Structure 09: Cloud Computing is Changing the World, But My Old Products Will Still Work

Balakrishna Narasimhan

Last week, I attended GigaOM's Structure09 conference, which was an interesting and well-run conference. It was fun to see industry thought-leaders like Werner Vogels, Marc Benioff, Chuck Hollis, James Urquhart and many others. For me, the conference confirmed many of the things we've written about recently:

1) Broad acceptance that enterprises are interested
There's absolutely no question that cloud computing has moved into the mainstream of enterprise technology. Everyone from Microsoft to Accenture to HP to IBM to SAP admitted as much. With the worsening economic conditions and the maturation of cloud computing services, enterprises are actively investigating cloud computing. The main differences of opinion between the legacy vendors and companies like Salesforce and Amazon lie in how quickly and broadly companies will adopt cloud computing.

2) Big vendors still at conceptual level, and trying to constrain the cloud
Large vendors like HP, IBM, SAP and Microsoft are still grappling with cloud computing at a conceptual level. It's clear that they recognize the importance of the profound shift that's happening in the industry but are not sure what to do about it.

Russ Daniels, HP's CTO of Cloud Services, talked about cloud computing as the brain that sits above the nervous system of the internet, and HP's vision of "everything-as-a-service". While interesting conceptually, there was little beyond abstract concepts in Russ' talk. If you were listening closely, there were also hints of how HP wants to preserve the status quo. While saying that the cloud was transformational, Russ made a point of saying that the cloud is best for solving new problems rather than for business automation, which current systems and processes do very well. I agree that the cloud can help solve new problems or enable new processes but it's also very disruptive to the status quo. Current approaches to business automation are expensive, brittle and leave CIOs managing the entire stack. Cloud platforms and applications change this completely and enable nimbler, faster processes.

Microsoft's Yousef Khalidi admitted that every enterprise he's talked to recently wants to move to the cloud but are held back by concerns about trust, performance and availability. He went on to say that enterprises have a variety of workloads, many of which will stay on-premise for a long time. It's hard to disagree with that premise but the question is whether Microsoft is really going to accelerate the movement of the majority of workloads to the cloud, given what that would mean to their revenues and profits.

SAP's Vishal Sikka continued along the themes he used in a recent CIO.com interview. He acknowledged the importance of cloud computing, but at the same time said that it's best suited to "simple transactions" and edge process within enterprises. Japan's largest employer would beg to differ with Vishal.

IBM's Willy Chiu talked about how IBM is approaching cloud computing from the ground up. They're partnering with universities to improve education on the topic and creating global innovation centers to explore use cases. I was impressed by the comprehensiveness and ambition of the approach. However, I was disappointed by the conclusion - companies can adopt cloud computing by purchasing a "Cloudburst" appliance, then having IBM build them a private cloud, and eventually by moving to IBM's public cloud. This sounds an awful lot like a "cloudwashing" of IBM's current offerings.

3) Too much discussion of clouds at the infrastructure rather than platform layers
The entire cloud conversation at Structure was very focused on infrastructure. As Daryl Plummer of Gartner has noted, Cloud computing is not about infrastructure. It's about a new delivery and consumption model for IT services that are elastic, metered and abstract away the SW stack. The conference was mostly focused on the lowest layer of the stack and didn't really talk about how the cloud enables transformation at the business process level. Greg Papadopoulos of Sun was one of the few people to talk about this, although he didn't dwell on it.

The thing that excites us most about cloud computing is its ability to help companies achieve the impossible. A great example of this is Starbucks' Pledge5 campaign. 21 days before the inauguration, Starbucks decided that they wanted to launch a national campaign (online, in stores and on Facebook) to drive community service across the nation. They needed to build a massively scalable infrastructure and application to do this. Before the cloud, this would've been hard to pull off even in time for the next inauguration. With Salesforce's Force.com platform, we were able to quickly build an application that performed flawlessly in supporting over 1M transactions across 10,000 store locations and millions of Facebook and Twitter fans.

The danger with just talking about infrastructure is that we miss the broader opportunity to engage the business and turn this into a conversation about achieving business outcomes faster and cheaper, rather than conversations about bits and bytes, which causes every business owner's eyes to glaze over. The cloud enables IT to change the conversation and it was unfortunate that this was rarely mentioned during the day.

4) Little mention of customers until Marc Benioff
The highlight of the day was Om Malik's interview with Marc Benioff. Marc brought not only brought his trademark humor to the event but brought a much-needed pragmatism and focus on what really matters. Customers. Marc was literally the first person all day to mention customers. He gave the room, which was largely composed of vendor marketing types, the best advice that we'll get - "Customers have been sold to by vendors for 30 years and they're tired of it. Customers want to talk to other customers and learn from them." Great advice and something we should take to heart.

