Sadagopan's weblog on Emerging Technologies,Thoughts, Ideas,Trends and The Flat World

The Next Wave Of Technology Led Business Gains

2012-01-08T18:35:00.000-08:00

I was in a long conversation with the CIO of Fortune 500 company recently and invariably the conversation turned towards how much it is becomimg difficult for IT organization to continue to delight the business – the world of business itself is undergoing massive changes while the world of technology is also changing very fast. The IT organization is supposed to be on top of these whirlwind of change and continue to support the current and also be the enabler of change for the future. All this when dollars and cents spent on IT matters more than ever. This week, as I finished by keynote address at PSGTECH and sat for questions, more and more of this began to look clear to me.

Let’s look from the outside – what are the contours of deep change that need to be understood to remain relevant for today and stay competitive. Starting from the dawn of this new century, there has been a deep rooted shift in the sphere of IT innovation. Earlier, the new technology/product/systems that hit the market set their foot mostly at the Fortune 500 companies ( typifying high spend, highly mature, high growth areas of applied IT innovation). Then the medium sized enterprises would try and adapt those systems and the SOHO, Consumer segments would get to use them in time. This flow seems to have reversed noticeably in the last decade. It may not be an overstatement to say that today we see that more cool and modern technology tends to get adopted and popularised at the consumer, SOHO end of the spectrum before moving onto the late adopter class : medium and large enterprises.

It may be too tempting to dismiss such claims as outlandish or not based on limited set of data – but unargualbly the trend is set and widely recogniseable. This can also be seen by some as not a matter of great concern ot the large enterprises. For some inside the large enterprises for decades such things have never nothered them – after all they are the biggest spenders of IT and have traditionally leveraged IT substantially with proven methods of success. For some inside the enterprise, the consumer centric services like social sites games are all mindless distraction and these should find no place inside the large enterprises.

Whats my view on this? Are the large enterprises correct in taking such a “Prim & Propah” view? No – An emphatic and clear “NO”. What’s happening in the Consumer, Social, Mobile space is nothing short of creating a new paradigm of doing business – it’s like as if a new set of DNA strands are coming together to create a new organism per se, Nothing sort of this. Those enterprises that fail to recognize this or choose to not participate in this journey would be missing out a huge chance of business success potential.

Let’s look deeper here: The Twitter, Facebook. Google Plus and Mobile are actually creating a new sort of connected world, wherein new rules of presence, social relationships and collaborations are getting shaped. Needless to say that these new rules would be the drivers/enablers of innovation and competitive success for tomorrow. And that big enterprises would approach that tomorrow faster than they have seen at any point in time in the past would approach The digital natives who are at the forefront of this revolution, would never allow this journey to be slowed/halted. For big and medium enterprises that is following a “Wait & Watch” attitude, they will be failing demonstrably in their abilities to reach out to a new generation of customers/stakeholders, who are beating their drums to a different future. And inside these enterprises, a phenomenal opportunity to redefine ways of working and foster effective collaboration would get lost if large and medium enterprises don’t adopt this quick enough.

Enter the world of connectedness: by Social - from car buying to university selection to travelling to holiday shopping to medical concerns, the world is getting engulfed with social tools and mechanisms. Look deeper, at the heart of the social phenomenon: In one sense, the people who matter, the consumers – they are connecting with one another in an unprecedented manner, creating a vast and efficient network of information that shapes and steers experiences and markets. What do they get out of this: The participants are beneficiaries of a new genre of collective intelligence that informs and guides people in real time in a myriad number of ways. By making available a platform that is universally accessible – which facilitates discussions of the experiences consumers have had with brands, businesses, a new we have created a new world of consumer influence.

The consumer world has adopted this world much faster than expected right from Googling to get an instant answer to points of interest, doing comparative shopping, assessing medical facilities to electronics shopping to university education comparison. One can see a pool of like oriented people sharing their views, out of which any information seeker can draw appropriate inferences. All at a click away, in a realtime basis.

Now lets turn our attention to look at the enterprise in the same perspective.

From the industry supply side, it can be seen that the enterprise software industry can't avoid the glaringly noticeable trend therein. This is an industry - seen as ever-maturing by some and "never maturing" by others - and an ecosystem that is demonstrating growth indicators which are now becoming visible to all observers. A range of data clearly supports the notion of growth: starting from value added by the industry over the last few years - take the number of people that the industry employs, the projected growth rates, the capital outlay for the industry, and so on.

The consumerization of the enterprise is moving ahead at full speed and may become irreversible. While some enterprises are experimenting with this –wherever adoption has happened the surge in interest appears high promising to make the adoption of such technologies faster and deeper within enterprises. The interesting part of the equation is that a number of newcomers are coming with a variety of solutions but enterprises see before them humongous opportunities for differentiation and for fostering competitive advantage in adopting such technologies.

Most of the enterprises are still in a slow adoption mode. Are enterprises looking at moving beyond email as the standard way of communication? Most of the CIO’s/ IT department take a big breath before trying to introduce any new technology inside their enterprise. It’s a classic problem – 75% or more of the enterprise IT spend goes towards supporting investments/assets built in the past aka legacy systems. How does enterprise get to attack this cost structure. What’s the magic wand to make the enterprises adopt technology at the same speed as the consumer world is embracing.

Clearly the answer lay in a combination of vendor lock-in mechanisms and data lock-in mechanisms. Vendor lock-ins are getting manageable with the body of knowledge in how to manage them having improved substantially over time, question that begs an answer is what is data /information lock-in? It’s clearly the system of record. In a number of conversations with CIO’s who want to move ahead and try new technologies the defining question that gets raised is my backbone systems should not be tinkered with while you build a jazzy front office apps using collaborative tools and mechanisms and then the question is how much more can the whole thing put together be more effective.

If you examine closely, the system of records that anchors the enterprise system internally ( which used to help in creating leading edge enterprise solutions) though may look to be working fine may not be necessarily perfect in their composition. So much of maintenance spend has to be committed to make this perform continually, a challenge that lock-ins always bring to the fore. All cost optimizations inside enterprise IT have been traditionally focused on infrastructure, outsourcing etc.

In this flat economy and a maturing IT discipline, the common denominator across the board is that enterprise suffer from a serious commoditization curve effect and to create and sustain a competitive advantage through IT would call for looking at getting their core business processes get architected very differently and in a manner that competition may not find it easy to imitate or catch-up. Such core processes would in areas like customer support, supply chain, channel management etc. Here the IT system needs to be more flexible and adaptive for varied forms of collaboration as against a rigid form of communication. Such a type of arrangement where new forms of collaborations can be enabled to provide high quality enablement for business would be a strong leading edge differentiator for any enterprise.

The underlying factor here is being able to tap new order of productivities not just the glamour of a new tool being brought in and this is precisely the next orbit of progress for IT inside enterprises. Here the role IT plays goes beyond setting up the information backbone to helping in creating intelligent business by business empowerment – starting all the way from the bottom to the top of the organizations, particularly by empowering more and more operational executive better, transcending all the barriers of language, geography just as the consumer world has shown how effective it could be .

Obviously, these mechanisms won’t replace the existing investments but co-reside with focus on collaboration and engagement rather just on plain transactions. This evolution can be seen as part of the progress from paper based communications to email to real time connectivity of minds as against just a process led workflows and system. Mobile devices, video communications, ever increasing bandwidth, multi-lingual support, new forms of enabling technologies like social and in-memory databases all would help the right IT setup for organizations that would put a premium on engagement to deliver better business results.IT Today, in the competitive global business ecosystem cutting across almost all industries, there is an extended value chain that needs to perform efficiently to make business successful and that’s where more and more enablement needs to go – it’s like pouring gas at the tip of the hockey stick curve. We see huge opportunities for the next wave of gains for business with such a focus.

iSalute : Remembering Steve Jobs

2011-10-06T20:39:00.000-07:00

I was about to board my flight at Chicago's O’Hare when the news of Steve Jobs passing away broke. When I landed in San Fran (My United flight did not have Wi-Fi)- my thoughts were with the family, Apple colleagues and the huge number of Steve Jobs and Apple supporters. Innumerable iPads, Macs, iPods inside the aircraft symbolized everything that Apple got out to the world. As I landed in San Francisco, nothing prepared me to see the huge global outpouring of affection for Steve Jobs. Today as I drove past Infinite Loop @ Cupertino, I just couldn’t stop recollecting the fact that From Tokyo and Paris to San Francisco and New York, mourners created impromptu memorials outside Apple stores, from flowers and candles to a dozen green and red apples on Manhattan's Fifth Avenue.

The speed and reach amazed me – not in a way surprising given the reach of the electronic media and social tools but what did surprise me was the fact that in this age where scandals, misdeeds make huge news, for news of Steve’s demise to make such an impression, completely swept me off my foot.

A creative genius, a perfectionist, someone who keeps pushing the boundaries of innovation, keep improving the state of the art in technology and provide flawless value to people and win their hearts and gain walletshare consistently is perhaps an unparalleled phenomenon in the world. That Steve could do this in this century – when choices abound and consumers are so picky and promiscuous is an incredible, unmatched saga of achievement.

Steve and Apple stood for unadulterated class. What to pick and what to ignore. From his legendary presentation skills to the new industry models that he created to the array of products that symbolized the very best of its genre stands testimony to his genius. From converting a consumer product space from a volume play centered around margin outreach, he proved that volume play can be done with very respectable margins and still make each and every consumer feel very proud of their status symbol as consumer of Apple products, While people may debate for ever whether Apple is a media company or an entertainment company or a company playing in the consumer non-durable space etc.. he truly made Apple as a lifestyle for its countless number of consumers around the world. In his recent presentation to the Cupertino city council on Apple new campus plans, he said that the architecture would be of so high standards that all students of architecture around the world would plan a visit to see the campus when it is brought up. I have seen in countless occasions the sort of work culture, full of focus and energy that Steve had brought inside Apple. For several years continually, he defined the norms through his products, the definition of what could be done in the high tech consumer space.
Its Jobs’ vision, and the design of Apple’s products — the touch interface, the easy to navigate non-computer-like operating system, the ease of use — and the well designed and now robust Apple ecosystem, the iPod and the iPhone and the iPad have each played a role in disrupting virtually every form of entertainment – the consumable media, from music to text to video.

Not for nothing people call him the best CEO in the world, which he proudly occupied or for some he is the greatest industrialist that America has produced. In and of itself, Steve proved to be the defining standard here. While the world was broadly aware of the deep set of concerns around Steve’s health for the last few years, not many would have expected the end to happen so soon. For many of his admirers, he could pull that magic out that so famously espoused in his product launch presentations. For several decades, the world will recollect the fact that while fighting these personal setbacks, that Steve and his team could keep rolling out category killers/creating products so consistently, create the volumes, maintain healthy margins (in a very tough business and competitive environment), making Apple in the process the top valued technology company in the world. A truly awe inspiring phenomenon ,indeed. The fighter and winner that he is nothing (except those who could have known his medical condition well enough) could make it look that he himself could fall soon.

Ever since he came back to lead the reigns of Apple, Steve and Apple were synonymous with success, His master set of strategies that helped turn around the prospects of Apple would be part of textbook history for ever. Why is it that in his passing away, there’s so much of feelings all around? Steve Jobs stood for the user in a computing world where missteps and mishaps get tolerated across the board. He single mindedly advocated the cause of users as seen from the range of Apple products that got launched - for a majority of Apple users he through magic worked to get whats in their minds and roll out not only products that meet their needs but provide more than those – teens, moms, father and older generation – virtually all strata of society shared similar adulation for Steve.

The PC industry’s most fascinating grandfather who also brought out the post PC–World into reality is clearly the greatest visionary and creative mind that unfortunately just moved into the shadows. In the last few weeks, ever since Steve announced that he is moving out of the CEO role citing his health concerns, some wrote premature obituaries, citing their personal admiration and the impact that Apple products have made in their lives. Some would like to see him as a combination of Henry Ford, Thomas Edison, Mozart. While some of my choice of technology usage could be different from that of Apple, Steve jobs never ceased to excite and create awe and inspiration in my mind.

That the world could see a 56 year old man in the most technological advanced nation on earth and for somebody who practically had all the global resources at his disposal could lose a fight against cancer( as widely reported), leaves a chilling feeling in the minds and hearts of his followers. There’s anger behind all the praise and sorrow that one man who has done so much to advance the state of the art , who could have given so much had he lived longer could be taken away right in front of our eyes.

Am sure Apple management would continue to take his journey forward, but what stands out is the fact that in this world innovators are always outnumbered and being a successful innovator and a business man is a deadly combination -that’s available only in its rarest forms – symbolized as with Steve Jobs. There is no substitute for Steve – its truly the end of an era. Hopefully this would be part of a continuum, where the new takes over from where where he left and keep running.

Words from Steve Job’s commemorative speech at Stanford rings resplendent with widom,” “Your time is limited, so don’t waste it living someone else’s life. Don’t be trapped by dogma — which is living with the results of other people’s thinking. Don’t let the noise of others’ opinions drown out your own inner voice. And most important, have the courage to follow your heart and intuition. They somehow already know what you truly want to become. Everything else is secondary.” From Steve Jobs Stanford Commencement Speech, 2005

Steve leaves us with this thought : A true hero in life who could change so much in the world leaves a great thought of substantive force in our minds.- at everyone’s level, given the vision, determination and energy, all of us can make a difference in what we set out to do – small or big. The world will never ever see another Steve Jobs – he is truly unique – one who cared about liberal arts and technology together keeping user needs in mind. It's still difficult for me to see how this great smart computing world would maintain its growth and innovation without a Steve Jobs touch to its advancement. Hope is the answer and as Steve has shown in resurrecting the prospects of Apple, for the determined, it is always possible to achieve. He started his business journey from a garage with a friend. How destiny shaped him & how he shaped his destiny.

As someone said to me in the words of Steve –“iCame, iCreated, iWent. And my legacy will live on.

Cloud Business : Some Perspectives

2011-05-17T04:50:00.000-07:00

Cloud may mean different things to different people – It would be better to focus less on technology but devote more energy to cloud business in terms of how, where, and why these could be used to get unique value was the key message in the Cloud Business Summit, which I attended last week at NYC, courtesy of invitation by Bill Mcnee and his team at Saugatuck Technology. In a very intensive set of sessions, significant insights were brought out by impressive set of presenters followed by good amount of discussions. Let’s examine the context.

It’s now clear that in almost all forward looking business organizations, cloud journey is definitely happening/about to happen in most part of their business/technology operations. The reach is going to be ever expanding and the effect is definitely going to be significantly felt – though this can be an open ended journey in terms of learning and accruable benefits . These force enterprises to plan and manage cloud journey as more and more knowledge on realizable benefits begin to accumulate. Let’s examine the context in a little more detail: As there is a widespread interest in adopting cloud for business, varied approaches grounded on different schools of thought begin to sprout. What we see across the board in the context of cloud and business is that cloud can enable new business application architectures, transform business and create new revenue channel opportunities aside from improving process efficiencies while supporting existing business models. New business services can fundamentally redesign the ecosystem across the extended enterprise creating a new measure of performance across the value chain. These sort of heightened impact calls for a very studied and measured approach to embrace the cloud and that’s where the insights and discussions add immense value.

For example, Saugatuck emphasizes on leveraging cloud for creating new business value and enabling new business opportunities – this is where differentiated and lasting value comes out and as such is very important dimension for business to explore. The CIO panel brought out the fact how business and IT working together can be enabled and why this becomes necessary to create value. More importantly, the ability to take the right set of use cases and deliver business value comes only by working together and it becomes imperative for CIO organizations to steer their organizations in such directions.

Xerox brought out details of their cloud journey in areas of SaaS, Expense Management to see significant improvement in business efficiencies and improved business agility. The more significant theme came out on cloud centered approach towards firmware/software updates for their traditional copiers/scanners/printers – this is an illustration of opening up new business opportunities – something only a cloud based solution coud have enabled. Such successful initatitives spur them to do more, makes their ecosystem partners more excited setting the stage for more such things to happen with Xerox and I would think across the industry as well.

Another important message is to have a pull centered view – from the customer to inside the enterprise. Remember taking the customer to the boardroom discussions in the past – here’s a demonstrated way to make this happen with the emergence of cloud. The key is systems thinking – looking at linkages and relationships across the board and identify opportunities for better orchestration across the ecosystem to create larger value.

SAP’s Nicholas Cumins provided his view of the changing business software / application landscape, the need to effectively leverage Cloud with traditional suites, and how these are being addressed in the next generation of enterprise version and SAP’s strategies in offering varied solutions. I think we need to think through the right pattern of fits: what type of differentiated capabilities could be mapped to applications, devices and delivery methods. Fidelity further elaborated on their cloud journey in the summit.

An important aspect of cloud business either gets overemphasized inside enterprises to the point of avoidance or gets completely overlooked : Am referring to risk management, Important discussions around was an eye opener of sorts. Risk here transcends the traditional boundaries of functions like IT, Finance. The right approach would include identifying, characterizing/ classifying, prioritizing, and then governing Cloud Business changes and implementations. This needs to tie in to the sourcing process of the cloud solution – a very involved engagement but one that can deliver very high value to enterprises.

From an enterprise/CIO perspective, for the first time in this century, IT now has the chance to reposition itself and its role in the enterprise. The shackles that tied traditional IT could now be broken open with the emergence of cloud . Leading CIOs have already started to redefine their role and the value of IT resources away from a focus on provisioning and operating technologies and toward applying information and technology to create unique and sustainable business value. IT has always been waiting for the moment to reassign more funding from maintenance to innovation, to enable creating greater value. Cloud provides that window of opportunity to CIO’s and business now. The economics of IT and opportunity to add business value was never this pronounced in the IT world. Let’s examine this: The need to invest now and wait for results ages later don’t necessarily apply here. Cloud enables companies to gain some of the efficiencies of scale without having to scale themselves. The result is freeing up money previously locked into the 70% of IT committed spend for innovation and new solutions. Typically these are the type of value propositions that interests business and this helps business to take more direct role in making such solutions happen – its more just IT baby and business being an uninterested partner. The relationship fundamentally changes and will demand CIOs react and reform IT.

Around the world and across the board, business is desperately looking for ways and means of creating new solutions, particularly for addressing adjacent markets and new geographies. Cloud fits in very well here: in extending the reach of IT and to provide value added services and in creating new solutions leveraging the ecosystem partners. Integrating in the process, growth and innovation with benefits of economics inside enterprises. We have reached a stage where running business with IT help is normal and the differentiation comes only by creating differentiated and sustainable business value and cloud is a nice fit here. Examining cloud from the standpoint of operations would under leverage its true potential but true opportunities manifest themselves in the business context of growth, innovation and strategic pursuits. CIO’s need to find solutions that aligns with their work culture, their appetite for risk, ability to absorb change, governance and their technology maturity. Irrespective of what these may indicate, increasingly in the cloud world, new ways to make things happen always exist. This doesn’t mean that old models of operation give way to something entirely new right from the word “GO”. A neat blend can exist.

The beauty of this cloud business journey is the fact while cloud can make many things happen at different levels, the realization is that this is still evolving, but for those early adopters it is clearly delivering substantial value Cloud IT and Cloud Business can’t be and needn’t be separated - scalable services and sustainable value can happen only when these two work hand in hand. Saugatuck should be complimented to bringing together business leaders, vendors and analysts to look at cloud as business opportunity and not just just as technical solutions.Clearly with cloud, we are seeing the pioneers and business leaders unshackling the traditional bonds and aiming high and reaching there as well. We will actually see more business taking this path.

AWS Outage & Customer Readiness

2011-04-30T18:36:00.000-07:00

Reddit, Foursquare, EngineYard and Quora were among the many sites that went down recently due to a rather prolonged outage of Amazon's cloud services. On Thursday April 21, When Amazon Elastic Block Store (EBS) went offline, it took many of its Web and database servers depending on that storage down. With Amazon working aggressively to set this back right, on Sunday April 24, most of the services were restored back . As promised and as would be expected, Amazon has now come out with a detailed explanation describing what went wrong, and explaining why the failure was so widely felt and why it took that much time to restore back all the services. Some say that measured against Amazon’s promised availability, this lengthy outage would mean that Amazon may need to maintain full availability for more than a decade to adhere to their promised availability service level commitments.

Now, let’s examine what happened and how this happened. To start with some basics: Amazon has its facilities spread out around the world. Most users would know that its cloud computing data centers are in five different locations. Virginia, Northern California, Ireland, Singapore, and Tokyo. These centers are so architected that within each of these regions, the cloud services are further separated into what Amazon calls Availability Zone. The availability zones are within themselves self contained with physically and logically separate groups of computers setup therein. Amazon explains that such an arrangement helps customer choose the right level of redundancy as appropriate to their win needs. Such a design with a spectrum of options helps customers choose the right level of robustness also when they for a premium choose to host them in multiple regions. The logic here is that hosting in multiple availability zones within a same region must provide comparable robustness (as in hosting across multiple regions) but would come with a much better economics benefitting the customer.

Amazon offers several services as part of this arrangement. Amongst those services, Elastic Block Store(EBS) is an important service. With EBS, Amazon provides mountable disk volumes to virtual machines using the more well known Elastic Compute Cloud(EC2). This is quite attractive to customers, as Amazon with this service, provides the virtual machines with huge amount of reliable storage – typically this gets used for database hosting and the like. The powerfulness of this feature can be seen by the fact that while this can be used from EC2, another Amazon feature called Amazon Relational Database Service( RDS) also uses this as a data store. As an added feature for its services, Amazon has designed this feature for high availability purposes and replicates data through EBS between multiple systems. Given the volume and variety involved therein, this process is highly automated. In such an arrangement, if for some reason an EBS node loses connection form its replica, instantly an alternate storage within the same zone is made available to maintain connectivity.

As per Amazon, while doing routine maintenance operations in Virgnia operations on April 21, engineers were trying to make a change in network configuration to the zone. As part of the process, traffic to the routers affected apparently got moved into a low capacity network as against getting moved onto a backup. The low capacity network, is meant for handling inter node communication and not large scale replication/data transfer internally between the system and so the additional traffic made the network malfunction. With the primary network brought down for maintenance and the secondary network completely mal-functioning the EBS nodes lost their ability to replicate for want of nodes. This is where the unintended consequence of automation began to rear its ugly head. Every system in this network acted as if they are at risk and began to frenetically look for available nodes with free space for replication. While Amazon tried to restore the primary network, damage has been by then done, with all the available space within the cluster were already used, while some remaining nodes continued their search for nodes with free space available – while such nodes with free space were not available.

With a massive deadlock of nodes trying to find replicas, while there were not nodes with free space, impacted the control system’s performance. The control system performance issue severely impacted execution of new service requests like creating a new volume. A long back up began to get created for the slow control system to act upon and this with time reached catastrophic proportions, with some requests beginning to get returned with fail messages. Now, comes the second but the most crucial part of the outage – unlike other services, the control systems span across the region and not the individual availability zones. The net impact was therefore experienced across different availability zones. Remember the idea of Single Point Of Failure? That was proven here in its full might.

Slowly and deliberately, Amazon began the course correction – by beginning to tend to the control system and by adding more nodes to the cluster. Over time, the backlogs on the control system began to get cleared and this took painful efforts and a lot of time in the process. Outages of public cloud systems have made news in the past but clearly with time, the body of knowledge and maturity levels ought to improve things. Cloud service providers make high availability as the cornerstone of their offerings but this outage would in many ways, put such claims to question. Even while this outage happened with Amazon Virginia operations, there were many users of AWS, who managed to maintain availability of their system. A majority of those installations had fall back in terms of multiple regions, multiple zone coverage. Such moves necessarily bring cost, complexity equation into consideration.

It’s a little odd to see that when the problem of non availability of nodes happened, Amazon almost began to get into a denial –of-service attacks within their environment . Amazon now claims that this aspect of crisis related actions have been set right but one may have to wait till next outage to see what else could give way It may be noted that Amazon cloud services suffered a major outage in 2008 – the failure pattern looks somewhat similar upon diagnosis.Clearly, the systems need to operate differently under different circumstances – while it’s normal for nodes to keep replicating on storage/access concerns, the system ought to exhibit different behavior with a different nature of crisis. With the increasing adoption of public cloud services, certainly the volume, complexity and range of workloads would increase and the systems would get tested under varying circumstances for availability and reliability. All business and IT users would seek answers to such questions as they consider moving their workloads onto the cloud

It is interesting to see how Netflix, a poster user of Amazon cloud services managed to survive this outage. Netflix says,” When we re-designed for the cloud this Amazon failure was exactly the sort of issue that we wanted to be resilient to. Our architecture avoids using EBS as our main data storage service, and the SimpleDB, S3 and Cassandra services that we do depend upon were not affected by the outage”. Netflix admits that their service ran without intervention but with a higher than usual error rate and higher latency than normal through the morning, which is the low traffic time of day for Netflix streaming. Amongst the major engineering decisions that they implemented to avoid such outages includes designing things as stateless applications and maintain multiple redundant hot copies of the data spread across zones. Netflix calls their solution –“ Cloud Solutions for the Cloud” as the claim here is that instead of fork-lifting the existing applications from their data centers to Amazon's and simply using EC2, with their approach they believe that they have fully embraced the cloud paradigm. Essentially, Netflix has automated its zone fail-over and recovery process, hosted its services in multiple regions while reducing its dependence on EBS.

Clearly there are ways to get the best of cloud – except that some of these may have different economics and would call for greater ability to engineer and manage the operations. Amazon may have to increase the level of transparency in terms of their design and the operational metrics need to cover many more areas of operations as against the narrow set of metrics that users get to see now. To sum up , I would hesitate to call AWS as failure of the cloud but this journey into the cloud would call for more preparation and better thought out design to be in place from user’s side.

CIOs & Cloud Centric IT Organization Refresh Strategies

2011-04-23T23:33:00.000-07:00

As enterprises concentrate on growth, they remain vigilant about costs and operational efficiencies – coming out of recession, even in times of high growth and radiant optimism. Such a model of growth provides IT with a lot of fresh opportunities to adapt and innovate . More than ever, this new model of growth mandates IT to raise its strategic importance to the business rather than just be content to focus on delivery of generic business plans. In many ways the tenor of change is set in with such changing context – With the continuing tight budgets, the CIO’s are now getting forced to” think and act different” – one of the critical ways that can be tried is to follow the time tested model of being creative in discarding the past while taking a bold and fresh approach in creating a new future of IT within enterprises.

The classic way of looking into conceptualizing a new IT organization and its contribution to the enterprise starts by thinking aloud typically by asking the question “What If?” Now in the radar of every CIO and IT organization, Cloud happens to be mostly at the top where some expect more than half of new workloads to naturally move to the cloud besides the expectation that a majority of applications and infrastructure inside the enterprises would move to the cloud over the next few years. That forces the hand of enterprises in ensuring quick think through of the future possibilities for IT in terms of alternate models and the cloud.

Let’s face the facts : CIO’s of large organizations have to manage the burden of the past in terms of legacy systems, data and the processes set in there. They come with huge costs in terms of maintenance and in many cases impose restrictions on flexibility and extensibility. More importantly, in many cases, these systems come in the way of contributing to business agility in an increasingly dynamic world of business across industries,

The cloud model is increasingly being adopted by companies looking to lower cost and improve scalability and enhance flexibility. Many different models of cloud adoption abound varied by size, maturity, expectations, nature of the industry etc. But all agree on one need – cloud services need to be well integrated with existing legacy systems. Some are choosing a hybrid approach between online and on-premise services as a low-risk way to test the benefits. To work, these cloud services need to be well integrated with existing legacy systems.

Possibilities include selectively letting go of the past and unlocking resources and in realigning priorities and setting new directions towards creating more space for innovation and greater business value. Some CIO’s see this as an opportunity to look beyond delivery models towards getting strategic advantage to business through sophisticated information and insights. Cloud centric technologies are a big driver in enabling IT to take center stage in support of innovation, business growth and delivered value.

For enterprises and the CIO, this journey is replete with possibilities, challenges where the upside swing could be alluringly high but the downside fall could be steep if not carefully strategized and executed on those strategies well enough. After all, we are living in an era where technology edge is almost equivalent to business edge and this warrants a new approach to business technology architecture and strategy. That’s when Saugatech came with the interview with Mike Wilens, on Fidelity’s cloud journey , I got real interested.

In a very detailed discussion Mike covers a series of topics and brings out the fact that while people talk a lot about lock-in, reliability, and security in the cloud , these are manageable with good engineering and good planning and it’s not really all that scary – cloud is indeed doable and can be a key enabler for business innovation and enterprise agility. The key here is that the cloud is indeed revolutionary in how we think about application delivery and infrastructure.

In discussions published as part of cloud leadership strategies, Mike outlines the approach to the cloud, the execution plan and alignment to business needs. Covering all aspects of cloud journey within Fidelity, there are lots of important insights coming out of actual experience. Starting with foundational issues, such as standards, cost avoidance and experimenting with new capabilities in the Cloud, the discussion then extends to centralization versus decentralization. Inside Fidelity, the cloud model is slowly altering the degree of decentralization with a view to lower costs but not compromise on ability to innovate around business needs. The key insight here is dealing with reducing risk and cost while not inhibiting innovation that can lead to top line growth.
Moving onto the more interesting aspects of cloud and business the discussions revolve around business innovation, governance frameworks and balancing opportunity and risk. In areas like collaboration and social computing tools, the logic behind determination of what can be used internally and taking into account the regulatory standards, the usage of such tools externally requires very carefully considered solutions. Wilens points out that the standards that are evolving to help public clouds power down the economies of scale are now becoming available for private clouds as well.

Cloud can be a big platform for testing out /piloting new ideas and can be scaled out and scaled up – at any point in time this pilot footprint on cloud should be actively pursued. For example, he believes that migration to mobile devices and the related implications for the presentation layers of any technology infrastructure will be implemented within the cloud based technologies, private or public. Similarly co-opting the startup partners to try out new operational/innovative models and make them scale up on the cloud infuses new dynamics in developing partnerships and new offerings. Fidelity has found that private Cloud portals can deliver to its clients access to financial information, while still maintaining the on-premise, legacy, mainframe record keeping systems. Here comes the reinforcement, that hybrid solutions leveraging the data of on-premise systems will soon become the norm.

The best practices talked about ranges from adopting de-facto cloud standards, for example cloud infrastructure could be coalescing around the LAMP stack. Some other notable insights include:
- Creating shared services with a common platform, look and feel
- Use of cloud as testing environment
- Portioning of clouds – confidential /mission critical data where to keep -on-premise or outside
- What volumes of new workloads to be pushed onto the cloud – particularly in long standing industries like financial services where lot of data tend to be in old but reliable platforms

Operating at both ends of the stacks with a robust risk management plan and governance makes cloud an indispensable framework for IT, Innovation and Business Agility. I recommend reading this for demonstrating that with a good strategy and well laid out execution on such strategy, even in a fast moving but highly regulated industry with a lot of legacy system in place, clouds can be successfully and progressively deployed with demonstrable results in providing flexibility and making business agile.

Mobile and Social Innovations

2011-03-29T06:50:00.000-07:00

I woke up this morning to see significant developments.

MOSOLOCO – Mobile, Social, Local, Commerce, a term getting popularized by Jason Maynard is really brimming with lot of activities now. We are now seeing that four proximate but distinctive trends are converging to change the way consumers interact, explore, transact and putting pressure on businesses to keep pace and in some cases create entirely new business opportunities.

