Our Finance Director said I should take a look at a new blog post by Andrew McAfee, in which he explores the topic of IT-as-Electricity and the dangerous messaging therein propagated by cloud computing providers claiming to make “IT” as pervasive and ubiquitous as electricity. I’m really glad he did, as it is an interesting topic.
McAfee’s basic argument is that it is dangerous and naïve to think of IT as electricity because it breeds a perception that IT ‘just happens’, much like the experience we have when we plug our toaster into the wall and pop in a slice of bread. He is right on point. The danger of this thinking, he ascribes, is that commodities or utilities don’t warrant a second thought from business people and that thinking can hurt any organization. If I can add to Andrew’s analysis, I would argue that IT doesn’t ‘just happen’ because IT isn’t about cool web applications that can be procured and deployed with a few mouse clicks. It’s a great vision and a very seductive idea, but it simply isn’t practical. This is bad news perhaps for the one-trick pony SaaS or PaaS folks out there, but it is a dose of reality that I think is long overdue.
IT, in the corporate sense, is about the automation and innovation that happens AFTER a business idea or even an entire venture is conceived (it might be immediately after, but it is still logically sequential). From my perspective, IT is about making a good business better, a small business facilitating something bigger, a new idea take form, or improving a struggling one. IT is about improving business process, the zenith being the point at which you cross over from simply automating to improve to actually innovating (McAfee’s Harvard Business article on this subject is worth the read). In my opinion, this is a process that involves every other C-Level exec as much as it involves the CIO. And if what we are now telling the world is that IT is just like electricity and you can ‘set it and forget it’, it is a very slippery slope and a dangerous one for a business of any size.
This may come as a bit of surprise coming from us since we we’ve been on cloud computing-techno-economic-paradigm-shift bus since it left the station many miles ago. So here is the connection to the relevance of the Electricity analogy: It’s not about IT-as-Electricity, it’s about Computing-as-Electricity.
There is a huge difference in this message. Computing is not IT. ‘Computing’ is one aspect of the whole, and this is what I think is missing in the world of cloud computing. When you talk about electricity the demarcation point is always the plug on your wall. What happens after that is the creative genius that makes environments, companies or even a household what they are – a unique place marked by the creativeness, inventiveness an ingenuity of the people and processes that exist in it. It could be argued that your toaster and the bread you put in it is to electricity what IT is to computing.
Computing is, and should be, the only commodity for consideration. Computing should be the thing we no longer think about in our decision set as outlined by McAfee. As a CEO, I shouldn’t care (notwithstanding political or other peripheral influences) what brand of hardware produces my computing power, where it ultimately came from, whether it was produced by a blade or a rack mounted unit, what switch sent the packet, what external storage array holds the information or whether that storage array uses iSCSI or FC drives. What I care about is that what I use supports my ability to automate my business processes and innovate in areas of core competency. And most importantly, I care that when I need to rely on it, it doesn’t let me down. Just like when I get home at night I expect the lights to come on when I hit the switch so that I can see what’s going on and then focus on my primary objective. I don’t care, nor should I, about the wiring that delivered the circuit from the breaker to my house or from the power plant to my street. Nor do I care whether that current was produced by a Hydro, Nuclear or Diesel generation plant. I’m sure it’s a complex process involving a lot of really interesting things, but when I get home at night my primary objective is seeing my wife and daughter, much the same way the CEO only wants to think about his/her business operation when they get into the board room or fires up some line of business software application.
Here are some questions to think about: If computing is to follow the commodity path of electricity, achieving a similar level of ubiquity and pervasiveness, must it then have a single unit of measurement that transcends politics, production, language and proprietary invention? What if there were “kinds of electricity”? How pervasive would it be then? What if electricity was sold by the flavor or by some cooked up combination of things? How would we know what we were buying or that what we were buying could be compared universally?
Feel free to leave us your comments!
My watered down translation of Long Tail theory is simply the notion that the aggregate sum of stuff buyers take in small, infrequent quantities will invariably outstrip the aggregate sum of the most popular counterparts.
