Category: Cost-effective scalability
November 24th, 2009
The cloud computing battleground takes shape. Will it be winner-take-all?
You can bet that the industry will be playing for keeps yet businesses can increasingly reap real bottom line benefits. This year has been one of relatively grand alliances between emerging cloud computing vendors as they fill holes in their capabilities and try to create appealing one-stop enterprise cloud services.
We’ve seen major announcements so far from IBM and Juniper, Cisco/EMC/VMware, and most recently BMC and Salesforce. There are many other smaller initiatives that have formed as well and all of these efforts underscore several key points for those businesses trying to understand the real strategic benefits of the cloud including cost, agility, and scalability:
First, there is no single vendor that can today provide an end-to-end cloud computing solution for businesses, hence the reason for all the alliances. The cloud computing stack (facilities, bandwidth, compute power, storage, operations, management, etc.) is deep and comprises not only most of the elements that you would find in a corporate data center but a great deal more besides. This includes R&D, product development, support capabilities, developer networks, and capabilities such as compliance monitoring and additional layers of security and governance.
Second, it’s unclear how the cloud computing vendor landscape is going to shape up. Everyone is in early days yet with only Amazon with anything approaching operational maturity, with Google and Force.com vying for the lower end of the enterprise. Making long-term decisions isn’t a good idea in this environment, though using cloud computing tactically does make good sense at this point, especially if you’re experimenting with private cloud technology that will likely translate well to public clouds, such as Eucalyptus.
Third, and perhaps most importantly, standards for cloud computing are just emerging and only cover today an incomplete portion of the cloud computing stack. This means scenarios where you can seamlessly move your cloud computing workloads from your private cloud and public clouds of choice are fairly far off still, unless you are willing to commit to one of the alliances that will enable it with proprietary approaches. This is the core scenario that businesses are interested in as dabble with cloud technology internally today and then want to move outside to get cost and quality advantages as they get more confidence in the cloud. But it’s one that is currently rife with lock-in and those that remember the platform wars of the 90s are wise to recall.
Related: Cloud computing and the return of the platform wars
Let’s also not forget the economics of online services, which apply generally to any cloud computing service that is self-provisioning (meaning users can sign-up and begin using it immediately). Infoworld’s Zack Urlocker pointed out last week that Tim O’Reilly’s discussion of the tendency of the end-game scenario for a given online segment to be winner-takes-all almost certainly applies to cloud computing as well:
While the benefits of cloud computing are enormous in terms of reducing costs, increasing utilization, and providing scalability, there’s a significant risk of lock-in. Given the early state of cloud technology, there simply aren’t adequate standards to offset this.
My fellow ZDNet colleague Phil Wainewright recently pointed out what I like to call the
October 5th, 2009
Twenty-two power laws of the emerging social economy
Traditional measures of business success are becoming less and less important.There is a time for big picture thinking and there is a time for details in business and IT, the latter which make business and technical strategy a reality and the former which provides needed direction and focus.
Highlighting the big picture side last week we saw Steve Ballmer’s exploration of the efficiencies he believes are being driven by something he calls “the new normal”. In this view, he tries to frame up how a reset of economic expectations during the downturn has created an environment that is putting pressure on business to do more with less, affecting IT at least as much as the rest of the organization, if not more.
We’ve seen also seen similar and broader variations on this theme this year, such as John Hagel’s capable attempt to define the “Big Shifts” in business taking place in this century. Just recently McKinsey published a similar reported titled The 10 Trends You Have to Watch: And What They Mean For IT in the Harvard Business Journal (summary is by Gartner).
If we factor out the commonalities in these views, it highlights a core set of strategic trends in IT and business in 2009, namely:
- New resource constraints. Today’s new economic baselines (the downturn, green business, etc) are requiring that we find ways to accomplish our goals using fewer resources. This includes identifying the means to capture opportunity and transform “in process” business activities using newer, more efficient models. Business leaders will need to effectively link IT and business much more so than in the past to accomplish the movement to this new baseline. This also doesn’t mean everything is constrained. As we’ll see on the technology side, abundance is being produced that may address shortcomings in the business side.