Amazon is now fully charged to muscle into the Android Ecosystem. Am not just talking about the Amazon Appstore. With the launch of the new Cloud Drive and Cloud Player joining the Amazon Appstore , the strategy is clearly to parade as a full scale service shopping destination for Android device users. With the new Cloud Drive, Amazon in essence has got an update to the Amazon MP3 app for Android, bringing cloud storage into the music buying scheme, and further adds the Cloud Player to Amazon MP3 for streaming the user’s music to any Android device or web computer. This multi device rendering is a key tenet of success for the Kindle platform and Amazon is clearly focused on building on this strength. I know that one other formidable cloud giant has all got everything ready to roll out – may be they were waiting to launch it in the developer’s conference in May. Now Look at what all Amazon can do with their superior personalization and ecommerce capabilities – the value of the platform is beginning to unfold here. Amazon is essentially taking a step forward in the consumerization of Amazon web services.

Tracking another development, CapLinked, a social platform for private investing, announces exponential growth of its platform with over $1 billion now available in potential investment activity. The company claims to have seen an exponential increase in user base sincee Jan 1 2011, with a total of 5500 dealmakers, investors and entrepreneurs now on the platform. This news comes on the heels of CapLinked’s angel funding totaling $900k, led by PayPal alums Peter Thiel, Dave McClure, Joe Lonsdale and Aman Verjee as well as David Anderson of 7th Rig.This rapid growth shows confirms the power of platform and communities - essentially in this case investors and businesses need a common platform to connect – and it is happening now on CapLinked, the LinkedIn-meets-Salesforce for private investing,” says Eric Jackson, CEO of CapLinked and former PayPal Vice President. He adds that In addition, the new CRM tools will help identify potential deals, share information and get the right deals done faster.

Caplinked sees the trillion dollar a year private investing still using old, inefficient technology and points out to the fact most of these enterprises have been stuck in the email-and-spreadsheet mindset for too long. This gives them an opportunity to focus on bringing innovation in the form of social, cloud based, secure software to the world of private investment. The objective is to get investors, advisors, and companies the tools they need to better manage making connections and handling deal flow, due diligence, closings, and company reporting.
Both the entrepreneur and investor are brought together in the same platform. For entrepreneurs raising capital, the tool makes it easier to be transparent and share information. That makes it easier to get money in the door, and keep investors happy for follow on investments. For investors, this helps track their investments in one place, and have an idea of what is going on with their companies. Added to that, this is not a pay-to-play service, the claim here is that by letting entrepreneurs access the social graph, the value increases and so to get more strong social signals, the service strives to keep this platform free for entrepreneurs to raise capital.

We will actually see more and more innovation and success stories in the MOSOLOCO world.

Cloud & Outsourcing Service Providers

2011-03-19T23:52:00.000-07:00

Far too often, am asked the question – Won’t cloud disrupt the outsourcing vendors in a big way. My answer is Yes & No. Yes. The cloud will definitely impact those outsourcing vendors who just wait and watch or do superficial adjustments to the emergence of cloud. For those outsourcing vendors (just like in the case of all the players in the software ecosystem), trying to understand the impact of the cloud and proactively embracing the cloud, the impact is going to positively felt. Let’s examines this further. It’s clear: The cloud’s impact on outsourcing over the next five years will be profound because “it will significantly influence the demand made on the nature of services and the type of expertise built by service players as seen in the industry today. On an As-Is scenario, one of the key changes would be that the demand on labor will go down – as cloud could cut down need for support processes while enabling near real-time data processing across the value chain for business”. At the same time, the disruptive cloud technology can enable whole host of new business opportunities centered on new business and technology and support execution models hitherto just dreamt of.

Zoom forward: The beauty of the cloud technologies is such that overtime, it would be seen that cloud technologies will enable IT service providers to deliver end-to-end services regardless of the various platforms, applications, and technologies involved. Extend the thought – one can easily see that within enterprises the classification of core/non-core would begin to diminish overtime as cloud enables Enterprise IT to act as a hybrid environment of on-premise, private cloud, and public cloud services.
The cloud-based services will change outsourcing contract methodologies. “Buyers will move away from long-term contracts where the return on investment depended on continuous improvement, and move to shorter-term contracts with more flexibility to quickly buy new services. In respect of some business functions, the complexities involved in structuring a deal centered around cloud would encompass requirements like providers promising to take over customer infrastructure and run it from their shared centers to minimize multiple cloud vendor management for customers”. Cloud-based services will also cause an evolution and huge change in the way outsourcing providers price their services.

There are various types of cloud-related services that outsourcers will typically provide:
• Consulting around integrating enterprise IT with private and public clouds to create a hybrid environment
• Organization change management & risk management
• Implementing and managing private clouds to consolidate and optimize infrastructure
• Developing custom applications for the emerging cloud software platforms
• Developing new applications that integrate collaboration, communication, and cloud platforms
• Migrating enterprise applications to the cloud and the related testing, certification, and governance for risk and compliance
• Offering many commonly used functions as –a –service
• Governance mechanisms, regulation compliance
• Making Business –IT alignment realized over time.

In its fully evolved state, service providers will take on the role of a trusted partner to integrate cloud services of multiple service providers with Enterprise IT. Outsourcing providers are going to move up the value chain, offering consulting and information management services — not in the actual delivery of IT but in how buyers should provision and organize their systems and business process workflows.

Services providers that focus on providing services at the lower levels of the infrastructure and platform stack will need to become more agile and nimble to new technologies and faster technology cycles. They will have to provision new services as quickly as their cloud computing alternatives. The ease with which users can access social technologies, mobile devices and SaaS technologies will mean that IT and outsourcing partners will be bypassed, leaving a myriad of contract support challenges. Inevitably, outsourcers will have to support new technologies and do so in a far more rapid manner. This will lead to tactical responses by outsourcing providers for example leveraging service catalogs to provide a range of computing alternatives and service options to business users (including dedicated, shared and cloud services at different prices and service alternatives). But the real change is one of drastic business model change from hierarchical command structures to a modularized, configurable set of services that can be provisioned to clients in a rapid fashion.

Cloud Computing challenges services providers to sell beyond IT - . Service providers that own the IT budget do not have the relationships to effectively sell many of the cloud enabled business services that are emerging, as they require IT, business and executive relationships – and of course process knowledge. “Upwardly mobile” services providers capable of selling at the process layer will become aggregators of on-premise and Cloud IT technologies within hybrid environments.

If a service provider’s revenue is dependent on increased resource consumption as defined by resource units (e.g., managing more servers) any move to the Cloud most likely will result in a net reduction in resource consumption as infrastructure is consolidated, automated and virtualized.
Overall, I think Cloud Computing is about to bring a lot of changes to the traditional Outsourcing world with a few challenges such as security which is slated to have crossed the tipping point and is poised to put customers at greater risk at the cost of low-cost cloud alternatives that today present themselves as the new-world outsourcing parties.
Nevertheless it will accelerate offshoring / outsourcing, in my opinion because:
- It will drive the traditional outsourcing parties to adopt faster nimble methods

- Contract cycles and agreements will have to be revisited as niche core cloud service players will go after the buyers as contract renewal approaches.

- Fixed Contracts will come under fire as demand of variable contracts will increase. Traditional vendors will have a problem as their models are based of one-time fixed with incremental charges while with hardware/software costs dropping dramatically customers will end up paying more

Cloud computing is surprisingly incremental – software provides a potential risk, hardware provides a potential risk but platform as a service offerings and ability to tap huge new markets tilt the scale. We believe cloud models, like SaaS, will take more years to go mainstream in a true sense of the term, ie, relative to the size of the overall software market. This implies that while SaaS has already displaced traditional software in some categories (eg, CRM), a widespread shift will only be gradual. This provides a window of opportunity for IT-services vendors. Newer offerings like platform BPO adds to the service provider pie. Platform BPO can be described in many ways. For example, it can be considered a SaaS model implemented across a business process, or something akin to “process as a service”.

In effect, platform BPO is about:
- Automating a business process to ensure lower dependence on manpower resources;
- Hosting that process on shared infrastructure (of the vendor or rented by the vendor) rather than on the customer’s premises;
- Pricing the offering on a transaction-based model rather than on a cost centric - people deployed model;
- Sharing of the core platform across many customers (multi-tenant) rather than proprietary to a single customer. Platform BPO is, thus, a new way to deliver processes that have already been around, and it is much influenced by the emerging cloud-computing concept.

Three years from now I would say a good number of enterprises will have their strategies in place for how they plan to use the cloud. The smaller the enterprise the greater the potential exploitation of a third-party cloud will happen. The larger customers will likely use cloud-like technologies, but internally private clouds. Our customers are unlikely to use any public platforms except for what they would deem as commodity activities, such as payroll, F&A, HR, etc (not core strategies). How does that impact companies like us? Large enterprise market, our predominant market space, is likely to adopt cloud technologies internally, and try to charge back their internal clients/departments on a cloud-like billing pattern. Therefore, they would like to reduce the complexity of what they have to take advantage of the variable costs from a costing perspective. In a three-year timeframe that will be a substantial transformation for a lot of companies, which translates into opportunities for people like us.

On a three to five-year perspective, most of the enterprises will be transitioning to a cloud-based delivery strategy for tech and services. Not likely too big, as big a transformation as ERP, CRM, etc as it will be technology-driven transformation on the inside. Business benefits that the end user will see will be greater efficiency, from infrastructure, hardware perspective. There will be a better sharing of resources. What we are seeing in a lot of pilots is speed. Change and speed will be much better in a cloud environment.

And that provides an opportunity for outsourcing service providers when it comes to cloud integration, cloud enablement of existing applications or creating new applications all together on the cloud.

As long as the outsourcing partners’ providers continue to be innovative, and adapt themselves to the market conditions, there should be no room to get worried. After all, the outsourcing service providers do carry with us the knowledge of the applications, ecosystem and architecture for the customers we operate with. Value gets created only by assisting the end client in their business process. In its true sense, value is not just created by cloud infrastructure providers, as they are only going to commoditize the data centre service.

So, overall, well run offshore headquartered firms shall see net positive opportunities with large enterprises embracing the cloud.

The Cloud & Enterprises

2010-12-29T08:14:00.000-08:00

This is in continuation of the previous note:

Thomas Friedman makes the case that Value creation is becoming so complex that no single firm can master it without closely collaborating with a wide set of partners. John Hagel brings this up :” We are shifting from a world where the key source of strategic advantage was in protecting and extracting value from a given set of knowledge stocks — the sum total of what we know at any point in time, which is now depreciating at an accelerating pace — into a world in which the focus of value creation is effective participation in knowledge flows, which are constantly being renewed”. All these thoughts presuppose or recognize the role that information technology plays in making this shift happen. Extending the thought, once can see that from an infrastructural perspective, externalization of data and processes, for example through cloud computing, can create a secure foundation for collaboration that will eventually be indispensable. This flow and collaboration – critical components in the shift becomes so important that it is worth dwelling a little more into this theme.

With the global competitive forces getting more and more powerful one case that business around the world are keen to get more agile and more lean. With dependence in IT increasing with time, solutions centered on IT get more significant. With cloud as an enabler to such a change, one can see many things are coming together to make benefits get realized. As business tends to focus on getting the easy to do business with tag, the ease of provisioning extranets makes the organization more agile as it establishes lightweight, short term partnerships and outsources granular services to external providers. When information and goods flow across borders and enterprises, the concern of rising transactional cost is bound to arise. With well designed cloud solutions , transaction costs can be actually managed better. And by reducing the transaction costs of contractual collaboration the company can effectively leverage external resources without engaging in full scale mergers and acquisitions or setting up joint ventures.

How to engineer a seamless and reliable experience that can not only absorb changes in the external environment but also function as a critical enabler of such change? Look carefully and we can see that at the operational level , an increasing number of data sources are becoming available in the form of web services, truly interoperable and are easy to integrate. Enterprises move really aggressively to make gains on this count – some of them are able to leverage these effectively have an advantage over their competition. The real advantage comes by being able to extract context sensitive, pattern based business intelligence by combining the data sources with their internal information and that of their partners.

This in essence sets the stage of preparing to not only take advantage of emerging technology to stay competitive but also potentially help a set of enterprises to create new standards of competing and thereby create competitive advantage through differentiation. Talking of differentiation, form the perspective of business enabled through the cloud it can be seen that the increased service orientation of cloud squarely uplifts the importance of identifying and analyzing competitive differentiation. Once core functions are established inside enterprises likely centered around core competencies the next question to seek is : determining whether they lead to a business benefit and the larger question therein is whether they are indeed unique and whether the uniqueness is sustainable in the fast changing world?

In such critical turns and decisions, enterprises need to take a far more involvement in activities that may look too mundane and operational. For example, it is a perfectly valid question to ask and keep asking at regular intervals as to how much of IT should be delivered by internal sources. As the technology and technology enabled markets and business services mature, many viable and economical solutions become available for enterprises to consider. And if standardized services (preferably configurable) are available on the market on a more economical footing, then it is obligatory on the part of enterprises to investigate whether it would be possible to leverage them. There may also be alternate forms of delivering the services. Let’s see from an IT perspective - in such a scenario, very effective solutions delivered over the cloud are becoming more and more commonplace. For example, self service portals can reduce human involvement overhead and can thereby lower the costs of basic services. Add ability to configure and integrate – the potential multiplies. Such decisions help enterprises move resources to focus on efforts inside the enterprise that could yield far better returns and may help enterprises become more lean and efficient and in some cases can make them more innovative as well.

Then where does it leave genuinely core processes that are supposed to provide differentiation by design? Where these processes begin to get intertwined with undifferentiated tasks, the effectiveness definitely goes down. Many of the generic IT solutions with customized overlays clearly fall into this category. Such a scenarios also provides enterprises to examine objectively if it would be possible to isolate the generic functions and have them sourced from the most effective and efficient source. Obviously there may not be standard answers for every conceivable scenario but enterprises can think through and decide on embracing appropriate choices.

Now comes the question of horizontal scalability – can the core competencies be looked as a platform to provide a base for a broad range of solutions? Can most of the solutions be plausibly monetized? Too often we see that the competitive advantage can begin to help in gaining business in related areas as well – there cloud solutions can provide can help in providing quick entry and act as a simulation media before eventually becoming a core infrastructure for leverage in steady state on scale up. Similarly IP that can be enabled through cloud can facilitate embracing new business models for cross domain/ cross enterprise usage. Obviously these things don’t happen just by chance – every such possibility needs to be thought through and details worked out in a rigorous manner. When competencies get stretched to serve a more broad base of services, it would invariably call for a realignment of resources and focus inside enterprises. Enterprises then get sucked into taking decisions on designing organization structures ranging from divisions to horizontals.

With market shifts happening more frequently – the dynamism with which enterprises monitor and prepare for them increase more rapidly. Too often, today we see that corporate strategies are reflecting upon changes across all stakeholders – competition, suppliers, customers besides geographies and market segments. This is a more complex game but technology and cloud by extension can provide more strategic enabling support. Such changes can foist huge demands on enterprises –some of them could be very direct and some of them could bring in an indirect but overbearing expectations on the business. The utility model is not just limited to computing CPU cycles and counts the saving. Its actually about making a range of services available on demand – information consulting, data streams, business processes, real time collaboration etc. The reality is that almost all the industries would have a need to consume such services as they begin to navigate the effects of changes that are happening in their industries and in some case extend such services when they act the role as providers. The lesser recognized part of the equation viz. the indirect impact : this can be more powerful and with a larger reach. How? In this complex web of business, enterprises which don’t provide such services may have to engage in transactions with others that do provide such services. Now one will have run as fast as the ecosystem to at least hold on to the current competitive position ( in some cases –in fast changing industries, one will have to run faster to hold on to the position). So the moral here is : no enterprise is likely to be immune from this sort of change and this is going to create a series of cascading changes across the business landscape.

The fact remains cloud provides a very huge canvas. By its huge capabilities and reach , the cloud can effectively change the business dynamics along with the progressions that it creates and this can simply dominate careful setups laid inside enterprises. By attacking the cost structure of IT operations and being seen as business friendly, it can find more support in its absorption. And, the truly disruptive phenomenon that cloud is - shall influence this business ecosystem more rapidly and with greater reach : net result – cloud could become the harbinger of change that will accelerate the changes in the partner landscape in this interconnected world.

The Cloud & Its Impact!

2010-12-08T18:58:00.000-08:00

Was on a long flight to Asia, when conversation with the co-passenger began to get centered around cloud computing and what could be its impact that an educated executive ought to know. I have seen the various definitions of cloud computing that include elements of the varied description of the term, yet they typically do not address every single aspect that is associated with cloud computing. The definitions vary from being seen as IT as a service independent of location by IT resources to massive scalable IT capabilities provided as service across the internet to multiple customers to infrastructure hosting of customer applications and billed by consumption.

My intent here is not to add confusion with yet another attempt at fine tuning the various definitions that are currently available. Each and every thought strand provides a good job at giving an idea of what is involved. Nothing of importance suggests to me that there is any particular value in having an authentic/authoritative/cardinal definition. The attributes provide a more meaningful way to provide a near close authentic touch : off premise, elasticity, pay-as-you go billing, virtualization, service delivery, universal access, centralized and distributed management, multi- tenancy etc.

For me, the way I see it, the innovation of the internet from a technical perspective lies in identifying the confluence of several technical trends , look forward and visualizing how these can combine with improving cost factors, a changing environment and evolving societal needs can combine to create a virtuous cycle that generate an ever increasing economies of scale and benefits from network effects. Look carefully. One can see that cloud computing is similar in nature while admittedly its difficult to isolate a single grain of technology strand triggering the cloud’s advent and progress. A number of incremental improvements in various areas ( notable among those fine grained metering, flexible billing, virtualization, broadband, SOA, service management) have all come together recently. Combined together they enable new business models that can dramatically affect cost and cash flow patterns and are therefore of direct great interest to the business . In the backdrop of economic changes affecting the business environment and a investment overhang of IT , cloud and the opportunities it presents look very significant to business.

If we examine further, the combined effect has reached a critical threshold by achieving sufficient scale to dramatically reduce prices, thus leading to a virtuous cycle of benefits (cost reduction for customers, profits for providers), exponential growth and ramifications that may reverberate across many of our lives, including technology, business, economic, social & political dimensions. As cloud computing establishes itself as primarily a service delivery channel, its likely to have a significant impact on the IT industry ( by maximizing service interconnectivity), by stimulating requirements that support it.

The Capex Vs Opex discussion is well known and I won’t repeat it here but would like to point out that the reduction in fixed costs also allows the company to become much more agile and aggressive in pursuing new revenue streams. Since resources can be elastically scaled up and down they can take advantage of unanticipated high demand but without being burdened with the excess costs when the market softens. The outsourcing of IT infrastructure reduces the responsibilities and help organizations focus in the area of delivering true value of IT. The shift can help IT to focus from Plan-Build-Run onto Source-Integrate- Manage mode of functioning.

Another form of business impact may be that the high level of service standardization that cloud computing brings may blur the traditional market segmentation. The conventional distinction that separates small and medium businesses from enterprises, based on their levels of customization & requirement for sales and service support may fade in favour of richer set of options & combinations of service offerings. Let’s zoom out and come back. In some ways, cloud computing is only a small part of a much larger trend that is taking over the business world. The transition to services centered economy is gaining momentum over the decades - the critical constraint had been on collaboration - if we do a root cause analysis we can find that the constraint is rooted on trans- enterprise barriers and a cohesive well geared technical infrastructure.

The difficulty rests on the fact that unlike in a tangible product, it is very difficult for one to break services into its elemental components that come together to provide a seamless efficient service. The transaction costs that are associated with identification, contracting, monitoring and collection were far too high to justify bringing different entities together. A s we progress towards an ecosystem where everything –as-a-service becomes a defined norm, the gamut expands to include a lot of business as well. From Human resources management to finance to logistics to manufacturing all can be potentially handled by a strategic partner. And cloud here can play a critical enabling role of providing an infrastructure that acts as a critical component of this transformation.

Regardless of whether a company seeks to adopt cloud computing, the technology may have a significant impact on the competitive landscape of many industries. Some enterprises may be forced to look at cloud computing simple keep pace with external efficiencies in their ecosystem. And for some, it could be the case that their core business is being eroded by the arrival of newer agile competitors. As a result, I think that it very likely that there will be a market shift as some companies leverage the benefits of cloud computing better than others. These may trigger a reshuffling of the competitive landscape, an event that may harbor high risks and huge opportunities. More on this theme later

The Cloud Economics : Emerging Signals

2010-11-17T04:14:00.000-08:00

Over the weekend, I finished reading the recently released Microsoft paper on the “Economics of the cloud”. As I head to Denver today for participating in the defrag panel on the impact of cloud computing in the enterprise irregulars track, I just wanted to share some thoughts on the theme which I want to discuss while at the conference both on and off the stage.

The Microsoft paper starts by connecting the dots between technology, economics, and disruption:

Economics are a powerful force in shaping industry transformations. Today‘s discussions on the cloud focus a great deal on technical complexities and adoption hurdles. While we acknowledge that such concerns exist and are important, historically, underlying economics have a much stronger impact on the direction and speed of disruptions, as technological challenges are resolved or overcome through the rapid innovation we‘ve grown accustomed to….

The pressures on IT & the engulfing sense of change in the IT landscape are hard to overlook. The pressures would mean more business begin to seriously look at SaaS, re-negotiating license terms, focusing on rapid adoption of virtualization etc. As part of this and beyond, internal IT would be forced more and more to show more bang for the buck and it is my view that organizations would begin to look more and more to question committed costs and begin to aggressively look at attacking them more systematically – earlier sporadic efforts marked their endeavors. This could also unlock additional resources that could potentially go towards funding new initiatives. There are enough number of enterprises going this route and their service partners are also in some cases prodding them to go this way.The emergence of cloud services is again fundamentally shifting the economics of IT. Cloud technology standardizes and pools IT resources and automates many of the maintenance tasks done manually today. Cloud architectures facilitate elastic consumption, self-service, and pay-as-you-go pricing.

The paper starts by highlighting that the basis for the economic advantage in the cloudosphere is the economy of scale available to cloud computing data centers. The paper identifies three areas of scale advantage:

1. Supply-side savings: Owing to scale, Cloud data centers have lower costs per server.

2. Demand-side aggregation: By aggregation, cloud can support an intermix of tenants and therefore directly contributing to higher server utilization rates ( this would be definitely higher than what can be achieved with single-tenant data centers).

3. Multi-tenancy efficiency: Hosting multiple tenants brings administrative cost overheads, and lowers server cost per tenant and by extension cost per data center user goes down.

On the demand side of things, the story is complementary and drives similar conclusions. By aggregating volume of compute usage, cloud service providers enable users to smooth out peaks and valleys. The contention here is that by pumping up large server volumes, corresponding increase in utilization can be achieved and this has the effect of reducing operational costs. Now extend this scenario : cloud service providers can potentially run a number of data centers while administratively support them through centralized NOCs, with the results the costs can get further spread across.

The paper notes,"public clouds are in a relatively early stage of development, so naturally critical areas like reliability and security will continue to improve. Data already suggests that public cloud email is more reliable than most on-premises implementations". In concluding the section on economies of scale, the white paper goes on to state that economies of scale are so significant that the TCO calculated server wise of a 100K server data center is 80% lower than that of a 1K server data center. While there are legitimate opportunities for a set of customers to pursue private cloud in certain periods of time in their cloud journey, strong indicators suggest that over time the cloud efforts would begin to coalesce around the public cloud given significant computing economic advantages – these need to be to be recognized, and in the process of this journey, vital concerns regarding security and reliability will get addressed (gradually melt away) thus feeding the momentum into the public cloud journey.

Clearly economics will begin to weigh its hand if the cost advantage of public cloud over the private ones are of the order of 10X as the paper seems to suggest . The paper also suggests that any SMB would be crazy to factor on-premise or private cloud into their future strategy when these options are going to cost up to 40x more than public cloud alternatives. I would love to see the complete data points on which the benefits have been quantified and inferences drawn - this will be very useful in advancing the body of knowledge and state of practice of cloud adoption inside enterprises. Lets examine from an organization standpoint : As I wrote earlier, setting up private cloud is a motherhood statement at best( in many organizational surveys, one can find setting private clouds is not in the CIO’s top three priorities – if anything virtualization finds a place-) to make this happen in a credible way means re-examining most parts of IT functioning and business –IT relationship inside enterprises. IT teams while conceptualizing private clouds are happy to retain existing architectural designs, happily propose a clasical DMZ/Perimeterized model for providing security and enabling access, too often leveraging a highly virtualized infrastructure. More often than not, it’s enabling virtualization, automation and self service and color it as private cloud. Do recognize the implicit differences in constructing a private cloud and a public cloud. Comfort with the status quo with some adjustments versus an opportunity to rethink architecture, security, privacy,compliance needs in a way summarizes the nature of thought process and expected results between the private and public clouds. Speaking more directly, public clouds present the opportunity for enterprises to review and achieve specific requirements in the areas like agility, flexibility and efficiency at optimal effort Versus a skewed , boxed implementation of private cloud setup. Taking advantage of the public cloud benefits would far outweigh the advantages of getting boxed inside with private clouds.

Most elements of the bedrock gets affected – the processes, culture, metrics, performance, funding, service levels etc. Well thought out frameworks, roadmaps need to be put in place to make this transition successful. These frameworks need to cater not only to setting up internal cloud but eventually help in embracing the public cloud over the years- not an easy task as it appears. A few of those organizations that master this transition may also look at making business out of these – so it’s a journey – that needs to be travelled onto embracing public clouds. Some business may take a staged approach and call it by private cloud, internal cloud or whatever but eventually the road may lead into public clouds!

Cloud : Vision & Tactful Deployment

2010-10-22T05:40:00.000-07:00

I was moderating an informal discussion amongst decision makers on how much resources to allocate to cloud computing efforts inside their respective enterprises. Someone wanted to know if there is a benchmark available as to how much individual enterprises spend on cloud efforts to stay ahead of the curve. I murmured that this may not be so relevant as a factor for taking decisions inside their respective enterprise but at best can act as an aide – either to reinforce that we are doing what everyone else is doing – little or more as the case may be, but can’t become a guiding mantra. Remember best practice vs next practice dilemma. Cloud actually provides an opportunity to create transformational change inside IT and enterprise. I told myself that the key remains evolving a vision for cloud inside every enterprise.

Cloud is a truly disruptive use of technology and many of the traditional principles such as vision, strategy and trusted execution partners are highly relevant in assessing and managing cloud adoption progress inside enterprises.What I see all around is the fact that, many enterprises are not developing a full vision for their cloud computing efforts. I see that in a number of cases, cloud efforts are pilot efforts, departmental efforts, proof of concepts etc. Seldom does one get to see a full blown real time cloud efforts inside enterprises. Why these half steps – while testing the water is per se not bad, winners need to learn to swim –fast and in an easy manner. Enter cloud computing vision – connected dots, big picture ….

Since it is the early days of the cloud, it is understandable that people take baby steps on an experimental basis as a start point , but the rate of adoption of the technology is getting faster and faster. This is irrespective of the nature of the cloud – private, hybrid, public – all are seeing faster rates of adoption and enterprises are sooner than later going to be confronted with the question – how fast are we moving on their cloud initiatives.

The early initiatives of virtualzation hold an ominous parallel here. When server virtualization fever began to grip enterprises, we saw that everyone wanted to rush into that, so much so that many parallel initiatives were happening inside enterprises - so much so no one owned these at a central level and mostly many purused them as independent efforts – the result, enterprises began to face the rising prospect of VM sprawl. This created opportunities for vendors to sell new services around managing VM sprawl. The point here is – without an overaching vision, efforts which look successful in the short term but may create a formdable set of problems to manage – medium to long term!

Simple questions like who manages the process inside to manage these deployments – whats the overall security compliance etc.. In many organizations, individual efforts begin to bubble up at a central level only when security, risk , compliance efforts get pushed from the CFO/CIO organizations, That’s when most of the so called local efforts come together to show a gargantuan picture of the number of moving parts so to say that need to be shephered together..

When enterprises focus on shepherding and untangling the messy knots – already time has passed to examine the business value such efforts could bring in. The shift to cloud does not bestow long lasting benefits by just doing all over - rather I argue , it is going to come out of having a lasting vision, with a well detailed out program plan and aided by flawless execution. A strategy that speaks for itself and a concerted plan of action communicated well enough inside enterprises would go a long way in realizing benefits out of cloud efforts.

Cloud computing is all about driving holistic change in IT, but comes with the flexibility to start locally – this is a double edged sword – you can move fast locally thinking that bottoms up could work but harldly true based on real life experiences. What helps is having an overarching vision and tactically executing smaller programs locally in alignment with the overall vision.Such vision/strategy ought to illustrate how cloud facilitates pursuit and accomplishment of a set of goals articulated at the enterprise level. The plan should espouse the plan of adoption and address issues like compliance, security, governance, change management, partnership plans, auditing, provisioning , chargeback, exit strategies etc. Departmental efforts can draw from this plan the appropriate linkages and drive towards achieving the stated goals through their efforts. Think about this : such effors would help drive business value by bringing alignment across all internal initiatives, bringing cohesion across all efforts and help achieve larger goals such as capex to opex centric spending models, compliance, security etc. Such efforts would truly provide the basis of creating a platform centric IT infrastructure for enterprises to enable IT leverage for lot more benefits.

For cloud initiatives to be successful, enterprises need to focus on the larger end goal and have a game plan to achieve them in a truly centrally driven but localy executed model of execution. Success in large enterprise initiatives are always predicated upon their vision and execution – cloud adoption fits into this model very well. Is the partner system ready for this? The answer is Yes. The benefits of what is available today to service providers in the Cloud ecosystem provides more than ever the promise that they can focus on the business goals of the organizations they seek to support.

Typically larger enterprises need to focus on an array of things centrally to make progress on cloud adoption. Enterprises need to worry about new scale, different levels of security, reliability to support the new order of things. This means putting in place a new model of information and infrastructure governance, deployment, training, support - needless to say all these need to be reframed inside the enterprise. The IT environments need to be upgraded to provide for very high transaction workloads, security infrastructure needs to be retuned and app experiences need to be completely rehauled to provide a consumer feel for look and usage.

We have been waiting for the moment when transformative disruptions of this nature and scale happen. Learning organizations always had a charter to capture the latent knowledge that reside within people, process and systems, Existing technologies and methods could provide a lending hand to capture that vision in a limited way. People across the ranks inside organization can now participate in such transformation efforts quite easily and this could become the bedrock of new forms of collaboration leading to innovation and productivity improvements. Ironically this is mostly facilitated by advances in technology and communications and those responsible for technology management need to be ready to make this transformation possible inside their enterprises.

As I wrote elsewhere earlier, too often, inside enterprises, IT today is seen as the dampener towards embracing change at a mega-scale. IT organizations have an urgent need to transform themselves to keep pace with the change and become more relevant and stay aligned with business to leverage the opportunities that revolve around improving productivity, improving the efficiencies of operation, making organizations more innovative etc.. This also becomes a major force towards attracting talent. The clarion call here is for the enterprises to adopt to this change and create a new basis of competing – to distinguish from competition and create a leading distance from others through good plans, design and practice.

Making Consumer Technologies Help Enterprises Create A Winning Edge

2010-10-11T22:16:00.000-07:00

There’s a revolution taking place in the IT ecosystem today. When more and more focus is put on innovation, its evolution, growth and in managing innovation while looking through what conventional collaborative mechanism in fusion with powerful mechanisms like internet enabled collaboration could help achieve –all these point to a world of immense possibilities. With a dominant number of internet users poised to take a dip in the virtual world, the virtual world could become more and more real!! Ten years back it is told that less than 3% of U.S. households had access to broadband. Today, it is estimated that nearly 90% of U.S. households have access to broadband.