Research evidence is beginning to corroborate what we saw some three years ago: There is a Long Tail in Cloud Computing. Consider some well accepted research points from IDC and others of late:
- The Cloud Computing market will hit USD $42 Billion by 2012
- Of that, more than 50% will comprise business process applications (the stuff we all use daily to run companies big and small)
So, I can infer then that some $20 Billion will comprise the 2012 feed bag from which all the little cloud computing piggies will line up at the trough to consume. Not a bad market, from 10,000 feet away. But here’s the thing. The cloud computing market is already becoming pretty full. I mean rush hour commuter train full and it will get even more crowded in the coming few years. $20 Billion doesn’t last long when you have a litany of players stepping up to the plate, and with the recent moves made by Oracle, Microsoft, EDS and other big time shops, the groovy young open source outfits that are all the rage now could very well be fighting over table scraps by 2012 (um, what’s your exit strategy?). Table scraps in a $20 Billion market? Imagine that. Welcome to the hysteria of cloud computing.
So where is the refuge for agile boots trappers like 6fusion and the fraternity of cloud junkies in 2009?
There is another little research stat that is important, but that you won’t find on any other cloud computing blog: IDC estimates that the net spending on IT services within the SMB space to eclipse USD $160 Billion by 2012.
Wait a sec. Hold the phone. How can SMB’s spend that much money on IT services, yet the business apps the cloud industry is going to cuts it own throat to grab will only comprise some $20B? That’s a pretty big gap, doncha think?
Herein lies the Long Tail of cloud computing.
Whilst the present day cloud computing vendors flock to gobble up the web based applications that made Web 2.0 more popular than a Rolling Stones reunion tour, the bigger market is all those business applications that automate processes and make the average SMB take flight. “Rubbish!” says the average pimple-faced freshman-drop-out-turned-internet-entrepreneur. The world is going to run on web services! Legacy apps are passé and unsexy. They are a dying breed, ready for the IT graveyard.
Maybe. But the research says not for the foreseeable future.
Here is what I don’t think cloud computing companies ‘get’ today: Technology is made to fit business; business is not made to fit technology. This point was nicely driven home recently by VMware’s Dan Chu. In his blog post, Dan delivered a nice little kidney shot to the Google-ites. Here is my favorite line: “Customers are looking to match their IT platform to their business needs, not the inverse. The Google approach calls for a least common denominator set of non integrated cloud services that everyone squeezes into. Customers want the flexibility and breadth of solutions that exist today along with the efficiency of the cloud.” I couldn’t agree more, Dano. And I’ll take that one step further. Real businesses are a made up of a collection of processes and procedures, which technology typically augments to make things faster or easier. So, unless what you are peddling can plug into Reality 1.0, I wouldn’t want to the guy whose paycheck depends on widespread adoption.
Of course, Chu sounds like a kool-aid-drinking evangelist too. He just belongs to a different cult. But if you look to the school of product management, a field that suffers from a little less myopia, you will get the same type of message. In his concise post-mortem on The Demise of Cassatt, Saeed Khan illustrates a critical axiom that I think a lot of cloud service providers either ignore or don’t understand: “Nobody, and I mean nobody, gets up in the morning and thinks, “I’m willing to change everything about how my business operates because a vendor has a really great product that could save me money.”" In my opinion, that’s why there is such a discrepancy between what the SMB market is going to spend and how much the cloud computing market for business applications will be worth, now and in the future.
It stands to reason then that the Long Tail of cloud computing could very well be the operation of critical business applications that are not sexy Web 2.0 apps or otherwise qualify as ‘way cool’. Is it possible the purveyors of cloud computing are missing untapped potential of harvesting less of more?
It sounds like the simplest of questions: So, what does it cost? Yet, for an immature industry like cloud computing, it’s a doozy.
For 5 years my cohorts and I poured our energy into the singular quest of trying to make complex computing available and affordable to the SMB and mid market customer. Unlike a lot of purveyors of the cloud, we got our start as a blood sweat and tears IT service shop, which means we only have time for stuff customers are willing and able to buy! (Incidentally, I truly believe there is a huge source of untapped innovation sitting idle in what the IT Service market calls “The Channel”, but I’ll save that for another day).
Like most innovators our early inventiveness was driven by a lot of trial and error exercises. We found no shortage of willing lab rats within our base of existing customers, but each time we thought we cracked the code we came back to the drawing board with something inevitably missing from the puzzle. Being very, very early adopters of virtualization technologies, it was easy for us to grasp and produce cloud computing deployment. From the get go we succeeded in putting customer applications into our cloud. That part was easy. What was not so easy was what invariable came next in the selling process: Pricing.
On the surface, it sounds like a simple problem. Heck, if you already have customers wanting your solution, just ‘givem’ a price’ already! Right?
