Structure 09 - Cloud Computing Is Here To Stay And Grow

I was invited as a guest blogger to Structure 09 - a day long event by GigaOM focusing on cloud computing. It was a great event with an incredible speaker line-up of thought leaders in the domain of cloud computing. The panel and keynote topics included persistence on the cloud, hosting web apps on the cloud, infrastructure design etc. I won't attempt to summarize everything that I saw and heard, instead here are some impressions:

Solving interoperability with Open Source: A founding developer of Wordpress, Matt Mullenweg, strongly advocated open source for the cloud for two reasons. The first reason is to achieve interoperability and the second is to ensure the business continuity when certain vendors cease to exist. As I have argued before there is a strong business case for open source on the cloud. It was great to see the reaffirmation that other thought leaders feel the same way.

Operational excellence: Javier Soltero, CTO of Management Products at SpringSource, emphasized the operational excellence as a key differentiation for a company to achieve a competitive advantage. Vijay Gill, a senior manager Engineering and Architecture at Google, also feels the same way. He believes that having the lowest cost platforms capable of providing good enough service is going to be a competitive advantage for the companies. For good software, you need great engineers – and most companies aren’t set up to do that. The technological challenges can be solved but it is the smart people writing smart code that will provide the competitive advantage to the cloud infrastructure companies.

Vertical clouds: We are likely to see more and more cloud offerings that are optimized for the vertical functionality e.g. run your Ruby apps on the cloud, analytics on the cloud, storage on the cloud etc. The IT should focus on becoming a service provider against merely a cost center. Chuck Hollis, CTO of Global Marketing, EMC Corporation believes that if IT does not embrace the cloud technology stack, they will most likely become an organization that manages the consolidation of all the cloud services. James Lindenbaum, co-founder and CEO of Heroku, emphasized that the developers should focus on core - what they are really good at and not worry about how the code will scale on the cloud. The bad code is bad code regardless of where it runs.

Hybrid cloud: The debate between private and public cloud continued. The proponents of the public cloud such as Greg Papadopoulos, CTO of Sun Microsystems, argued that most public clouds are run more securely than most private enterprise clouds. I completely agree. One of the ideas that was pitched is to have SEC force the public companies to put their data on the cloud. If, for compliance reasons, the data needs to be retrieved the government has a better shot at retrieving this data from a public cloud against a private and proprietary system that could potentially be sabotaged. The proponents of the private cloud such as Michael Crandell, CEO and founder of RightScale, cited security as a barrier and suggested approaches such as silo clouds that are dedicated for a given customer that do not share data with other customers.

I believe that hybrid deployments are here to stay. Successful cloud and SaaS vendors will be ones who can create seamless experience for the customers and end users from top to the bottom of the stack such that the customers still retain their current on-premise investment, keep their data that they don't want on the cloud, and significantly leverage cloud for all their other needs.

It was a lot of information packed into one day event. However on the lighter side Om's conversation with Marc Benioff included Marc poking fun at Oracle and Microsoft. Marc is witty and he has great sense of humor. Check out his conversation:

Cloud Computing At The Bottom Of The Pyramid

I see cloud computing play a big role in enabling IT revolution in the developing nations to help companies market products and services to 4 billion consumers at the bottom of the pyramid (BOP). C.K.Prahlad has extensively covered many aspects of the BOP strategy in his book Fortune At The Bottom Of The Pyramid that is a must-read for the strategists and marketers working on the BOP strategy.

This is how I think cloud computing is extremely relevant to the companies that are trying to reach to the consumers at the BOP:

Logical extension to the mobile revolution: The mobile phone revolution at the BOP has changed the way people communicate in their daily lives and conduct business. Many people never had a landline and in some case no electricity. Some of them charged their mobile phones using a charger that generates electricity from a bike. As the cellular data networks become more and more mature and reliable the same consumers will have access to the Internet on their mobile phones without having a computer or broadband at home.