Apple and the high tech semicon industry can vouch for the pull from the consumer segment – for both of them, consumer segment happens to be the largest consuming class!
Let’s look at the numbers : Morgan Stanley data tells us there are more than 1.2 billion consumers with Internet access, 700 million consumers with their own PCs, and 2 billion consumers with mobile phones, of which more than 400 million users have access to the internet through 3G connections. 1 billion users around the world access the internet through wi-fi connections. Let’s look at what customers do with these devices. Obviously, around the world, they use these devices to send billions and trillions of emails and text messages

-600 + million customers watch videos or YouTube or listen to music on the Web - most of them download music, video etc.

- 600+ million customers use instant messaging - a majority of them participate in online communities and a 100 million plus users actively blog

- The mobile brigade is not far behind. More than half a billion users access the internet from the mobile today around the world. The growth of the mobile markets is reinforcing the growth of the mobile apps market as well in a big way.

Of those 1–2 billion consumers using mobile phones, computers, and the Internet, 300 million people work inside enterprises. End of last year, the estimated number of connected devices at 6 billion devices on the planet — growing to 7 billion this year. These devices include camera phones, computers, , digital cameras, GPS devices , mobile devices, printers, smart phones, Internet phones, MP3 players, surveillance cameras, sensing devices and many other types of gadgets, gizmos, and chip-powered devices. Interestingly, amongst the population of connected devices, it can be seen that four out of five of these devices were not computers (either PCs or servers). Atleast, half of these devices are of the consumer electronics genre. The projections show that over the next three years, this category will double in size, growing much faster outpacing the growth of the traditional computer system.

Plain common sense thinking shows that while all these devices may not arrive inside the enterprise, the reality is that a majority of these devices would begin to show up in the enterprise. Obviously, consumers are bringing the chariots of fire with these connected devices into the enterprise – and in large numbers. The key thing to note here is that way above the investments made by the enterprise; we see that consumers in large measures are self investing in learning to use the connected devices and along the line are creating a huge market for tools and apps for connected devices.

This large group of consumers works with a huge swath of connected devices and wants similar access and experience of the applications and access mechanisms inside enterprises. They are getting used to accessing all information at near zero latency levels. The connected world may not respect the boundaries of enterprise and consumer in terms of experience and access - granted the security and audit mechanisms could be different between these two worlds. This expectation is creating a huge pressure on enterprise IT organizations to harmonize and integrate consumer-oriented devices and applications. Most of the young people joining the workforce have become quite accustomed to the experience that the world of mobile, social networking and connected devices . Clearly this expectation would keep increasing with time as more and younger workforce joins the enterprise.

Just like enterprises began to come under pressure to webify their enterprise(s) in the start of this decade, we see that the consumer driven revolution centering around connected devices are creating a new wave of pressure on enterprises to make their systems and processes ready for the connected devices. The Smartphones, Superphones, iPads, Social Networks get used /consumed quite extensively across the enterprise and at home - to stay informed, connected and productive in their professional as well as their personal lives. Add to that the changing usage demands of an always-on environment with anytime/anywhere access - this fundamentally changes the nature of support and service requirements.

A number of factors go towards making this shift happen: ranging from perceived gaps in the capabilities (in either functionality or ease of use) of existing corporate tools; employees incorporating their favorite social and collaborative tools into daily workflow; the low or absent cost of most consumer-grade tools and economic pressure to do more with less; and a narrowing of the differences between tools designed for the consumer and those built for enterprise. The gap between consumer and enterprise tools is narrowing quite rapidly. Gartner’s Nick Jones says he expects there will essentially be no difference between enterprise and consumer mobile tools within five years. The wave of change is indeed very powerful. New real-time cloud applications, platforms, and infrastructure offer the path to redefine the future of collaboration. The challenge before enterprise IT is to marry this phenomenon to business. We need to transform the business conversation the same way Facebook has changed the consumer conversation. If we look at the real world, Market shifts happen in real time, deals are won and lost in real time, and data changes in real time. Yet, all of us know that inside the enterprise, the software used to run is anything but real time. This forces enterprises to look for tools that work smarter, make better use of new technology (like the mobile devices in everyone’s hands), and fully leverage the opportunities of the Internet.

This “Consumer-Powered IT” trend is having a prolific effect inside enterprise IT. They are clearly changing the rules of the game in respect of the IT support models. It’s a powerful new way to work that will transform organizations over the next three to five years . Against this background, if we were to assess the readiness of most of the enterprises, we find that a majority of enterprises woefully unprepared to leverage this huge impactful opportunities. Such opportunities would revolve around improving productivity, improving the efficiencies of operation, making organizations more innovative etc..
The interesting thing here is change and transformation is happening bottoms up here – so we will see employees not waiting for things to change but their own expectations and expertise, becomes the change that enterprise IT needs to have to realize the potential of this changing nature of connectedness. The security risks, management issues, and policy and governance implications that arise from mass introduction of consumer devices and applications into the enterprise becomes a concern for enterprise IT to handle on their own. One of the things that internet did to traditional business is the deflationary effect it brought on them. Similarly the connected devices and social networks are going to bring in an unusually high degree of delayering within organizations so much so what appeared to be very sophisticated and confined to certain class of users may become very common and accessible to all those who seek them.

This means enterprises need to worry about new scale, different levels of security, reliability to support the new order of things. This means putting in place a new model of information and infrastructure governance, deployment, training, support - needless to say all these need to be reframed inside the enterprise. The IT environments need to be upgraded to provide for very high transaction workloads, security infrastructure needs to be retuned and app experiences need to be completely rehauled to provide a consumer feel for look and usage.

We have been waiting for the moment when transformative disruptions of this nature and scale happen. Learning organizations always had a charter to capture the latent knowledge that reside within people, process and systems, Existing technologies and methods could provide a lending hand to capture that vision in a limited way. People across the ranks inside organization can now participate in such transformation efforts quite easily and this could become the bedrock of new forms of collaboration leading to innovation and productivity improvements. Ironically this is mostly facilitated by advances in technology and communications and those responsible for technology management need to be ready to make this transformation possible inside their enterprises.

Too often, inside enterprises, IT today is seen as the dampener towards embracing change at a mega-scale. IT organizations have an urgent need to transform themselves to keep pace with the change and become more relevant and stay aligned with business to leverage the opportunities that revolve around improving productivity, improving the efficiencies of operation, making organizations more innovative etc.. This also becomes a major force towards attracting talent. The clarion call here is for the enterprises to adopt to this change and create a new basis of competing – to distinguish from competition and create a leading distance from others through good plans, design and practice.

Oracle : Racing Ahead

2010-09-25T10:57:00.000-07:00

This note follows the post on Fusion Apps Launch announcement. There were a slew of announcements from Oracle this Open World 2010 and Larry said few times that Oracle has launched so much this week like never before in the history of the company. I spent time at the Oracle Open World conference talking to partners, customers, oracle teams and fellow influencers and found that in general the mood was positive and Oracle was trying to move things forward. The tagline hardware and software engineered together was resonating quite a bit in the variety of announcements made in the meet . Oracle’s integrated hardware and software systems approach is a major step forward and brings an element of twist to the data center game. I want to quickly look at the core ideas, rationale and benefit of the integrated appliance model, the impact of Exadata and Exalogic, the new Fusion suite, and an early view of what could be coming next.

Oracle Fusion Apps – Giant Leap? : Integration, Simpicity, Ease of Use, Flexibility are the key advantages touted by Oracle. The first set of apps encompass 7 big modules of fusion apps – Financial Management, HCM, Sales and Marketing, Project Portfolio management, SCM, PROCUREMENT & GRC . A good spread so to say, Oracle claims that these modules have within themselves, 5000 TABLES, 20000 VIEW OBJECTS, 10000 BUSINESS PROCESSES , 2500 APP MODULES – no doubt a mammoth effort. An Oracle engineer told me 8000 plus engineers worked for several years to get this out – truly a massive engineering effort. Oracle showed a good demo of Fusion Apps in action integrating a variety of business processes. The demo showed Fusion Apps having good clean UI with modern look and feel with lots of embedded activity stream.

Apparently, these modules were simultaneously tested with select customers while getting developed and Oracle says extensive efforts went behind optimizing the screens, workflows and functionalities. The key thing here is that the Fusion Apps platform leverages standard middleware and oracle says no proprietary language is involved. By using Java as the development standard, Oracle seems to have pushed the platform become lot more easy to adopt and Oracle highlighted that competition ranging from SAP to Salesforce.com insists on using proprietary languages to develop on their respective platforms. Such a middleware support makes it possible to connect easily with SAP and any other enterprise system and the emphasis here is that the ease come from the fact that everything is web service enabled. All these confirm the fact that Oracle is one of the few vendors to completely rebuild its apps, BI, and middleware from scratch though their stand on multitenancy is not clear as of today. It’s a major step forward to see that all models of cloud - Public, private, hybrid, on premise are fully supported with facilitated help to move easily across these clouds. Fusion Apps, the long-awaited next iteration of the company’s application suite, will begin shipping to customers in CY1Q11, but the full vision is likely still a couple of years from reality( as in fully blown implementations)

I did spend a lot of time looking at the new set of fusion apps - HCM to CRM to SCM etc.. Oracle is claiming embedded collaboration inside Fusion apps and what I saw therein was an integrated social layer built inside, engineered to share and use the profile information tied to identity management and leading onto analytics. The standard features that we see in terms of begin able to synthesise information based on social profiles, initiate loose form of collaboration like chat, VoIP are now integral inside Fusion Apps. The in-speak, in-context enablement was certainly there inside the apps. This may run contrary to purist form of social collaboration but context is a powerful element in the collaboration mix and coupled with enterprise objectives of easing communications amongst stakeholders make this a powerful enterprise collaboration enabler. The product has good social networking inside the ECM product with support for activity streams and features like integration with Microsoft Outlook to support threaded conversations, document level collaborations etc, ability to have linkages with non Oracle apps through social networks signify important advancements therein. Fusion apps is stepping up to behave and act like an enterprise collaboration infrastructure for Apps users and this is SIGNIFICANT advancement in and of itself.

Collaboration inside Fusion apps looks very powerful – mirroring SAP’s streamworks, it provides context based social conversation possible. The real-time and intelligent collaboration inise Fusion Apps is designed to operate around ‘conversations’ as the primary social object, it works as a central engagement utility in the enterprise that can be triggered from anywhere – natively or (soon) from other applications. Oracle executives told me that this extends to provide a lightweight collaboration feature such as tagging and annotating digital assets , analytics integration With light collaboration features such as annotation on digital assets, multimedia support (like video, voice), this will prove to be very useful inside enterprises. It appears to me that Oracle’s goal was to be best amongst the enterprise players in the social and collaborative space (ignoring the stand alone best of breed players) and they seem to have achieved their objectives here. If these go into their customer’s enterprise, we will see significant usage and extensions

With the launch of Exalogic Elastic Cloud, Oracle now has an integrated, purpose-built machine for data warehousing, OLTP, (Exadata) and application server middleware workloads. The key things to note is that when Fusion Apps rolls out early year, they will also run on Exalogic. Potential Impact : Significant – Oracle gets a differentiated position to balance and consolidate workloads and given its significant marketshare, gets to become a big force in the data center.

Exalogic- Optimizing (Redefining?) Java Workloads

The launch of Exalogic is a real milestone for Oracle and for the enterprise users. An integrated Java middleware aimed at balancing and consolidating workloads and potentially drive costs down for the enterprise. We now see Oracle making full use of the BEA acquisition here – the complete WebLogic stack is made to run on an optimized Linxu Kernel delivers can deliver very high reliability and a mindblowing performance. Add the Tuxedo piece here (forthcoming according to Oracle) – this makes the combo more powerful and can potentially run as a credible candidate in some cases for mainframe replacements. Tuxedo already has offerings that can enable enterprises migrate OLTP apps to run on Oracle platforms without any code change. Today Tuxedo can run on Exalogic but a fully optimized Tuxedo on Exalogic is rolling out shortly.

I could not attend the Java one conference but would expect Oracle to make Java programming easier to compete with easy to use newer cousins like VMWare’s spring source framework. Such a move would add more possibilities for growth herein.

Consolidating Customer Spend

Together with Exadata and Exalogic, Oracle’s positioning would be that they are giving their customers the real opportunity to reduce TCO. With more than 2/3rd of the IT budget goes towards sustenance leaving less than a third for new programs and innovation, Exalogic is engineered to enable customers to provision, monitor and manage the infrastructure stake end-to-end. This obliviates the need for enterprises to invest in separate storage and management mechanism for enterprises. If Oracle muscles into enterprise and help them lower costs by having an integrated, simpler to use and easy to maintain well engineered systems, By optimizing across the stack including middleware and database, Oracle can optimize so much that queries can run faster and performance can get a real push. Exalogic obviates the need to purchase SAN storage, by integrating disk storage, compute and middleware into Exalogic. Not only would it impact high end sales but Oracle also integrated several backup features including replication, snapshots, and disk to disk to tape backup, Enterprises will begin to see opportunities around consolidation od their assets and leverage their internal talent to reduce maintenance overheads – resulting in a potentially big savings, if thought through and executed well. For enterprises, such a strategy could unlock more dollars from sustanence activities to be redeployed to new programs and innovation. Belief in such a philosophy could force enterprise customers to consolidate more and more around the oracle stack.

Its undeniable that the “feel on the street” at Oracle OpenWorld this year was that it was “full speed ahead” at Oracle. Its clear that Oracle has attempted to create an entirely new architecture here and amongst the key differences include building business intelligence and analytics directly into the applications, This move also in a way gives an upgrade path to users of add –on enterprise apps like JDE, Peoplesoft etc that Oracle over a period acquired, This increases the stickiness for Oracle customers and potentially make competition look that much more distant. Oracle has been able to demonstrate its ability to integrate wide ranging technology players and show a decent financial performance and their streak seems to continue here with hardware and software engineered together to deliver successful performance, Oracle blue stack is now well ahead of the pack in terms of owning key technologies in every layer of the stack from the chip through the application. If all these reach the customer in exactly the same way Oracle demonstrated, it will be a huge success story for Oracle and the enterprise software industry,

Oracle is moving very fast here –considering its size and reach. They are now rightfully setting the pace for its ecosystem partners to keep in step and deliver value to its customers . In fact Oracle seems to be getting closer to be the leader in the enterprise technology space –putting competition on alert and forcing them to collaborate with them as well as race fast where they want to play and lead.

Fusion Apps Launch Announced

2010-09-19T21:50:00.000-07:00

What’s the key difference between SaaS VS On Premise. According to Larry Ellison, with SaaS – everything is designed around the plan that everything related to software needs to be managed by business whereas in an on-premise model, technical teams have the charter to initiate, manage the applications both on premise ranging from data center management to app management. With this in mind, if we ask what is Fusion upto? The Answer : With Fusion, all interfaces shall be used by business teams. Larry first brought out two definitions of cloud computing:
1. Virtualized cloud computing infrastructure services, as offered by Amazon.com's Elastic Cloud Computing services, and
2. Software applications that are offered as a service over the Internet, as typified by Salesforce.com.

Oracle's view of cloud computing seems to match that of Amazon.com and not Salesforce.com's.This note follows Larry Ellison's sunday night keynote address and should be read along this earlier note

As I watched the live webcast of the Keynote tonight at the Oracle Openworld 2010, Larry finally announced the launch of Fusion Apps. He recalled the major acquisitions that Oracle made starting with PeopleSoft, Siebel, J.D.Edwards etc and how this forced Oracle’s hand to come with a homogenized service enabled enterprise system. Well , tonight a beaming Larry announces the limited customer launch of Fusion apps – a culmination of 5+ years of effort and Larry called this a monumental effort resulting in the announcement of launch of 100+ fusion app modules. Some customer may begin trying the product from the the fourth quarter of this year while the general availability to public is expected to be first quarter of 2011. What are Fusion Application design principles? BI driven, Standards-based, Modern, Service Oriented. and SaaS ready. Process automation is no more the focus of today's enterprise system but business intelligence driven apps are the focus of enterprise systems - this is the progression dictated by current needs of business and achievable given the maturity of technology.

In making these launch announcements, Larry pointed out that Fusion apps are being built on the same middleware that oracle sells to customers and confirmed that Fusion apps runs on top of Fusion middleware , Oracle claims that with Fusion apps, it becomes easy for customers to take oracle apps and integrate with SAP . The promise here : No rip and replace involved. This is made entirely possible as the whole app stack is said to have been using standard SOA models. The additional announcement was that the interfaces would look lot like Facebook ,very different look from ebusiness suite. Larry said that social features , activity streams and collaboration are built-in as integral to the fusion apps modules.
One of the key announcements that I was waiting to hear about was regarding the mode of availability : The answer - Al l fusion apps are available both on-premise or over the cloud and Larry claimed that no one else has done this) . Larry contrasted this with SAP experience : SAP business by design cant run in an on premise mode while traditional SAP modules are not yet cloud/SaaS enabled. The highlight here : since Fusion Apps can support multiple delivery models, Oracle claims that intermobility across clouds is assured and easy movement across clouds remain enabled. One can start with on-premise models and move it to private clouds onto hybrid and public clouds. I was not sure from the announcement about three things:
A. If the Public cloud support that Oracle announced related to Fusion Apps is a private cloud managed by Oracle accessible in a public way or if it meant support across public service providers.

B. What about multitenancy? Is it supported in the Fusion Apps architecture?

C. Would all standard databases get supported - in this vertically integrated model would the stack be optimized just to support Oracle products

Oracle pointed to the fact that the current ERP system s use 25 years old technology and even products like Salesforce.com, Taleo are also relatively old ( say 10 years or so!)
Now, back to Fusion Apps . The first set of apps encompass 7 big modules of fusion apps – Financial Management, HCM, Sales and Marketing, Project Portfolio management, SCM, PROCUREMENT & GRC . A good spread so to say, Oracle claims that these modules have within themselves, 5000 TABLES, 20000 VIEW OBJECTS, 10000 BUSINESS PROCESSES , 2500 APP MODULES – no doubt a mammoth effort. Oracle showed a teaser demo – there’s another session later in the event that will get a full blown view of Fusion Apps. Fusion Apps demo showed good clean UI with modern look and feel with lots of embedded activity stream.

Apparently , these modules were simultaneously tested with select customers while getting developed and Oracle says extensive efforts went behind optimizing the screens, workflows and functionalities. The key thing here is that the Fusion Apps platform leverages standard middleware and oracle says no proprietary language is involved. By using Java as the development standard, Oracle seems to have pushed the platform become lot more easy to adopt and Oracle highlighted that competition ranging from SAP to Salesforce.com insists on using proprietary languages to develop on their respective platforms. Such a middleware support makes it possible to connect easily with SAP and any other enterprise system and the emphasis here is that the ease come from the fact that everything is web service enabled

All these confirm the fact that Oracle is one of the few vendors to completely rebuild its apps, BI, and middleware from scratch though their stand on multitenancy is not clear as of today. It’s a major step forward to see that all models of cloud - Public, private, hybrid, on premise are fully supported with facilitated help to move easily across these clouds.

Hopefully more details about the products would be available in the Fusion Apps exclusive sessions later this week.

What’s the adoption strategy? Oracle recommends its customers to continue on your current path and they are very clearly not asking all customers to migrate to Fusion immediately. In fact Oracle did not appear to be aggressive in nudging its customers to move into this platform at the earliest. Oracle further advises that enterprises wanting to explore Fusion need to adopt a co-existence strategy ( EXPECTING 50-100 CUSTOMERS EARLY NEXT YEAR) Larry is cautious and says not all need to move into fusion apps immediately but plan moving into Fusion Apps over time. Oracle confirms on support for current ebiz suite will continue to be supported for a long time. New modules like talent management in fusion( not available in on-premise) is an ideal way to start using Fusion Apps.

Exalogic – Cloud In A Box : Another important thing that came out today is the fact that Oracle is working really hard to integrate its software and hardware capabilities. Earlier with Exadata, Oracle integrated its database prowess with hardware prowess. Now Exalogic joins Exadata in Oracle's appliance family – here Oracle is integrating its hardware with application server. Whats the objective here? With Exalogic, Oracle claims that its customers can build Amazon-like and Amazon-scale (almost) datacenter infrastructure. Exalogic is targeted at customers that are looking to deploy Java applications (custom or packaged) in large scale.Exalogic Elastic Cloud packages server, storage, network, virtual machine, operating system and application middleware in one box, which provides an environment for building and running Java applications. Exalogic touts good support for virtualization and elasticity. Exalogic is designed to work together with Exadata Database Machine. Some of the numbers that Oracle showcased were mightily impressive : Exalogic is capable of performing at 1 million HTTP requests per second and comes at a very attractive $1.075mn. Oracel claims that this is a quarter of the cost for comparable IBM machines. Exalogic customers will be running a consistent configuration, which significantly reduces pain in testing, configuration and maintenance – another significant source of cost savings for customers, while achieving order of magnitude results..

(Image Courtesy : Oracle)

Oracle, Cloud & Enterprise

2010-09-19T11:27:00.000-07:00

I read with interest that observers of Oracle Open World 2010 brought out while reviewing the agenda : Oracle executive vice president Thomas Kurian's keynote was originally scheduled to showcase Fusion apps, but will now be all about "Oracle and Cloud Computing" and his company's role in the cloud "throughout the application lifecycle—from development and deployment to management and self-service administration. . . . Oracle's cloud solution spans all layers of the cloud, including infrastructure as a service (IaaS), platform as a service (PaaS), and applications or software as a service (SaaS), and this keynote focuses on how Oracle products enable cloud computing." Am headed later this evening,to Mascone to listen to Larry Ellison talk about the much delayed and much awaited Fusion Apps launch besides others like Exadata, Java, MySql and ofcourse about Mark Hurd.

There are compelling reasons for both large and medium-sized enterprises to be interested in cloud computing. For medium-sized companies, the top reason they are looking at cloud computing is that it's so much faster and cheaper to get started. Medium-sized companies may not have sophisticated IT departments nor the money to invest in upfront capital expenses, so using a public cloud provider may be very attractive. For larger companies, using an external cloud vendor may enable small teams or departments to get a new application or a development/test environment running in minutes instead of months. The self-service aspect of public clouds means that small teams can avoid a long wait for IT departments to approve project requests, procure servers, find room for them in the data center, install software, configure software, etc. Also, some applications have a limited lifespan of a few weeks or months, perhaps for a marketing campaign, event or special project. Pay-for-use and being able to return IT resources to the pool is perfect for these situations. Some enterprises, especially larger ones with economies of scale, are implementing "private clouds" for their own exclusive use. Large enterprises are interested in building their own private cloud to get the agility, efficiency and quality of service advantages of cloud computing, while mitigating concerns about public clouds, such as security, compliance, performance, reliability, vendor lock-in and long-term costs.

While we assess cloud adoption inside enterprises, we can overlook the fact that there really is a perfect storm in IT. Cloud computing, open source and Enterprise 2.0 are complementary technology shifts that threaten incumbant vendors, offer innovation & cost benefit opportunities (&risk) while challenging IT. It may be more profound than the introduction of PCs or Web 1.0 in business.

While I mull over all these topics, I was just seeing the state of adoption of Cloud/SaaS and the mindset amo0ngst enterprise buyers in moving to the new model. While I have written about how the cloud will disrupt all the stakeholders here, here and here, I wanted to look at the inhibiting factors for cloud adoption inside enterprises and what can be done about it.

Survey after survey lists key adoption concerns of users revolving around, legacy environments –stakeholder interests –in terms of ownership, governance ,legacy environments –protecting investments, Status quo maintenance in respect of leagacy apps – why tinker with it if its performing at acceptable levels. In many places, IT and Business are thoroughly underprepared to do the generation climb – they may have to revisit all the important decisions that they have lived woth in respect of system of records, security practices, integration mechanisms, business rules and process orchestrations, master data management etc. Revisiting all these things would call for mammoth preparation from IT and Business . Arguably, this is a very overwhelming proposition for IT inside enterprises. Business would tend to believe this move into clouds/SaaS may simplify their operations but in reality expectations may be overrunning reality and with the result the list of needs keep expanding adding to the burden on cloud/SaaS adoption.

Business need to look at their portfolio and arrive at a right solution that fits their need, Oracle with its very rich and highly capable consulting and system integration partners can help customers work through this terrain towards adopting Cloud/SaaS model starting from planning, contracting, migration approaches, implementation, integration and ongoing support. But,what Ellison announces today would be very important as it will in many ways shape enterprise adoption of cloud.Oracle is a profoundly influential force in the market today, and the strategies it pursues and the positions that it takes and its view on the ecosystem influences everybody across all those constituent sets of customers and prospects and partners and stakeholders and, perhaps most of all, competitors. Through various public announcements, Oracle has indicated that Fusion Applications' technical underpinnings, which include Oracle Fusion Middleware and the JDeveloper toolkit, may result in change for many users of Oracle's existing ERP (enterprise resource planning) products, which include JD Edwards, PeopleSoft and E-Business Suite. In terms of commercials, Oracle has indicated that Fusion Applications will obviously be sold in on-premises form as well as via hosting services like Oracle's own On Demand division, But it may be up to partners to deliver the software as true multi-tenant SaaS, which provides cost savings and cuts management chores, since multiple customers share the same application instance. Oracle has indicated in the past that upgrades could be “'like-for-like” meaning, if customers are upgrading from [E-Business Suite] financials to Fusion financials that should be a no-cost upgrade. But if it's a new module, that will be additional cost.

So far Oracle has revealed its cloud computing approach in three parts:
1. If you want an internal, or private, cloud, Oracle will sell you the hardware and/or middleware to build it.
2. If you want to use Oracle’s software on a third-party cloud, Oracle supports Amazon Web Services and Rackspace Cloud today, and will support other clouds in the future.
3. If you want to rent rather than own Oracle’s business applications, Oracle will provide those apps under a hosted subscription model.

This calls for too much of IT assembly and what’s needed is multitenant solutions across the oracle platform with a clearly articulated strategy . Rolling out more SaaS products is a good start point that will help simplify Oracle's offerings for customers. But Oracle also needs to define packages of its hardware and software components - similar to IBM’s notion of a “cloud in a box” and/or Microsoft’s Business Productivity Online Suite (BPOS). I am also keen to find out how much across the stack Oracle intends to support external products say DB2 or other virtualization platforms. All eyes are on what Larry will announce about Oracle’s cloud strategy tonight and the various cloud sessions planned in the next three days.

From information made available so far, What I see is that Oracle's strategy on public clouds remain very hazy( may be it is emerging or kept as a top secret pending an announcement in the session tonight), while their partners are Iaas/Paas partners are seen more of an additional channel. While private and hybrid cloud look to be a good starting point for enterprises to adopt, I see that the destination may be to have federated clouds and fully embracing public clouds. Also transitions to private clouds, may not be so easy as one tends to believe before venturing into the journey. Oracle's cloud approach needs to provide answers to these scenarios. I will be there talking to Oracle to find out more answers.

Cloud And New Roles For Players

2010-09-18T04:18:00.000-07:00

It's often widely acknowledged that all players in the software ecosystem needs to make adjustments and put efforts to embrace the world of cloud. We saw in the earlier posts the nature of issues that need to be confronted by buyers, IT service providers/Outsourcing firms, internal IT . Now lets look at some issues to be faced by other important stakeholders in the cloud ecosytem - software providers & infrastructure service providers.

One of the paradoxes in the software world is that despite being of the high technology genre, software performance have always provided room for improvement and the established order here is to keep improving performance over time. It's a comfortable spot that vendors and buyers always seemed to have settled in. In some cases, performance issues were always a toss between software, consulting firms, IT infrastructure, Internal IT, business processes etc.. Now comes the world of cloud. A near uniform experience at the core level is what’s getting promised by the service providers. In the current on premise IT World, it’s common to see Enterprise this play out all the time : IT managers buy commercial software packages and involve integrators to deliver software solutions and mostly they find that hardware consumption overshoots original plans- so they are forced to invest more in hardware and the process of taking such decisions happen late in the implementation cycle and this introduces more delay and hence the project costs tend to go significantly up,coupled as these are with some related issues forcing more delays.

It's a common knowledge,that many system integrators lack sufficient depth in creating a good enterprise architecture, in time for an engagement and configurations take multiple cycles to deliver an acceptable level of performance. Why did I earlier call such a painful experience as something that all players are comfortable in accepting? Lets look at this. Performance issues that needed to be fixed by the software vendor invariably gets pushed to the next release/version ,while they hype and sell the current release. When software performance trailed expectation by some percentage points, the common belief was that enterprise data centers are underutilised and therefore the excess capacity would take care in bridging the performance gap. Buyers couldn’t care less. It was cheaper and easier to simply throw hardware at the problem rather than to worry about either performance optimization in software, or proper hardware architecture and tuning.

Now the world of cloud/SaaS brings this issue squarely to the table back again. Cloud/SaaS turns that equation around sharply, whether multi-tenant or hosted single tenant. Now, the Cloud/SaaS vendor is responsible for all the operational costs, and therefore the Cloud/SaaS vendor is compelled to look at all levers that can help drive better performance to pay attention to performance, as costs become more directly measurable by them.

Now in such a rapidly changing scenario, what needs to happen? Today, we see traditional ISV’s moving fast to offer their software in the cloud/SaaS model. They typically start in a single tenant model ( We need to recognise that despite multi tenant model being the better one in terms of capacity utilization and for lowering operational costs), ISV’s tell me (and I tend to believe them here),developing multi-tenant software could be way expensive to develop. Its equally an investment intense effort to move a product from single tenant model into multi tenant model. (The theme is identical for businesses running software in their own data centers). It has to be recognised that software organizations are made up for creating software and not focused on benefiting out of investments in new delivery models or in offering consulting to customers for implementation( That product companies show significant revenue stream out of their consulting and services need to be discussed separately - perhaps in a different post altogether)

Coming back to the point of discussion, in such a scenario of product organizations getting focused on software development, businesses that are focussed on performance optimizations prioritized for the hosted model gets a new face of recognition. As a result, there is, and will continue to be, a significant market for infrastructure solutions that can help regular ISVs offer a SaaS model in a cost effective way without having to significantly retool their software.

Lets step back for a moment and see this : For a long time, hosting companies have been integrators of technology, not developers of technology. Today the forces of change are so powerful, they are increasingly pushing hosting companies into being software developers — they become a new niche in software development paradigm -they act as companies who create competitive advantage in significant part by creating software which is used to deliver capabilities to customers. Tools aimed at creating optimised multi-tenant model and delivered as a cloud service - these now become part of infrastructure players - Iaas. The more sophisticated and mature of the lot progress to become platform-as-a-service player(Paas).Many mistakenly think, IaaS players as focusing just on hiring boxes and having them hosted inside data centers and offer them as a rented service.Today, IaaS is now transforming into a software business, with the focus and mission on creating new software methods and tools aimed at introducing new features and capabilities to embrace Cloud/SaaS. Service and Support would be important functions for them while they step in to provide additional support to the software developers in the Cloud/SaaS ecosystem. For the skeptics, my answer is look at the players in the IaaS world, study their antecedents and one will recognize what am trying to say. This is one part of the axiom - the business model is the most disruptive change in cloud computing - not just the technology per se!

