We all know the conventional wisdom about cloud computing: it's cheap, fast and easy. But is it really that much cheaper? Or is it simply optics that make it appear cheaper?
Optics can absolutely change your perception of the cost of something. Just think about your morning jolt of coffee. $3.50 for a no-foam, half-caf, sugar-free vanilla latte doesn't seem that expensive. It's a small daily expense when viewed by the drink. It appears even cheaper if you pay for it with a loyalty card where you don't even have to fork over the dough and the vanilla shot is free. But what if you bought coffee like IT buys technology? You would pay for it on an annual basis. That $3.50 latte would now be about $900/year. For coffee? How many of you would go for that deal? That's optics and it plays right into the marketing hands of the public cloud services your business is consuming today.
But optics aside, is that $99/month per user SaaS application just another $20,000 per year enterprise application? Is that $0.25 per hour virtual machine just another $85 per year hosted VM? No, it's not the same. Because the pricing models are not just optics but an indication of the buying pattern that is possible. If you buy it the same way you do traditional IT, then yes, the math says, there's little difference here. The key to cloud economics is to not buy the cloud service the same way you do traditional IT. The key to taking advantage is to not statically and rotely consume the cloud. Instead, consume only what you need when you need it — and be diligent about turning off when you aren't.
In my last post, I wrote about the evolving need for big business to source generic capabilities from business partners/vendors. This shift provides an enormous opportunity as well as a threat for technology vendors and CIOs.
I’m not talking about the wholesale outsourcing of IT. Rather, the selective sourcing of business capabilities and business process through software-as-a-service (SaaS), most likely deployed through cloud-based platforms (capability-as-a-service, or CaaS). Software and hardware vendors need to rethink their business from the customer’s perspective. They must figure out how to transform their products into services that deliver business capabilities and business outcomes.
If you’re a tech vendor, this means that you need to analyze each target industry and determine which business capabilities are likely to be strategic, and which are most likely to be generic. In retailing, for example, strategic capabilities might center on mastering customer data to create unique and valuable customer experiences as well as price optimization. Whereas capabilities around merchandising and assortment planning may be generic across many retailers (even though most merchandisers I know would never admit to this), these generic capabilities are likely to be delivered as SaaS in the future.
If you have existing solutions that target an industry’s generic capabilities, they are prime candidates for delivering the capability to the market as a service. Where your solutions target strategic capabilities, you will need to provide highly customized services through strategic partnership arrangements.
It's a little-known fact that both Southwest Airlines and the (soon-to-be) famous Yee-Haw Pickle Company began life on a cocktail napkin. What better medium to illustrate why Windows Intune should be on your radar as an I&O leader or professional?
In the late 1990s, no one could have imagined what PC management would eventually entail in an always-on, always-connected world. Those of you who know me, know that I've either managed or marketed 3 different client management product lines in my career. All of the vendors in the space, including Microsoft, have spent the last 15 years trying to make it easier to manage Windows PCs on an enterprise scale, for utility, security, business continuity and performance.
A mess? I'd say! I spoke with a mid-sized oil company a few weeks ago about their client management tools, processes and maturity. They use only a fraction of System Center Configuration Manager (SCCM) 2007's capabilities. The weekly patch cycle and packaging alone are a full time job for one person, and endpoint protection and remediation are still wishlist items. Half of their assets sit at the end of satellite links 50 miles from the nearest towns and they have a fleet of trucks manned by a small army of techs dedicated to just fixing PC problems over 5 big western US States. Expensive? You bet. Ineffective? Absolutely.
As the end of 2012 approaches there is one clear takeaway about the cloud computing market — enterprise use has arrived. Cloud use is no longer solely hiding in the shadows, IT departments are no longer denying it’s happening in their company, and legitimate budgeting around cloud is now taking place. According to the latest Forrsights surveys nearly half of all enterprises in North America and Europe will set aside budget for private cloud investments in 2013 and nearly as many software development managers are planning to deploy applications to the cloud.