The marketers tend to be dismissive about the spending power of the people at the BOP to buy and use a device that could consume applications from the cloud. BOP requires innovative distribution channels. The telcos who have invested into the current BPO distribution channels will have significant advantage over their competitors. The telcos, that empowered people leap frog the landline to move to the mobile phones, could further invest into the infrastructure and become the cloud providers to fuel the IT revolution. They already have relationship with the consumers at the BOP that they can effectively utilize to pedal more products and services.

Elastic capacity at utility pricing: The computing demand growth in the developing countries is not going to be linear and it is certainly not going to be uniform across the countries. The cloud computing is the right kind of architecture that allows the companies to add computing infrastructure as demand surges amongst the BPO consumers in different geographies. Leaving political issues aside the data centers, if set up well, could potentially work across the countries to serve concentrated BOP population. The cloud computing would also allow the application providers to eliminate the upfront infrastructure investment and truly leverage the utility model. The BOP consumers are extremely value conscious. It is a win-win situation if this value can be delivered to match the true ongoing usage at zero upfront cost.

Cheap computing devices: OLPC and other small handheld devices such as Netbooks are weak in the computing power and low in memory but they are a good enough solution to run a few tools locally and an application inside a browser. These devices would discourage people from using the applications that are thick-client and requires heavy computation on the client side. The Netbooks and the introduction of tablets and other smaller devices are likely to proliferate since they are affordable, reliable, and provide the value that the BOP consumers expect. Serving tools and applications over the cloud might just become an expectation, especially when these devices come with a prepaid data plans.

Highly-skilled top of the pyramid serving BOP: Countries such as India and China have highly skilled IT people at the top and middle of the pyramid. These people are skilled to write new kind of software that will fuel the cloud computing growth in these emerging economies. The United States has been going through a reverse immigration trend amongst highly skilled IT workers who have chosen to return back to their home countries to pursue exiting opportunities. These skilled people are likely to bring in their experience of the western world to build new generation of tools and applications and innovative ways to serve the people at the BOP.

Sustainable social economies: It might seem that the countries with a large BOP population are not simply ready for the modern and reliable IT infrastructure due to bureaucratic government policies and lack of modern infrastructure. However if you take a closer look you will find that these countries receive a large FDI [pdf] that empowers the companies to invest into modern infrastructure that creates a sustainable social economy.

Most of the petrochemical refineries and cement manufacturing plants that I have visited in India do not rely on the grid (utility) for electricity. They have set up their own Captive Power Plants (CPP) to run their businesses. Running a mission critical data center would require an in-house power generation. As I have argued before, local power generation for a data center will result into clean energy and reduced distribution loss. There are also discussions on generating DC power locally to feed the data centers to minimize the AC to DC conversion loss. Relatively inexpensive and readily available workforce that have been building and maintaining the power plants will make it easier to build and maintain these data centers as well. The local governments would encourage the investment that creates employment opportunities. Not only this allows the countries to serve BOP and build sustainable social economy but to contribute to the global sustainability movement as well.

Structure 09: Put Cloud Computing To Work

GigaOM has organized an exciting event on cloud computing, Structure 09, on 06/25/2009. I will be at the event as a guest blogger and will be part of the energy and excitement. GigaOM has managed to put on an excellent schedule packed with great speakers including Marc Benioff, Michael Stonebraker, Jonathan Helliger, Greg Papadopoulos, Werner Vogels, and many others. I like the breadth of topics - cloud databases, data center design and optimization, commodity hardware, private cloud etc. I will see you there if you are planning on attending the event and if not come back here for blog posts covering the event. Leave a comment if you would like to see any specific topics or sessions covered.