- Value shifting from transactions to relationships. This is the growing realization that the traditional rote business transaction as the core source of organizational value is diminishing and value is now coming from relationship dynamics. This has many implications including using new management methods (example: from top down command-and-control to community curator and facilitator), tapping into new reservoirs of innovation, adopting new ways of interacting with customers, or driving better tacit interactions. Web 2.0 and social computing will be key enablers of this for business units and IT organizations that want increased relevance.
- Industries in flux with new ones emerging. Previously stable industries such as finance and media are feeling the pinch the strongest, but most others are as well. The recession is creating a bigger gap between healthy and unhealthy businesses while many industries are being unbundled or transformed into new ones (traditional software companies moving to SaaS and cloud computing for example or the rise of crowdsourcing competing with outsourcing at the low end.) Again, today’s dynamic Web-driven global knowledge flows and agile online models for computing and collaboration — as well as economic and intellectual production — are now a significant change agent.
- Moving from change as the exception to change as the norm. Today we’re seeing faster consumer behavior shifts, quicker pricing changes, more rapid product cycles, and faster media feedback loops. While this can also lead to more extreme market conditions, it also enables opportunities to be turned into bottom-line impact for organizations that can adapt to market realities quickly enough. The network is the culprit (and solution) for much of this again: We now have pervasive social media instantly transmitting and shaping cultural phenomenon and faster financial cause-and-effect in the markets, real-time online markets, and so on. In the 21st century, following a plan is increasingly less important than responding actively and effectively to change.
- A shift of control to the edge of organizations. This has been predicted at least as far back as the Cluetrain Manifesto, if not farther. It’s not even really a shift, it’s more like the addition of a new dimension to how we operate organizationally, something I’ve referred to previously as “social business.” This new addition changes the dynamics of where useful information comes from, how decisions are made, and how more autonomy and self-organization will be needed (and tolerated) in modern organizations to meet more dynamic and changing global marketplace.
As I explored recently in “How the Web OS has begun to reshape IT and business”, today’s Internet has become a central driver of how we do things today. It’s the richest marketplace that
September 6th, 2009
How the Web OS has begun to reshape IT and business
These days in the halls of IT departments around the world there is a growing realization that the next wave of outsourcing, things like cloud computing and crowdsourcing, are going to require responses that will forever change the trajectory of their current relationship with the business, or finally cause them to be relegated as a primarily administrative, keep-the-lights-on function.
IT is going to either have to get more strategic to the business or get out of the way. Businesses too must grow a Web DNA. The proximal cause of this seems to be the growing domination of the global network that surrounds all businesses today: The Web. If you’ve read my writings here since 2006 you largely know what’s happening: Today’s highly evolved Web has grown far beyond its original roots in content distribution and communication. It has become a fully fledged platform for media (TV, movies, music, newspapers, gaming, etc. have been strongly disrupted by the Web and now largely reside there) as well as more strategic pursuits. Probably most significantly is computing in all its many forms. This ranges from low-level services such as raw compute power and storage to social computing, semantics, and collective intelligence.
But the advent of a Web OS is certainly not just an IT story. It’s also — and really mostly — a business story. Those who are trying to track the so-called “big shifts” in the 21st century, thinkers like John Hagel, are attempting to pin down the specific changes taking place in the world today. John recently noted that “we are moving from a relatively stable business environment to one characterized by rapid rates of change with ever more disruptions generating increasing uncertainty and unpredictability“. In this way, routinely transforming instability and rapid change from a threat (which it is to most businesses today) into opportunity is a core skill that organizations increasingly must be able to cultivate.
That much of the pace of change today is driven by the modern world’s pervasive and instant global flows of knowledge is largely due to influence of the Web and its billions of two-way touchpoints with nearly a third of the world’s population (including practically all of the developed world). In addition to ultra fast feedback loops that drive real-time action/response scenarios in the marketplace, the Web has also become an incredibly efficient, inexpensive, and easy-to-use delivery system for just about anything that an interface can be wrapped around.