Cloud Adoption : Cadence & Transparency

2010-09-14T04:45:00.000-07:00

One of the challenges for enterprises in adopting new technology is the effect of unintended consequences – no am not talking ofserendipity here but of excess or extended usage in ways totally unintended. I was in a corporate discussion recently where someone was mentioning within his enterprise business has empowered the users the most,in ways where IT could have never done. I probed a little further to find that he was referring to . user self-provisioned applications and even user self-provisioned migrations to new operating systems such as Windows 7, made possible by a client hypervisor. This very thought that users could successfully self provision Windows 7 migration would send shivers down the spine of corporate IT – what about security , compliance issues. What about configuration and app compatibility issues- whose responsibility would things like these become, screamed an IT guy –my job there was to just to listen. This conversation set me thinking a lot (thought this was an open issue when self provisioning apps became a reality).

In the early days of SaaS implementation (not long ago –say 5- years back), I found that several departments wanting to cut throught the perceived inefficiency of internal IT, would opt for departmental SaaS applications ( either surreptitiously or in a brazen manner irritating corporate IT) – Their argument was that they are just paying for a service and they havenot moved any IT assets internally and so don’t see the need for involving internalIT.I know ofsales guys in those days talking amongst themselves how their strategy of carefully avoiding IT and going directly tobusiness helped them win deals! The practice ( of under the radar SaaS investments)hit roadblocks when the need to extend and integrate those departmental apps arose and in some cases CFO began to see how to align those departmental apps with the compliance frameworks ( corporate IT role becomes important therein).

Today I see this trend repeating itself in cloud services adoption. s for cloud computing services, business users tired of waiting for IT to provision a new application or service are tapping cloud providers and bypassing IT along the way, much as they have for many Software as a Service applications over the past few years. And some cloud providers are having a field day. They are not calling on the IT department, but rather going to department heads to pitch their wares. Technologies in some way allow these first level indiscretions, so to say. Powerful virtualization techniques allow IT to be disaggregated in a way to pass control from the vendor lockdown model to the IT department, but more practice centric approach would do enterprises more good. Vendor pitches today promise an Amazon like iTunes like facilities to configure solutions and businesses –mostly long tired from IT inertia tend to jump at these – atleast in the early stages of cloud adoption. Some IT departments are not exactly thrilled with this prospect of user control -- or the cloud, for that matter. Business in many cases tend to think of this differently. Not only is this entry made easy, some in the business side of things begin to think that this is a journey where power gets transferred to the users and this satiates their instant gratification or genuine needs depending on which camp you listen to.

As I see it, as business begin to invest moreand more in cloud computing,amongst a few things that get underinvested in attention and efforts is the central role of IT chargeback. The metering solutions are very critical in cloud solutions assessment –in the contest of one s own business, the ability to measure when you are using resources, at what level, and for how long, becomes very important IT cost allocation becomes a different ballgame in adopting cloud for specific business purposes. Now businesses are asking for the same “IT as a Service” approach that they get in the consumer world from their IT organizations as well. Today, corporate IT precisely use this as a weapon of defence and veer business to look at willingly pay more to set up and run the internal / hybrid clouds than the public cloud price in order to get the security and manageability of an internal cloud service – at least for now. See now cloud is now slowly modulating itself to act and behave in a varied form,
In any cloud journey - irrespective of the nature of the cloud, it becomes very important to layout in advance as an agreement between business and IT in terms of how to measure, monitor and charge for cloud services- clearly what you see in brochures and slide decks do not convey the actual cost of embracing clouds-its not just do-it-yourself stuff – in so far as larger and medium business are concerned. The nature of business that such IT supports can also influence in many ways the type of chargeback that needs to be put in place. For example, for those wanting to use IT to close the loop – transaction-analytics-decision- transaction, the mechanisms can be quite different. Many tend to ignore taking these carefully taken steps before embracing clouds, only to find them hitting hard to get this fixed. It would be more prudent to look into such issues beforehand and have them laid out comprehensively.

Traditional chargebacks divides budget by number ofunits served – the inequity there is quite unknown.With cloud, the problem gets more complex – like in an energy grid,the rate and time of consumption can tend to vary the charge rates.
In heavily virtualized environments ( Read-most corporate IT today), both metering and system failure possibilities need to be interlinked – many virtual clusters crash when overuse so one way to prevent overuse is to charge heavily for oveuse - so one can see the level of complexity and sophistication needed to design a right process and solution. An ideal scenario envisages setting up a service catalog with all pricing published in advance for business users to know the full details and help them take right decisions to evaluate, track, and audit their internal cloud expenses.

Having a good process that captures accurate usage details, precanned, predefined, monitoring and billing processes , a good dispute monitoring mechanisms all are part of what enterprises need to demand as they begin to embrace cloud. Bringing more transparency to IT costs is a cherished but that involves preparation, well laid out IT plans and a mature IT and Business Organizations to effect this. Its very important for IT to demand these even if business does not care for at the start of the program – as again many times the service level expectations can potentially bring about many changes in the choices that can be exerted be it storage, access, collaboration etc. Making these changes at the start of a cloud project can be far less expensive than making them retroactively. Now this one is for chargeback – extend this for security, compliance, integration, analytics etc.. the choices and issues are enormous- this where consulting firms bring in a lot of value, Based on global experience, best practices, success stories, processes and assessment on supply side- how different technology players and features pan out – their future roadmaps etc , good consulting firms can help institute good cloud governance mechanisms. Enterprises wanting to jump headlong without adequate foresight and planning , will end up having to endure lot of pain and too often they may turn to be very costly fix later or on an ongoing basis.
Bottom line – getting good planning, governance mechanisms are key ingredients in creating a successful cloud program.

Cloud Powered Outsourcing

2010-09-09T10:07:00.000-07:00

I wrote an Op-Ed piece for Sandhill.com on “Cloud Powered Outsourcing” available here. The focus is to highlight how services firms can leverage the disruptive nature of cloud computing to deliver new value to their enterprise clients. Thought I shall leave here a quick synopsis.

In the fast changing world of technology and outsourcing, many forces are at play. And for the outsourcing industry, any development – be it hardware, software, service delivery or something new – will change the business significantly. Cloud computing is rapidly changing the climate of enterprise IT – and the outsourcing business along with it. The disruptive nature of the cloud model will mean outsourcers will have to adapt for success in the next era.

Two significant factors are currently creating a new wave of change in the outsourcing industry. First, enterprise software is increasingly being delivered over the cloud. This is impacting the hardware commitments that a business makes.

Second, we are now seeing a situation where high quality IT infrastructure capacity is quickly becoming a commodity. With delivery models being disrupted, IT service providers should get into a mode of investing massively in creating/provisioning an infrastructure that their outsourcing customers can leverage sooner rather than later. This translates to an investment cycle from the service provider side as IT service providers invest heavily in capacity, virtualization, globalization and automation. With these investments, service providers begin to get positioned as players that are able to offer capabilities that can transform the way organizations access and use IT services.

The advantages of employing a cloud-based model of service delivery are well established now. In certain types of computing environments, embracing clouds can provide significantly lower costs, higher reliability, assured uptime, greatly enhanced flexibility , robust availability and up-and-down scalability configurable in real-time. The contention here is that outsourcing contracts can block move to the cloud. The separation of service lines in outsourcing that forces distinct blocks of services outsourced to different service providers creates significant challenges to embracing a cloud-based service model because both application and infrastructure management services typically come together in the cloud and normally would get supported by a single service provider. Here is a case where the incumbent service provider’s interests conflict with a client trying to adopt a cloud model. Many enterprises have a range of services contractually assigned to different service providers. Today, many buyers have a range of IT services contracts spread across multiple service providers. Under such arrangements, by default, we see that contracts get optimized at the tower level and by extension, the cost and value get sub-optimized at the tower level. Conflicts between the designated service providers managing the different towers get managed by differing contractual terms and it is quite common to see such partners in a conflict.
This is a “first order challenge” – a conflict rooted in the existing models of engagement and so typically calls for a fundamental rethink on the outsourcing model per se!

Moving further, adoption issues could come in the way . However attractive the benefits, the determination as to what, how, where and when to launch a new model of cloud service is always an issue that businesses have to grapple with – like any other operational decision. Enterprise outsourcers also find the need to find a solution to the dilemma: Do they continue, modify or disband their existing outsourcing arrangements to embrace the new model and reap the benefits in terms of savings, ease of use and performance.

In a nutshell, a revised cloud/SaaS model of outsourcing through service providers can help buyers in new ways resulting in lowered costs and improved operational performance - never ending requirements in today’s business world. This calls for a majority of businesses with mature IT environments and outsourcing arrangements in place to look at recasting their existing contracts and embrace a new model of outsourcing governance. This transition won’t happen by the flip of a switch. Moving into a cloud environment for consuming IT services requires a fundamental change in the delivery mechanisms that would impact almost all the stakeholders inside business. Read the full article here.

Google Instant : Awesome Engineering To Result In Enhanced Revenue

2010-09-08T19:08:00.000-07:00

A few hours back today, Google launched an ambitious effort to make search faster for all . In the process they have laid the foundation for a new version of SEO to take roots. Lets look at the details here.

To quote Google:

"Google Instant is a new search enhancement that shows results as you type. We are pushing the limits of our technology and infrastructure to help you get better search results, faster. Our key technical insight was that people type slowly, but read quickly, typically taking 300 milliseconds between keystrokes, but only 30 milliseconds (a tenth of the time!) to glance at another part of the page. This means that you can scan a results page while you type."

Marketers and SEO professionals cant ignore this ..
"Smarter Predictions: Even when you don’t know exactly what you’re looking for, predictions help guide your search. The top prediction is shown in grey text directly in the search box, so you can stop typing as soon as you see what you need."

This essentially means that different people would potentially get to see different results for the same query. Up until now, search queries used to return identical results for users ( i think in the same continent/region). Now with this, Google is introducing a ground shift : adding a new dimension to search and bringing out in the open a loop in play. Today’s new dimension is the user.Tomorrow,it can potentially add language,location, nature of access device to the mix and this spins a new territory. The basis of operations of search engines and by extension the discipline of search engine optimization is fundamentally altered. The new loop of response and feedback is going to make this field more and more sophisticated. . Like an aircraft on flight path monitoring direction, altitude, wind speed, payload etc to help pilot take the right instanteous decision,Google Instant search results gets predicated on a variety of factors. Marketers, SEO professionals have quite a task at hand moving forward.

In a webcast today for select attendees, Google shared additional details - rather it put on display it’s massive engineering prowess. Google estimates that a search typically takes 9 seconds to enter, 0.8 seconds for data transfers between its data centers, and 0.3 seconds to process. The user then spends 15 seconds choosing a link. For consumers, Instant can save the average user 2-5 seconds per search via dynamic search results, enhanced predictive technology, and scroll-to-search functionality that changes results pages as users choose search suggestions. You can read more about Google Instant here (including crazy statistics, like "If everyone uses Google Instant globally, we estimate this will save more than 3.5 billion seconds a day. That's 11 hours saved every second."). Some users may find the new process a little bewildering but may soon get acclimatized.

What does Google get out of this :more query volume, increased market share and loyalty - but more importantly overtime traffic may shift more to head ( recall the last time you looked at the 47th result). Optimizing search results around query volume makes access to such results more precious and by extension turbocharges average price per keyword click thus boosting Google’s monetization initiatives much better.

So massive engineering prowess pushing better monetization efforts sums up the development - consumers have nothing to complain but rejoice at the next massive leap that Google has taken.

IT, Cloud & Competitive Advantage

2010-09-07T01:17:00.000-07:00

I was in a conversation with a CIO the other day about how fast the tech industry is changing and how continual adaption of the latest has become a norm for his business - he also said that some time sponsors within the organization keep asking what if we give this advancement a miss and try and catch up two or three steps down the line? He added, some within the company argued that information technology is so pervasive that it no longer offers companies any big advantage. He singled out curiosity of moving to cloud made such people repeat this question again. His answers were many - the competitive advantage can take a hit , the culture of being up-to-date is a continuous process, many parts come together in every step of the progress and can’t be easily stitched when we need etc ..

As I see it, IT’s contribution to the success of any and almost every business is now unquestionable.

From the 90’s we are seeing that investments in IT by US headquartered business increased many times - enterprise software and internet gave awesome power to business to create new business models and create differentiation centered on processes and keep improving the process advantage, Today, the fact remains that owing to technology advancements, Very few processes within an organization are self-contained; they most involve multiple groups. With enterprise software, companies could electronically copy and enforce new business procedures across hundreds of sites, thousands of employees and millions of transactions—all without the same level of inertia, errors or delays that typically accompanied such efforts in the era of fragmented computer systems.

Numerous studies have confirmed and reconfirmed the correlation between IT and business success. We have seen experts present after detailed analysis that accelerated competition amongst business enterprises coincided with a sharp increase in the quantity and quality of IT investments, as more organizations have moved to bolster (or altogether replace) their existing operating models using the internet and enterprise software. Tellingly, the changes in competitive dynamics are most apparent in precisely those sectors that have spent the most on information technology, when other factors were controlled This pattern is a familiar one in markets for digitized products like computer software and music. Those industries have long been dominated by both a winner-take-all dynamic and high turbulence, as each group of dominant innovators is threatened by succeeding waves of innovation. Andrew McAfee & Erik Brynjolfsson argue that just as a digital photo or a web-search algorithm can be endlessly replicated quickly and accurately by copying the underlying bits, a company’s unique business processes can now be propagated with much higher fidelity across the organization by embedding it in enterprise information technology. As a result, an innovator with a better way of doing things can scale up with unprecedented speed to dominate an industry. In response, a rival can roll out further process innovations throughout its product lines and geographic markets to recapture market share. Winners can win big and fast, but not necessarily for very long.

Harvard’s formal theorm of competition states :
-First, companies with superior ways of doing business would be able to rapidly leverage that advantage over competitors, leaving a smaller number of firms holding a higher proportion of both sales and market value within industries.
- Second, just because the wins would be bigger doesn’t mean the same companies would always win. There would be more turbulence in sales and market-value rankings within industries because competitors with new ideas could scale up rapidly and overtake the leaders.

In real life let’s see how this pans out. Productivity is realised when an advantage gets created - but this is an ever moving target. A business acquires an advantage by lets say creating a new sophisticated sales and distribution system and we see that competition would in a short time try , replicate and improve on this t seize advantage for themselves. If they indeed manage to make this happen, the investments originally made you becomes part of the cost of doing business. Similarly, business and IT that keep basking on yesterday’s success would miss the bus to lead today and runs the risk of being out of contention to succeed tomorrow! Just remeber the case Escada - a great company that could boast of almost all hollywood celebrities as customer missed being a relevant force in a matter of years as it falied to invest internally to keep the first to the market advantage intact. Ford is successfully leveraging ITin its much acclaimed turnaround story. Ofcourse, most of us know that its just not investment but how tech gets applied would make a difference in business success. Mere IT spend to keep up with neighbours would not directly get to productivity gains unless it is properly coupled with efforts on Innovation.

Like being Power IT Savvy, then look at this :

- You have to stop thinking about IT as a set of solutions and start thinking about integration and standardization. Because IT does integration and standardization well.

- IT Savvy firms have 20% higher margins than their competitors.

- An operating model is a pre-requisite before committing sound investments in IT

- IT funding is important, as systems become the firm's legacy that influence, constrain or dictate how business processes are performed. IT funding decision are long term strategic decision that implement the operating model

- IT Savvy is based on three main ideas:

1- Fix what is broken about IT, which concentrates on having a clear vision on how IT will support business operations and a well-understood funding model. In most places, IT is delegated and benignly neglected in the enterprise with disastrous consequences of underperformance/poor leverage.

2- Build a digitized platform to standardize and automate the processes that are not going to change so focus shifts on the elements that do change. The platform idea is a powerful one and can drive significant margin, operational and strategic advantage.

3- Exploit the platform for growth by focusing on leading organization changes that drive value from the platform. With a platform built for scale, leverage efficiencies that scale can deliver. Ironically many enterprises fail to do one of these two!

Innovating with IT is not an easy process - where to direct the hose becomes more important as the force of the water coming out of the hose. CIO’s need to have their best efforts put behind solving unique large impact ( either by reach or by dollar effect) problems.

So this leads to the question - what is the direction for CIO’s to point the hose towards ? Like in punctuated equilibrium , a similar thing can be noticed in IT and its effect on business. If CIO’s remain happy with parity status with competitors, they would be sooner than later outdistanced by more innovative competition. Today, no business can afford to take their eyes off two important areas - Cloud & Enterprise 2.0. Far reaching changes at the operational, strategic and leadership levels become possible by embracing emerging technologies. CIOs need to have convincing strategies as answers to questions in search of solutions for problems like how quickly we can move our IT into cloud and how can we do that in a differentiated and quicker way. Similarly answers to questions on how to leverage collaboration and Enterprise 2.0 for competitive advantage need to be thought through and strategies built around them - this process needs to be repeated at every review span - the actors may vary but the mechanisms would be the key. More than that, concerted action with demonstrable results would give more convincing answers.

VMworld: Private Cloud & Random Musings

2010-09-01T19:12:00.000-07:00

I went to catch up with my friends coming to VMworld 2010 at San Francisco from around the world and ended up meeting some upcoming technology players as well. In the course of my discussions, I recognized the existence of a lot more energy in the cloud ecosystem – big and small, private and public cloud service providers and enterprises seriously exploring adoption opportunities.

First on VMware : The most important message that is coming across clearly is the ambition of VMware in becoming a key player across the stack - covering server and desktop virtualization and application platforms. This comes at a time when the number of virtualized servers set up this year exceeded the number of actual physical servers set up and this is expected to grow further – we have seen projections that show that the installed base of virtual machines will grow 5Xin three years. One can see in VMware’s strategy a broadly outlined roadmap for internal clouds built on the server virtualization hypervisor layer with an integrated management (including security) backplane directly as part of the platform. Clearly, it is time for more established infrastructure players like BMC, CA, HP to be concerned about. I liked their announcement to provide more robust support and agility to port between internal and external Clouds – this move makes VMware a more strong player in the cloud ecosystem. VMware’s ambition does not end with being just the operating system for the data center, but wants to be a big player with the means of assuring the flow of enterprise bits between data centers —a synonym for cloud to many. VMware knows the cloud is nebulous in terms of where information can travel, but it also knows that enterprises are uncomfortable with the nebulous and uncontrolled flow of bits, so it’s acquiring companies and offering products that will help it create the logical boundaries in an IT atmosphere veering toward abstraction. VMware is building a new application platform for next generation cloud applications leveraging SpringSource and partnering with Salesforce.com through vmforce.

Since it is VMworld, it always begs the question what next for their customers. After all, the percentage of new servers running virtualization as the primary boot option will approach 90 percent by 2012, according to analysts. For many moving apps into cloud becomes a next logical step. Afterall, the movement toward private clouds started, with the virtualized data center and virtualized desktops. The movement toward broader cloud computing began for the enterprise with data center virtualization and consolidation of server, storage, and network resources to reduce redundancy and wasted space and equipment with measured planning of both architecture (including facilities allocation and design) and process. Depending on the maturity of their adoption cycle, enterprises end up adopting different flavors of the cloud.I always maintain that business would embrace the right cloud at the right time – be it private, hybrid or public but the eventual goal would be to move everything into the public cloud to leverage true cloud benefits. While this may look logical, the path was not always a direct one for all embracing such a journey. Many approaches are being tried – the most ambitious one the introduction of publicly shared core services—much like domain name system (DNS) and peering services—into carrier and service provider networks will enable a more loosely coupled relationship between the customer and the cloud provider. With such infrastructure and services enables, enterprises will be able to choose among service providers, and federated service providers will be able to share service loads. Implication: Such a looser relationship will increase the elasticity of the cloud market and create a single, public, open cloud internetwork: the intercloud. Now, with federation and application portability as the cornerstones of the intercloud, businesses will be able to achieve business process freedom and innovate, and users will experience choice and faster, better services. Obviously a journey like this involves careful planning, co-ordination and provides leverageable opportunities across the board. Consulting majors have defined approaches to help business move along this path as painlessly as could be possible.It is actually a good thing that VMware has realized that virtualisation is a commodity now and management of virtual solutions is the key
Lets begin at the beginning to re-emphasize the perspective on cloud computing. Cloud computing model ought to provide resources and services , abstracted from the underlying infrastructure and provided on demand and at scale in a multi-tenant environment. In addition to its on-demand quality and its scalability, cloud computing can provide the enterprise with some key advantages like :

- Global deployment & support capabilities, with policy-based control by geography and other factors
- Operational efficiency from consistent infrastructure, policy-based automation, and trusted multi-tenant operations
- Integrated service management interfaces ( catalog management, provisioning etc.)native to the cloud
- Regulatory compliance ( both global and local) through automated data policies
- Better TCO and increased ease of operations

If we examine cloud computing particularly private clouds through this prism , it throws up some interesting insights. Different enterprises are getting ready to embrace the cloud but have different starting points and not without much trade-off analysis as to the best direction or computing model. To add to the confusion, I saw in the VMWorld meet, a number of players (some promising, I should say), talk about helping in setting private clouds in a manner suggesting a simplistic switch to the clouds. I also know that there are some cloud service players offering to provide readymade solutions to make business embrace private clouds faster and easier to adopt. This is startling so to say – a readymade solution may be farfetched ( clear analogy : a decade back some were promising to make enterprises web ready easily – we all know how different it is to enable business to be web enabled – certainly no readymade solutions nor shortcuts could have worked there). Migration, workload balancing, and integration – all are overbearing issues to be resolved and certainly not minor things to be glossed over. The problem is that transitioning to a cloud-enabled environment can involve large degrees of technical, cultural and budgetary evolution, and it is of utmost importance that organizations deploy the right solution. Private clouds should be differentiated with hybrid clouds. (Note :A hybrid cloud uses both external (under the control of a vendor) and internal (under the control of the enterprise) cloud capabilities to meet the needs of an application system. A private cloud lets the enterprise choose, and control the use of, both types of resources).

Evidently, cloud shift is not an easy journey. The greatest barrier to cloud adoption would be for enterprises to make that switch – that would mean crossing so many issues centered on excitement to fear and uncertainty. This is a paradigm shift and not just an incremental change and as such would require planning, co-ordination and leadership to traverse the path. Initially, the administrative change would be far more pronounced as the shift happens and if this is entrusted to an external vendor – it would call for serious planning and training as the new environment would be dramatically different from what existed in the past.

Business need to be wary of so called cloud solutions that are made to look like off-the-shelf cloud solutions given that there is a frenzied interest in business circles to adopt cloud in some form. Genuinely some would go for the most ell thought out, most rigorous approach and at the other end there would be some wanting to embrace cloud in a tentative, easy to slip-in manner. The level of confusion in how to adopt from business side seems to be in lock with the high decibel, cloud - easy to embrace target marketing. This state of affairs may tempt business to look for solutions that stretches their infrastructure a bit but leverages more of what they have – a combination clearly far from ideal.

New partnership and alliances between cloud service providers and consulting firms are providing a good onramp towards private, hybrid and public clouds. This should reassure business for a variety of reasons – choice, balance in terms of solution and broad body of expertise that comes together. Initiatives like this could slowly begin to bring an orderly discipline towards cloudswitch by enterprises. This should also facilitate adding flexibility to selectively opt –out part of services in their portfolio be it towards migrating to other clouds, or integrating with other clouds etc. With a robust ecosystem like this, solidified solutions specific to each and every business needs (emphasis is on distinct customized solutions) with multitenant architectures measurable on multiple factors like scalability, agility, access, flexibility etc should begin to provide a reasonably firm cloud foundation for business. The message is watch not only for the right cloud but also look for the right ecosystem and right consulting methodology to get enduring benefits.

The Transient Nature Of Private Clouds

2010-08-31T06:05:00.000-07:00

An interesting thread is now on within the enterprise irregulars group on what constitutes private clouds –as again very enlightened discussion therein. The issue that I want to talk about is if private cloud do indeed exist, then what is their adoption path ? Lets start from the beginning : the issue is can we can use the term ”cloud” for describing the changes that happen inside IT architectures within enterprise? Thought there can be no definitive answer – a series of transition to a new order of things, will in my opinion, become imminent.

The pressures on IT & the engulfing sense of change in the IT landscape are hard to overlook. The pressures would mean more business begin to seriously look at SaaS, re-negotiating license terms, focusing on rapid adoption of virtualization etc. As part of this and beyond, internal IT would be forced more and more to show more bang for the buck and it is my view that organizations would begin to look more and more to question committed costs and begin to aggressively look at attacking them more systematically – earlier sporadic efforts marked their endeavors. This could also unlock additional resources that could potentially go towards funding new initiatives. There are enough number of enterprises going this route and their service partners are also in some cases prodding them to go this way.

The change in many senses may make IT inside enterprises to look , behave and perform like cloud computing providers – though there would be limitations( in most places serious) on scale, usage assessments , security and the like. There are strong incentives propelling enterprises to channel their efforts and investments over the next few years in mimicking a private cloud service architecture that gets managed by them internally. This could well become their approach of staging towards finally embracing the cloud(public) over a period of time . These baby steps to nearly full blown efforts are needed in preparing organizations to embrace clouds and it may not be feasible at all to make the shift from on-premise to cloud like flip switch. Serious licensing issues, maturity, lack of readiness, integration concerns, security all come in the way of enterprises looking at public cloud in a holistic way. These steps need not be looked down – they would very well become the foundation to move into public clouds in a big way.

Let’s for a moment assess this theme from a security perspective - a dominant concern business expresses when it comes to clouds. While assessing security requirements in public clouds,we see the recognition that a whole host of chnages need to be done at application architecture levels, the need to accomodate specific compliance requirements, privacy provisions in the public cloud etc.

Lets think through this : setting up private cloud is a motherhood statement at best( in many organizational surveys, one can find setting private clouds is not in the CIO’s top three priorities – if anything virtualization finds a place-) to make this happen in a credible way means re-examining most parts of IT functioning and business –IT relationship inside enterprises. IT teams while conceptualizing private clouds are happy to retain existing architectural designs, happily propose a clasical DMZ/Perimeterized model for providing security and enabling access, too often leveraging a highly virtualized infrastructure. More often than not, it’s enabling virtualization, automation and self service and color it as private cloud. Do recognize the implicit differences in constructing a private cloud and a public cloud. Comfort with the status quo with some adjustments versus an opportunity to rethink architecture, security, privacy,compliance needs in a way summarizes the nature of thought process and expected results between the private and public clouds. Speaking more directly, public clouds present the opportunity for enterprises to review and achieve specific requirements in the areas like agility, flexibility and efficiency at optimal effort Versus a skewed , boxed implementation of private cloud setup. Taking advantage of the public cloud benefits would far outweigh the advantages of getting boxed inside with private clouds.

Most elements of the bedrock gets affected – the processes, culture, metrics, performance, funding, service levels etc. Well thought out frameworks, roadmaps need to be put in place to make this transition successful. These frameworks need to cater not only to setting up internal cloud but eventually help in embracing the public cloud over the years- not an easy task as it appears. A few of those organizations that master this transition may also look at making business out of these – so it’s a journey – that needs to be travelled onto embracing public clouds. Some business may take a staged approach and call it by private cloud, internal cloud or whatever but eventually the road may lead into public clouds!

Doing Both : Protect The Present & Create The Future

2010-08-20T07:23:00.000-07:00

Cisco founded in 1984,is a global technology powerhouse and a very admired corporation. Its seminal breakthrough of the router connecting two different computer networks laid the seed for the internet enabled networking industry.. Today, as we look ahead, Cisco is positioned to lead the evolution of the network to enable a ‘connected future’ which is increasingly "collaborative, video-driven, personalized, and mobile." With more than 7,000 patents, Cisco today is the worldwide leader in networking technologies that are changing how the world works, lives, plays and learns. The company’s commitment to innovation, customers have been key to Cisco’s success over the years—and it helps shape the future of the Internet by creating unprecedented value and opportunity for customers, employees, investors and ecosystem partners.
In less than fifteen years since it was started in 1984, Cisco achieved the feat of the most valuable company ever on earth when its market cap soared to 500 +billion dollars during the dot.com boom era. Cisco is one of Fortune's most admired companies, and being a technology bellwether, has successfully managed multiple transitions in its last 25 plus years of existence. In the mid-1990s, for example, Cisco was strictly a router and switch vendor. But over time Cisco has moved from making gear for data networks to providing all kinds of equipment for voice communications and video systems, highlighted by products like Cisco TelePresence. The company has also become much more focused on software to make networks work even better for communicating, collaborating and entertaining. Perhaps more importantly, Cisco has also been able to reinvent its business operations – continuously!

Cisco is also widely credited as the tech company which has done maximum number of acquisitions in the last ten years and it scores as the leader in a number of areas and initiatives. Understanding Cisco’s mind and its style of execution is something that every investor, partner, executives across industry show interest in. Inder Sidhu, Cisco’s Senior Vice President has come out with a lovely book titled “Doing Both” describing Cisco’s strategy for success. Inder Sidhu points out that by pursuing new and existing business models alike- Cisco has positioned itself to be as nimble as it is strong and as flexible as it is precise. That, contends Sidhu helps Cisco when market transitions frequently! It should be noted that this book is not about technology. Instead, it addresses the fundamental dilemma that every business struggles with at some point - making a choice between two equally attractive strategic alternatives. Some of the nature of choices Cisco had to navigate through as brought out in the book include:

• Sustaining and Disruptive Innovation
• Existing and New Business Models
• Optimization and Reinvention
• Satisfied Customers and Gratified Partners
• Established and Emerging Countries
• Doing Things Right and Doing What Matters
• Superstar Performers and Winning Teams
• Authoritative Leadership and Democratic Decision Making

This is highly relevant in fast changing industries like High Tech where Cisco operates. Arguably, some may say that with globalization comes heightened competition and therefore the pace of change has substantially increased for every large industry in the world. The book brings how in Cisco’s DNA the philosophy of exerting both choices is built inside and how in its various points in history, Cisco was guided by this approach leading to spectacular business success. The book brings out the various business models that Cisco planned to pursue and executed around Consumer, Video, Services & Collaboration space. As Sidhu shows how Cisco sort of walked the talk and shares details, the reading of the book becomes more interesting and as we reflect on these, realization dawns about the significance of how tough those decisions must have been to even conceive and still more difficult to execute!

The eight principal dilemmas that the book showcases from the prism of Cisco’s decision making and execution of those make a fantastic reading. Among those covered are classic dilemmas like investing in incremental innovation vs breakthrough innovation simultaneously. Some might think that larger organizations are bestowed with the ability to take right decisions and make those decisions work out successfully. In reality, such a proposition is far from being true - swift decision making and flawless execution are not easily achievable inside large enterprises. Just imagine how may stakeholders need to align to create something new or modify something that exists – enormous pressures from different directions would make it hard for such shared objectives and well aligned execution to happen easily.

The strategic insights that the book provides are quite interesting- such as how Cisco manages the partner channel – how they changed the channel strategy, the globalization initiative of Cisco, deputing talents to potential spin-in’s, the fabled Cisco operational committee’s – Discussions centered around these areas provide a very powerful insight into the decision making rythms of the ever successful industry leader.

If we sort of step back from a very absorbing reading pleasure the book extends – (I finished reading the book in less than 24 hours after I got the book – this while attending to other things), I am drawn to the classical innovator’s dilemma paradigm of Clayton Christensen- he has written extensively on what characterizes a sound management framework. In a nutshell he outlines the framework in terms of ability to have a good set of state mechanisms that executives would go through on varying circumstances and then by extension the mechanisms to make right decisions towards an efficient and successful navigation. Seasoned executives are sort of trained to parse through this framework many times to know what could be the most appropriate path to take in a given context. The grind of analysis of known contexts and the audacity to traverse new paths when faced with a new type of context makes radical winners (like Cisco) more special and those are the type of insights that this book brings out.