Here is a lineup of the speakers:

Keynotes

• Marc Benioff | Chairman and CEO, Salesforce.com
• Paul Sagan | President and CEO, Akamai

Confirmed Speakers Include:

• Werner Vogels | CTO, Amazon.com
• Greg Papadopoulos | CTO, Sun Microsystems
• Jonathan Heiliger | VP Technical Operations, Facebook
• Dr. David Yen | EVP Emerging Technologies, Juniper Networks
• Russ Daniels | VP and CTO, Cloud Services Strategy, Hewlett-Packard
• Vijay Gill | VP, Engineering, Google
• Richard Buckingham | VP Technical Operations, MySpace.com
• Jack Waters | CTO, Level 3 Communications
• Yousef Khalidi | Distinguished Engineer, Microsoft
• Dr. Michael Stonebraker, Ph.D. | RDBMS pioneer and CTO, Vertica
• Raj Patel | VP of Global Networks, Yahoo!
• Michelle Munson | President and Co-founder, Aspera
• Lloyd Taylor | VP Tech Operations, LinkedIn
• Michael Crandell | CEO, Rightscale
• Jeff Hammerbacher | Chief Scientist, Cloudera
• Allan Leinwand | Venture Partner, Panorama Capital
• Jason Hoffman | Co-founder and CTO, Joyent

Calculating ROI Of Enterprise 2.0 Is Calculating The Cost Of A Lost Opportunity

I get this asked a lot – How do I calculate ROI of Enterprise 2.0? Bruce Schneier says, “Security is not an investment that provides a return, like a new factory or a financial instrument. It's an expense that, hopefully, pays for itself in cost savings. Security is about loss prevention, not about earnings. The term just doesn't make sense in this context.”. Similarly thinking of Enterprise 2.0 as an “investment” looking for a return does not make any sense. At best it is the cost of a lost opportunity.

If you are a CIO looking for a detailed ROI metrics or a simple checklist for Enterprise 2.0 you are probably out of luck. However you could adopt a two-pronged approach. Convince the business that the organization needs Enterprise 2.0 by showing whatever resonates with them e.g. sharing files help reduce email quota, Wiki makes people productive by X percentage, giving them a copy of The Future of Management by Gary Hamel etc. Once you do get a green signal for Enterprise 2.0 deployment, please, don’t be prescriptive to frame the problem or the solution. Instead simply provide the tools at grassroots and let people run with these tools.

For any collaboration, productivity, and social networking tools there is content and there is context that significantly depends upon the individuals that use these tools. For example some people prefer to be human-centric against artifact-centric. Some start interacting and collaborating with other people before exchanging the artifacts and there are others that prefer collaboration that is primarily an artifact-driven. Most of the tools mandate that users make an upfront choice. Even worse the IT makes the decision for them when they decide to purchase a specific tool assuming how people might want to work. This is the reason I like Google Wave since it does not make any assumptions on how people may want to use it. In fact it allows people to weave across people and artifacts seamlessly.

When Google Wave was announced Google spent most of the time demonstrating what it does and spent very little time showing what problems it is designed to solve. They received quite a criticism for that. Many designers questioned Google whether they really know if people want to work this way. Some bloggers called it an act of breathtaking arrogance of blowing off potential competition and touting tech buzzwords. I believe they all are missing the point. Google Wave has broken the grid that the designers are very protective about and has empowered people to stretch their imagination to make mental connections about how this tool might meet their needs that no other tool has met so far.

Would you still ask what’s the ROI?

Cloud Computing - Old Wine In A New Bottle?

A recent cloud computing report from McKinsey stirred quite a controversy. TechCrunch called the report partly cloudy. Google responded to the report with the great details on why cloud is relevant. I appreciate the efforts that McKinsey put into this report. However I believe that they took a very narrow approach in their scope and analysis. An interaction designer, Chris Horn, from MAYA Design sent me a paper, The Wrong Cloud, which argues that the cloud computing is essentially an old wine in a new bottle and the big companies are fueling the hype.