This has created a new form of leverage in terms of the ability to change and adapt by tapping rapidly and deeply into on-demand resources (be they computing, data, or even people and ideas) in virtually real-time. A recent article in the Wall Street Journal noted that because of modern technology, particularly the Web, business “initiatives that used to take months and megabucks to coordinate and launch can often be started in seconds for cents.” Clearly, this is a brave new world, even if it’s one that’s still happening more on the edge than in the core of businesses today.
WOA = Web-Oriented Architecture
CC/SRR = Creative Commons/Some Rights Reserved
AOP = Architectures of Participation
It’s a world where scarcity practically doesn’t exist and access to abundance is virtually free. It’s also true that the business models of the Web OS are only emerging as well. While monetization is prevalent for those consuming or participating in the Web OS, there is also a real and ongoing concern that it’s also the modern version of sharecropping. That traditional management approaches often don’t understand the nuances of these issues and aren’t designed to take advantage of this modern economic landscape, much less compete with a growing number of businesses that do, is a whole side story I’ll explore when I’m able. But it’s one in which the Web OS is increasingly forcing a serious reevaluation of modern business practices as well as the very notion of how an opportunity is defined, identified, and targeted.
What is the Web OS?
While there are multiple ways of looking at the Web as an operating system, from cloud environments that mimic a desktop operating system to sets of services packaged together and bundled as an individual product to companies, the largest — and the most significant — is the idea of an overarching and emergent Internet operating system. The data, services, and even communities of the Web are now programmatic and can be incorporated and remixed into any other business or product at will. The concept of a Web OS isn’t new. But its arrival on the scene in compelling form with serious impact to the enterprise is.
Over the last few years, as open APIs, social networking platforms, cloud computing, open identity services, sensor-driven databases (such as with GPS and OpenStreetMap), or even people (example: Amazon’s Mechanical Turk) have created open ecosystems in which anyone can participate, including business, both to contribute and to consume. The Web has become the ultimate outsourcing platform and one that is incredibly agile too, combined with economies of scale that are very hard to match. There are challenges too: Unpredictabilities and risks exist that must be dealt with both routinely and successfully.
But to perform well in this changing business environment organizations have to
August 18th, 2009
Using social software to reinvent the customer relationship
The elimination of decades of inadequate communication channels will suddenly unleash a tide of many opportunities, as well as challenges, for most organizations.As Web 2.0 applications move more deeply into the strategic operations of enterprises, a unique hybrid of social software has emerged to help businesses deal with the giant sea of customers that awaits them on the other side of the network. While Enterprise 2.0 tools, primarily aimed at collaboration, are certainly part of this story, they often don’t help companies enjoy the full range of possibilities when it comes customer-facing social computing.
Enter the rapidly emerging Social CRM space, an area that’s become significant enough that there’s now a dedicated blog on the subject here on ZDNet by the terrific Paul Greenberg.
This year’s rise of enterprise social computing is opening a new front line in many businesses where the old ways of engaging with customers is no longer sufficient or even competitive. Many organizations I talk to these days are now evaluating the way social software seems to be altering the CRM landscape. In particular, Social CRM has recently come into its own as a leading model for this transformation. For comparison’s sake, online customer communities were a very hot topic last year in this same space, but as I pointed out then, it was surprisingly hard to create them repeatably. My sense is that Social CRM will be a more predictable, reliable model for applying Web 2.0 to customer relationships using many of the strengths of the community model.
Read Michael Krigsman’s 3 Big Reasons CRM Initiatives Fail
This is not to say that many of the social media tools that companies have deployed already aren’t good examples of Social CRM. Many of them are and this highlights a major discussion in the blogosphere last week sparked by SocialText’s Ross Mayfield, who posited that with Social CRM, the people are the platform. The key point here is that where online tools let customers have a social relationship with a business — in other words, interaction that is visible to them and other customers whenever possible — then some Social CRM is taking place. Without a fundamentally community-based relationship, you’re just back to traditional, one-on-one push management of customers. This latter model, a closed and asocial mode of customer interaction, is the very antithesis of Social CRM.
