incorporate new open source projects into their offering quickly and in a form that is digestible by enterprises.

Regardless of the trends, the average enterprise still lacks the skills to effectively install Open Shift, deploy applications on it, and manage the deployments operationally.  These are new skills and are not pervasive in the enterprise IT crowd yet. To fill this skills gap, Red Hat is partnering with smaller “channel partners” to help enterprises with their hybrid-cloud Open Shift clusters.  These partners tend to be small, regional shops.  The technical teams of these channel partners are on the cutting-edge of DevOps practices and are very much at ease with open source software. Specifically, they:

 

These events are where all the interested parties coincide and where the “new enterprise IT sales model” is going.  It is a community were vendors like Red Hat, technically capable channel partners, and ready and willing customers comingle in a consultative, educational environment where customers can make the best engineering and economic decision in a pressure-free setting.  And, as it happens, this approach also builds trust between the vendor and the customer.

Reviewing the competitive landscape, you are either a top-three cloud service provider or everyone else.  If you are everyone else, as chances are, you have to thread the needle quite carefully to make it in the emerging and evolving cloud-native world. As a member of everyone else, Red Hat appears to understand the competitive landscape quite astutely and has designed its actions to take full advantage of the terrain.  That is the definition of “excellent strategy,” and this is why they get a solid A.


Also published on Medium.

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