So what does that mean for the coming year? In short, cloud use in 2013 will get real. We can stop speculating, hopefully stop cloudwashing, and get down to the real business of incorporating cloud services and platforms into our formal IT portfolios. As we get real about cloud, we will institute some substantial changes in our cultures and approaches to cloud investments. We asked all the contributors to the Forrester cloud playbook to weigh in with their cloud predictions for the coming year, then voted for the top ten. Here is what we expect to happen when enterprise gets real about cloud in 2013:
Well if you're going to make a dramatic about face from total dismissal of cloud computing, this is a relatively credible way to do it. Following up on its announcement of a serious cloud future at Oracle Open World 2011, the company delivered new cloud services with some credibility at this last week's show. It's a strategy with laser focus on selling to Oracle's own installed base and all guns aimed at Salesforce.com. While the promise from last year was a homegrown cloud strategy, most of this year's execution has been bought. The strategy is essentially to deliver enterprise-class applications and middleware any way you want it - on-premise, hosted and managed or true cloud. A quick look at where they are and how they got here:
Cloud Services Offer New Opportunities For Big Data Solutions
What’s better than writing about one hot topic? Well, writing about two hot topics in one blog post — and here you go:
The State Of BI In The Cloud
Over the past few years, BI business intelligence (BI) was the overlooked stepchild of cloud solutions and market adoption. Sure, some BI software-as-a-service (SaaS) vendors have been pretty successful in this space, but it was success in a niche compared with the four main SaaS applications: customer relationship management (CRM), collaboration, human capital management (HCM), and eProcurement. While those four applications each reached cloud adoption of 25% and more in North America and Western Europe, BI was leading the field of second-tier SaaS solutions used by 17% of all companies in our Forrester Software Survey, Q4 2011. Considering that the main challenges of cloud computing are data security and integration efforts (yes, the story of simply swiping your credit card to get a full operational cloud solution in place is a fairy tale), 17% cloud adoption is actually not bad at all; BI is all about data integration, data analysis, and security. With BI there is of course the flexibility to choose which data a company considers to run in a cloud deployment and what data sources to integrate — a choice that is very limited when implementing, e.g., a CRM or eProcurement cloud solution.
“38% of all companies are planning a BI SaaS project before the end of 2013.”
Services budgets represent 10% of annual IT operating and capital budgets[i], but Forrester sees considerable evidence that the influence of these IT Services vendors is proportionally higher — and growing dramatically. While there are several reasons for the rising importance of your services partners, at the most fundamental level Forrester sees that:
Business professionals need immediate access to tech-enabled innovation. Most strategic business initiatives now have an underlying technology component. Service providers come to the table with the tech savvy, vertical market expertise, and best practices to make these initiatives work.
IT professionals can’t keep pace with business demand. The volume and complexity of technology demands from business professionals means that traditional IT organizations have difficulty keeping pace. They too need to work with the best mix of IT service providers to meet the demands of their business. Effective supplier management is quickly becoming the most essential skill in IT organizations.
Just three months after SAP acquired SuccessFactors, a cloud leader for human capital management solutions, for $3.4 billion, it has now announced the acquisition of Ariba, a cloud leader for eProcurement solutions, for another $4.3 billion. Now, $7.7 billion is a lot of money to spend in a short amount of time on two companies that hardly make any profit. But it’s all for the cloud, which means it’s for the future business opportunity in cloud computing services. So far, so good; SAP has invested and acquired quite a number of cloud companies over the past years: Frictionless, Clear Standards, Crossgate, etc. The difference in this most recent acquisition is the big overlap with existing solutions and internal R&D.
Following the first wave of cloud acquisitions, SAP was sitting amid a zoo of cloud solutions, all based on different platforms: ePurchasing, CRM-OnDemand, BI-OnDemand, Carbon Impact, ByDesign, Streamwork . . . They all used very different technology, resulting in big integration and scale challenges behind the scenes. The market welcomed with open arms SAP’s announcement 1.5 years ago that it would consolidate its cloud strategy on the new NetWeaver platform for both ABAP- and Java-based cloud solutions.
SaaS vendors must collect customer insights for innovation and compliance.
As of the end of last year, about 30% of companies from our Forrsights Software Survey, Q4 2011, were using some software-as-a-service (SaaS) solution; that number will grow to 45% by the end of 2012 and 60% by the end of 2013. The public cloud market for SaaS is the biggest and fastest-growing of all of the cloud markets ($33 billion in 2012, growing to $78 billion by the end of 2015).
However, most of this growth is based on the cannibalization of the on-premises software market; software companies need to build their cloud strategy or risk getting stuck in the much slower-growing traditional application market and falling behind the competition. This is no easy task, however. Implementing a cloud strategy involves a lot of changes for a software company in terms of products, processes, and people.
A successful SaaS strategy requires an open architecture (note: multitenancy is not a prerequisite for a SaaS solution from a definition point of view but is highly recommended for vendors for better scale) and a flexible business model that includes the appropriate sales incentive structure that will bring the momentum to the street. For the purposes of this post, I’d like to highlight the challenge that software vendors need to solve for sustainable growth in the SaaS market: maintaining and increasing customer insights.
Extending core offerings through marketing technology. eCircle joins Teradata’s two prior investments in marketing technology: Aprimo Marketing Studio (AMS) and Aprimo Relationship Manager (ARM), which were separately acquired in previous years. Teradata confirmed that it will position the eCircle product within its standalone Aprimo division.
Complementing data warehousing with big data analytics. Through the acquisition of Aster Data, Teradata moved to beef up its presence in analytics for large-scale data sets, such as log files, clickstream, and sensor data. eCircle’s platform is built on a similar (Hadoop-based) platform, allowing marketers to co-mingle and analyze customer records, campaign data, online behavioral interactions, and more.