Inder Sidhu brings out the key tenets of of Cisco's strategy, very well with his theme based discussions . Cisco is an outstanding exemplar of a firm that has been able to combine profits and productivity - today's success - and expansion and adaptation in an uncertain environment leading to tomorrow's growth. This is the core theme of the book: the seamless fusion inside Cisco of highly optimized operations co-existing with truly flexible, innovative and adaptive continuous expansion. This is a tall order – very very few high tech companies have been so consistently successful as Cisco is in pursuing this strategy – in fact examples of companies that could not manage ever evolving transitions abound in the high tech space. Making spin-in acquisitions for talent, new ideas, new lines of business have proven to be a tough task to execute by many business

As a company besotted with growth, Cisco keeps trying multiple options and in the process tries many novel things to keep growing and maintaining the margins. The principles and the thought process behind the acquisitions like Linksys, Scientific Atlanta, Webex make great reading- I particularly liked the discussion about what new things Cisco got out of these acquisitions in terms of learning and practice knowledge besides their products and services – this is very very important to know that such a culture of reverse assimilation is institutionalized inside Cisco. The rest of the book is skillfully presented and interesting. It captures Cisco's multifaceted strategy well and is full of insights into global strategy and execution – It covers significant areas like how Cisco re-jigged its supply chain soon after it had to write off 2 billion dollars in the dot com bust attributed to supply chain build up, Cisco’s globalization efforts including how it scaled up India as the alternate global headquarters outside of San Jose . For example in the case of supply chain, Cisco implemented a rationalization plan that brought 1300 component suppliers down to less than 300 in four years and it reduced the number of contract manufacturers that it worked with from 20 to 4 in the same timeframe. The book shows that today Cisco is able to handle two times the volume that it had during dot com days and more importantly could get this done with half the people! Successful companies need to take tough decisions and execute on those decisions very well and the book shows Cisco is no exception on this. Another important reading in the book is around Cisco’s structure to bring executive teams together to drive new initiatives together and charter areas of growth around new ideas. Inside Cisco, powers have been shifted from traditional business owners –like head of sales, marketing, engineering into councils and boards, populated with executives across the company. These councils and boards complement the traditional hierarchy, providing scale and replicability of a centralized company and the speed and flexibility of a decentralized one. Cisco’s IT absorption in the last ten years is well chronicled and the insights into how it is now trying to push the collaboration framework inside shows the unending zeal with which Cisco keeps pushing new frontiers. A very lucid description of Cisco’s decision making mechanism is covered inside the book. Takeaway : A highly collaborative system can also move fast if properly driven and can yield significant returns.

The book , I think by design avoids picking on how Cisco outbid the competition in a myriad number of areas it competes - understandable as this book is meant to chronicle Cisco’s internal process , systems and decision making mechanism. Some very powerful examples of failed business models pursued by Escada, Harley Davidson amongst others and how Cisco avoided getting trapped like them makes this book a comprehensive read.

I recommend this book as a refreshing and lively read. This is a classic book – one that chronicles the global strategy and high class execution prowess of Cisco , a top technology player in the world! Very rarely, we will see such a well chronicled book on a successful mega corporation come out from executives inside the organization - Sidhu is an exemplary writer – he brings the situation that he writes about right in front of the eyes of the reader and the discussions are centered around very important aspects of running global business. Highly recommended reading for business leaders and practitioners around the world.

Note : Article first published as Book Review: Doing Both: How Cisco Captures Today's Profit and Drives Tomorrow's Growth by Inder Sidhu on Blogcritics

The Fallacy called Patents -Time To Discipline!

2010-08-07T11:20:00.000-07:00

Vivek Wadhwa writes,"Patents make a lot of sense in many industries; they are needed to protect the designs of important components or design of physical products. But in software these are just nuclear weapons in an arms race. They don’t foster innovation, they inhibit it. He adds, That’s because things change rapidly in this industry. Speed and technological obsolescence are the only protections that matter. Fledgling startups have to worry more about some big player or patent troll bankrupting them than they do about someone stealing their ideas". A recent Berkley patent survey shows,venture backed business file for more patents as against startups across industries including software. Brad Feld points out to the absurdity behind the idea of patents. Bob Warfield with multiple startup credits and himself a patent holder points out how difficult it is to fight suits against patent trolls. He points to several absurd situations that we all come across in the name of patents while defending genuine progress.

Earlier we covered why patent systems need to be disciplined and went to the extent of saying that its time to abolish patents for atleast software industry. On the other hand some people think that we have reached the dark age of innovation – Physicist Heubner says that rather than growing exponentially, or even keeping pace with population growth, major innovations & scientific advances peaked in 1873 and have been declining ever since. While examining number of patents granted in the US from 1790 to the present. when he plotted the number of US patents granted per decade divided by the country's population, he found the graph peaked in 1915. The global rate of innovation today, which is running at seven "important technological developments" per billion people per year, matches the rate in 1600. Despite far higher standards of education and massive R&D funding "it is more difficult now for people to develop new technology”.

Patents impede innovation and not encourage innovation. Innovation may be the core to success and it is not be mistaken against patents or R&D budgets. As Michael Scrage wrote brilliantly, the simple fact is that R&D spending is an input, not a measure of efficiency, effectiveness or productivity. Ingenuity, invention and innovation are rarely functions of budgetary investment & pointed to the fact that Wal-Mart, Texco and Dell have miniscule R&D budgets, their quality, procurement and growth requirements have probably done more to drive productive innovation investment than any competing initiatives. Growing market competition, not growing R&D spending, is what drives innovation. A successful innovation policy is a competition policy where companies see innovation as a cost-effective investment to differentiate themselves profitably. John Hagel adds that it is a fallacy in equating patents with innovation. Normally the focus is on product innovation, ignoring process and business model innovation. Process innovation is far more powerful than product innovation – it has a multiplier effect that product innovation can rarely match & notes that the only effective measure of innovation activity is the rate of productivity improvement in an enterprise – the growth in value added generated per employee. Static productivity measures can be misleading & what may really count is the ability to sustain and amplify productivity improvements through innovative products, process improvements or new business models. Lets all shout for more innovation and whatever comes in the way that may include patents – lets get rid of them!

Change As The Constant, Reflex As The Saviour

2010-08-04T09:13:00.000-07:00

Just finished some random reading. Started with Jeane Bliss on customer loyalty and Zappos is profiled therein in detail. Zappos decision making paradigm seems to be centered around making far reaching changes happen as part of their DNA. As Tony Hseih says in his afterword of Jeane Bliss book on customer loyalty –“Decision making not purposefully directed can lead your company down a path and to an unintended conclusion. Products, Services, Companies can be taken down the wrong direction whereas well thought out , purposeful decision making centered around customer needs can make a huge difference to business growth !

The more and more I think of it , decision making gets more impactful when it meets the trajectory of change. Look at Seth Godin’s post on the calculus of change. Seth outlines how how a change in operating systems (from DOS to Windows) made people look at different things – in this case, people began to rethink about choice in word processors. The leader at that time was Word Perfect but when Windows began to take centerstage, World also grew along with it -all this while Word Perfect was not ready on the Windows platform. The closest analogy is in Smartphones and where Android is set to get to the top of the heap, many business are having just an iPhone app and not investing in getting an Android App out fast. The point of maximum disruptive timing is the point where people have to make something new or different to happen, got to make a change and can't be avoided.

Extend this logic. When is the last time when the sales , marketing & customer service function of our business got a refresh – no am not taking about just changing people but the process, measures, response etc. Extend this a litte further – when did the core technologies that run our business enterprise get a meaningful refresh – Am talking about Enterprise Software here. Today emerging technologies revolve around Java, MySQL, Open Source, Cloud Computing, and Web 2.0 Social Media. Clearly, these did not exist in full form when the current enterprise software leaders began to dominate the space. Each one of these forces are powerful forces of disruption .

As the beneficiaries and victims of the technology gap phenomenon can testify. For people in both the camps, everything in their digital lives have changed so much. Today, more than 4 billion people around the world now use cell phones, and for 450 million of those people the Web is a fully mobile experience.Alas the big fat guys of the technology world are so slow to embrace and make them as part of their core offerings. We all know the lessons of history.

Look at what change can do to the employed. The evolution of the role of the employed is indeed remarkable. Thomas Malone believes that we're headed for equilibrium in the global wage market.It may take a decade or two, but at some point, people capable of doing work will get paid roughly the same amount wherever they are. It will happen a lot faster than people think," Malone said. He earlier wrote,"Four decentralized organizational structures—loose hierarchies, democracies, external markets, and internal markets—that will be enabled by technology but centered around enduring human values shall be the dominant model. The shift from "command-and-control" management to "coordinate-and-cultivate," and the new skills that will be required to succeed would become critical to succeed. A framework for determining if a company’s situation is ripe for decentralizing and which organizational structure would be most effective would evolve".

Mckinsey identifies ten important tech-enabled business trends to watch out- Its an important read. For the first six trends, which can be applied across an enterprise, it will be important to assign the responsibility for identifying the specific implications of each issue to functional groups and business units. The impact of these six trends—distributed cocreation, networks as organizations, deeper collaboration, the Internet of Things, experimentation with big data, and wiring for a sustainable world—often will vary considerably in different parts of the organization and should be managed accordingly. Three of the trends—anything-as-a-service, multisided business models, and innovation from the bottom of the pyramid—augur far-reaching changes in the business environment that could require radical shifts in strategy. CEOs and their immediate senior teams need to grapple with these issues; otherwise it will be too difficult to generate the interdisciplinary, enterprise-wide insights needed to exploit these trends fully.

Mckinsey rightly observes, the pace of technology and business change will only accelerate, and the impact of the trends above will broaden and deepen. For some organizations, they will unlock significant competitive advantages; for others, dealing with the disruption they bring will be a major challenge. It’s clear that organizations should incorporate an understanding of the trends into their strategic thinking to help identify new market opportunities, invent new ways of doing business, and compete with an ever-growing number of innovative rivals. Embracing change in every major twist and turn is an absolute must and decision making process that can force technology companies to respond in a timely and efficient manner would bring huge rewards to the stakeholders of the business. To keep trying to change regularly needs to be in the decision framework and DNA of sustainable growth focused business . Watch out for the alternative : Standing still is the kiss of the death and those standing with deep roots would not see such waves of change but when they get affected, it would be a massive hit for them.

Adobe + Day Software Coming Together: Cautious Optimism

2010-07-31T08:48:00.000-07:00

The Enterprise Software space is undergoing big change. No, I am not talking about just the shift to SaaS, Cloud, Potentially increasing spend etc. Its seeing momentum of a different kind - form a moment of pause, it is getting rediscovered as being sexy again. Different enterprise players make different moves to sort of remain relevant and continue their growth. This week, Adobe announces its plan to buy Swiss software maker Day Software. Day Software is a content management company focused on the high growth markets of Web Content Management, Digital Asset Management, Social Collaboration and Targeting & Optimization. A quick reading shows that following Adobe’s acquisition of Omniture in September 2009, this move by Adobe is clearly aimed at getting into the web experience management (WEM) market place . The expectation here is that Adobe would help its customers through its combined offerings the capabilities to bring together the audience insight gained through the web analytics of Omniture and Day’s CRX content platform. The acquisition price is about US$240 mn, a 67% premium over Day’s last 90-day average price. Analysts note that Day Software had $44 mn in TTM revenue (based on filings and current exchange rate) and has been growing at 40% yoy. Goldman Sachs estimates the EV value of Adobe to be about $214 mn, which implies an EV/LTM revenue multiple of 5.1X vs. 5.0X for Adobe’s Omniture acquisition.

Day has been positioning itself as a leader in the web experience management space for a while. Web experience management, sometimes called customer experience management acts a single platform to manage all interactions, across a variety of apps and business systems like ERP, CRM etc. Day’s products like Web CMS CQ5 and their content repository CRX will become integral bedrock to this solution set. Adobe has outlined its vision of leveraging the benefits of Day being a leader in the WEM market and a as a heavyweight in developing the concept of next generation content management with focus on web experience. Day comes with an array of capabilities – particularly its Social Collaboration and CQ 5.3 Personalization, Segmentation and Targeting capabilities make its case as a leading player in the arena of web engagement.

Day Software has been making substantial efforts to improve on their capabilities and were sort of repositioning themselves as THE WEB EXPERIENCE management Company for some time and were building rich functionalities centered around personalization, collaboration and analytics leveraging its content repositories. A robust content repository integrated well with a variety of functionality centric add-ons one that can integrate with social networks is a killer combination and that’s the direction that Day was moving towards. A larger company like Adobe with higher resources and a killer analytics product like Omniture in its stable can potentially create a new momentum for Day’s product. The integration roadmap would be a key thing to watch here. Day might be less known in US corporate circles given that it is Europe headquartered and most of the leading CMS players are US headquartered, but Day has widely known in the open source and open standards community. Day has been an active contributor to the Apache projects like Sling & Jackrabbit and the open source community is watching to see how Adobe will work on this moving forward. Similarly Day has been a big supporter of CMS repository standards (JCR and CMIS, JSR standards) and it has to be seen what direction Adobe would like to take moving forward post the acquisition. For some, Adobe and open standards represent opposite ends of the spectrum!

For Adobe, a big player in the creative and front end space, this deal is significant, as it helps them to do two things:

A. First time Adobe gets a real shot at getting a slice in the back end – content management space – traditionally they have partnered to get a grip on this space and have made limited impact with their own efforts in getting there thus far. It’s a paradox that was unfathomable for awhile and with this move, Adobe gets a real crack at it.

B. Adobe, based on the nature of their core business has been mostly doing shrink wrapped solutions whereas a content management solution has to be sold to enterprises as an infrastructure with different sales and support mechanisms.

However, for their customers, some answers to questions /scenarios like these are very important :

A. How would Adobe help move Day’s offering into cloud – given Omniture’s experience in the cloud and Adobe’s clickstream and how much and which way these could be brought to work with Day’s software. (Moving transactional data and content into the cloud is the hottest area for enterprises today – this is a VERY BIG OPPORTUNITY here)

B. Day’s customers would be hoping that Adobe keeps the direction of the product evolution in its core areas and can invest more and accelerate research and development besides potentially integrating with Omniture and Adobe’s content creation tools.

C. Adobe has OEM’d Alfresco in some of its Livecycle Enterprise - how classy Day product could integrate there is an open issue.

D. Cultural Integration : Day Software is Swiss based software maker and Adobe is primarily based in the Silicon Valley and ably supported by their teams in India – this is going to be kind of tough getting them together . (My view is for Adobe to leverage Day’s talent besides in integrating Day products with Adobe by leveraging them to work in Adobe platforms like Extensible Metadata Platforms

The risks of enterprise software mergers and integration are well know but in this case , the space is a reasonably neat fit (with some minor conflicts) but the upside possibilities abound!. The hidden value is to bring together content creation, content management and analytics together and straddle the transaction to analytics value chain - this is indeed a great space to play in. On the whole, upside for Day’s customers exist but Adobe needs a very finely thought out plan, to be executed really fast and with sophistication for this marriage to deliver and endure well enough

The Cascading Power Of Institutional Innovation

2010-07-13T23:10:00.000-07:00

For a long time, it is an almost universally held view that a very wide majority of established big companies are slow innovators – while these were very disciplined in their execution , their ability to keep making game changing innovations were suspect. The innovation ethos inside large enterprises remains a goal worthy of pursuit. Sometime last year,John Seely Brown (JSB), John Hagel and Lang Davison published the results of a major research project, they have been conducting at Deloitte’s Center for the Edge. The Big Shift, a very insightful report that calls for immediate concerted action, highlights the deep rooted transformation that is pervading the global business. As one can easily spot out, last few decades of global business have been significantly influenced by advances in digital technologies amidst other major influencing factors.

The Big Shift brought out the fact the return on assets (ROA)of US companies,( this study looked at some 20,000 US companies) - a direct indicator of economic value add has been over a period of time in the last few decades progressively falling and is now hovering around 25% of what was recorded circa 1965. This is counterintuitive and paradoxical so to say. After all the general consensus is that the labor productivity has been raising and measured now , it is perhaps around twice the 1965 levels. So this begs the question why did this happen besides an appreciation of what and how the supposed benefits got lost in translation?

John Seely Brown, Johan Hagel and their teams came out with more than two dozen metric trackers that can be seen together to understand the massive shift that is happening in business which in turn contributed to the noticeable fall in rate of business value generation. With that as the background, the authors – John Seely Brown, John Hagel & Lang Davison have now attempted to look for solutions to overcome the slide and there they are here with the new book The Power of Pull: how small moves, smartly made, can set big things in motion,

Traditional management techniques of centralized management in areas like planning , resource allocation, investments , branding , marketing etc are firm pillars on which the “push based management" is centered upon. The raison-d’être of the traditional firms lay in centralizing all planning and resource allocation to ensure the transaction costs within the system get optimized. Conventional management is so structured that the ability to create an environment of constant innovation and swifter response gets compromised as everything gets tied to a model of central planning and resource allocation – the actors in this model are also so aligned to this way of working – it requires a huge swathe of change to try anything different and the opportunity for optimizing this model is also getting very limited as it is in vogue for a long time – so scope for incremental innovation gets much harder and harder.

This can be best corroborated by the fact that the life expectancy of firms in the Fortune 500 has already fallen to less than fifteen years—down from 50-60 years around 1960. The authors predict that if these current trends continue, with no change in management, the life expectancy of Fortune 500 will fall to five years. Clearly, this can be attributed to the fact that at a certain point, the economic rot of the traditional organization will be clear to all , so much so that even traditional managers will be forced to embrace change, irrespective of their preferred way of work. Has this model delivered in terms of generating sustainable business value is the question that the authors asked as they began to investigate corporate performance of business in the last several decades.

In this business world of heightened global competition, the authors argue that the pace of change and buyer power inflicts enormous demands on enterprises and the basis of competition shifts from strengths centered on scalable efficiency to scalable collaboration. The span of influence of collaboration extends to hundreds and hundreds of participants in the “pull platform”. This is in contrast to techniques techniques like lean manufacturing which encompasses tighter integration amongst small number of select partners.

Let’s begin at the beginning. The book sees pull as the ability to draw out people and resources as needed to address opportunities and challenges.” “Pull, “gives us unprecedented access to what we need, when we need it, even if we’re not quite sure what‘it’ is. . . The power of pull provides a key to how all of us - individually and collectively - can turn challenge and stress into opportunity and reward as digital technology remakes our lives.” How’s this different. Let’s look at the push economy that has been in vogue for many many years. The book points out that “Push approaches begin by forecasting needs and then designing the most efficient systems to ensure that the right people and resources are available at the right time and the right place using carefully scripted and standardized processes. . . Push programs have dominated our lives from our very earliest years.”

From our education framework to institutional planning and execution, the authors point out were all centered on a push culture. Push was a suitable mechanism to support the industrial age companies performance characterized by incremental growth, hierarchical style of management in a deterministic world where correlation between yield and plan remained in a satisfactory state, The fading push economy had given way to a more dynamic world with more linkages showing more dynamic, complex and emergent behaviors. Dispassionate employees, disloyal customers, fast churning brands, dysfunctional governments all are clear indicators of this complex interplay.

Lets switch to the “pull model” The key premise in this model is that tapping the benefits of what is happening at the edges of organization and typically passionate and motivated employees and their networks make such things happen – the pull model leverages such participation and efforts. Deep performance improvements are made possible by embracing the pull model and this unleashes the power of individuals towards achieving such goals. The Power of Pull argues that the network effects of scalable collaboration can flip the experience curve and create what was unthinkable in traditional 20th Century management: an increasing performance improvement curve.

The Power of Pull is anchored on a framework that includes multiple dimensions in which interventions and initiatives happen and in their interplay comes out a very different mechanism of operation that encompasses business, process and people.

Some of those key levers of influence as identified by the authors include:

Access : the ability to fluidly find and get to the people and resources when and where we need them.

Attract : the ability to get resources and people wth right expertise both within and outside the enterprise.

Achieve : the ability to get results based on the partnership , collaboration , production leveraging amongst other things knowledge flows.

Within the achieve dimension, the book brings a new concept called “creation spaces”. These are defined as “environments that effectively integrate teams within a broader learning ecology so that performance improvement accelerates as more participants join.” These creation spaces “ . . . allow large numbers of participants, often in the millions, to come together to test and refine the practices required to master this third level of pull - achieving their potential more effectively.” “Although from a distance it may look like they are emerging spontaneously, self-organizing in response to the needs of the participants, a closer look reveals that creation spaces are carefully crafted by their organizers, especially in the early stages, to engage the right kinds of participants and foster specific types of interactions, all within environments that unleash the potential for increasing returns.” I like the emphasis the book makes on “Passion” of individual as cornerstone of their success. All these interplay at the individual, organization and network of organizations. The nature of interplay could range from “shaping views (direction or trajectory)”, “ shaping platforms (creates incremental values at individual, organizational and network wide)” and “shaping acts and assets ( interventions of rightly aligned resources)”.

Though the book may be short on real life examples that we can relate to, it is a very important body of work. We have to recognize that happenings in the edge (of the business ecosystem) may not be so obvious as we are accustomed to recognizing corresponding happenings at the core of the business ecosystem, The book succinctly argues that in this emerging 21st century economy, scalable mass collaboration brings together the people centered expertise and innovative ideas needed to address the very complex challenges, as well as the humongous opportunities all around us. This is hugely different from the last century model of mass production. The book convinces us that it is clear that our existing institutions, firmly rooted in the world of push, will require significant redesign in order to effectively harness the potential of pull. Institutional innovation - redesigning the roles, relationships and governance structures required to bring participants together in productive endeavors - will be a key requirement. In fact, the book argues that institutional innovation will trump either product or process innovation in terms of potential for value creation. Clearly this calls for well studied efforts to make this leap and I believe that The Power of Pull is one of the companions that shall help us navigate through this transition to conquer greater heights!

(Article first published as Book Review: The Power of Pull: How Small Moves, Smartly Made, Can Set Big Things in Motion by John Hagel III, John Seely Brown, and Lang Davison on Blogcritics).

Fred Brooks : The Design Of Design

2010-06-28T06:42:00.000-07:00

After a long time, I got the opportunity to read a new book, that I would have loved to read several years back aptly named – The Design Of Design. Several decades back, the onset of a discipline called software engineering started with a big problem of software project getting delayed inside IBM and Fred Brooks at the successful completion of the engagement came out with a seminal work – The Mythical Man-Month. Over the years I must have advocated reading the book to several hundred friends and colleagues at various points in time. Much like technology icons aka Bill Gates , Steve Jobs, Sergey Brin & Larry Page whom we keep referring to, the software engineering field has such icons – Fred Brooks stands taller than most others in the gallery of all time software engineering greats.
Let’s look back a little – at a time when everyone thought computers were hardware and every decision revolved around this thinking, Fred Brooks created history with the publishing of Mythical Man-Month and virtually started the body of work called software engineering. This is a discipline that millions of engineers around the world have over time embraced, practiced and also advanced the state of the art and in many ways contributing to the growth of process, technology and business. It would be hard to find a well regarded software engineer not knowing or resonating to Brooks laws ‘adding more people to a late project makes it later’. I have heard comparisons between Moore’s Law in hardware engineering and Brook’s Law in software engineering.

Be that as it may , the context here is : Well now, 35 years later, Frederick P. Brooks, Jr. has written another book, aptly titled The Design Of Design this time not about software in general but about design. Lets look at this : Design is at the core of things that influences everyone. If design is to be seen as “planning for execution or a build “, then most of us keep doing this at all the time – some may be more specialized – lets say designing the next generation smartphone to relatively more simpler cases. From designing garage at home to kitchen remodeling to design software, there are multiple patters of learning to distill which can be potentially leveraged across a wide domain of disciplines. Why do we need to focus on design now? Fred explains team designs are becoming complex artifacts and globally distributed teams, sophisticated computer models and most of the designers are divorced from implementation and end use.

The 400+ page book is distilled with wisdoms of design principles – it captures the essence of design learnings of six decades of Fred Brooks experience in design across as he brings out in five different media – computer architecture, houses, software, books and organization. It’s a revelation to me to know from the book that Fed Brooks wrote a paper on analytic design of automatic data processing systems in 1956 - much much(decades) before even I was born! Brooks says that he has tried to capture the invariants among the mental processes, human interactions, the iterations, the constraints etc. What a rich base of experience and a superlative effort to bring out the golden braid of thinking across time and space!

The case studies section of the book starts with this great quote: ‘In retrospect, most of the case studies have a striking common attribute: the boldest design decisions, whoever made them, have accounted for much of the goodness of the outcome. These bold decisions were due sometimes to vision, sometimes to desperation. They were always gambles, requiring extra investment in hopes of getting a much better result.’ One does not need to look beyond the success story of Apple to appreciate this.

I especially liked the essay called "What Is Wrong With This Process?" This is again popping the classical question – do you take a waterfall model or settle for an iterative design – This is often a question in every program that I get to provide executive oversight around the world. Passionate arguments on either side makes this a difficult situation to judge and I feel very relieved that Fred Brooks decides in favor of being on the iterative side: he points out that even if the goal were fixed and known … "design would still be iterative, because the constraints keep changing."
His conclusion : "The waterfall model is wrong and harmful . we must outgrow it" . In an yet another revelation of a very powerful mind, Brooks brings out the the deep rooted support for waterfall model Is hinging on concepts like Herbert Simon’s Rational Model - supporters clamor for frozen design . Brooks comes down heavily on this approach pointing out that effectiveness is far more critical than embracing a simple process of building to frozen design.The section talking about design as a collaborative process is a fascinating read. Different perspectives for thinking about design, visions for designing houses, the role of individual design talent (process can't replace greatness!), and how great designers can be nurtured. In these, a discerning reader would notice the pearls of wisdom thrown in all around.

By taking a broader view of design, the book makes reading more interesting and the message appeal more wide. Each chapter in the book starts with various interesting quotes, and starts the first chapter with a quote from Francis Bacon:

[New ideas would come about] by a connexion and transferring of the observations of one Arte, to the uses of another, when the experience of several misteries shall fall under consideration of one mans minde.

In the collision of several thoughts and idea streams originate new ideas and it’s a fascinating journey that Fred Brooks takes us in the field of design with his rich tapestry of experience and a wide variety of annotated case studies. This is a journey of understanding – some may like all the ideas, some may like to disagree with a few but overtime things change but our persectives get more grounded when we begin to base our understanding and learning on wider and far rooted experiences such as brought out by Fred Brooks herein.I imagine most designers who read this book will be software developers and few will be involved in OS design or design of physical structures. Brooks would argue that there are universal ideas that really make design transcend particular design domains, and in that sense the cases studies he provides are certainly useful. Obviously, one needs to extend the ideas here to the context in which they operate. For example,the sudden lowering of the cost of collaboration brought by the internet represents revolutionary new kinds of creativity and problem‑solving. Overall, Brook's writing style is excellent, entertaining and thoroughly researched. Seen from this perspective, this is a great book for a reading club with computer scientists, architects, system thinkers and such experts across disciplines.

Google's Economic Impact : Next Time It Will Look Different

2010-05-31T05:38:00.000-07:00

Google published the first ever “Google’s Economic Impact” report, which estimates that in 2009, Google generated $54 billion of economic activity for advertisers, publishers, and non-profit bodies in the United States. This is done using the AdSense & AdWords frameworks and delivered via paid search clicks, natural search clicks, AdSense revenue sharing, and Google Grants aka charitable donations. The report reveals that Google’s US revenue in 2009 was $11 billion; the $54 billion figure is Google's computation on how much value Google creates for its partners. The methodology used therein is quite a pioneering one, given that this is the first time that someone is attempting to assess the economic impact of online ads at this scale : the whole internet and who else is better qualified than Google to attempt this.

This is an interesting report, the implications of which will be felt more and more in the years to come. If we reason out that search engines (Google)are in many senses replacing displacing traditional media ad spends, it may be difficult to agree with Google’s $54 billion estimate for its direct economic impact but we have to concede a few things. This is a new growing media, the media, by nature brings in more participation from new class of users and one that may be potentially more ready to spend and the flexibility this provides to advertisers - they can cap daily ad spend and can look at in realtime extending or suspending ads based on clicks and reach. Google's report primarily depends on the assumption that clicks on natural results drive five times as many leads for businesses as clicks on paid results. However, we believe the indirect impact may be much much more.

I have seen estimates suggesting that Google's Traffic Acquisition Cost payments to US publisher websites, (as assessed by analysts) at about $3 billion, for an revenue of 11 billion dollars which is now being projected by Google to have an advertiser impact of about $50 plus billion. Lets look at the calculation :
Google calculates the advertiser impact of its search service by assuming that for every dollar spent by an advertiser, the advertiser generates two dollars in sales (and one dollar in “sales minus marketing expense”, which the report calls “profits”) from consumers clicking on the purchased search result, and a further seven dollars in “profits” from consumers clicking on natural search results for the same advertiser, creating an 8X multiplier effect. Thus, claims the report, $7 billion in US-owned and operated revenue should drive $56 billion in economic impact

Now the difficult part:
- Google says that businesses receive an average of five clicks on search results for companies as ads, and by its own conservative standards, estimates that search clicks are about 70 percent as commercially relevant and valuable as ad clicks, and thereby calculates that advertisers receive a total of eight times in surplus what they spend in AdWords. Look carefully here:

- Google assumes that people clicking on links are as inclined to purchase. Any benefit from link clicks has nothing at all to do with having ads. The two are separate events, and a company gets the benefit from search engine optimization and all the work of having a Web site, rapidly increasing the effective cost of using the ads.

- As the Jansen and Spink study states, “More than 80% of web queries are informational in nature and approximately 10% aretransactional, and 10% navigational.” This may lead one to think that the vast majority of clicks need not convert into sales (this is understandable) and so the impact may be less than what is assumed herein.

Thinking deep, it occurs to me it would be tough to embrace or discard Google’s estimated multiplier effect .As noted earlier, Google calculates the advertiser impact of its search service by assuming that for every dollar spent by an advertiser, the advertiser generates one dollar in “sales minus marketing expense” from consumers clicking on the purchased search result, and a further seven dollars from consumers clicking on natural search results for the same advertiser, creating an 8X multiplier effect. Google estimates that one dollar spent on search generates two dollars in advertiser sales via consumer clicks on paid search results. This assessment is centered on the methodology devised by Hal Varian, its Chief Economist, which in its core, assumes that advertisers are spending rationally to buy a certain keyword ranking rather than a higher or lower ranking, and then deriving the implied value which advertisers place on a click. I would think that this resonates well with my intuitive reasoning. Google estimates that one dollar spent on search corresponds to seven dollars in advertiser revenue via consumer clicks on natural search results.

Ideally , Google should have attempted a Lifetime Value assessment to derive the economic impact but rightfuly chooses to center these on transaction basis given the characteristics of the internet media and its limited lifespan. I talked to a few power users of these services (corporate and SMB) and find that for many interenet centric revenue generators, the proportion of their online centric revenue coming out of search engines on an average hover around upwards of 20% in their established and growing phase of business. The informal estimates from such sources point to 40-20-40 ratio - direct traffic,keyword centric and natural search referrals. For startups and early life enterprises, the ratio could be 25-35-40 pointing to a near 6X ratio. The swing across the range hovers between 4x to 6x ratio.