In fact, we're turning that idea into action in the coming weeks when we'll start a new series of posts with our customers. If you're interested in being featured, leave us a comment below.

5) A few fun highlights of the day
Marc on Larry Ellison
Larry said something really zen on the earnings call - without on-demand, there's no on-premise and without on-premise, there's no on-demand.

Marc on Microsoft
I hear Microsoft is coming out with an Azune cloud.

and finally, Om's fly threads

Part I - Beware the Wolf in Blue Clothing

Narinder Singh

Its not unexpected, a look back only a few years tells a similar story. When left trailing in disruptive innovation, large legacy vendors muddy the market while trying to play catch up. IBM's push of the private cloud concept is analogous to their and other providers 'leadership' in 'helping' develop web services standards, In reality they created substantial complexity until they could catch up. This led to a bottoms up revolution that brought about alternatives like REST. We are now seeing a dangerous repeat of this pattern, with an even bigger set of stakes - the rate of the cloud computing revolution.

Before examining how forces like how and why its dangerous for the market, we want to lay out our core beliefs on how enterprise CIOs can actually pragmatically view hybrid cloud models (view a great intro video on what cloud computing is).

Private Cloud, Private Internet?

Private Clouds make as much sense a having a private Internet. Leveraging concepts, standards and technologies from the Internet makes complete sense for enterprises large and small. However that is not equivalent to creating a private Internet; nor could it be a substitute for the real Internet. Similarly, technologies like virtualization, elastic infrastructure, interoperability between internal systems and public clouds all make sense. Yet, these are not the same as being a cloud provider or a substitute for public clouds.

This is not simply a matter of semantics. Companies that pursue primary strategies of attempting to replicate the approach of public clouds for purpose of bypassing them may gain some cost advantages and perhaps even some business benefits (quicker scaling) but it's an incremental change. Moving to public infrastructure/platforms is transformational from a cost and activity/focus perspective - especially at higher levels of the cloud stack. Improving the performance of your fleet of horses is no substitute for exploring the benefits of a car.

We strongly encourage companies to pursue improvements to their own IT capabilities through concepts and technologies from cloud computing - but without looking at it as a long term substitute for what real clouds can deliver. It will always be important to make sure public clouds work seamlessly with existing IT infrastructure and applications. The danger lies in falling prey to focusing on private clouds and letting IT teams and organizations preserve the status quo (for the most part) while telling leadership that they're doing something about cloud.

Private Clouds, Public Clouds - Is there anything in between?

At the same time, not all clouds will be "open to the public". We do expect very large, unique special cases to exist. At the MIT CIO forum we heard how DISA was providing certain cloud services only to government agencies. Hearing them describe the processes, policies, technologies, independence, and challenges - it was clear they were a cloud provider.

Over time, we could see very large groups or collectives pushing the creation of cloud providers that serve more specific segments (pricing models alone could be one such segmentation). However, a successful cloud provider must have a large, diverse base of customers, massive scale, and a unique angle. We expect this scale and expertise to be beyond all but the very largest organizations, only be focused on narrow threads of what is available in public clouds, and require technology expertise that rivals the best commercial technology providers.

Even where this edge case nuance applies, the reality is that the fastest route to benefit, that also aligns with the long term industry direction, will be to take advantage of what true cloud platforms like Amazon, salesforce.com and Google provide today - after years of refinement. Enterprise architects will quickly see that clouds will operate at different levels (infrastructure, platform and applications), should be analyzed accordingly, and have a substantial set of benefits it would be costly and less effective to try to replicate with private clouds.

In Part II we will discuss how large entrenched vendors like IBM and SAP go about creating confusion in the market and how enterprise CIOs should react.

PS - At Appirio we are genuinely excited about the innovation occurring in our industry and believe that vigorous, candid debate (vs. massive promotion) helps accelerate information dissemination and results in technology professionals making better decisions. To that end, I'd like to issue an open invitation to relevant executives from IBM to participate in an unscripted public webinar to directly share their perspective and debate its merits with us. We look forward to hearing from you !

What Force.com Free Edition & Force.com Sites Mean for the Enterprise

Balakrishna Narasimhan

Today's launch of Salesforce's Force.com Sites and Force.com Free Edition makes it even easier for companies to get started building applications in the cloud. Force.com Free Edition enables companies to build an application on the Force.com platform and deploy to 100 users at no cost, and Force.com sites lets companies build and scale websites without any investment in infrastructure. This is a perfect opportunity for companies of all sizes to build their first cloud-based application...the question is where and how to get started.

