Cloud Computing and the Skeptics

I was just checking the comments to a recent CNN post on Cloud Computing, a story that compares it to the electric utility grid. Aside from my comment (positive), almost every other comment was fear and doom.

It’s not surprising. Any time a disruptive force like Cloud Computing threatens to redefine an entire, huge industry, the naysayers will come out of the woodwork. 

Problem is, you can build or buy your own super powerful and secure technology, but at what cost and at what risk? Cloud puts the power in the hands of the buyer. And vendors suddenly need to deliver a cost-effective, working product. Amazingly, that’s still rare in the software industry.

Each passing day the technology in the cloud gets better, faster, cheaper, more secure, more customizable, more reliable. It’s no longer a matter of if, but when.

 

Trade Information Utilities in the Cloud

Often when trying to explain the concept of cloud-based platforms, I reference the electric utility analogy. Back in 2007, we even had a byline article published by Supply & Demand Chain Executive magazine titled “Global Logistics Power Plants”.

CNN recently picked up on the concept of comparing power plants to cloud computing. Their position goes beyond supply chain and trade and into computing in general, but the concept is the same. Don’t build your own power plant. Hook up to an existing grid and pay a small monthly fee to access infrastructure you could never ever get by building it yourself.

The cloud, SaaS, on-demand noise is really heating up.

Sky is the limit for Cloud Computing (if only people could understand it)

To those of us who spend every workday talking about cloud, SaaS, on-demand and seeing it work with major customers, the whole concept is a no brainer. But the market is moving so quickly and the jargon marketing bandwagon machines shift monthly with the hype tide. Bottom line is it’s confusing. The average person must now think “what is this new thing called cloud that EVERYBODY is talking about these days.”

I came across a good story from Rich Miller at Data Center Knowledge, who also rants about the confusion and hype. He also dug up some interesting research facts, but the one that struck me was this one:

“UK. Research released Tuesday by Peer 1 Networks found that 88 percent of IT decision makers don’t use cloud computing technologies, with 39 percent citing “lack of knowledge” as a barrier.”

Wow. These are IT decision makers that are even confused.  I guess we have more work to do to address this major awareness problem.

Try software before you buy

One of the great faults of the software industry is this little thing called hype. We have all seen the marketing machines tout how their software will solve all your problems, on a single, “seamlessly integrated” solution. The result? Nobody believes a word.

Installing software is hard and fails more than it succeeds. But as the paradigm shifts from buy and install to a SaaS rental model, the buyer can take advantage of various free or low-cost activation programs because the software is already in place and running for other customers.

Why would vendors do this? It helps them differentiate, it changes the mindset from “trust me” to “go see for yourself” and it helps them distinguish between the serious potential buyers and the tire kickers.

What does cloud computing mean?

I recently saw a blog from Adrian Gonzalez from ARC Advisory Group wondering what this “cloud” thing really about?  Is it simply the latest jargon (As I have ranted before in this blog), or is it something different? Interesting perspective.

I continue to maintain that in the world I work in — inter-company, business to business trade and logistics — this whole concept of delivering technology and a network over a shared, web-based platform is the ONLY way to automate without spending a small fortune and many years doing it.

Salesforce.com big at Oracle OpenWorld

Earlier this week, I spent a day at OpenWorld to see if there were any big on-demand happenings going on. There were. Salesforce.com was ALL OVER the event. You really couldn’t miss their massive booth, Mini Cooper giveaways and “blue sky with fluffy clouds” branding that now dominate their marketing materials. I also noticed the .com missing in the materials…now just Salesforce. The cloud company?

Oracle let them come to the show and SFDC spent millions making sure they made a mark. Lots of speculation why Oracle let them in. SFDC CEO Mark Benioff made a point to thank Oracle during his speech (they are a big hardware customer, I guess). Ellison has been in the news recently taking shots at Salesforce.com, cloud, on-demand,  but Benioff basically just hammered away on the single instance, shared, multi-tenant delivery model in his speech which, in effect, blasts Oracle the software company, but in an educational context.

The Oracle girls made sure to give everyone waiting in line for Benioff’s speech (100’s of us, in the driving rain) a white “Oracle CRM On Demand” hat, but that really was too little, too late. That theater was packed but only a few white hats could be seen. 

Salesforce.com is disruptive technology. Ellison is correct when he says they will still need Oracle “stuff” to run their platform but he’s missing one point. Think how may of SFDC’s 62K customers suddenly didn’t need to buy their own Oracle servers, databases, etc. to make their CRM system run? Good for the customer, bad for Oracle.

There are more chapters in this story. These companies are intertwined beginning with Ellison’s early investments, they’re based 30 miles apart, and they have brash, smart CEOs who are locking horns at every turn. Should be interesting to follow.