Social CRM: It’s all about people
For its part, Social CRM paints a vision of creating a deeper and more engaging community-based relationship with your customers, instead of the traditional approach of managing them, in a very Cluetrain Manifesto way. Part online community, part crowdsourcing, part customer service, Social CRM can create an emergent, collaborative online partnership with customers that can result in an array of improvements to business performance.
Far from being just for the benefit of the business however, with Social CRM customers tend to 1) be much more in control, 2) are in sustained contact with the organizations they care about, and 3) can use self-service, mutually visible participation, collective history, and peer relationships to assist each other as much — and often much more — than the classic CRM model ever could.
But like any composite, heterogeneous group of participants, Social CRM necessarily entails less deterministic control and outcomes. For example, these new Social CRM tools will let anyone ask a question publicly and anyone else in the community (customers or employees) answer it. Or provide a means to let new ideas flow in from the community in a very Dell IdeaStorm fashion. The question of who decides what the right “official” answer is, or which ideas will be selected and how non-employee submitters will be compensated are currently hard questions to answer for many organizations.
Then there is the challenge that by its very nature Social CRM is
August 5th, 2009
The future of enterprise data in a radically open and Web-based world
Like many aspects of applying Web 2.0 to the enterprise, the challenge is both in adapting the business and its thinking while successfully leveraging the latest delivery methods.In recent months, another significant front in the growing trend of open data has emerged, and with it a growing focus on what businesses can do with that most precious asset they’ve developed at enormous expense over the years: their data.
The advent of a new administration in the United States, which has been pushing to open U.S. government databases en masse, and a proliferation of open data initiatives in other countries — perhaps most notably in the U.K. — has put the often behind-the-times government world into the forefront of open data with such sites as data.gov, which the nation’s CIO Vivek Kundra has promised will have tens of thousands of feeds this year alone.
Open data holds up the promise of instant connectivity between arbitrary numbers of ad hoc partners while at the same time reducing integration costs, improving transparency, harnessing external innovation, and even (perhaps especially) creating entirely new and significant business models. I sometimes refer to these as “open supply chains“, and the term is highly descriptive when it comes to the potential for open data models to make cloud computing safe and interoperable, help journalists to do their jobs better, or create multi-million dollar new lines of business, such as Amazon’s well-known Web Services division.
All of this activity underscores the relatively lackluster track record of traditional businesses in understanding and managing the opportunities, risks, and rewards of open data. Despite some significant success stories there is an apparent — and perhaps widening — digital divide between the classical world of business and the online world.
Even the considerable investments that most large organizations have made in IT system interoperability and integration, particularly with such popular approaches such as service-oriented architecture, have produced famously lackluster results. My good friend David Linthicum, a leading SOA expert, has gone as far as saying that the lack of focus on data is a major part of the problem.
Taking a product focus instead of a project focus
For those that have embarked down the open data road to see where it leads, one thing seems to be clear: Exposing data — whether it is internally within an organization or outside to partners, or even the whole world — is a way of thinking about the very nature of the business, more than it is about achieving a one-off end goal. This is because open data seems to create immediate, close, and powerful relationships between the publisher and the consumer of the data, and leads to a series of unexpected outcomes. These relationships can be created with extreme ease with today’s methods over networks like the Web and though often speculative, a good subset of them form rapidly into important ones that can draw in new customers, identify new innovations, head off competitors, or just generate revenue. Witness Twitter and its hundreds of partners accessing the platform (and its enormous audience) through its API or Netflix and its impressively successful prize contest that opened up data selectively to dozens of high-value self-selected contributors as a leading example.
Read about emerging open business methods for more open data success stories.
In other words, in order to be competitive with the next generation of businesses, most organizations are going to have to look at open data for reasons involving efficiency, competitiveness, and long term health, particularly as open data enters their particular industry.