The Challenge
We've written before about the benefits of moving your application portfolio to the cloud. The benefits can range from cost savings and a higher level of innovation to strategic advantage in the case of business-critical applications. With the worsening economic conditions, the maturation of companies like Salesforce and the growing drumbeat of successes at large enterprises, more and more CIOs at large enterprises want to evaluate cloud computing.

A CIO's job of charting a path to the cloud is complicated by three things:

1. Complexity of current IT portfolio: Any large IT organization has a plethora of custom and packaged applications, multiple databases, one or more types of middleware and lots of datacenters. Given such complex application and infrastructure portfolios, it's not clear where to start or what the right path forward is.
2. Size and scope of the cloud ecosystem: The ecosystem of cloud applications, platforms and infrastructure has grown rapidly over the past few years. TripleTree research estimates that there are 2000+ SaaS applications, let alone all the platform, infrastructure and service providers.
3. Confusing marketing messages and FUD: The growth and interest in cloud computing have led everyone from IBM to SAP throw their hats in the cloud ring. Each company has their own spin on cloud computing ranging from IBM's "private clouds" to Microsoft's "software + services". Since every vendor talks about cloud computing from their own perspective, it's hard to parse what it actually means to the customer.

The Cloud Portfolio Mapping Approach
We've worked with a number of large enterprises to build the business case for cloud computing, map their application and infrastructure portfolios, and help them chart their path to the cloud. Based on this experience, we've identified 3 things that every enterprise can do to get started on the path to the cloud.

1) Current State Assessment:

The first step is to assess the current state of your IT portfolio and organization. This involves collecting and analyzing budget data, inventorying your projects and infrastructure, understanding where your team is spending time, assessing skill levels and readiness for change across your team and understanding how the IT organization is performing from the perspective of your internal and external customers (we've created a checklist here). The objective of this effort is to identify where your team is spending time and effort, understand how this aligns with your organization's priorities and understand where your major pain points are.

2) Opportunity Identification and Prototyping:

The next step is identifying the areas in your portfolio where cloud computing could help you achieve your goals more quickly and efficiently. It's critical to understand the major cloud computing platforms and typical use cases. Cloud computing is a delivery model that enables you to purchase compute power, storage, application platforms and applications in a fundamentally different way. Cloud computing can be purchased in the form of Infrastructure as a Service, e.g., Amazon Web Services, Platform as a Services, e.g., Salesforce's Force.com or Google's App Engine, or Software as a Service, e.g., Salesforce, Workday, SuccessFactors, Coda, etc. The 150+ enterprises we've worked with use the cloud in many different ways to achieve their business objectives.

After developing a baseline understanding of cloud platforms and use cases, you can identify opportunities in your own portfolio. It's best to develop a long-list of opportunities (based on your pain points and priorities) and get started with a prototype. We've typically focused prototypes on areas that address an immediate pain point and are relatively self-contained. Examples range from an IT project portfolio management application (shown in the screenshots above), to a floor-level manufacturing capacity management application to a Gmail or Salesforce pilot.

Prototypes are critical to demonstrate the impact of cloud computing. We can talk about the benefits of cloud computing, but it's completely different to experience it in your organization. Whether it's the speed and ease of development on Force.com or the search experience in Gmail, experiencing the benefits first-hand creates significant excitement and drives momentum.

3) Roadmap and Impact
The final step is prioritizing the long-list of opportunities. We've typically done this by looking at the risk and reward associated with each opportunity and then sequencing the projects based on your appetite for risk and financial objectives. Turning the roadmap into reality will require a solid business case as well as a change plan for your organization. Prototypes go a long way toward demonstrating the benefits and can be used as real-life data points to support the business case. This makes the business case far more impactful than if it's based on academic assumptions.

Cloud computing is a significant mindset and skill shift within IT and more broadly within your business. To ensure success, it's critical to develop a communication and change plan, as well as a training program for your staff. When this is done well, we've seen IT teams energized and excited about the possibilities. Unlike traditional models like outsourcing, cloud platforms help IT teams get closer to the business, so there's plenty to get excited about.

Getting Started
Force.com Free Edition and Force.com Sites make it easy for companies to get started building applications in the cloud. We're excited to offer "Day in the Cloud" workshops to help accelerate this process. These 1-2 day workshops help you accelerate the cloud portfolio mapping process and quickly realize the benefits of cloud computing - quantifiable ROI, rapid time-to-value and innovation that drives the business.

Please email us at cloud@appirio.com or contact us with any questions about getting stated with cloud computing. We look forward to hearing from you!