Larry Ellison mocks cloud computing

Here’s a video of Mr. Oracle mocking cloud. He’s right about the industry jargon nonsense…the flavor of the month was On-demand, then SaaS, then Cloud, and who knows what’s next pure Web-based technology.  But he’s missing that fact that it’s not just hardware and applications. What about the evolution of delivering specialized, integrated partner networks along with the applications in the cloud? You know, the thing YOU MUST HAVE to support various inter-company business processes?

Sure, Oracle will build a network for you, but at what cost? If you read the comment posts below the video, you get a sense of the market’s confusion. One person says “Sounds just like Ken Olsen, CEO of Digital, who continually debunked the PC,” while another says “The first time I used ‘cloud computing’ was with an IBM 360 and 2260 dumb terminal, around 1969 I believe. Nothing new here that I can see…”

Lastly, for all the mocking of Salesforce.com, he keeps talking about them. Oracle’s on-demand strategy came up recently during the Oracle earnings call.  It will not be easy for Oracle to change, so if cloud/SaaS/on-demand keeps marching its way into the IT world, they may be in for a rough ride.

SaaS in tough times

Interesting story recently appeared on ZD Net about SaaS and how it appears to be thriving in these tough times. You can see the article here.  This doesn’t surprise me. The risk and expense of traditional license software has never been a good deal for buyers. On-demand, SaaS solutions have become a viable alternative, with multiple proven examples of success across business segments. The economy is that big external event that is forcing buyers to take a serious look.

SaaS platforms for global trade defined – Part VII, They must include a community of companies and partners.

Reason #1 — SaaS platforms are designed to support processes between multiple self-governing entities.   (read)

Reason #2:  SaaS platforms typically are industry focused, and as a consequence have a library of rich, well-used and proven business objects that are specialized and relevant to a specific industry. (read)

Reason #3: SaaS platforms that support global trade automation are multi-enterprise AND single instance at the same time. (read)

Reason #4: SaaS platforms are more than collaborative software applications deployed on-demand over the Web. (read)

Reason #5:  SaaS platforms do not replace “inside the 4 walls” ERP or other enterprise systems, they augment them.  They “bolt into” them; they “extend” them. (read)

Reason #6: SaaS platforms ARE systems of record for transactions that happen in your trade network. (read)

Here’s Reason #7: Applications are just the tip of the iceberg. SaaS platforms for trade involve, and include, and leverage a community of companies and partners.

By its very nature, global supply chain and trade management requires interaction between a large, geographically dispersed community of partners within the industry. Each is a stand-alone company, big and small, with its own IT systems.

If at the tip of the iceberg are collaborative inter-company software applications delivered over the Web on a subscription fee basis, and in the vast middle section of the iceberg, almost entirely under water, is the B2B integration infrastructure, data management and standardization services, then the foundation of that iceberg, well below the waterline, is an ever-increasing community of “linked in” partners that have managed to stitch their own proprietary systems and processes to the universal hub that is shared by others. 

The greater the network of partners, the more value the platform can offer to its users. The greater the network, the greater the overall data set, and the better the quality of the data used by all.  It’s an incredibly viral model, but these B2B networks take a lot more time, and are a lot more complex, than what we’ve seen in consumer-to-consumer networks like Facebook, or LinkedIn.  But once a solid foundation of community traction is established they can begin to drive the same kind of “network effect” benefits that these C2C platforms were so successfully able to cultivate.

SaaS platforms for global trade defined – Part VI, THE transactional system of record

Reason #1 — SaaS platforms are designed to support processes between multiple self-governing entities.   (read)

Reason #2:  SaaS platforms typically are industry focused, and as a consequence have a library of rich, well-used and proven business objects that are specialized and relevant to a specific industry. (read)

Reason #3: SaaS platforms that support global trade automation are multi-enterprise AND single instance at the same time. (read)

Reason #4: SaaS platforms are more than collaborative software applications deployed on-demand over the Web. (read)

Reason #5:  SaaS platforms do not replace “inside the 4 walls” ERP or other enterprise systems, they augment them.  They “bolt into” them; they “extend” them. (read)

Here’s Reason #6: SaaS platforms ARE systems of record for transactions that happen in your trade network.   They are the system of record for the transactions that occur beyond your four walls between you and your partners and in many cases — this is important — SaaS platforms are the systems of record for what transpired between your partners (e.g. transactions to which you were not a party, but to which you have some interest or claim). 

The transactional information being collected gives SaaS platforms a hidden, less obvious, yet enormous side benefit:  they are data hubs.  They accumulate and hold huge amounts of detailed and hard-to-get data about the business processes that happen among partners, beyond your four walls. By applying business analytic tools, companies can tap into and see information that drives insights about their business that they could never accomplish before. 

Unlike traditional on-premise ERP software, or the first generation SaaS software applications that are now replacing those on-premise solutions, the SaaS platform benefits from a data entry multiplier effect that simply cannot be matched by “inside the 4 walls” systems.

SaaS platforms harness the power of a network of linked companies that are all adding and enriching data to the business objects that are transacted every day.  Thus, the total data set available to any one partner on the platform can easily increase by several orders of magnitude.