"Today’s “cloud computing” claims to be the next big thing, but in fact it’s the end of the line. Those corporate dirigibles painted to look like clouds are tied to a mooring mast at the very top of the old centralized-computing mountain that we conquered long ago."

I appreciate that there are people out there who question the validity and relevance of cloud computing. This puts an extra onus on the shoulders of the cloud computing companies and others to make their message crisper and communicate the real values that they provide. I was recently invited at the Under The Radar conference where many early stage cloud computing start-ups presented. The place was packed with the venture capitalists closely watching the companies and taking notes. It did feel like 1999 all over again! I hope that we don't fuel the hype and deliver the clear message on how cloud computing is different and what value it brings in. Here are my arguments on why cloud is not just a fad:


Utility style cheap, abundant, and purpose-agnostic computing was never accessible before: There are plenty of case studies about near zero adoption barrier for Amazon EC2 that allowed people to access the purpose-agnostic computing capabilities of the cloud computing at the scale that had never been technologically and economically feasible before. I particularly like the case study of Washington Post where they used Amazon EC2 to convert 17,481 pages of non-searchable PDF to searchable text by launching 200 instances for less than $150 in under nine hours. We did have massive parallel processing capabilities available to us such as grid computing and clusters but they were purpose-specific, expensive, and not easy to set up and access.

Peer-to-peer and cloud computing are not alternatives at the same level: The MAYA paper argues that the cloud computing is similar to P2P. I believe these two are complementing technology. The P2P solves the last mile problem of client-side computing where as the cloud computing is a collection of server-side technology and frameworks that has centralized computing characteristics. BitTorrent is a great example of effectively using P2P for distribution purposes since the distribution problem is fundamentally a decentralized one that could leverage the bandwidth and computing of the personal computers. However I do see potential in effectively combining both the approaches to design an end-to-end solution for certain kinds of problems e.g. use CDN on the cloud with P2P streaming to broadcast live events.

Virtualization and cloud computing are not the same: McKinsey's report on cloud computing recommends that organizations can get the most out of virtualizing their data centers against adopting the true cloud computing. I am a big fan of virtualization but it does not replace the cloud computing and does not yield the same benefits. Eucalyptus, an emerging cloud computing start-up, has detailed analysis on how cloud computing is different than virtualization.

Disruptive Early Stage Cloud Computing Start-ups

I was invited as a guest blogger to the Under The Radar conference organized by the Dealmaker media. This year's focus was to track early stage start-ups in cloud computing. The format was simple - each start-up gets six minutes to pitch their company and a panel listens to the pitch and provides feedback. It was a blast! The place was filled with the venture capitalists, entrepreneurs, and curious bloggers. I would highly recommend to check out the conference blog, Twitter updates, and watch some of the pitches. I wish I could blog about all the companies that participated in the conference. I have picked few companies - Twilio, Boomi, Zuora, and Cloudkick - based on their potential to cause some serious disruption in the cloud computing space. At the conference, while interacting with several people, the cloud computing felt to be nascent space bursting with energy and enthusiasm. The venture capitalists were drooling for the leads. It felt 1999 all over again.


Twilio commoditizes the telephony skills and uses the cloud to allow the companies to easily build and scale the voice applications without upfront capacity planning and expensive contracts with telco. Twilio has potential to revolutionize how developers build voice applications and allow companies to add a voice channel, by leveraging cloud-as-a-utility, to enhance the customer experience.

Watch Twilio's pitch:



Twilio's presentation:

Final Twilio Under the Radar 2009 Cloud

View more presentations from UTR.

Boomi's tag line "Connect Once Integrate Everywhere" is a riff on Java's tag line "Write Once Run Anywhere". Boomi is positioning their product Atomsphere as an integration middleware for the cloud that works across SaaS and on-premise systems. Boomi chose a hub-and-spoke architecture against an ad-hoc point-to-point integration. This not only allows Boomi and the partners to continue adding integration connectors without disrupting the core product and customers' deployments but it also allows the SaaS vendors to tap into Atomsphere to connect to other SaaS and on-premise vendors. The revenue model is based on integration-as-a-service - how many systems an organization wants to connect to. This allows Boomi to extract the maximum value out of the integration efforts that can be reused and resold.