Without search engine, Google acknowledges advertisers would find other means of reaching consumers. We have to concede that search engines are not just merely capturing existing consumer spending rather they stimulate additional consumer spending(any online purchaser can vouch for this - they tend to buy more , owing to the dramatic increase in efficiencies and the smoothness of the operation). To be fair, Google’s true “economic impact” on a community should likely be measured in a way that balances the economic patterns it disrupts with the new-model of business it generates. Online ads and Google being the dominant player there are directly influencing the sale and retail mechanisms in a big way and are bound to increase their influence and hopefully, we will see the economic impact assessment methods improve a lot more along with the results.

The New Polymath : The New Way To The New Future

2010-05-25T03:54:00.000-07:00

Fellow Enterprise Irregular and a great friend Vinnie Mirchandani is coming out with a new book :The New Polymath - Profiles in Compound-Technology Innovations, due for release last week of June 2010. He shared an early review copy with me for my reading – what a pleasurable and stimulating read it turned out to be. I was impressed with the theme of the book , the very powerful examples therein ( who won’t be impressed to look at the striking success of the likes of Apple, Google, General Electric and scores of others in other industries in a new light) and the recommended practices therein.
The present era of mankind is seeing lot of excitement and promise all around. Around the world, everyday in our lives bring lot of changes – fast , unpredictable and may times we have to struggle hard to understand what the change stands for. Globalization, Technology has transformed the playing fields across continents, industries and sectors. Very powerful forces of change have shaken the beliefs in many aspects of governance and social thinking. Fortune 500 companies list is changing faster than the fast pace that we have seen in the past. Powerful brands have suffered huge damages and many industries have gotten transformed substantially so much so that many successful leaders today claim their business need to adapt and transform faster than ever. Leading edge corporations run faster in this direction to ensure that their rate of change inside is ahead of the change seen in their external environments. Looking at these developments, its clear that the time to re-imagine the future is now, and it is best done by a fresh school of thought that governs our thinking frameworks to enable a fundamental rethink and envision what is desirable and sustainable.

Now about the book: What does the term Polymath mean? Vinnie explains, “Polymath,” as in Greek for someone who excels in many disciplines, like Leonardo da Vinci, who was an artist, sculptor, architect, and so much more,
Isaac Newton, the English physicist, astronomer, and philosopher, and Hypatia of Alexandria, who was a mathematician, astronomer, philosopher, and teacher
Ben Franklin - author, journalist, scientist, inventor, political philosopher and statesman. In this book, Vinnie focuses on Polymath enterprises, who are setting out a strikingly successful path in business.

Vinnie, the quintessential polymath as defined in the book, starts by observing that for the most part today, most of us seem to specialize and highlights the fact that we are monomaths in a world of exploding knowledge and passionately argues for more and more polymaths to be nurtured both at the institutional and at personal levels. (Being a monomath is a direct teaching of many management thinkers of recent era – for example, as recently as in the last two decades, Jim Collins adopted Peter Drucker’s thinking and brought out in his book “Good to Great” that leaders need to think and act like hedgehogs , not foxes. Hedgehogs are more like monomaths and foxes are more like polymaths ). With monomaths around, Vinnie argues that many ecosystems are going through a phase aka the dark ages, where there was plenty of living, but there was little forward movement in terms of progress. It was defined by its relative “nothingness”. Drawing a parallel to the current time, he points out, in the information technology, there is lack of nutrition—so much of the spending is wasted. In sustainability, there is lack of agreement—there are so many rancors in spite of so many global concerns. In health care, it is about lack of availability—so much of the world does not have access to all the advances in technology—or even basic health care. The core of these problems Vinnie argues amongst others centers on monomath thinking and execution.

At the same , Vinnie brings out the modern day success stories of polymath enterprises and individuals and argues that in them he sees the potential to capitalize on the promise that future holds for business and mankind. He succinctly points out to the fact that well-designed enterprises are taking individual monomaths, leveraging a wide array of technologies and becoming the new polymaths. The good news is that as in the European Renaissance, there are plenty of polymaths that are around. Though a lot of attention these days seems to go to innovation in mobile and social technologies, plenty of complex, hairy “industrial innovation” is also going on. This is encouraging because we face a daunting series of challenges at the global, enterprise, and individual level. We need polymaths to help deal with a range of challenges – big and small, of various size and structures.

Let's looks at the new business that are shaping many emerging industries - The successful enterprises spanning established corporations to upcoming start-ups—are creating incredible value by succeeding in a new way: by bringing together various streams of technology (biotech, cleantech, healthtech, infotech,Nanotech etc) to create new form of processes, products and services to create value . These are the poster child of Vinnie’s definition of the New Polymaths.

What I see in the book are a rich set of examples and metaphors that talk the story of entrepreneurs, business leaders, and multinational companies innovatively leveraging technology to tackle big problems, “grand challenges,” related to health, hunger, and natural disasters—and, of course, information technology. In their own ways, these big and small enterprises in their spheres of influence are reshaping the world . Vinnie highlights that examples represent a range from a triangle to an eight sided octagon to a ten sided decagon to a twenty sided icosagon to a 50 sided pentacontagon! The “more-sided” polymaths are trying to solve the really big, hairy problems. The “fewer-sided” ones are a bit less ambitious, but they are helping us run our enterprises and lives much better. The book rightfully brings out the range, recognizing that we need a variety of such forms of organizations.

The easy to read book is structured into three parts :

Part I sets the stage for the challenges of today and opportunities for polymaths of today and profiles GE, a new polymath.

Part II is organized around an acronym—R-E-N-A-I-S-S-A-N-C-E—each letter of which discusses a building block for the new polymath to leverage.

Part III is focused on how helping you groom your own new polymath. It profiles the BP CTO group, its tools and processes, and its vast ecosystem of innovation ideas, besides bringing together common threads from the seven other polymath profiles and the 11 building blocks

Leaders who disrupt to succeed in business need a framework to navigate their way and Vinnie provides that through his key building blocks of the R-E-N-A-I-S-S-A-N-C-E framework (each letter is a chapter that discusses a building block for the New Polymath), we learn about 11 key ideas: Residence; Exotics; Networks
(Bluetooth to broadband); Arsonists; Interfaces; Sustainability; Singularity;
Analytics; Networks (social); Cloud Computing; and Ethics. He further brings in the ethics dimension and urges integrating this into the warp and weft of innovation that the Polymaths unleash. This is a nice read explaining the need for these changes and how to effectively leverage them for success.

Do all these things thing look theoretical? - No way!. Look at the rich examples that Vinnie is parading: Apple, Google, Salesforce.com et al... Marc Benioff in the preface to the book captures this very well.–“Being a Polymath isn’t that difficult—and it always yields multidimensional rewards”. One of my favorite in this book is the chapter on steps to becoming a polymath – and the book lays out the key steps to becoming a Polymath enterprise.

Vinnie’s closing comments captures the essence that if we add up all the personal interests and skills that do not show up in job descriptions, there are plenty of other modern-day, mainstream polymaths and urges business to craft the right blend of monomaths that can lead to running successful polymath enterprises. And that we need these polymaths to solve the world’s wicked problems that Aristotle and al-Tusi and Jefferson never even imagined. In Vinnie’s dream, in such a world, Michelangelo would propose a toast to the uomo universale, the Italian term for polymath, and invoke his contemporary, Leon Battista Alberti: “A man can do all things if he but wills them.”

When In Search Of Excellence got published in 1981, it was a time when every good business idea seemed to be born in Japan, and most did not appear transferable to the United States. That’s the time, Tom Peters & Robert Waterman, the authors of the book examined several successful American companies and detailed readily transferable attributes shared by most of them. It helped American executives look into the mirror and see that some of the things they were doing were not bad at all, that others were excellent, and that they could borrow excellent ideas from each other. That, in turn, paved the way for many wannabes to create successful business. With the examples showcased in The New Polymath, Vinnie is again demonstrating the extraordinary ways in which the New Polymaths of the American business are winning in the international arena – he tops it by laying a robust framework for others to get there. When we extend these concepts to new strata - the likes of the emerging world, the non profit institutions etc. the results shall turn out to be much more significant. A very important reference book for business, entrepreneurs, management students and all professionals who dream and are working to create a better world.

Charlene Li’s Book : Open Leadership

2010-05-10T05:43:00.000-07:00

Charlene Li and Forrester’s Josh Bernoff earlier gave the pioneering book, “Groundswell: Winning in a World Transformed by Social Technologies”, which provided business a leg up to understand social technologies and consumer behaviors. (For the record : Charlene was amongst the well known Forrester Star who quit to start her own venture Altimeter Group with other partners) Among other things the book laid out the now widely used, the four-step process for developing a social media strategy. A lot has changed since then – the most noticeable one includes, blogging meeting its match as a popular social technology with the exploding popularity of social tools like Facebook ,Twitter, Ning etc. I was delighted to when I got the chance to review Charlene Li’s to be released book – “Open Leadership – How Social Technology Can Transform The Way You Lead” (Release planned May 24, 2010) .

To begin, let’s look at the business world and leadership challenges therein as it exists today: As is now widely recognized, the contours of leadership inside business are changing. Business in this era are discovering that the command -and-control leadership methods of the last century are a misnomer in this age where changes happen too fast, ten year old organizations scale up to support multiples of tens of billion dollars in market cap, business can go global at such a terrific pace that virtually every business that operate in the free market edifice becomes global in nature. Advances in social media impose a huge influence in the way stakeholders come together in running the business. In these circumstances, to attract and retain employees and all other stakeholders to get them to contribute their best to make business grow is a challenge being grappled by all organizations. Working styles and enriching work environments becomes a clarion need and the traditional models of centralized leadership is slowly (some would say that is too swiftly) giving way to more social(open) leadership. In its classical command-and control leadership style, the leadership was identified by its position, authority and power, whereas in this new age – this paradigm has suffered a lot – resulting in lack of innovation, participation and creativity, passion and accountability. The new positioning is for business to recreate leaders embracing open leadership who see themselves more as coaches, facilitators, investors and partners. The boundaries inside an organization have become more permeable; knowledge and innovations can easily transfer inward and outward. All involved elements in the organization participate and influence decisions in the process helping these companies to perform better than their rivals on employee retention and morale, and other performance measures like innovation, profitability and market leadership. A very towering presence serves as the backdrop for this change: your business does not embrace social media – its social media that embraces your business and creates a huge perturbation effect so to say! Every organization is becoming a social organization. The challenges organization faces is how to evolve into a social organization. This evolution will affect individual staff, internal processes, and the structure and culture of the organization association – every part of the organization gets affected and that includes leadership within the organization.

Simple and appealing right ? No, not that easy for all business to embrace such things so easily. As they say in organizational change management, hard change( say process, technology) is soft and soft change( human beaviour) is hard. Ask the question why is social hard ? Charlene has the answer: It’s because real relationship requires you to cede control and win by influence! She explains, having the confidence and humility to give up the need to be in control, while inspiring commitment from people to accomplish goals is the basic tenet of open leadership. Open leadership is coming to organizations—companies, non-profits, governments, schools—because we are in the middle of a fundamental shift in power, one in which individuals have the ability to broadcast their views to the world. It means that the person at the top no longer controls the flow of information, and without that the leader is no longer the best person to make all the decisions. To be open, you need to let go of the need to be in control. You need to develop the confidence—to develop the trust—that when you let go of control, the people to whom you pass the power will act responsibly. Leaders who are unable to let go in this new world of social media will eventually find themselves at the head of a sorry band of unimaginative time-servers.

Open Leadership argues that a new organizational structure is required to accommodate and benefit from the culture of sharing that social media has fueled over the last few years. Charlene’s new book, “Open Leadership: How Social Technology Can Transform the Way You Lead”, is essentially about how leaders can tap into the power of the social technology revolution and how to be “open” while still maintaining control. Does it sound paradoxical? No! Not at all.
Charlene argues for openness but cautions toprovide for disciplined control. Practically speaking, this is being more grounded on reality – open leadership is not like laissez-fair leadership. While this may look like a natural progression in the business scheme of embracing technology advances, the reality is that there is a huge challenge for executives and leadership teams to embrace openness while maintaining control. Charlene helps provide that framework with her new book - this is relevant to all business that are exploring the new social web and creating/refining an approach towards effectively embracing them. This has come at the right moment, when almost all business – big and small have been confronted with this challenge /opportunity of embracing the social web actively and in an effective manner.

And, now about the structure of the book: I like the fact the book is organized into three sections – 1. Upside of giving up control. 2. Crafting Your Open Strategy, 3.Redefining Relationships. The book starts with a persuasive argument as to why giving up control is non-negotiable and goes on to define ten characteristics of being open (In my view, openness is a journey – difficult to define in a scientific way, but can only be characterized – the more we travel this route, the more enriching the characteristics become). Section two helps delineate the methods of custom creating open strategy - with means to initializing with determinations of how open to be, followed by understanding benefits and measuring the value of being open. The idea of “Sandbox Covenants” is a very powerful metaphor and can act as a tool for strategizing openness and executing the strategy.
Creating a robust mechanism for social graphic profile definitions – the steps include Social Audit, Engagement Audit and Influence Audit is a powerful tool and as told by Charlene in the chapter of orchestrating your own social strategy is a very powerful message and a robust mechanism for business to follow with a social fabric while on the open leadership path. The framework of organic, centralized, co-ordinated forms of openness is an important advance in the study and practice of openness. Part three focuses on the mind set changes and skills, executives need to learn to foster a climate of openness inside their business and means to nurture openness, imperative of failures and transformational case studies centered on organizations like Cisco, Dell and Proctor & Gamble.

Very rich and well known examples and case studies from an array of organizations have been included and widely quoted within the book – Best Buy, Cisco, Google, Kodak, Microsoft, The State Bank Of India, United Airlines, U.S.Department Of State, etc I like the book’s structure and presentation for three reasons :

A.Its about strategy but highly actionable Refreshingly, most chapters come with actionable lists.

B. The examples are of Large corporate behemoths – the Fortune 500 types and this shows the power, reach and results of openness as we can all see. (Charlene must be complemented for this – by relating to examples that all can find out with some efforts and research adds to the credibility) and the need to embrace failure where needed and learn from those.

C. The very easy to read style and the fact the actionable frameworks can be applied to business of all sizes, shape and color.

Needless to say, this is a good read for leaders planning to effectively embrace openness and leverage social technologies inside their organizations.

C.K.Prahalad : Will Be Sorely Missed

2010-04-21T08:37:00.000-07:00

C.K.Prahalad : The name resonates with different people - Business, Entrepreneurs, Management thinkers, Co-Authors, Consultants, Management Students, Government workers - in many different ways. For CK, perspective in most of what he had done has essentially come out of discussing, debating, working, observing and challenging with everyone around him. His belief in the early 1990s that there was more to strategy than the existing body of knowledge caught the attention of all and catapulted him into a different league. The idea that smaller business entities in a newer market can successfully compete and win looked counterintuitive until CK began to push the idea more aggressively.

He had more integrated view of business than most others of his genre. He had a firm belief that inclusive growth and sustainability were intertwined and believed that inclusive growth and sustainability forces us to recognize how to do more for more people with less. This is the bedrock of his themes on business competitiveness, co-creation and sustainability. He claimed that his work centered around four areas: globalization, connectivity, inclusive growth and sustainability. The reality is that nobody has looked at all four of these and tried to understand their linkages for better leverage. He rightfully felt that this intersection of the four would be creating the next big opportunities for management and the society at large.I have seen him in action in the fields of information technology, innovation, TiE, Sustainability - all within a span of few years and the way he created seminal thinking and action in the respective fields was sheer magic. He galvanized the movers and shakers of these industries and many times was part of creating new landscape. He was very imaginative in his thinking and always had the ability to move the needle through his discussions. Read the full note http://sandhill.com/opinion/daily_blog.php?id=44&post=632" target="_blank">here

Greenpeace: Cloud, Consumption & Climate Change

2010-03-31T10:14:00.000-07:00

Greenpeace has now turned its attention to cloud computing, its impact on the energy consumption and the resultant influence on the environment. A somewhat loosely compiled report takes a shot at the various cloud initiatives of the consumer tech majors like Google, Apple, Microsoft, Yahoo etc. and arrives at a broad set of concerns that need to be addressed.

The Greenpeace chart details the power needs for some of the major data center projects.

The report focuses on the role data center builders can effectively play in the environment al sensitive design and investments that look to be highly needful. The report envisages a role for data center builders in becoming an integral part of the solution to changed in global climate centered issues and emphasizes the positive impact that these players can make on the tech ecosystem and by extension on the extended universe . Greenpeace commissioned studies on carbon footprint of the data centers show that there is a wide space that can be covered by them potentially leveraging clean and renewable energy while building the business cloud infrastructure for their customers. Key approach recommended if for the data enters to pressurize the government , local bodies and energy manufacturers like utilities to make renewable energy available readily.

Metrics show the enormity of the task at hand. Greenpeace believe that public awareness is the best ammunition in the pursuit of any cause. On the week of the launch of the Apple Pad, it brings out data in support of its position. Apple investing in NC data center is tied to cheap power available in large measures from coal fired plants therein. In its report titled, Cloud Computing and its Contribution to Climate Change, Greenpeace provides estimates that data centers power consumption could peak at a million megawatt hours of power by 2020 and its sister cousin industry viz the telecom sector could be using energy around 950,000 megawatt hours. Consistent with its focus on advancing its perspective via news coverage, Greenpeace tied its report to the release of this week’s release of the Apple iPad. The reality is that in the last decade or so there has been a massive proliferation of computing power in the form of desktops, laptops, smartphones, iPods, tablets, e-readers, gaming interface devices – all these not only consume power by themselves but are also massively connected with cloud grids – all consume power in large numbers. Greenpeace centers its concern mostly on the 2008 analysis by the Climate Group and the Global e-Sustainability Initiative, and finds that the cloud could consumption of energy could massively explode (almost triple) in the next ten years. One of the projections in the report include that data centers would produce more carbon than the airline industry by 2020 “if current trends go unchecked.”
The cloud energy phenomenon, as the report recognizes is going to be a bit of a paradox in managing. On the consumption side, major conscious tech majors – the likes of Google who consume power have a major incentive in bringing more efficiencies in power consumption and are actively working towards advancing the field aiming at reducing energy consumption. The hope is that the best practices and technology that they advance would in time progress to cover the tech ecosystem. While this can happen, the fear is that the connected devices around the world could massively push up the energy consumption at an aggregate level. All of us have more connected devices at home compared to what we had in the last 5 + years and so this explosion should rightfully worry the likes of Greenpeace. The report, part of Greenpeace’s cool It Campaign, builds on the group’s criticism of Facebook for building its new Oregon data center in an area where utility power comes primarily from coal. Incidentally, there is a Facebook group urging Facebook to use only clean energy but has not been able to move the needle a tad bit. So much for Facebook activism to show or fail to show real results! The important factor here is that all the criticism of IT energy usage, the sector is an important lighthouse for improved sustainability. “While the sector plans to significantly step up the energy efficiency of its products and services, ICT’s largest influence will be by enabling energy efficiencies in other sectors, an opportunity that could deliver carbon savings five times larger than the total missions from the entire ICT sector in 2020,” points out the 2020 report.

Greenpeace writes. “The industry also needs to take responsibility for where it gets its energy from in the first place. Simply put: Will the cloud run on coal or renewable energy? -“We are calling on IT industry giants to put their might behind government policies that give priority grid access for renewable sources like wind and solar energy,” Greenpeace said. “IT companies should also support economy-wide climate and energy policies around the world that peak climate emissions by 2015. … The great innovators of the digital age can and should be leaders in promoting an energy revolution.”
In reality, as things stand today, clean and renewable energy is unfortunately not the one and only criteria for data center location selection and factors like local incentives, benefits, energy grid pricing mechanisms all play important roles in decision making . Greenpeace is right in highlighting the fact that the issue of clean energy needs to be pushed into the center of decision making by data centers but realizes that this won’t be entirely possible to be acted upon just by data centers and calls for mobilizing public and political views to support this. While Greenpeace and other activists could focus on cloud service providers, there is a larger role to be played by the public. Many things are expected to change in the next few years. There are expectations that there would be a spurt of common green initiatives that include the likes of e-documents, tele-working, reduced travel etc. Technology can also provide many analytic tools that others in business can use to monitor and reduce energy consumption in real time in areas such as transportation and other carbon management activities. Optimum usage of energy in day-to-day lives by millions of us actively using the cloud – without that the laudable goal of clean and renewable energy will always remain a dream.

Enterprise Software : The Moments Of Pause

2010-02-09T23:59:00.000-08:00

SAP announced major executive board level changes on Sunday. Léo Apotheker moves out out as CEO and in comes Bill McDermott, head of the field operations, and Jim Hagemann Snabe, head of product development, who will now share the top job. Interestingly, SAP promoted Vishal Sika, chief technology officer (CTO) to the SAP Executive Board.

Joab Jackson and Chris Kanaracus have an excellent write up at Computerworld, with some excerpts from an internal email from Apotheker to SAP employees. I found in it a curious piece of information - references to the results of a recent SAP employee survey, which found a dramatic loss of confidence in senior management, according to a Financial Times report.

In the conference call earlier this morning, Plattner sounded a humble note on SAP's unilateral decision to increase its software maintenance fees, in the midst of a recession. As reported by Computerworld:

He addressed head-on one of the most heated issues in SAP's recent history -Its recent decision to move customers to a richer-featured but more expensive Enterprise Support service. The plan rankled users worldwide, particularly those with older, stable systems and little need or desire for additional support.

"I was part of the decision that we had to raise maintenance fees," he said. "That is not something we can put in Léo's shoes. This was done by SAP. We made a mistake and we have to change course here, and regain trust from the customers who were more than upset. Unfortunately, the head of the company takes the blame, whether it was just or not."

It is well known in the industry circles that SAP by showing cost-of-living indices managed to push maintenance fees at around 22% despite several customer misgivings.

On the same development, Bob Evans has a very good piece in InformationWeek on SAP's failure to put its customers front and center:

Speaking in broad strokes about trust and the need to rebuild it, Plattner said this: "What SAP has to re-establish is that we have trust between all involved parties: the [SAP] Supervisory Board, [SAP] Executive Board, the co-CEOs, the management team, the employees, the works council, the partners, the customers, and the employees working for our customers." Do read Bob Evan;s very insightful perspective on the order of importance provided to various stakeholders therein.

For me, the issue that bothered the most :Why did the customer backlash was so felt? Even when Leo assumed office, it was widely believed that SAP needed someone to destroy the set ways of doing business fully factoring in the market transitioning away from the upfront license and implementation and operating cost model. When the year-on-year spend on SAP kept to be a very large numbers, business concerns on SAP spend was always an agenda item for discussions inside enterprises. When the 2008-2009 slowdown happened, while the IT spend was coming down, many were seething when the big ticket items like that of SAP spend could not be touched at all and there was really very little that business could to step out of this logjam! In fairness to SAP, this might have been generally tue of most of the big on-premise enterprise software vendors, but SAP probably had to bear the brunt as the core/ frontline software inside many business. This at a time SaaS & Cloud were the ringing buzz all across the enterprise while like the big old iron – SAP was there reminding business of the just gone era’s model of software and operations! The need for innovation in the SAP eco-system has been amply clear – customer’s were always vocal about this - but the almost regimented groups within SAP appears to have hardly got it and continued to persist on the past operational models - we are now going to see what quick steps SAP takes to reposition itself – how it becomes more agile, nimble , caring and friendly to customers. There are some tough and challenging positions that SAP may have to take to move forward and come out successful – the talent is there, the heart seems to be there going by Hasso’s comments– fast execution would make the ultimate difference here.

There are great lessons here – When a company gets dangerously out of touch with what its customers do and want and need, and with how those customers rate and reward IT vendors in these days – there is a big discernable shift – the ringing message is customers want to do a great deal more with a whole lot less. In an age of short cycles, the model of software product companies trying to harvest with almost EOL products with maintenance coming at a high price when the commercial barriers to adoption of the next generational technology constantly coming down is quite comical to say the least. The whole enterprise software ecosystem is closely watching the next steps here and what happens here wil in many forms affect the entire enterprise software ecosystem. I do no want on –premise enterprise systems to be thrown out with the bath water, though. Without doubt, wherever designed and implemented properly, these systems continue to serve the their purpose . What comes in the way is their rigid and sometimes monolithic architectures, which bring unreasonable rigidity and inject unwanted complexity in the way business can leverage them. With the result, they tend to become a costly asset akin to an old utility that needs massive budgets for maintenance – whereas identical spend in newer technologies can perhaps yield far better business demonstrable business results. My wish is simple :Like in the world of mass customization - I want simple, service enabled modular functionalities with multiple delivery options – On-premise, SaaS & Cloud based made available and with reasonable integration/orchestration mechanisms these can be brought together on need basis and which can bring down the TCO of enterprise software adoption while simultaneously, increasing business benefits realized!

As I see it, gone are the days of investments centered on big-bang inititatives. In the userbase that am interacting with, there's almost a near fatigue effect all around when it comes to fresh IT investments, while supporting existing/ongoing initiatives consume most part of the planned spend budget. Here comes the opportunity actually - this forces people to think of highly innovative and purposeful initiatives - this opens the space for newer software players with fresh solutions - big monoliths obviously can't get there that fast. Smaller software players who have been weakened by the onslaught of consolidation and slowdown, unfortunately would fall by the wayside. In sum the situation is slowly but surely opening up opportunities for fresh play. Some see it as SaaS opporunity, some see it as new players ..but for sure a slow but steady momentum is building up in search of the elusive futuristic solutions and no software vendor – however big and mighty can ignore /try go against the stream or swim slowly along the stream!

Smart Techology For The Smart Enterprise

2009-12-21T07:33:00.000-08:00

The web is abuzz with analyses on Google’s real time search effectiveness assessed in the context of the death of an Hollywood actress today. The question there is how real time is realtime? Google has demonstrated through algorithmic means(without human intervention), the capability to report results in a search query in less than 3 mts(Read Google’s Matt Cutt’s comments therein!) after the reporting of the event! What an amazing progress shown by Google here!

Recently, Morgan Stanley brought out the fact that the mobile Internet is ramping faster than desktop Internet did, and believes more users may connect to the Internet via mobile devices than desktop PCs within 5 years – this is pushing things hard for service providers. Massive mobile data growth is driving transitions for carriers and equipment providers. This is slated to increase over time with emerging markets embracing mobile technologies much faster and pushes the material potential for mobile Internet user growth. Low penetration of fixed-line telephone and already vibrant mobile value-added services mean that for many EM users and SMEs, the Internet will be mobile.
As the MIT journal notes it, both Google and Microsoft are racing to add more real-time information to their search results, and a slew of startups are developing technology to collect and deliver the freshest information from around the Web. But there's more to the real-time Web than just microblogging posts, social network updates, and up-to-the-minute news stories. Huge volumes of data are generated, behind the scenes, every time a person watches a video, clicks on an ad, or performs just about any other action online. And if this user-generated data can be processed rapidly, it could provide new ways to tailor the content on a website, in close to real time.
Many different approaches are possible here to realize this opportunity – currently many web companies already use analytics to optimize their content throughout the course of a day. The aggregation sites , for example, tweak the layout on their home page by monitoring the popularity of different articles. But traditionally, information has been collected, stored, and then analyzed afterward. The MIT journal article correctly highlights that using seconds-old data to tailor content automatically is the next step. In particular, a lot of the information generated in real-time relates to advertising. Real-time applications, whether using traditional database technology or Hadoop, stand to become much more sophisticated going forward. "When people say real-time Web today, they have a narrow view of it--consumer applications like Twitter, Facebook, and a little bit of search," Startups are also beginning to look at different technologies to capture and everage on current data and patterns therein.
Last month, in a very nice article, The Economist highlights, thanks to Moore’s law (a doubling of capacity every 18 months or so), chips, sensors and radio devices have become so small and cheap that they can be embedded virtually anywhere.

Today, two-thirds of new products already come with some electronics built in. By 2017 there could be 7 trillion wirelessly connected devices and objects—about 1,000 per person. Sensors and chips will produce huge amounts of data. And IT systems are becoming powerful enough to analyse them in real time and predict how things will evolve.
Building on the smart grids space – wherein colossal waste in transmission , distribution and consumption could get positively reduced, the Economist notes that it is in big cities that “smartification” will have the most impact. A plethora of systems can be made more intelligent and then combined into a “system of systems”: not just transport and the power grid, but public safety, water supply and even health care (think remote monitoring of patients). With the help of Cisco, another big IT firm, the South Korean city of Incheon aims to become a “Smart+Connected” community, with virtual government services, green energy services and intelligent buildings.

If one were to look at a different place –inside the enterprises, collaboration is enabling people coming together more easily and readily than before – but the upside potential there is very high with possibilities like workflow getting baked natively into documents enabling real time communication amongst the stakeholders.

What is that technology which would enable all this to happen covering data, transaction, content, collaboration, streaming etc inside smart enterprises? It is Complex Event Processing or CEP, a technology in transition- hallmark of any maturing technology and more importantly its potential – as a precursor to enabling enterprises to get ready for more sophistication in autonomous realtime decision making..

At its elements – CEP collects data from various sources and prime raw events & then applies smart algorithms(this learns with time) and invokes right set of rules to decipher patterns in real time – complex scenarios and distills trends therein and churns out results enabling real time decision making. Smart enterprises can ill afford not having such technologies deployed internally. IBM calls this smart planet revolution- all tech majors ranging from software players to infrastructure players want to have a decisive play herein. Every utility service, all competitive sectors like transport and retails etc are looking at adopting this technology aggressively in areas like supply chain management, finance optimization etc.
But smart infrastructure alone won’t be sufficient to make organizations leverage this – it calls for smart thinking at process levels and at decision making rooms. Today information overload is almost choking enterprises and to an extent individuals.

Existing architectures centered around RDBMS and modern web services/SOA are not equipped to handle this nature of data, range, volume and complexity. While processing data from very diverse sources, CEP’s can model data, have native AI capabilities that can be applied while processing event streams. With the right executive interventions and decision makings, smart enterprises of the future may have the wherewithal and power to divide and conquer where needed and synthesise various streams of info in real time in the right way. Such a process would unlock the proverbial hold of central decision making within enterprises and allow decentralized autonomous decision making at real time to maintain competitive edge in the marketplace.
This would lead to more and more of adoption and the resultant complexity would force technology to improve more rapidly –the ideal scenario is that the complex mesh that an enterprise is would get more and more opportunity to respond with real time data at all its nodes making a smart enterprise implementing armed with such solutions to be a veritable force in the marketplace. There is no more the luxury of building cubes and waiting for analyses when real time forces can torpedo any strategic plan with rapid killer response from market forces – that’s where CEP fits in very well – providing real time digitally unified view of various scenarios and their overall effects – enabling much more rapid response in real time. Remember the saying –“the CEO can’t even blink for a moment”
When you look at the key google labs projects (courtesy – CIO magazine) – you cant ignore the Google Goggles project or for that matter, Google’s voice to message to voice translation network -these are all precursors of complex things processed in CEP world –took google as an example as this company wants to solve really big and complex problems as part of its charter!
Real business problems seeking new technology solutions and emerging technology solutions maturing to serve increasingly complex business problems are the perfect way to catalyze growth in new/emerging areas and here we see that playing together well. Forward looking plans, simulation, optimization are all a direct derivatives of good CEP solutions and with such solutions deployed well – we can see the emergence of new digital nervous system inside enterprises and in some cases can trigger creation of new business models itself.

Cloud Computing & IT Spending!