Enterprise open data options: Leveraging today’s Web best practices
But it’s still not clear to businesses the options they have and how they need to think about opening up strategic sets of data for reuse internally, with their partners, and indeed, with the rest of the world. Far from being a story about IT plumbing, open data is a way of doing business, forging strong relationships over the network with other organizations, customers, and potential customers. However, the success of the Web itself as a dominant global platform has made it the de facto channel for providing open data, even the networks internally to most businesses heavily use Web technology for their applications, intranet, and interaction with the rest of the world. This means opening data generally means opening it up over the Internet using Web technology and approaches.
So critically, being successful with enterprise open data requires
June 14th, 2009
Cloud computing and open source face-off
Cloud computing remains one of the big topics in software this year despite considerable and ongoing concerns over lock-in, lack of control, and security. The siren song of ease-of-development, reduced costs, highly elastic scalability, and next-generation architectures has many in IT and in the Web community carefully weighing the benefits and risks.
This puts open source on individual installations at a distinct disadvantage with the cloud. Along the way, open source has become a key enabler for cloud computing by providing both cheap inputs (as in free) as well as rich capabilities to providers of cloud services. The writing, however, is beginning to appear on the wall: the cloud computing industry will use open source as leverage for a new generation of proprietary platforms-as-a-service, very much like the established Web 2.0 services in the consumer space have used open source platforms to capture and create lock-in around data.
Dana Blankenhorn’s coverage last week (”IBM expects Linux to make money“) of that company’s re-emphasized focus on the bottom line with open source puts cloud economics on the front line of major computing vendors:
IBM is tightly focused on server sales and the development of clouds, which can be sold, rented, or deliver profitable services.
For cloud computing, “why wouldn’t you run it on Linux?” [IBM's Bob Sutor] asked, because Linux can deliver all kinds of virtualization and those who want Windows desktops need never know they’re not.
Thanks to clouds IBM can profitably deliver thousands of desktops that look like Windows but have Linux on the back-end. It can also sell servers that are compatible with its clouds at the deepest level. [snip]
Sutor and Zemlin also discussed what might be called the “corporate-cloud boundary,” the point in the growth of an enterprise system where building a cloud starts to make economic sense. Clouds start to make sense when heavy virtualization takes place, Sutor said.
And Linux will make IBM money when used in cloud-based products which are metered to customers, often by the hour. One big reason that open source will help fuel the rise of cloud computing, while often becoming second fiddle to platforms in the cloud, is that software is only a component of a computing environment, albeit an expensive one and cloud economics almost always favor the incorporation of open source products. However, something that open source has only been partially successful at incorporating as a value creator (essentially, only the cost of development) is what IBM’s Sutor clearly stated: economies of scale.
It’s not that cloud-enabled services such as Ubuntu with Eucalyptus can’t provide cloud services; they can. However, they aren’t part of a finished solution and don’t create an ecosystem that provides intrinsic economic or technical benefits in a situated setting. This is because a significant part of building a robust and successful cloud computing environment is creating a complete and compelling finished solution that includes infrastructure, management, research & development, and support. All of these come together to create a service comprehensive enough that computing can take place, or significantly, can be an effective target environment for outsourcing. When a computing ecosystem consists of multiple stakeholders that depend upon it, costs and effort can then be distributed. The more customers a cloud provider has, the better the outcome for the cloud provider and its customers (eventually becoming “too big to fail“, an additional cloud computing issue that’s outside of this discussion, but an important one as well.)
At the end of the day, cloud providers generally have two major advantages they can
April 18th, 2009
Google's cloud gets ready for the enterprise
Last week’s announcement of Java support for Google App Engine (GAE), along with a host of new features aim specifically at businesses, served to reconfirm the Internet giant’s interest in providing enterprises with its evolving cloud computing capabilities. So what’s new and what’s missing in GAE for enterprises that are looking to try out the cloud?
These additions move Google much closer to the enterprise space than it was previously, though there is still work to do.For its part, the enterprise software market has so far remained fairly resistant to Google’s offerings, which range from search to SaaS products, at least compared to the uptake in software from established enterprise leaders such as Microsoft, IBM, Oracle, and SAP.