Watch Boomi's pitch:



Boomi's presentation:

Boomi Under The Radar Cloud 2009 (Grad Circle

View more presentations from UTR.

Zuora wants to be the Amdocs for SaaS and they are getting there much faster than I originally thought. In addition to commoditizing the billing for SaaS they also demonstrated that the cloud is a great platform not only for the edge applications but also for core applications such as billing that the organizations never thought of putting it on the cloud. Organizations are increasingly looking for a payment system and not just a billing system. Zuora does a great job by combining their billing domain expertise with an integration with PayPal. Zuora seems to be an acquisition target for eBay. I can't help notice that the typeface for "Pay" in Zuora's marketing collateral is identical to the typeface that PayPal uses. Coincident? I don't think so.

Watch Zuora's pitch:



Zuora's presentation:

Zuora Under the Radar Cloud 2009

View more presentations from UTR.

I have used many management consoles but haven't seen a holistic design approach and simplicity in a management console that Cloudkick demonstrated. Three founders built the entire company in four months with $20k investment from Y Combinator and launched it to support other 40 Y Combinator companies to help manage their EC2 instances. Instead of waiting for the cloud vendors Cloudkick solved the interoperability problem by allowing the customers to get an AMI out of Amazon and put it on other cloud provider such as Slicehost. This is certainly encouraging for the organizations who see lack of interoperability as an adoption issue. The cloud management start-ups do run into risk of getting steamrolled by Amazon, but the fast and agile approach of Cloudkick could bring in some great innovation in the cloud management and interoperability domain that we may not see from the big cloud providers in the near future.

Watch Cloudkick's pitch:



Cloudkick's presentation:

Cloudkick Under the Radar Cloud 2009

View more presentations from UTR.

Pre-seeding CRM With Data-as-a-service To Accelerate Adoption

I had discussion with Jim Fowler, the CEO of JigSaw, a couple of weeks back where he walked me through their new offering, Data Fusion, that JigSaw announced today. Data Fusion is a data-as-a-service offering that allows Salesforce.com customers to buy a large list of prospects with detailed verified contact information provided by JigSaw. There are plenty of legal and ethical issues around how JigSaw acquires the business contact information. Michael Arrington does not like JigSaw and Rafe Needleman calls it one of the creepiest products that he has ever seen. I don't want to argue about these ethical and legal aspects. I would let the other people, users, and customers sort that out.

I find the idea of acquiring such a list to pre-seed a CRM instance with the vetted data is an interesting one that utilizes data-as-a-service. A pre-seeded CRM instance speeds up the adoption of the tool inside an organization since suddenly sales people start seeing value in the tool and are willingly to invest their time into it. This could cause similar kinds of network effects that a social network causes where more people and more data bring in a lot more data. The sales people inside an organization typically view CRM system as an administrative overhead since they don't get any value out of it. They are compensated based on the deals closed and not the data being correct. This dynamics affect the adoption of a CRM tool and the quality of data in it. Pre-seeding a CRM instance with some good data and keeping it clean moving forward could solve this problem.

Jim Fowler says if the organizations have made a conscious decision not to own software by moving to SaaS why should they even own data? That's certainly an interesting take on data-as-a-service to enable SaaS 2.0. There has been an ongoing tension between LOBs and IT since most of the SaaS purchase decisions are initially driven by LOBs and IT is brought into the discussion late in the game. LOB will continue looking for an easy solution that meets their needs and does not require upfront IT involvement. The data-as-a-service certainly has an added value on top of SaaS. I can imagine some "come to Jesus" meetings between LOBs and IT. I would love to be a fly on the wall for some of those meetings!