How the cloud could help fix your state’s IT

Number of the Week

300%

That's the increase in traffic to Stack Exchange's puzzling site, as the stay-at-home orders drag on. Look, everyone needs something to do, OK?

The Big Story

Clouds for the states

As earnings season kicks off, we're about to get a better picture of the economic destruction left in the wake of the COVID-19 pandemic, and a sense of how bad it's about to get. Some businesses that already know they are in dire straits are hoping Big Cloud will throw them a lifeline.

• Some cloud customers are trying to revisit long-term agreements with cloud providers as their businesses grind to a halt, according to two reports published within hours of each other Friday from The Information and Bloomberg.
• While early cloud customers embraced the flexibility of a pay-as-you-go system, as larger companies have come onto the cloud they've welcomed pricing discounts in exchange for spending commitments over a period of time, usually one to three years.
• So far, it sounds like providers aren't falling over themselves to issue rebates, although after the reports emerged on Friday AWS sent emails to some customers this week saying that it was "here to help."

Meanwhile, state governments continue to have problems processing record-high numbers of unemployment applications and other essential services, thanks to outdated and poorly maintained technology infrastructure.

• Oregon's unemployment office has forced applicants to "restart" applications several weeks in a row, a problem that was supposed to have been fixed but has not been due to "record level of online claim processing, paired with other weekend system maintenance," according to the Oregonian.
• Florida has only paid out 6% of unemployment claims filed in the last month, thanks in part to problems with the online application process giving people the impression their claims weren't processed, leading them to submit multiple applications.
• In Vermont, unemployment claims were delayed for several weeks partly because of outdated infrastructure. That could have had a huge impact on those waiting for their benefits.

Other enterprise tech vendors are giving customers a break. Cisco, for instance, has given customers a 90-day payment holiday, allowing them to defer 95% of costs until 2021, while HPE is allowing customers to hold off paying 90% of costs until 2021.

I have a modest proposal for AWS, Microsoft, and Google if they're thinking about following suit: Instead of bailing out venture-backed startups and big companies with cash in the bank, how about they first figure out a low-cost or at-cost way to shore up the tech infrastructures used by state governments?

• With states mostly on their own without federal assistance when it comes to fighting the pandemic, state budgets are going to bear a huge brunt of the cost required to protect their citizens — and paying for things like unemployment, food banks, and medical facilities will be top of the list.
• Faced with these costs, increasing state IT budgets will be non-existent. So the chances of upgrades to tech infrastructure, precisely at the time when more and more people will rely upon it to survive, are slim. And the longer this period of economic uncertainty lasts, the less taxpayers are going to want to approve big bonds for massive IT projects.

States have been burned by promises from tech vendors, in the past, but the need for their services has never been greater.

• The details would be tricky: Privacy, security, and ongoing maintenance are just some of the issues that would need to be hammered out.
• But some groups are already providing services to local governments on a volunteer basis, as this story from Protocol's Emily Birnbaum detailed.
• And Google Cloud CEO Thomas Kurian told me this week that his company is working with New York and North Carolina to improve their critical tech infrastructure.

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This Week In Protocol

Foundation bound: Google has been coy about its plans for Istio, one of the more important open-source projects it has developed, and last year it angered partners by backtracking on a commitment to donate the service to a foundation. But Google Cloud CEO Thomas Kurian told me in an interview this week that Istio will indeed wind up in a foundation "relatively soon." (Stay tuned for more from that interview.)

Slippery slope: IBM's multiyear trend of declining revenue continued this week after it reported a 3% drop in revenue, noting that its software business experienced a significant slowdown in the last few weeks of the first quarter. Give new CEO Arvind Krishna credit for acknowledging the elephant in the room: "You should look at [revenue] growth as the number one most important metric" in assessing IBM over the next few years, he said during the earnings conference call.

Special snowflake: "The IPO market is effectively closed," Snowflake CEO Frank Slootman told me in an interview last week. The $12.4 billion cloud data-warehouse company was expected to go public some time in the relatively near future, but COVID-19 has put those plans on hold.

Around the cloud

• AWS released an update to its Snowball Edge devices, which give businesses dependent on real-time data a way to process that information without sending it all the way to the cloud.
• Alibaba announced plans to invest $28 billion in its cloud computing infrastructure over the next three years, and hinted that it wants to design its own chips.
• Microsoft Azure is now the official cloud computing provider of the NBA, and I'm sure it's a mere coincidence that one of the company's largest shareholders also owns an NBA team.
• A federal judge agreed to let the Department of Defense revisit a few aspects of its $10 billion JEDI cloud contract, which was awarded to Microsoft last year but is under protest by AWS.
• Cloudflare suffered a widespread outage after a technician pulled the wrong cables in one of its data centers, which has to be every data center technician's worst nightmare.
• The rush to profit from disaster is as old as disaster itself, and Google disclosed that it is blocking 18 million spam emails each day targeting G Suite customers with COVID-19 related scams.
• Google started sharing its alternative to VPN. Its "zero-trust" BeyondCorp system, originally built for internal use, started rolling out for customers this week.
• This is an interesting post from John Batelle about the possibility of Zoom turning to advertising as a revenue source. I was initially tempted to dismiss it given the state of the ad market right now, until I got to the part explaining Zoom's unique data set.
• Remember Yammer? Well it's still around, and this week Microsoft added a version of it to its current workplace collaboration bet, Teams.
• Confluent's streaming data service is popular inside companies looking for ways to analyze real-time data, and it just raised a $250 million Series E round valuing the company at $4.5 billion.
• Snap has been pulling off an impressive trick amid a surge in usage thanks to the pandemic: It figured out how to keep its per-user infrastructure costs relatively flat. But it's not sure it can keep up that magic forever if the crisis continues.