But today’s increasingly broad interest in cloud computing may provide Google with an ideal opening. That is, if they can successfully deliver their unique strengths in the technical and economic underpinnings of networked computing in a form businesses find compelling for cutting costs, becoming more agile, and transitioning successfully to the next generation of computing.
The good news for Google: Of the big four enterprise firms mentioned above, only Microsoft currently has a credible cloud computing offering heading to the market with Azure, though IBM and Oracle are certain to follow shortly. Thus there is a clear opening for Google if it can offer businesses what they really need in the cloud before the leading enterprise software firms manage to arrive. It won’t be easy; the network is Google’s turf and it is clear that the platform wars have indeed returned, as I discussed a few weeks ago.
The original GAE was primarily a consumer Web application-focused cloud computing offering at the outset and was concerned about performance and high scalability much more than it cared about a robust feature set. It took cloud computing minimalism to a new level, though again, that was also about making it run quickly. GAE also required that you adopt its choices in programming language (Python), database (proprietary datastore), and request/response application model. And while it’s not giving these up, the latest additions promise to bring many of the capabilities and technologies that enterprises will require and open up Google’s nascent cloud computing platform for a much broader range of uses. As we’ll see, these additions move Google much closer to the enterprise space than it was previously, though there is still clearly work to do.
Let’s take a look at exactly what the new GAE offers from an enterprise perspective and then look at what
March 26th, 2009
Cloud computing and the return of the platform wars
Sun’s announcement last week that its new Cloud Compute Service would be API compatible at a storage level with Amazon’s popular S3 service is probably the first real evidence of the coming platform war in the cloud computing space. It’s a war that’s likely to be significant and protracted given the number of players that are lining up for a shot at what’s sizing up to be the next big development in the evolution of computing.
It must be easy to move existing applications and data into the cloud.The final outcome of this struggle, as it’s been in many earlier platform battles over personal computer hardware, operating systems, databases, and even the Web itself, will be the result of a fairly predictable and oft-repeated cycle of events (see diagram below) for which a small number of large winners are likely to emerge victorious.
When we look back many years from now, it’s probable that cloud computing will be regarded as both a momentous and major change of course in the history of software; many future computing platforms will be created and operated by what seemingly amount to utility companies. While this might seem like a boring future for computing, it’s a necessarily pragmatic evolution as the very size and scope of modern software requires new economic models in order to remain cost effective. Virtually any online application these days has to scale to a few million users as quickly and inexpensively as possible.
However, cost is just one of the interesting aspects of cloud computing and the stakes are huge: The Wall Street Journal reported today that the cloud computing industry is estimated to reach $42 billion by 2012, or nearly half the entire software business.
The world of software has recently, at least up until now, been moving slowly and steadily towards an increasingly commoditized, virtualized, and open sourced future. Cloud computing in its present form does appear to herald a return to the classical days of big vendor computing — and all the baggage (good and bad) that it implies — along with some unique twists of its own.
This means a lot of the old issues are back: Proprietary, commercial systems running our applications, very real risks of vendor lock-in, the requirements of adapting our businesses to difficult-to-customize one-size-fits-all computing models, and many others. While some companies are still dealing with these issues from the last round of computing platforms, a growing percentage of them have opted recently for more open and collaborative offerings such as open source, LAMP, and lightweight applications stacks from non-commercial vendors. Non-trivially, cloud computing also adds a number of all new concerns to the mix as well. Governance issues such as risk and trust are prominent as well as run-time concerns around the latency and performance of cloud-based applications.
The modern network era, however, has ushered in SaaS and Web 2.0 services which have been chipping away with a growing degree of effectiveness at the do-it-all-yourself view of IT that we’ve classically held for so many years. New computing models that take advantage of the inherent strength of networks to harness resources, distribute costs, and accumulate shared value have become compelling precisely because they’ve now become fully realized as products over the last year. They are now also (mostly) ready for prime-time for businesses to use and rely upon. This is true of both the open API model, which is a more application specific form of cloud computing as well as the more horizontal type such as storage, processing, and infrastructure, which is dominating the cloud discussion at the moment.