Herein lies the difference between a company that has build a cloud computing platform and a company that has actually tried to get a customer (and I real, tried and true SMB) to pay for it. There is a big difference. Cloud computing is something of a Pandora’s Box, you see. By unleashing elastic computing with the promise (at least in our case) to a customer that they could run WHATEVER they wanted, you effectively let the lightning out of the bottle. It is uncontrollable, yet the possibilities are fascinatingly endless.
We quickly (well, 2 years of trial and error quick) realized that what this pony needed was a saddle.
The power of cloud computing is the stuff of techno-economic paradigms, for sure. But it needs an effective pricing model and here’s the kicker: It has to be simple. I mean no offence here to our counterparts that operate public clouds, but pricing is WAY too complex. I know I’m not the smartest guy on the planet, but here is what I also know: The buying public is not made up of MIT laureates, nor do they really care how many all-nighters you pulled to develop your system.
Let me give you some insight into 6fusion R&D culture and mentality when it comes to pricing, which I think a lot of other companies that take themselves and their technology way too serious should consider:
1) If you need a whiteboard to explain pricing, you will only sell cloud computing to yourself.
2) If the customer doesn’t know the cost of cloud computing before giving the P.O, chances are they won’t.
3) If, when you talk about your pricing model, you ever say “that depends…”, don’t call the Marketing Dept just yet.
I don’t want to sound overly dramatic, but we believe the pace at which cloud computing moves from ’technological revolution’ to ‘technology paradigm’ hinges on the subject of universal costing. Put another way, the point at which cloud computing is truly ready for mainstream business is the point at which the customer says “So, what does it cost?” and the cloud computing purveyor says, “I’m so glad you asked!”
Dallas, TX May 3, 2009 — 6fusion, a pioneer in the development of pure-play utility computing systems and software for the IT Channel, announced today that Managing Director and company founder, John Cowan, will present at the 2009 Ingram Micro Seismic Partner Conference, which takes place May 4th through May 6th in Dallas, TX.
Cowan’s keynote presentation, “Get Plugged Into Your Future,” will explore how Managed Service Providers (MSPs) and IT solution providers can use utility computing to build a profitable and innovative IT services business in the cloud, and how this technology can deliver more robust solutions at a lower cost to their customers. In addition, Cowan will discuss the impact and evolution of cloud computing and how utility computing will fundamentally change the way IT services are delivered and consumed in the business world.
“Utility computing is defining the future of IT services and changing how businesses and consumers market, sell, support and use IT computing power,” says Cowan. “The cloud computing innovations we are seeing today represent the tip of the iceberg for delivering an easier and more cost effective solution. The innovation behind utility computing will take the cloud to a new level of sophistication and scalability, bringing a more simplified, secure and affordable means of deploying new technologies and applications to market.”
Cowan’s presentation will also outline the key success factors for using utility computing, as well as operational best practices for MSPs to consider as more IT solutions migrate off premise and into the cloud.
The Ingram Micro 2009 Seismic Partner Conference, “Make Your Mark,” brings together more than 300 MSPs, leaders and influencers within the IT industry to engage in candid business discussions, share best practices and explore high-impact IT service trends. As a presenter, 6fusion will lend its expertise on how IT channel partners can successfully navigate and deploy the hundreds of cloud-based computing solutions emerging, such as Infrastructure-as-a-Service (IaaS), Platform-as-a-Service (PaaS), and Software-as-a-Service (SaaS) – all of which promise compelling value propositions and business benefits.
Launched in the US market in Jan. 2009, 6fusion’s technology federates independent data centers and makes the collective available compute power available for use by traditional IT service providers, MSPs and ISV’s and their customers. Using 6fusion’s software, called UC6, channel partners can track computing consumption in real time and perform historical reporting functions. In addition, UC6 agents can be deployed to physical or virtual servers located on premise with no overhead to instantly determine the projected cloud computing costs.
In support of its channel partners’ success, 6fusion has also developed training and support exclusively for the IT channel. These resources work to eliminate the risk and uncertainty of utility computing and enable a viable new business alternative for MSPs to adopt and use in today’s challenging marketplace.
“We have made the cost of complex computing as easy to predict and understand as an everyday electricity bill, which means we are uniquely positioned to enable channel partners to help their clients realize the true benefits of cloud computing,” concludes Cowan. “We’re thrilled to share our insight with Ingram Micro’s Seismic Partners and look forward to a great event.”