2009-12-14T00:02:00.000-08:00

In continuation of the previous note:

Involved discussions on cloud invariably turn towards the question: would embracing cloud help business bring down IT spend? This question assumes more relevance given the fast early adoptors are seen to be increasing and IT spend by various counts could be seen to be flat to marginally higher numbers in the coming quarters.

Today cloud vendors seem to mostly follow the path of playing the volume game to make their money – very different from conventional approaches. In most of the cases, early adopters in the past, used to spend at higher costs to gain the first mover advantage in business and therby recoup the costs, while the technology matures and begins to be offered at lower prices. But doay, partly the confusion is sown by some vendors when they boldly proclaim huge cuts in IT spend with the adoption of the cloud. I think that this may be true in a few cases but this is hardly the way to push cloud computing. Why not, one may ask.

As recorded by Joe Mckendrick, at a recent panel at Interop, AT&T’s Joe Weinman, raised doubts about the sustainability of cloud computing economics, describing a scenario in which they break down as enterprise management requirements come into play. “I’m not sure there are any unit-cost advantages that are sustainable among large enterprises,” he said. He expects adoption of external cloud computing in some areas, and private capabilities for others.

The belief is that in the immediate future as investments get made in establishing infrastructure by cloud service providers and business setting up private clouds, there may be a surge of spending but with more sophisticated infrastructure management technologies, cost of automation may come down just as net virtualization benefits would begin to outweigh the costs incurred substantially.

Let’s look at the processing power acceleration inside the data centers this game never ceases to progress and so we will at any point in time see more and more investment to embrace the latest technology – the corollary is that business begins to see better and better usage of the progress but as we have seen in the last 25 years amidst this cycle , the spend in absolute terms have not come down at all. All of us know that more than higher % of virtualization is a pipedream even in the best of the circumstances. A new hardware refresh cycle looks to be a sold case as cloud computing gains more and more traction. Data centers are in constant race to improve performance, flexibility and delivery – in turn opening more opportunities for new software/services. All these will begin to reflect in additional IT spending.

All of us recognize the explosion of information and data in our day-to-day life and business experience similar explosion of data. From handling a few terabytes of data years back, today we are seeing the top 5 internet giants turning out several hundreds terabytes of data annually. The other day a friend of mine told me how he got reports about a smartphone launch push communication almost clogging the internet bandwidth some time earlier this quarter. This means that while unit cost level saving may provide for savings on paper, the information complexity would begin to leverage more and more of technologies like cloud – imagine every business beginning to expect/invest in cloud based analytics – the infrastructure needed to support such initiatives could become significant. Leading VC's like Evangelos are rolling the red carpet for investments in creating such companies that can cater to this pent up need. Now extend the argument further –more and more data followed by more and more complex realtime analytics – some skeptics may say - this is a never ending game of pushing the frontier – they may well be right in a way, but this could become the way of doing business in this century.

Like BI being a big ticket/focus item inside enterprises today, we shall potentially see more and more of analytics in the cloud becoming a very large component of cloud activity/spend landscape. David Linthicum notes a trend toward much of the innovation around leveraging larger amounts of structured and unstructured data for business intelligence, or general business operations, coming from innovation in the cloud, and not traditional on-premise software moving up to the cloud. This is a shift. Considering this trend and the fact that cloud providers provide scalability on-demand could be the one-two punch that sends much of our business data to cloud computing platforms.

Let’s look at this from a different plane. Business will begin to leverage advancements in cloud to seek more and more differentiated edge for themselves – this means the small efficient biz can really compete well against large inefficient business and win in real circumstances. The winner would spend more to maintain the edge and the responsible lagging business would imitate/surpass the enabling winning model and this means more and more cloud/IT involvement is a foregone conclusion. Maximizing benefits would in general give way to pull backs in IT enablement in an expanding business scenario. Cost, efficiency & flexibility leverage for improving productivity would be self serving for business but this would trigger more and more incentives to keep stretching this approach, in turn fuelling more leverage of IT enablement. In a dream situation , IT enablement must release locked –in value from investments and release more and more for funding future strategic initiatives, and directly help in creating new business models, facilitating new business channels etc.
The Bottomline : Expect more and more business leverage of IT and ironically, with clouds , this may not be through less IT but more and more benefits may flow out of engaging IT lot more. Just in case, business begins to demand more bang for the buck - the scenario looks plausible : Few mega vendors may dominate the space and they would again be at each other's throat promising low cost -high value computing benefits to the CIO - But i still believe the benefit frontiers would keep shifting forcing business to commit more and more IT leverage!

The Cloud Adoption : Early Signs

2009-12-11T07:26:00.000-08:00

Was in a closed door meet with some customers, influencers analyzing the state of the cloud computing market and the future directions including key players maturity, monetization and derivative impacts throughout the cloud landscape. The clear consensus was that we are set to enter a stage where increasing levels of outsourcing would be pointed towards cloud service providers.

Let's begin from the beginning : the definition of what cloud computing is seems to be still evolving – Infrastructure, Platfrom, Service – occasionally, all seem to be interchangeably used and the overlap in terms of what they can offer seems to be more pronounced with more discussions about their capabilities and demonstrated early success stories. Consensus is that phenomenal growth is expected in the on-demand infrastructure and platform markets.

The vendors are getting more and more confident about growth and adoption. The market leaders are beginning to report rapid adoption from customers across industries, regions and spanning varied size and supporting high degree of volume of transactions. One of the most important driver pushing this adoption seems to stemming out of the desire from business to look at SaaS and beyond into the cloud based mostly on considerations of cost takeouts and in a few cases of the desire to be the early adopters into the cloud.Considerations centering around change management, integration, migration of data, security rejig inside the enterprises, IT staff training, business push to move faster and scale ad infiniteum with cloud all become key areas to be managed as the cloud gets into the mainstream and are definitive factors in the adoption curve. Two things are common in this adoption.

Short-term, overflow or burst capacity to supplement on-premise assets – it appears that this may well be the primary use case for as-a-service cloud platforms currently in the market today. Some consider this to be a step of stop-gap hosting arrangement and for some this is an opportunity for cloud based services and applications adding on to existing on-premise stack with additional capabilities.

The adoption is not smooth just like a flip of a switch. Sophisticated users are beginning to weigh private clouds(hybrid), discussions about multi –tenancy, single instancing all are getting more and more attention and in some cases, already sowing the seeds for a religious discussions therein. Many users are beginning to assess the relevance of the cloud in respect of ability to integrate with communities, ability to share existing environments with other players, ability to integrate third party apps, look at ways of using and paying for real-time capacity, storage and compute usages etc .In terms of top-of-mind recollection and from the experience pool , it appears that Google, Amazon & SFDC are the frontrunners . Azure platform is beginning to rear its head in the discussions albeit occasionally, while everyone admitted that Microsoft one day or other will get to become a strong force to contend with. Some shared a statistic : Google may have more than 10 million paid users, more than half-a-million developers have courted the Amazon web services platform and SFDC has more than a million subscribers trying to leverage the Force.com platform. The surprising part is that more and more adoption, like the proverbial law, work fills to cover the time, more and more cloud centric offers would keep coming to eat the budget – so be assured no budget shrinks are going to happen in the short-to-medium term while capabilities begin to increase.

How Much Information & Overload Phenomenon!

2009-12-09T23:10:00.003-08:00

The Global Information Industry of the UCSD has put together statistics about how much information gets consumed by Americans every day. Two previous studies, by Peter Lyman and Hal Varian in 2000 and 2003, analyzed the quantity of original content created, rather than what was consumed. A more recent study measured consumption, but estimated that only .3 zettabytes were consumed worldwide in 2007.
In 2008, Americans consumed information for about 1.3 trillion hours, an average of almost 12 hours per day. Consumption totaled 3.6 zettabytes and 10,845 trillion words, corresponding to 100,500 words and 34 gigabytes for an average person on an average day. A zettabyte is 10 to the 21st power bytes, a million million gigabytes. Hours of information consumption grew at 2.6 percent per year from 1980 to 2008, due to a combination of population growth and increasing hours per capita, from 7.4 to 11.8. More surprising is that information consumption in bytes increased at only 5.4 percent per year. Yet the capacity to process data has been driven by Moore's Law, rising at least 30 percent per year. One reason for the slow growth in bytes is that color TV changed little over that period. High-definition TV is increasing the number of bytes in TV programs, but slowly. Additional stats to note:
The traditional media of radio and TV still dominate our consumption per day, with a total of 60 percent of the hours. In total, more than three-quarters of U.S. households' information time is spent with non-computer sources. Despite this, computers have had major effects on some aspects of information consumption. In the past, information consumption was overwhelmingly passive, with telephone being the only interactive medium. Thanks to computers, a full third of words and more than half of bytes are now received interactively. Reading, which was in decline due to the growth of television, tripled from 1980 to 2008, because it is the overwhelmingly preferred way to receive words on the Internet.
a. The average person spends 2 hours a day on the computer
b. 100,000 words are read each day.
Clearly, in this world, there is just too much of information. Notwithstanding the normal channels such as email, friends to stay in touch with, meetings to attend to, research papers that one needs to stay on top of, books to read, Tivo recordings and so forth. With Social media, RSS feeds, one could have literally hundreds of posts each day from highly selective sources coming through feed aggregators. To make matters worse, people are now finding ways to take non-textual informational sources such as audio files (e.g. podcasting) and even video files and tying that to RSS. A large fraction of the people one interacts with are walking around with their eyes glazed, seemingly on auto-pilot, speaking a mile a minute about this blog they read, this documentary they Tivo'd, this video they saw on the Net, this new startup company that's hot.
The Rise of Interaction : Most sources of information in the past were consumed passively. Listening to music on the radio, for example, does not require any interaction beyond selecting a channel, nor any attention thereafter. Telephone calls were the only interactive form of information, and they are only 5 percent of words and a negligible fraction of bytes. However, the arrival of home computers has dramatically changed this as computer games are highly interactive. Most home computer programs (such as writing or working with user generated content) are as well. Arguably, web use is also highly interactive, with multiple decisions each minute about what to click on next. 1/3rd of information is today received interactively.. This is an overwhelming transformation, and it is not surprising if it causes some cognitive changes. These changes may not all be good, but they will be widespread.

Private Clouds : Real & Relevant?

2009-12-09T10:19:00.001-08:00

An interesting thread is now on within the enterprise irregulars group on what constitutes private clouds –as again very enlightened discussion therein. The issue that I want to talk about is if private cloud do indeed exist, then what is their adoption path ? Lets start from the beginning : the issue is can we can use the term ”cloud” for describing the changes that happen inside IT architectures within enterprise? Thought there can be no definitive answer – a series of transition to a new order of things, will in my opinion, become imminent.

The pressures on IT & the engulfing sense of change in the IT landscape are hard to overlook. The The pressures would mean more begin to seriously look at SaaS, re-negotiating license terms, rapid adoption of virtualization etc. As part of this and beyond, internal IT would be forced more and more to show more bang for the buck and it is my view that organizations would begin to look more and more to question committed costs and begin to aggressively look at attacking them more systematically – earlier sporadic efforts marked their endeavors. This could also unlock additional resources that could potentially go towards funding new initiatives. There are enough number of enterprises going this route and their service partners are also in some cases prodding them to go this way.

The change in many senses may make IT inside enterprises to look , behave and perform like cloud computing providers – though there would be limitations( in most places serious) on scale, usage assessments , security and the like. There are strong incentives propelling enterprises to channel their efforts and investments over the next few years in mimicking a private cloud service architecture that gets managed by them internally. This could well become their approach of staging towards finally embracing the cloud(public) over a period of time . These baby steps to nearly full blown efforts are needed in preparing organizations to embrace clouds and it may not be feasible at all to make the shift from on-premise to cloud like flip switch. Serious licensing issues, maturity, lack of readiness, integration concerns, security all come in the way of enterprises looking at public cloud in a holistic way. These steps need not be looked down – they would very well become the foundation to move into public clouds in a big way.

Lets think through this : setting up private cloud is a motherhood statement at best( in many organizational surveys, one can find setting private clouds is not in the CIO’s top three priorities – if anything virtualization finds a place-) to make this happen in a credible way means re-examining most parts of IT functioning and business –IT relationship inside enterprises. Most elements of the bedrock gets affected – the processes, culture, metrics, performance, funding, service levels etc. Well thought out frameworks, roadmaps need to be put in place to make this transition successful. These frameworks need to cater not only to setting up internal cloud but eventually help in embracing the public cloud over the years- not an easy task as it appears. A few of those organizations that master this transition may also look at making business out of these – so it’s a journey – that needs to be travelled onto embracing public clouds. Some business may take a staged approach and call it by private cloud, internal cloud or whatever but eventually the road may lead into public clouds!

Analog Dollars Onto Digital Dimes : Challenging Transitions

2009-12-06T08:45:00.003-08:00

I was in a meeting with a CIO in New York on Friday where he outlined the onslaught of disruptive innovation in his industry and the broad set of challenges faced therein. The magnitude of the change that his organization needed to face was mindboggling! Just before, I entered to join the meet in the lounge saw this very interesting interview over the television. Jeff Zucker, President and CEO of NBC Universal, has succinctly captured what is going on in the media industry, with his widely quoted comment that the new digital business models are turning media revenues from analog dollars into digital dimes. As he puts it, the key problem for established media companies is thus to come up with new, innovative business models that will enable them to make money and survive as their industry accelerates the transition from a business model based mostly on analog dollars into one based mostly on digital dimes. The ongoing tussle on online advertising is yet another example of the pain transitions bring on.

What a difficult/interesting situation to be in : Lets see how typically leading enterprises face issues centered around disruptive models where the effects –positive if handled well can be far reaching and can turn disastrous when affected negatively. How do well run business handle the shift ? In my view, while it is tempting to look at acting all things material in a startup mode to tide over the situation – reality shows that this would be next to impossible to make it happen. Would-be innovators know that one of their biggest challenges is systematically identifying the innovations with the greatest likelihood of creating disruptive growth. Pick the wrong one, and squander a year or more of focus and investment. It is not by luck based on the draw anymore. By conducting a series of diagnostics, companies in any industry can quickly identify the most promising opportunities. By conducting customer, portfolio, and competitor diagnostics to pinpoint the highest-potential opportunities and the best business models for bringing them to market. Successful approach to make a positive spin around the disruption could be centered around figuring out how to leverage the new innovations to evolve its organization, culture and business models into the future. Too often solution points revolve around assessment and leverage of skills and capabilities of the enterprise in adapting to new changed realities. The challenge would be in figuring out how to leverage existing relationships and expand the adoption quotient across the enterprise ecosystem. A judicious assessment of what part of existing organization could be useful and what needs to ripped, replaced or retired need to be carried out in the most objective manner. Preparing leadership internally to get ready to manage the disruption is a prerequisite to succeed,

In reality, these seemingly ordinary questions/concerns may become the most tough one to crack, but no point in trying to avoid facing reality. In many cases, matter of fact cultural impediments may overshadow other set of concerns in managing the transition. There is no other way forward – except to properly manage the delicate balance between winning, excelling in its current operations, and quickly embracing disruptive innovations and lay a solid plan for growth.

IT Savvy Means Getting An Edge From IT

2009-12-02T23:33:00.002-08:00

As IT's importance grows inside organizations, with more competition and concerns about ROI and BVIT, pressures on resourcing, offshoring strategies and heightened sense of expectations from IT by business, all enterprises undergo such changes and an appropriate framework with a three year rolling plan perspective for IT strategy and planning is absolutely essential for any medium sized to large sized IT user organizations.

Just read this nice interview in the WSJ of MIT’s Peter Weill on IT Savvy, his (excellent) recent book, co-authored with Jeanne Ross. A nice interview –in essence this covers the main ideas of the book, standardization for innovation, IT as strategic asset vs. liability, creating digital platforms, and the importance of connecting projects. A couple of excerpts:

BUSINESS INSIGHT:Your newest book is about IT-savvy companies. How do you define IT savvy?
DR. WEILL: IT-savvy companies make information technology a strategic asset. The opposite of a strategic asset, of course, is a strategic liability. And there are many companies who feel their IT is a strategic liability. In those companies, the IT landscape is siloed, expensive and slow to change, and managers can't get the data they want.
IT-savvy companies are just the opposite. They use their technology not only to reduce costs today by standardizing and digitizing their core processes, but the information they summarize from that gives them ideas about where to innovate in the future. A third element is that IT-savvy companies use their digital platform to collaborate with other companies in their ecosystem of customers and suppliers.
So, IT-savvy companies are not just about savvy IT departments. It's about the whole company thinking digitally.
BUSINESS INSIGHT: You've done some research that suggests IT-savvy companies are more profitable than others. Tell me a bit about that.
DR. WEILL: The IT-savvy companies are 21% more profitable than non-IT-savvy companies. And the profitability shows up in two ways. One is that IT-savvy companies have identified the best way to run their core day-to-day processes. Think about UPS or Southwest Airlines or Amazon: They run those core processes flawlessly, 24 hours a day.
The second thing is that IT-savvy companies are faster to market with new products and services that are add-ons, because their innovations are so much easier to integrate than in a company with siloed technology architecture, where you have to glue together everything and test it and make sure that it all works. We call that the agility paradox—the companies that have more standardized and digitized business processes are faster to market and get more revenue from new products.
Those are the two sources of their greater profitability: lower costs for running existing business processes, and faster innovation.
DR. WEILL: The real secret to IT-savvy companies is that each project links together—like Lego blocks—to create a reusable platform. IT-savvy companies think reuse first. When they have a new idea, the first question they ask is: Can we use existing data, applications and infrastructure to get that idea to market fast? When we look at the impact of reusing processes and applications, we see measurable benefits in the top and bottom lines.

The book also covers defining your operating model, revamping your IT funding model, allocating decision rights and accountability, driving value from IT and leading an IT Savvy firm.

This is a book highly regarded by the cognoscenti and it starts by asking what does being IT savvy mean and answers as the ability to use IT to consistently improve firm performance. The book encapsulates very powerful observations and statements that matter:

- You have to stop thinking about IT as a set of solutions and start thinking about integration and standardization. Because IT does integration and standardization well.

- IT Savvy firms have 20% higher margins than their competitors.

- An operating model is a pre-requisite before committing sound investments in IT

- IT funding is important, as systems become the firm's legacy that influence, constrain or dictate how business processes are performed. IT funding decision are long term strategic decision that implement the operating model

IT Savvy is based on three main ideas with some commentary from the reviewer.

1- Fix what is broken about IT, which concentrates on having a clear vision on how IT will support business operations and a well-understood funding model. In most places, IT is delegated and benignly neglected in the enterprise with disastrous consequences of underperformance/poor leverage.

2- Build a digitized platform to standardize and automate the processes that are not going to change so focus shifts on the elements that do change. The platform idea is a powerful one and can drive significant margin, operational and strategic advantage.

3- Exploit the platform for growth by focusing on leading organization changes that drive value from the platform. With a platform built for scale, leverage efficiencies that scale can deliver. Ironically many enterprises fail to do one of these two!

Don’t miss the IT Savvy assessment methodology and over all a very important book to be must read.

The Cloud Monetization Paradigm.

2009-11-14T11:08:00.002-08:00

Too often when large enterprises begin to look at number justification to move onto the cloud, many seasoned executives are struck by the limited enterprise class billing choices that the model is able to provide – Granted this is an evolving space, the urgency in getting this done can’t be understated.

Let’s look at the basics :

The Advantages of cloud are far too well known :

-Pay subscription on usage
-Enables usage of the current version and focus is on continuous service
-Economies of scale and anytime, anywhere, ubiquitous use

There are clear upside to the whole cloud horizon when we are able to make determinations on issues around providing options to customer /providers in terms of

-Flexible pricing – spectrum from subscriptions to pay-per-use
-High Volume – Low touch sales model
-Elastic scaling – ability to scale up and down

When existing business computing models gets disrupted and order of magnitude business performance improvements are looked at, paradoxically the cloud paradigm offers both unmatched opportunity and competitive challenges for software and services providers. But seen from a customer perspective, too often the thought chain gets dimmed when the actual issue of metering and billing gets reviewed by customers. It transpires that as the mindshare of cloud picks up among the IT buyers and the various players begin to align we see that too often the locus of value creation is shifting within the Cloud ecosystem and with it the balance of power between service providers and channel partners. This is huge change in the ecosystem. The reality is that successfully transition to SaaS will affect every aspect of the company, including key operational systems such as billing and payments. 

The complexity in providing multiple levels of flexibility to customers in metering and billing are far too complex in real life and warrants careful determination of choices. Billing, administration and related marketing capabilities are essential in meeting the new operational challenges of a Software-as-a-Service business. More often than not the new models inject potential conflicts/role clarity amongst service providers, channel partners and in the process as Saugatuck brings out raises very fundamental questions like :

-Who owns the customer?
- What is the best way to compensate channel partners?
- Is the partner paid a commission for managing a customer that the vendor owns?
- Or does the partner own the customer and pay a revenue share?
- Can the partner up sell its own offerings and keep it all?

Obviously there are many possible answers to these questions and some answers are beginning to appear and in this direction the landmark study helps finds answers by taking a detail oriented view to evaluation options. Emergence of cloud based billing solutions reflects the fast pace at which things are evolving and the report notes that Cloud billing solutions have targeted Web providers of content, online gaming, virtual worlds, media and entertainment – primarily consumer offerings – as well as SaaS, SaaS enablement, PaaS, business media, business content and other online business solutions. On-premise solutions have moved into a variety of other verticals and segments, such as media and entertainment, financial services, transportation, SaaS, SaaS enablement and Cloud Infrastructure.

I think we will get an ideal monetization view across the cloud ecosystem in a few years from now but for early adopters we need more choices and more analyses and here’s one helping the progress.

Services, Innovation & Competitiveness

2009-11-05T23:46:00.003-08:00

Just came across the report from Royal Society, - the UK's national academy of science, - Hidden Wealth: the contribution of science to service sector innovation.
Innovation to services and its linkage to hard sciences happens to be one of the core focus area of this report. This excellent report presents the findings of a major study on the role of science, technology, engineering and mathematics (STEM) to innovation in the services sector. One of the pioneering and comprehensive investigations of the impact assessment of services innovation in the current age . Why is service sector economy so important? Let’s look at the significance of this : Over 2/3rd of the global economy (GDP)is centered around services with developed countries seeing a greater percentage of service sector contribution to their national economies. By far the single largest employing sector in the developed world, the significance of service industry cant be overlooked. It goes without saying that the competitiveness of service sector along with government policies and implementation efficiency would to a great extent determine the competitiveness of the nation.
The study revealed that STEM is omnipresent in the service sector, but, unlike the case in the industrial sector, its impact is rarely recognized. The Hidden Wealth study, points out that despite the great significance of services to global economy, their nature remains somewhat undefined and is invisible under a majority of circumstances !
Employment and economic vibrancy in developed countries hinges on service sector and hence this is an important body of study and the findings very relevant and useful to developed nations in large measures and by extension to global economy.

The report reinforces the traditionally held view about service sector :"Our main conclusion, . . . is that services are very like to remain central to the new economy, not least because we are at or near a tipping point: innovations now underway seem likely to change dramatically the way we live and to generate many services (though few can be predicted in detail at present). . . ."

"Scientiﬁc and technological developments have triggered and brought about major transformations in services industries and public services, with the advent of the internet and world-wide-web . However, the full extent of STEM's current contribution is hidden from view - it is not easily visible to those outside the process and is consequently under-appreciated by the service sector, policymakers and the academic research community. This blind spot threatens to hinder the development of effective innovation policies and the development of new business models and practices in the UK."

Services rely signiﬁcantly on external STEM capabilities to support or stimulate innovation - indeed they tend to innovate in more external and interdependent ways than manufacturing ﬁrms. This can take the form of bought-in expertise or technology and collaborations with suppliers, service users, consultants or the public science base. Through these ‘open innovation’ models, service organisations respond to the knowledge, science, and technology that they see being developed elsewhere (eg in other companies or universities), and use collaboration to solve their problems in innovative and competitive ways.”
The Hidden Wealth report eloquently makes the case that most of the economic value of breakthroughs in science and technology will likely be realized through services, and thus, this is the area around which most new, high paying jobs will be created. In conclusion:
“The main message of this study is that the contribution of STEM to service innovation is not an historic legacy, nor simply a matter of the provision of ‘human capital - important as the latter may be. STEM provides invaluable perspectives and tools that will help to nurture emergent service models and deﬁne future generations of services for the beneﬁt of businesses, government, and citizens.”

Customers : Major Force In Innovation!

2009-11-03T15:32:00.005-08:00

While trying to find answers for questions like what kinds of innovation will best help us to emerge from recession stronger than we went in, to gain market share, or to thrive in new and exciting markets, the GT report finds that the U.S. is the easiest country to create innovative products, services and business. Different geographical regions have varying degree of emphasis on innovation. Innovation in general is regarded as a top corporate priority by more executives in Western Europe (41 per cent) than in North America (33 per cent) or in Asia Pacific (31 per cent), while Asia Pacific places higher emphasis on customer led innovation . One of the key finding is the role of customers, along with the attitude of companies to their customers, emerges as a defining characteristic in the survey. The report notes "No longer simply passive recipients of goods and services, customers now help to shape the future of their own consumption." They are now the leading source of innovations globally (41 per cent), more important than anything inside companies, including research and development. Clearly, co-creation seems to be driving more value.

On innovation, the report draws four main conclusions:

- Pay more attention to what your customers say and their ideas for innovations
- Consider expanding your open innovation projects and working with more third parties
- Look outwards, explore new markets, rather than drawing back into your domestic market
- Capitalise on the great shifts of the age, the move away from carbon-based energy and the emergence of China and India as major trading nations with huge consumer markets.

As I wrote here, in this age of contribution economy – a phenomenon that we are seeing ever since the Internet started to connect everyone to everyone else all the time, people from around the world can more easily contribute leading to exploding results - caused by the coming together of energy, ideas, and knowledge. Some of the more familiar examples of these collaborative efforts include blogs, open-source software, podcasts, and even the nonprofit online encyclopedia Wikipedia. We are also seeing customers leading the charge of innovation and the economist article on user led innovation exemplifies a new form of collaboration. The rise of online communities, together with the development of powerful and easy-to-use design tools, seems to be boosting the phenomenon, as well as bringing it to the attention of a wider audience

R&D And Innovation In A Downturn : A Misnomer?

2009-10-30T05:29:00.005-07:00

I have always followed Booz Allen’s annual innovation study for the last several years and have written about it as well here, here etc.. This year’s study looks refreshing and asks the question how do smart companies spending good money &effort on innovation approach spending when the economy is down? The answer: Most of the leading innovators are actually accelerating their innovation efforts in the recession – in doing so they are actually betting that customers will demand new products and services as the economy gets out of the downturn. Many of the corporate decision makers in the list who control/manage budgets for innovation – running into hundreds of billion dollars of business every year believe that innovation is critical as they prepare for the upturn, and a majority have maintained or expanded their portfolios and are pursuing new products to improve growth and margins. Practically everyone wants to be as focused and result oriented as could be The recent trends, observed over the last few years suggest that as a rule, companies are performing less pure and applied research. Instead, they are concentrating their R&D budgets on product development and engineering. The software sector is now brimming with new strength on SaaS & Cloud centric products and services while behemoths like SAP struggling to maintain growth and leadership! Apple had the best quarters when the global economy was perhaps at its lowest ebb last few quarters!
I found it interesting to see an IBM executive’s statement suggesting that in a recession or downturn "...that really drives a need for innovation and a level of creativity that you might no otherwise have in normal times." I thought that the new normal is that normalcy is a product of bygone era! The reality is that last two decades have seen more changes in growth /slowdown and indications are that this may become the new normal – so downturn or upswing ought to marginally influence yearly spend on innovation – particularly when product development cycles can run into multiple years. If anything the sensitivity could prove itself in reverse direction of spending more/differently in a downturn, Read Applied material’s dilemma – the revenues are down significantly this year. Yet it’s customers continue to demand innovative new products to maintain their own competitive positions. The stronger companies want to stay on the same innovation page so that at the end of the cycle, they have a stronger competitive position. Taking a long view of economy, markets and relating to the context are done differently by different companies. The top three spenders on R&D in the world happen to be non-american companies! Matter of fact in many industries today, predicting the economy for the next few years and its implication for them may become the most coveted job and an art for its executive board. In fact, I would think that not being able to predict and adjust to an ever changing economic environment may become a disadvantage for any enterprise – being able to constantly test the assumptions about economic environment may have to become a top item for corporate strategy planning, adjusting internally and to succeed in the marketplace.

Lets look at how this would impact executives inside the organization. Business needs to look at talent horizontally across the business classified as per the roles and not necessarily as per the organizational norms and this would be the key in effectively harnessing talent inside enterprises. The differences ought to be expressed in terms of talent valuation - that is, such attributes as knowledge, experience, skills, and personal interaction capabilities - and not in terms of organizational structures (such as business units) or in human resources management terms (such as age, education, seniority, or compensation). In an age where the rules and procedures of an organization can be an obstacle to segmentation and a force for “averaging” the treatment of individuals’ roles, and in a situation where organizations need to offer very specialized services, definitely a radical new look at the way talent gets categorized, nurtured and reviewed are called for and on an ongoing basis, needs to be reviewed to provide a definitively fresh and dynamic approach. After all winning the people war is a crucial determinant of success for any organization. In most of the knowledge business, the future values of enterprises are centered on building seemingly intangible assets vs the conventional measures of capital assets. That’s where good, capable people, well aligned team, well conceived strategy and top quality leadership matters. With all these in place, the cutting edge would from innovation - in all its forms starting from management innovation to disruptive innovation to innovation of the incremental kind. The ability to recruit/ mould the leaders that will be able to create the future innovations that will make enterprise more successful is a major responsibility & talent management in many ways will determine the organization’s growth as much as the overall business strategies will. This will shape organizations in a significant way and if organizations get this right along with purposeful innovation models, competitiveness increases and success would follow.

The New Face Of The CIO

2009-09-27T23:41:00.005-07:00

The responsibilities of the CIO span a spectrum of managerial tasks, with one end of the spectrum as "supply" - the delivery of IT resources and services to support business functions - and the other end of the spectrum as "demand" -the task of helping the business innovate through its use of technology. Many CIOs admit that balancing both demand and supply is a difficult task. Fortunately, the CIO has a range of new opportunities and tools to help him manage and order these competing priorities. The process starts with an understanding of how new sourcing models can liberate internal resources and funding for strategic business enablement and innovation.

While every CIO plans aligning IT and business strategy, the irony is that they don't have enough time for effective strategic planning. Usually they blame it on demand-side pressures.Look at the challenges confronting the CIO:
The business side complains that their CIOs aren't up to speed on issues confronting the business and can't think through the implications of systems trade-offs, on a business-unit level, for planned implementations or proposed IT investments. At the same time, the business side usually gets confused in making assessments of the relevance of new technologies to safeguard their business competitiveness. More often than not, business leaders say that their CIOs are not proactively bringing them new ideas about how technology can help them compete more effectively.

Part of the problem stems from the inherent conflict of managing supply and shaping demand. CIOs often must meet requirements to reduce total IT spending, for instance, while making investments to support future scenarios-even though these upgrades will increase IT operating costs. It's indeed a tough job - trying to be both a cost cutter and an innovator - and the CIO sometimes compromises one role. Structural issues whereby parts of the organization are under the control of other executives also complicate the job. Business-unit leaders want more IT leadership, but they are wary of CIOs who don't tread carefully along business leaders' boundaries. Strategic IT management calls for making improvements on the demand side. Managing the demand side of the equation broadly covers:
- The financial understanding of costs and benefits,
- Business accountability for IT and
- Clear framework for investments in technologies.
CIOs shift their attention to different aspects of these three core components. As part of the evolution the CIOs shift focus: once operations are stabilized and business credibility has been achieved, emphasis shifts toward working more closely with business leading to opportunities to contribute to strategic initiatives and direction.