Cloud computing: A Faustian bargain?
Of course, many organizations would not consider dealing with these issues if it wasn’t for the
March 3rd, 2009
Cloud computing: A new era of IT opportunity and challenges
It doesn’t take long to get a good feel for the potential of cloud computing and how it can offer ready access to entirely new business capabilities, less expensive IT resources, and unrivaled flexibility for businesses of every size. Since becoming a hot topic early last year as major vendors, including top firms such as Amazon, Google, and Microsoft, jumped on the bandwagon with a wide-range of offerings, cloud computing has consistently stayed on the industry’s radar. One of the bigger challenges IT departments will face this year is whether they can take the plunge with cloud computing quickly enough to benefit their organizations as a whole.
With leading companies still joining the movement — including IBM, HP, and Salesforce — cloud computing has moved from a cottage industry to one of the bigger growth areas in the computing business, just as the industry as a whole begins to take serious lumps from the recession.
The onus is now on businesses to take advantage of cloud computing to cut costs and become more agile. In the process, they will have some hard choices to make — and some intriguing ones as well — if they want to access the many advantages that cloud computing platforms can provide.
There are also some non-trivial challenges involved in adopting cloud computing that must be watched closely as well. These includes a long list of issues such as the security and privacy of business data in remote 3rd party data centers, the dreaded concerns about platform lock-in, worries about reliability/performance, and even fears about making the wrong decision before the industry begins to mature.
However, in a business environment where change is almost mandatory in order to survive, cloud computing appears to offer significant economic benefits if the risks can be offset. Hence, one of the bigger challenges IT departments will face this year is whether they can take the plunge with cloud computing quickly enough to benefit their organizations as a whole.
ZDNet’s own Phil Wainewright has covered some of the more interesting issues swirling around cloud computing of late including the default lock-out that occurs in the event of the demise of a cloud computing provider as well as the brewing SLA battles between the major providers. This underscores how the cloud computing space is where the new platform wars are forming and it’s sizing up to be as big or bigger than earlier ones. The good news for now: In a wide-open new industry, there is no clear leader today and choice prevails.
This brings up the side discussion of what actually constitutes cloud computing, since everyone seems to be applying the label to anything that runs on the network. Is it Web hosting of your application code? Is it a software platform as an on-demand service? Do SaaS applications count as cloud computing? The answers to all these questions are a qualified yes; the answer hovers roughly around the outsourcing of computing of any kind (CPU, storage, apps, etc.) using a shared cost, commodity utility model. In general, you know if you’re involved with cloud computing of some kind if you’re receiving a bill for computing services being done for you somewhere else but which you can access directly.
I used the term commodity utility model since cloud computing providers aren’t monopolies today (unlike a lot of the other utility services we use in business) and currently compete actively with each other on features and pricing. This means that CPU cycles, bandwidth, and application logins in the cloud will be extremely cheap and extensively commoditized for the foreseeable future. This constant competition creates continuous pressure to drive down the costs and increase the capabilities of cloud computing platforms in a way that just doesn’t happen naturally within IT organizations today. In other words, just like most businesses don’t generate their own power or create their own financial institutions to keep their money in, increasingly they won’t keep their computing in largely parochial, private capabilities that can’t leverage the economies of scale, innovation, and efficiencies of dedicated providers.
Enterprise cloud computing: Some assembly required
As a new industry, there is a lot of choice in cloud computing today and will continue to be more until the inevitable shake-out occurs and the winners begin to emerge. That also means there is no dominant model for how cloud computing should be delivered and this is resulting in some interesting fragmentation in the market already. Some cloud computing offerings are so generic (Amazon’s Elastic Compute Cloud, aka EC2) that they are nothing more than sophisticated on-demand hosting services while others offer nearly everything you need to create software, as long as you use their programming model, frameworks, tools, and management systems (Google App Engine). Which model a business chooses will have deep ramifications for how they can take advantage of cloud computing and because of this, most organizations will likely have multiple providers.