In practice, it can be seen that CIOs who meet and exceed business expectations get rewarded with greater participation in their enterprise's business strategy, higher budgets and become favorites with the business side. In most cases, these CIOs tend to have the ear of the CEO through a direct reporting relationship. CIOs need to know not only what the differences are but also how to time the shift; move too soon or too late and credibility with business leaders will suffer.

This month IBM released its findings from the new global study of more than 2,500 chief information officers (CIOs), covering 19 industruesindustries and spread across 78 countries. The study confirms the strategic role played by CIO’s in making their business become visionary leaders of innovation and financial growth. Many CIO’s are getting much more actively engaged in setting strategy, enabling flexibility and change, and solving business problems, not just IT problems

The report replete with innumerable insights is an excellent collection and I started by looking at understanding some themes and associated metrics that preoccupy the CIO’s the most . I was startled to find that more and more CIO’s appear to be genuinely focusing on getting the growth lever of IT and business fire by rightly turning their attention in increased measures towards innovation. Someone quips overtime the role of the CIO is less and less about technology and more and more about strategy. Really hitting the nail on the head. As the role of the CIO itself transforms so do the types of projects they lead across their enterprises, which will allow CIOs to focus less time and resources on running internal infrastructure, and more time on transformation to help their companies grow revenue. CIOs are transforming their infrastructure to focus more on innovation and business value, rather than simply running IT. The report finds that today’s CIOs spend an impressive 55 percent of their time on activities that spur innovation. These activities include generating buy-in for innovative plans, implementing new technologies and managing non-technology business issues. The remaining 45 percent is spent on essential, more traditional CIO tasks related to managing the ongoing technology environment. This includes reducing IT costs, mitigating enterprise risks and leveraging automation to lower costs elsewhere in the business. Obviously not every CIO would make the cut. It’s reported that High-growth CIOs actively integrate business and IT across the organization 94 percent more often than Low-growth CIOs. The study notes that CIOs spend about 20 percent of their time creating and generating buy-in for innovative plans. But High-growth CIOs do certain things more often than Low-growth CIOs: they co-create innovation with the business, proactively suggest better ways to use data and encourage innovation through awards and recognition. 56 percent of High-growth CIOs use third-party business or IT services, versus 46 percent of Low-growth CIOs. The study also found that High-growth CIOs actively use collaboration and partnering technology within the IT organization 60 percent more often than Low-growth CIOs. Even more impressive, High-growth CIOs used such technology for the entire organization 86 percent more often than Low-growth CIOs
Successful CIO’s , the report notes actually blend three pairs of roles. At any given time, a CIO is:
• An Insightful Visionary and an Able Pragmatist
• A Savvy Value Creator and a Relentless Cost Cutter
• A Collaborative Business Leader and an Inspiring IT Manager

Adjusting the mix one pair at a time, the study reports make the CIO’s perform tasks that make innovation real, raise the ROI of IT and expand the business impact.

Other key findings of the survey:
• CIOs are continuing on the path to dramatically lower energy costs, with 78 percent undergoing or planning virtualization projects
• 76 percent of CIOs anticipate building a strongly centralized infrastructure in the next five years.
IBM's CIO Pat Toole has this to say about the findings. In addition to the detailed personal feedback, IBM also incorporated financial metrics and detailed statistical analysis into the findings.The report also highlights a number of recommendations from strategic business actions and use of key technologies that IBM has identified that CIOs can implement, based on CIO feedback from the study.

(Picture Courtesy :IBM)

The Product Maintenance Paradox!

2009-09-25T11:56:00.004-07:00

There was a mild tremor in the IT market few weeks back when Siemens threatened to terminate its annual maintenance contract with SAP owing to high price being charged by SAP. I have noted four years back that around half of Oracle's total revenue of $11.8 billion(in 2005)came from maintenance. As a matter-of-fact oracle sometimes used to justify its roll-up strategy based on attractive maintenance revenue streams of acquired products! The current maintenance stream revenue for Oracle continues to be very high. These open the questions :Why do customers pay vendors annual maintenance? What do they get in return to justify this substantial outgo year after year? For end customers, switching software providers is not easy. Most experts and customers agree that replacing big applications from one company with those from another is far too costly (millions at minimum) and time consuming to be worth the bother.
Now Wall street seems to be waking up to the fragile nature of the solid natured maintenance revenue stream of enterprise software vendors.

Courtesy Vinnie saw this CGCowen report written by Peter Goldmacher, Joe del Callar dated Sep 25 - focusing on the license revenue stream of enterprise software vendors.The report highlights

“As we interpret this data, we can't tell if vendors aren’t investing in R&D because customers aren.t buying products, or customers aren’t buying products because vendors aren.t investing in R&D. Regardless of the cause and effect, the trend is clear. Absolute investments in ERP are down dramatically, way beyond the synergies created by scale via M&A. The net result is that customers no longer look at material ERP upgrades as a competitive advantage and therefore vendors are unwilling to increase investments. Customers are watching their ERP vendors generate expanding margins without plowing that profit back into the product and we believe customers are getting resentful”

I certainly believe that the time is now ripe for the Tier I enterprise software market to be disrupted by third-party maintenance providers. With SAP and Oracle said to be realizing gross margins in the neighborhood of 90% on their maintenance business, the economics are simply too strong for third party maintenance providers not to rise up. Some regulatory interventions like antitrust suits may help accelerate the shift,this would embolden service providers to look at the maintenance market form a fresh value perspective.

I must also agree that with the moderate success of some pure play third party service providers, the landscape is changing and customer expectations are increasing and we shall begin to see third party supports coming in and several customers are also demanding annual lease contracts in place of perpetual license – at least in emerging economies. The era of enterprise software as we know may be over. The straightforward calculations about existing customers continuing to pay very high maintenance revenue year after year may prove to be wrong moving forward and in fact may choose to converge into one homogeneous platform and look at saving lot more costs. The real test of one's ability to hang onto customers will not come when maintenance contracts expire but when the major software companies, transition to so-called "service oriented architectures," a fundamental change in the way applications are deployed, integrated and accessed which should accentuate the ability of different vendors to provide ongoing maintenance support and create a new vibrant win-win business therein.

The Coming Video Revolution & The Internet Buildup

2009-09-23T23:22:00.006-07:00

Nielsen reported few weeks back that on an average Americans watch 153 hours of TV every month and 3 hours of online video every month. Video ads are beginning to appear in newspapers! Video has a powerful impact, it is easy to share on social platforms, it is much less expensive to produce that in the past, and more and more people have access to it as technology and reach are improving.

Cisco’s recent forecast of IP traffic for the coming years, makes an interesting read. The company expects IP traffic to increase fivefold compared to today, reaching two-thirds of a zettabyte by 2013. That's two thirds of a trillion gigabytes with a compound annual growth rate of 40 percent. In 2013, the Internet will be nearly four times larger than it is in 2009. By year-end 2013, the equivalent of 10 billion DVDs will cross the Internet each month.

An important highlight of the Cisco report : A significant part of that traffic will be online videos, which will make up 90 percent of all consumer IP traffic by 2013, reaching over 18 exabytes per month. Internet video is now approximately one-third of all consumer Internet traffic, not including the amount of video exchanged through P2P file sharing. The sum of all forms of video (TV, video on demand, Internet, and P2P) will account for over 91 percent of global consumer traffic by 2013. Internet video alone will account for over 60 percent of all consumer Internettraffic in 2013.Video communications will be a formidable block in this traffic – Cisco anticipates an increase by around ten times by 2013 (in the next four years). As the global mobile explosion continues, it reflects in mobile video volume as well. Mobile online video watching is also expected to rise spectacularly, reaching 64 percent of the total mobile IP traffic in 2013, growing from 33 petabytes in a month in 2008 to an estimated 2,184 petabytes, this is 2 exabytes, per month in 2013. The increase represents a 131 percent annual growth rate. However mobile IP traffic will still be only 4 percent of the total IP traffic.

The volume growth also factors in expected growth in Peer-to-peer traffic, which is also expected to increase but its percentage of the overall IP traffic will decline by 2013. P2P networks currently use 3.3 exabytes per month and the numbers are expected to grow at a compound annual growth rate of 18 percent. However, overall P2P traffic will decline to only 20 percent of the total consumer IP traffic coming from 50 percent in 2008. Cisco expects file hosting services to grow instead at a much bigger rate of 58 percent per year reaching 3.2 exabytes per month in 2013.

The internet continues to grow. With more and more news of a global economic turnaround, the growth can only accelarate. The support Infrastructure needs to grow faster to keep pace and this seems to be happening. Since 2007, the annual growth rate of international Internet capacity has exceeded 60%. In 2009, international internet bandwidth increased 64%. In 2009, network operators added 9.4Tbps of new capacity—exceeding the 8.7Tbps in existence just two years earlier.No wonder the internet buildout phenomenon is indeed an amazing one

(Picture courtesy : Cisco)

Consumerization Inside Enterprises Reinforces The Idea : IT is Business

2009-09-22T00:16:00.003-07:00

When more and more focus is put on innovation, its evolution, growth and in managing innovation while looking through what conventional collaborative mechanism in fusion with powerful mechanisms like internet enabled collaboration could help achieve –all these point to a world of immense possibilities. With a dominant number of internet users poised to take a dip in the virtual world, the virtual world could become more and more real!! Apple and the high tech semicon industry can vouch for the pull from the consumer segment – for both of them, consumer segment happens to be the largest consuming class!

The interesting part is that the consumerization of IT is creating a whole new world, all managed by a new set of rules. The impact of consumerization on enterprise and opportunities to leverage such advances are all groomed in the consumer space itself. The transition of such things into enterprise IT thereby happens automatically – in a way, advances in consumer space dictates the corresponding fallout in the enterprise space. Many of the digital collaboration mechanisms are made available at throwaway prices today. This creates so much pressure inside enterprises such that the IT departments are forced to give corporate users access to the scale and innovation of the consumer market. True, but difficult to believe – right? An analysis of the past shows that in a significant number of cases the technologies that were originally focused on consumer space have made deep impact over time on the enterprise space – Personal computers, search, IM all are shining examples of this powerful trend. Native web companies keep coming out with a lot of full blown but trial offerings that entices lot many more consumers and many a times a revenue and utilization value evolves out of more and more usage of such offerings. In the process, the consumer space gets more and richer forcing successful offering(s) to be pushed into the enterprise –in larger numbers and faster pace.

Consumerization opens up the organization to consumer-grade services that innovate at a much faster pace than the organization can. –providing in the process, an unmatchable potential for handsome returns to business. Productivity could rise as workers become less tied to the office. consumerisation is also forcing massive changes in resource consumption - consumerization offers a path to reducing a company’s carbon footprint by encouraging telecommuting and Internet-based applications run by mega-scale server farms, which are in many cases powered by greener energy sources and are more energy efficient than hardware in corporate data centers. Large corporates are beginning to adopt such technologies aggressively. With an impending explosive growth of communication and broadband capabilities, the medium of virtual reality/world is sure to take a central seat. Clearly the virtual reality movement does not appear to be a fad per se but can help business create and define new frontiers in its growth path. Implementing IT consumerization is not a major technical challenge, but it does need effective organizational change management discipline . What should the CXO’s do in such contexts: Beat the status quo. Break any resistance that comes from outsourcing partners who come in the way of faster adoption of consumer technologies inside the enterprise. By definition, consumerization is at odds with the notion of paying such high or fixed costs and, therefore, is perceived to be against outsourcers’ interests. .Embrace such technologies faster and in innovative ways align them to their business growth plans. Consumer technologies are not a taboo to be shunned - these need to be constantly assessed for their potential for innovative leverage in growing business. This could end up forcing a larger role for IT in Business further reinforcing the idea that IT is Business.

Dell To Buy Perot Systems : Too Little Too Late!

2009-09-21T08:04:00.011-07:00

Dell plans to acquire Perot systems. The momentum picks up! Dell expects this deal to position itself as a more formidable player parading both its hardware and services expertise given the fast changing nature of the business and the faster adoption of cloud computing. Dell was as always seen as a laggard when it to comes to services and given that its principal competitors – HP & IBM are now very big in services, Dell had to anyway bite the bullet of acquiring some big service player. Perot’s strengths are mostly in Banking, Financial Services, Healthcare & Government and would to a limited extent help Dell directly with its footprint. The capabilities of Perot system may be more useful to Dell compared to its current customer base. Perot systems customers would have to factor in the new reality of Perot systems ownership changing to Dell, though the existing CEO would continue to run the business. Two things struck me:

A. Dell must have acquired a services company at least two - three years back when it confronted serious growth troubles – At around the same time, HP muscled in to acquire EDS. I predicted that HP may buy EDS in years before ithappened.

B. Perot has limited scale compared to the other global service players and India headquartered service players. Perot’s offshore capability also is generally seen to be quite limited compared to other traditional global players. Valuation looks interesting here: 2.8 billion USD revenue gets a valuation of 3.9USD billion after providing a substantial premium to last quoted trade.

I am not too sure if this move by Dell would perturb IBM or HP given the lack of scale of Perot's operations, while this may give some limited upside to Dell. The corporate integration may get accomplished easily given that both companies are headquartered in Texas. I was actually expecting Dell to make a serious move to get into smartphone market - say by acquiring Palm. It may happen in the future - we will have to wait and see. It would be interesting to see how Oracle (which recently acquired Sun) looks at this development. I am very keen to watch what Cisco does now – it has entered into the more competitive server business (big competition to Dell , IBM, HP) and has more ambitions in unified computing. Cisco cash position and appetite for acquisition is well known and in the recent past there had been rumors of Cisco looking at acquiring Accenture.While am not clear about how this acquisition may decisively benefit Dell, I do believe that Dell’s move may trigger a new momentum in Cisco’s next acquisition move as well!

Update : See Phil's and Vinnie's perspective as well.

The Changing Enterprise Software Momentum

2009-09-17T08:03:00.007-07:00

Changing economic sentiments, and diminished IPO market create the perfect storm for the Big 4 MISO - (Microsoft, IBM, SAP, and Oracle)as they see the medium/small sized vendors are beginning to make M&A moves. See this:

-> Adobe acquires Omniture

-> CA buys NetQoS

-> VMware buying SpringSource

-> PE players scooping Skype

-> Intuit buying startup Mint

- >Avaya buys parts of Nortel

Clearly momentum is slowly beginning to hit the M&A circuit - the backdrop has been that this year has seen very few deals compared to last few years averages. Some trends at work that shape the thinking on why the immediate future could see more and more of continued consolidation. Sramana Mitra assesses the prospects of some players. One may ask - why think of enterprise software when consumer technologies and internet infra/app players are getting more attention. As I wrote here, the consumerization of enterprise technology has the potential to open up new powerful combinations. The possibilities of such fusion of different worlds may open up good chances for disruptive innovation - this provides a platform for such an ideal fertile ground that can lead up to a potential business model innovation – so enterprises need to be well prepared to capitalize on such possibilities. What should the CXO’s do in such contexts: Embrace such technologies faster and in innovative ways align them to their business growth plans. Consumer technologies are not a taboo to be shunned - these need to be constantly assessed for their potential for innovative leverage in growing business.

• Strategic acquisitions target vendors with new product presence/ strong recurring revenue streams in well established areas. The cognoscenti keep whispering that large maintenance revenues as an area for potential targets. Look at Oracle’s reported numbers for this quarter: GAAP new software license revenues were down 17%; software license updates and product support was up 6%.Nurturing a profitable and recurring revenue stream will allow many vendors to share overall development and support costs as they weather the next storm. The hunt is on for vendors who fit this bill as megavendors and private equity actively chase after these assets.

• Weaker companies would see much lowered publicly traded vendor valuations. For companies on the prowl for acquisition with a target class, its never been cheaper and easier to acquire a competitor. Most P/E ratio have become quite attractive and fall below the standard 2X to 3X revenue price target.

• International market expansion. the larger vendors express tremendous interest in acquiring new distribution channels, micro industry verticals, and new geographical coverage. Many in the MISO ecosystem see a lot of turbulence and rumors of M&A run fierce as the partners consolidate to gain scale for regional and global delivery.

• Most privately held vendor exit strategies revolve around acquisition not IPO. Many firms with IPO plans have been told by their boards to refocus on revenue growth and partnerships. The intention - use partnership success to both drive revenue growth and attract acquisition by a larger vendor. Many see acquisition by the Big 4 as the best exit strategy at this point in time.

• Newer delivery models get more and more acceptance : If we analyze the standalone new sales numbers we may get to see this trend clearly. MISO on-premise license revenues may keep dropping/stagnating and in some cases record very moderate growth (in specialized areas). The ERP refresh rates may slowly begin to show a downward trend! SaaS and cloud players need to and i would believe will expand their presence beyond FAS,CRM & HCM spaces - this may also include on premise players getting to offer SaaS solutions in niche areas like procurement, PLM etc. Cloud computing models would over time get to become more popular with ease of use, quick implementation times, pay as you go, no infrastructure model a la google or salesforce and are in fact seeing more faster adoptions.

• Net-Net : Despite the expectations of a slow moving economy, end users should assume that the biggest vendors/ faster moving niche vendors will continue their torrid pace of acquisitions. As these acquisitions factor into long term apps strategies and planning for 2010 purchases, users must assume that truly specialized solutions with significant industry footprint will be acquired. Many customers recommend niche vendors that they work with to the megavendors to acquire them so that their investments are deemed to be safe.

SaaS Evolution & Endless Cycle Of Innovation

2009-09-15T08:34:00.005-07:00

Ever wonder what the current state of SaaS adoption is and what does the future hold? Most of the answers come out in a report from Saugatuck. In its report very aptly titled, "Journey of endless cycle of innovation", it notes that SaaS is now an agent of change inside enterprises and could reach a state of taking on little less than 25% of new IT workload inside enterprises by 2012. It additionally points out that the nature of SaaS is changing user business, and user business is changing the nature of SaaS. True indeed. As we see today, enterprises are tired of over-provisioning by 150% only for equipment to sit idle and burn power/paying for bells and whistles in software and eating money in the process.

Saugatuck sees SaaS developing and being adopted in Waves, from stand-alone applications through integrative business systems, to game-changing transformative business workflow capabilities, through to ever-more-sophisticated Cloud Computing capabilities. Development, deployment, and adoption vary by size of firm, by regional and vertical markets, and by firms’ IT strategies. The SaaS markets are expected to go through at least three waves. Wave 1 took place from approximately 2000 to 2006. Stand alones characterized Wave 1 adoption – the focus was on reducing TCO and rapid deployment using standard web technologies here .

We are currently enjoying the breeze of the next series of Wave – Wave 2 expected to rule the roost till 2011 where we see mainstream adoption of on-demand applications and mostly coalescing as business services. Today we are seeing the evolution of SaaS integration platforms Viz SIPs. These provide for various set of SaaS point applications to interoperate. This enables in some cases to make the dream of fostering the much desired vertical and horizontal solutions & ecosystems.

How does a SaaS ecosystem look like ? Streams of related SaaS applications co-exist to deliver to the needs of a horizontal or vertical industry market and most importantly delivered as a business platform on-demand. Covering business, data , collaboration services and the like.

For business transactions are most dear to their heart as a first principle and here the adoption rates and evolution curve both travel fast. Not only that, even the quality of solutions are also improving-from plain focus on configuration, integration challenges, the veneer is also improving –usability and workflow mechanisms, service based extensions etc. Net result : Some sort of integrated industry solutions catering to small, medium and large enterprises are beginning to get deployed. The appeal is widening to cover a large spectrum of business. This would lead to fulfilling rising business needs thus more and more integration would happen at the data, process levels covering both on-premise and on-demand applications across the business spectrum.

SaaS Wave 3 is envisioned to start in 2010 and completely form by 2014 primarily characterized by ubiquitous adoption of business service delivery available on-demand. Adoption of SaaS centric enterprise applications enabling business transformations that include cloud collaboration platforms characterize this wave of SaaS evolution. The outreach would cover SME to large enterprise business encompassing industry solutions to core enterprise solutions provided as services. This phase would also provide for integration with other on-premise applications at the data, process and application levels. By YE 2014, however, SaaS (and Cloud Computing) will become integral to infrastructure, business systems, operations and development within all aspects of user firms, with variations in status and roles based on region and business culture.

As part of this evolution, one could actually see more opportunity in defining, creating new platforms and service like vertical/niches going beyond the currently available horizontal solutions, factoring the high degree of complexity therein.

Opportunites For New Billion Dollar Software Companies

2009-03-11T02:04:00.002-07:00

MR Rangaswami opens up a refreshing discussion on software’s billion dollar question, The article - highly recommended for reading points to possibilities of new billion dollars emerging (while some are skeptical of such large software companies coming out in the near future). I, for one firmly believe that possibilities of new billion dollar software companies are very bright. Lets examine the why and how of such a scenario. The business dependence on digitized processes are getting more and more pronounced. The warp and the weft of business processes are firmly centered around technology . With increasing complexity of enterprise applications, we see that the dilemma of business in supporting existing tech investments which keep increasing on the one hand and the pressure to gain more yields from such investments to make the business more competitive. This challenge is in many ways pushing the business to look for and invest in more and more innovative technology centric solutions. With large software vendors respond slowly to the changing realities or have their own delivery program schedules for providing such solutions, many best-of-breed vendors would be able to move in and begin to provide relief. This demand will provide the fodder for the growth and sustenance of many more billion dollar software companies albeit with varying means of delivery.

The enterprise2.0 technologies are providing huge opportunities for enhancing business competitiveness and the bottoms up participation centric approach of technology and tools of the enterprise 2.0 era enables a new trajectory and momentum for organizations to leverage technology in very many innovative ways. Surveys find that technology buyers are highly socially active, and software vendors are matching their appetite by being in the forefront of selling social media centric solutions. Today in the consumer driven technology age, technology buyers inside enterprises encompassing both the business and IT users are highly switched onto the social media and use/tend to use many of these tools in their business. The key here is to help create enterprises go after and attain tangible and sustainable value. Lets build this further and see one or two instances where this could create a huge market opportunity for software vendors.The enterprise 2.0 technologies provide firms with the mechanisms to create value by inviting many stakeholders to interact real time and enhance the value creation process with its openness and timeliness. There are examples of social networks that help business manage the entire product development processes and an interactive one enables it to be enriching and more valuable.

There are many bright spots where opportunities for new software that can pay back enterprises in very short time exist. For example in the cusp of collaboration technology and supply chain software we see the advent of new innovations like demand signal management. Here we see that enterprises replace relying on internal data such as order and shipment records with analyzing weekly and even daily point-of-sale data from retailers so they can better see what's selling where. Sustained efforts to exploit the growing importance of complex interactions could well generate durable competitive advantages and this can be done only by a new set of enabling software – and these are all big ticket opportunities. In all these leading edge opportunities, unarguably, small vendors and upstarts tend to move faster and therein lays the growth opportunities for software vendors to create billion dollar enterprises. The contours of such emerging software companies are clearly there to be seen.

GreenCards, GreenBacks, Startups & Bailout

2009-02-22T13:46:00.005-08:00

Thomas Friedman finds the US to be still bursting with innovators looking for capital. He points out that companies like Intel, were started in recessions, when necessity makes innovators even more inventive and risk-takers even more daring. He advocates more government targeted investments in startups. Friedman emphasises investment in the future (startups), not sustaining past failures through bailouts). Startups created with a focus and in time can become huge success reckons Mr. Friedman. In an earlier column, Mr.Friedman pointed out how more immigration could provide a booster to the US economy. I have to agree with Friedman when he points out that money at the hands of those capable of focussed efforts towards innovating would fetch better results and create more jobs. In this fast changing internet centric world, there a multitude of fresh opportunities ready to be tapped by a new class of entrepreneurs. Therein lies the opportunity to ideate, start ventures, give birth to new solutions/products, create jobs and generate wealth. In general, I find that of late, some forward looking emerging nations are able to make their investments in a more focused and productive way. Fred Wilson feels that government need not help the VC’s –they are already flooded with capital. A recent Goldman Sachs report notes that VC investments were down 8% in 2008 to $28 billion, with investments in Tech down 16% to $11 billion. Tech again attracted the most VC money at 39% of the total in 2008. To be fair to the VC community, maximum investments is going towards the cleantech space but as Friedman points out tax credit concerns almost crashed the cleantech industry last quarter. I like Don Dodge’s view that VC’s need to invest more in services and Sramana’s pioneering view that angels should also be allowed to create pools of tax-free capital for investing in start-ups–especially in unknown, unproven entrepreneurs who often don’t have access to venture capital and that it is not so different from a tax-free account set aside for a child’s education.

The Real Leaders!

2009-02-19T13:39:00.001-08:00

Close on the heels of Barry Diller’s Lay Off The Layoffs talk, comes a brilliant note form Mark Hurd. Faced with a deep slowdown and disappointing growth numbers, he highlights the challenges for HP and his plan of action.
From a productivity standpoint, you’re supposed to reduce headcount on par with declining revenue. If you believe the environment isn’t going to improve, you should take a bigger cut to get in front of the problems. Confronted with the challenge of 20% revenue down, he argues that a company wide level restructuring /retrenchment is not the solution as he believes that he does not see a structural problem of that magnitude(to reduce 20% workforce). In his words, he sees HP as fundamentally sound, and when the economy picks up, he wants HP to be strong, and to take share and to outgrow the market. Proposed action : Further variablize our cost structure by reducing base pay and some benefits across HP. CEO base pay will be reduced by 20 percent. The base pay of Executive Council members will be reduced by 15 percent. The base pay of other executives will be reduced by 10 percent. The base pay of all other exempt employees will be reduced by 5 percent. For non-exempt employees, base pay will be reduced by two-and-a-half percent. Additional efficiencies, including changes to the US 401(K) plan and the share ownership plan, will also be implemented. and all of these actions would be subject to compliance with local laws and regulations.
In an age when the corporate chieftains believe in laying off as a safe and acceptable option, it requires real courage and determination to hold on to your people on changed terms , motivate them to contribute more for a fast recovery and eventual growth. Looks simple but 90% plus organizations do not think that way – they act without class and no doubt – Losers!

Evolution Of A New Digital Newspaper Industry

2009-02-09T05:49:00.000-08:00

Courtesy of Techmeme,I saw this nice piece by Mathew Ingram on the Times move to make their digitial presence as a platform, extensible via API’s. Basically the NYT team has accumulated quite a few blocks/articles over the last 28 years — all of them tagged and labeled. This means programmers can now easily access 2.8 million news articles starting from 1981 and more importantly thanks to the great effort of the Times team - sort them based on 28 different tags, keywords and fields. The richness of the data and its organization looks mind-boggling – Derek Gottfrid claims that the Times articles can be searched using the 35 searchable fields Content is data at its core –properly parsed and efficiently indexed content can be made available in various formats and can be put to a variety of use. The newspaper industry is reeling under call kinds of pressures. There are calls for bailout of the industry! The Times initiative is indeed a pioneering one. At a time when there is a widely held view about the demise of the newspaper industry, pioneers show how by embracing instead of resisting the technology change, they can retain their pioneer status. Clearly the newspaper industry’s problems are similar in nature to that of the music industry’s challenges before Apple i-Pod days. The thought of buying a complete album looks outdated in this i-Pod age where once can safely buy good songs at much reduced prices. This forced the music industry in large measures to transform their business model around iPod/MySpace. The print media needs to look at similar moves and the NYT move is commendable – for its vision and execution. Clearly this will pave the way for the evolution of a new future for digital newspaper industry.

The Free & The Paid

2009-02-03T16:06:00.000-08:00

Chris Anderson has an excellent post on the ‘Economics of giving it away‘ in the Wall Street Journal. Very insightful article indeed.

He is bang on when he writes, “The last decade has seen the extension of this “two-sided market” [one side pays while the other gets for free] model far beyond media, and today it is the revenue engine for all of the biggest Web companies, from Facebook and MySpace to Google itself” In other cases, the same digital economics have spurred entirely new business models, such as "Freemium," a free version supported by a paid premium version. From a consumer perspective, it should only help. After all, when you have no money, $0.00 is a very good price. Expect the shift toward open source software (which is free) and Web-based productivity tools such as Google Docs (also free) to accelerate. These same consumers are saving their money and playing free online games, listening to free music on Pandora, canceling basic cable and watching free video on Hulu, and killing their landlines in favor of Skype. It's a consumer's paradise: The Web has become the biggest store in history and everything is 100% off. The psychological and economic case for it remains as good as ever -- the marginal cost of anything digital falls by 50% every year, making pricing a race to the bottom, and "Free" has as much power over the consumer psyche as ever. But it does mean that Free is not enough. It also has to be matched with Paid.

What chris says in indeed true in the digital world but the service world is almost following suit – therein lies the secret of an emerging all encompassing business model.

Brewing Controversy : The Valley & The Europe

2008-12-13T13:33:00.005-08:00

Michael Arrington, joins issue with Loic about American vs. European entrepreneurs, the controversy picked up at the Le Web conference. Loic responds back . As someone who has gone around the world many times and has met with hundreds of entrepreneurs, here are my thoughts.
Michael points out :

"...the joy of life is great, but all these two hour lunches over a bottle or two of great wine and general unwillingness to do whatever it takes to compete and win is the reason why all the big public Internet companies are U.S. based. And those European startups that do manage to break through cultural and tax hurdles and find success are quickly gobbled up by those U.S. companies. Skype (acquired by eBay ) and MySQL (acquired by Sun ) are recent examples.
The crowd jeered but the stark reality of it all is unavoidable. And the fact that the panelists on stage, all either American or living in America, suggested that you can somehow succeed with a startup while maintaining a healthy work-life balance is unfortunate. Too many people choose to be entrepreneurs as a lifestyle, without realizing that it takes everything you have and more to win. And if you aren’t in it to win, why not just take that nice job down the street that gives you five weeks of vacation."

In my view, Mike is spot on. Entrepreneurship is going to be more global and demanding and the fact remains that in the internet age, the valley has consistently provided/sustained large scale enterprises. I can’t even recall a single european startup name that looks significant enough to challenge the valley players in the internet age. The valley is the poster child for tech entrepreneurs around the world and that is clearly not going to change!
Loic is somewhat right when he says that iIt is the McDonalds fast culture against the highest rare quality possible talking about Guy Savoy but he completely misses the difference when he writes:

"There is a huge difference between being lazy and taking time to know each other. It is one of the main cultural differences I feel everyday as I moved to Silicon Valley: every minute, every coffee, every phone call must have a point. When you call someone in Silicon Valley for anything you will likely get "why are you calling me?" ...
...Don't even think about starting a conversation in Silicon Valley by "how was your week-end" or "how are your kids", they all want you to go straight to the point and no time to lose. I never thought inviting someone I really liked to know better to dinner would get me an email from his assistant "why would you like to invite him to dinner?". I do not think europeans are lazy taking the time to know each other and build deep long term friendships that are not limited to business and I do not think this hurts Europe in any way. On the contrary."

One will have to differ with you Loic! Mike is mostly right if not spot on!

Update : Zoho's Sridhar Vembu writes on worklife in Japan - a very neat description indeed. I have seen identical things happening in Japan for several years.