Is it time to declare the death of the enterprise data center? No, not quite yet, but it’s coming.
Let’s also make no mistake, most IT executives currently think very few cloud computing solutions are properly enterprise ready today. Though a number of them have come a good bit of the way towards
December 4th, 2008
The emerging case for open business methods
The Internet has been the genesis of countless useful business innovations over the last several decades. These include a globally unified e-mail network, the advent of search engines, the rise of rich user experiences and SaaS, and most recently cloud computing to name but a few. But perhaps one of the most far-reaching innovations was the Internet’s ability to enable the creation and organization of the open source movement, arguably the most important progenitor to most things 2.0 and perhaps eventually to business in general.
The business world of the next decade will look quite different from today and require different values and management styles to match.While open source itself is mostly closely associated with the creation of free software in the Internet age, the associated concepts of open collaboration and open information sharing has roots in the early scientific community, where the (mostly) transparent sharing of ideas and data was the most effective way to enable progress. Related trends such as open data and the Web 2.0 model of open content reflect the now widespread activity of open information sharing and exchange using primarily a commons-based approach, enabled greatly by pervasive world-wide networks such as the Internet.
Given the current size of the Internet, about 1.2 billion people, tapping into and unleashing the enormous productive capacity and latent knowledge at the edge of the network has become one of the most powerful and underutilized economic resources available to businesses today. Accessing this effectively ahead of the competition has been the explicit (though too often unstated) premise of countless Internet startups. It’s turned out that companies with a native “Web DNA” have the best perspective to see the fundamental potential here better than their traditional business counterparts. Most businesses still look at the network mostly as a secondary channel for activities such as value inputs, customer relationships, and worker communication and collaboration and not the most valuable one. This is primarily because they’ve traditionally had more dominant and important channels.
But this is starting to change. Through continuous and very widespread experimentation and endeavor, open models of communication, information, and even the creation of products and services, have emerged as a proven and highly effective way to directly drive business activity in entirely new and powerful ways. It’s largely thanks to things like open standards, open source, and open content (aka user generated content and peer production) which have tremendously challenged and even up-ended the old world models of proprietary formats, commercial software, and traditional media respectively.
All this might seem a familiar story but these methods, still too pent-up in a world of high technology and Internet businesses, have begun to spread beyond their origins in software and content and become an significant avenue of opportunity across all aspects of business, albeit involving both great rewards and significant challenges. Particularly in these trying economic times, open models have begun providing the crucial, raw ingredients for a fresh, new perspective in the way we look at how we operate our businesses.
Enterprise 2.0 is just one good example of the emerging intersection of many of these open trends combining open collaboration where anyone can collaborate with globally visible information sharing. It’s also one of the most immediately appealing models to most businesses since it doesn’t necessarily entail many of the risks and challenges that more external modes of open engagement would require. In other words, businesses today are generally comfortable with achieving objectives with the assistance of 3rd parties in an outsourcing or partnership model, but they are generally not as comfortable with using open sourcing or crowdsourcing to achieve the same objectives.
The reasons organizations are wary of more open and 2.0 models for sourcing work and information are many and varied but it generally boils down to four reasons:
- Lack of familiarity. Despite the extensive body of knowledge that has accumulated, particularly in the software and media industries, there is a broad lack of understanding of how open models work for those whose line of business lies outside the technology industry. These include how to start and successfully manage open business methods as well as the various governance, legal, and brand issues that open models involve, to name just a few. While many businesses are in fact evolving and expanding their Internet channel, most executives are not yet tracking how these open methods can potentially generate much greater value for less cost across their organization, something that most businesses would find very attractive right now.
- Poor evidence in their industry. Most organizations are medium-to-slow adopters or fast followers, not
An internationally recognized enterprise architect and business strategist, Dion Hinchcliffe has been working for two decades with leading-edge methods to accelerate project schedules and raise the bar for software quality. You can follow Dion on Twitter.
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