Monthly Archives: June 2009

Evolve or Perish – Cloud Computing and Enterprise Software

Cloud computing is in its infancy.  Even SaaS is a relative newcomer in the enterprise, even though it has been around for many years and gained popularity with the rise of  In most large enterprises, only a fraction of applications are “rented” and hosted outside the firewall.

What if the following adoption curve holds true, even partly?  What if at some not-to-distant point in the future – perhaps 5, 10 or 15 years – most systems in large enterprises are delivered from the cloud?  If you make software delivered under the old license + maintenance + services on-premise model today, is there a risk that your business is doomed to end up like Siebel Systems (e.g. roadkill)?

Cloud Penetration Curve

The lesson of and RightNow in the SFA/CRM space should be extended to the rest of enterprise software. Let’s take a quick look at some examples.  This is just a starting point, but what y0u must quickly realize is that for every traditional enterprise software category, there are cloud offerings (SaaS or other) attempting to compete.  Over time there may be some applications that just never make it to the cloud – like latency-sensitive algorithmic trading apps on Wall Street – but the list will get smaller and smaller over time.

Traditional vs. Cloud

Many of the traditional providers above have not yet begun to work out how they will compete in the post-premise software world.  The reasons for this may include:

  1. Inertia – many companies listed above are very successful and bring in hundreds of millions or even billions in revenues.  They feel that even if there is a threat, it’s a long time before they start to see it impact their business.
  2. Financial Constraints – if you’re losing money, or have a tough time keeping Wall Street happy, it may be hard to make the investment to produce a credible cloud offering.  Note that this often means re-writing what you have from the ground up — and that can cost millions of dollars if forward compatibility is included in the requirements (it should be).
  3. Fear – largely this is a fear of canibalization of existing sources of revenue and profit.  What happens if we make the switch to the cloud and our revenue or profit drops?  Perhaps the question should be “what happens when this happens?”  It may happen because you do it to yourself, but it will happen when competitors start taking away market share.
  4. No Vision – sometimes the key people in the company just don’t see what’s coming. They are too busy focused on today, or enjoying the fruits of past labors, and they miss the signs.  Smart underlings try to tell them, like they did to Bill Gates when Netscape was changing the world, and the boss still won’t listen (like Gates didn’t for a long time).
  5. Sales Entrenchment – with the revenue model shift from up-front licenses + maintenance model to on-demand subscriptions, many companies may offer less attractive sales compensation models.  Or, more likely, the leaders in the field won’t have comfort that they can continue to make as much money with the new SaaS or cloud products (they may be right), so they fight against them.

The bottom line is that most of the traditional old and profitable enterprise software companies are endanger of losing their grip on their markets.  And many do not yet see it.  It’s not too late, but in a couple of years it may be.

Joyent – Yes Virginia, There Is A Hybrid Cloud #cloudcomputing

I got a chance to spend time with James Duncan and Bryan Bogensberger of Joyent at #e2conf today.  I’ve always been a little bit cloudy on what Joyent actually does.  Their Web site (which is getting a makeover) is not all that clear today.

Let’s take a look at their stack as they described it to me this afternoon.

Joyent Stack

Accelerators – these are roughly equivalent to Amazon’s EC2 instances, though with a lot of compelling differences (if you’re using/considering EC2, you should check out Joyent).

“Cloud Control” – this is not a product per se, but it’s their management interface into their Accelerators.

Smart – this is their Javascript-based platform-as-a-service (PaaS) offering from Joyent’s acquisition of Reasonably Smart (where James and Bryan hail from). The value of Smart to Joyent is as a feature of their stack, and not as a compelling standalone solution. It’s going to be open-sourced so you can run the Smart PaaS offering inside your firewall. I’m a bit dubious on whether or not they will see much adoption, but perhaps it will kick butt.

The Hybrid Cloud

What struck me as totally unique and compelling about Joyent was an aside comment that they have a couple clients today running the Joyent Cloud Control management interface across both internal (IT-controlled) and external (Joyent-controlled) infrastructure. The net effect is that, to the IT user, their own servers and Joyent’s accelerators combine for a seamless and burstable hybrid cloud.

Joyent Hybrid Cloud

Effectively, your servers are “joined” to the cloud. This is my “marketecture” view from my conversation with James and Bryan, and what they end up releasing may look very different. But if what they say is true, they may be one of the first to have actually deployed a hybrid cloud into production. That’s huge – like Santa Claus is Real kind of huge!

IBM’s #CloudComputing Strategy Map #e2conf

The diagram below gives a bit of insight into where IBM is today and where they are heading. I posted this last week, but removed the diagram at IBM’s Request. Now I’m reposting it after seeing Sean Poulay from IBM presented the chart at the Enterprise 2.0 Conference in Boston.

IBM Smart Business Framework

IBM Infringes on CloudBzz with Beekeeper YouTube Video ;-) #cloudcomputing

In a stunning infringement, IBM has released a video about the story of Seamus McManus, the Al Gore of Cloud Computing (e.g. he invented it).  For some reason, IBM chose to have Seamus be a beekeeper, and they show bees in the video.  This is an outrage!

CloudBzz has retained the legal services of Dewey, Cheatem and Howe to issue a takedown notice, penned in a faux-RIAA style on faux-RIAA letterhead.  Further, we have called on IBM to stop comparing the work of SM to the creation of Cloud Computing.

In the immortal words of VP candidate Sen. Lloyd Bentsen, and I paraphrase,

“I know Cloud Computing.  Cloud Computing is a friend of mine.  And you, Seamus Mc-IBManus, are no father of Cloud Computing.”

Doth I protestetheth to mucheth? Don’t I pwn the bee?

You decideth!

Tomorrow’s IBM “Smart Business” #CloudComputing Strategy – Today

The NY Times broke IBM’s embargo this morning by publishing their story on IBM’s new cloud computing initiatives.  I’ve posted the full release here on CloudBzz.

The diagram below gives a bit of insight into where IBM is today and where they are heading.

{Diagram removed at IBM’s Request – not sure why they sent it out but didn’t want it shown}

IBM is also updating their collateral with a bit more detail.  Here is a fact sheet for their Smart Business initiative:

Fact sheet: IBM Smart Business

Smart Business is IBM’s commonly branded set of cloud computing offerings for business. This set of offerings gives clients three choices to deliver and consume cloud services to drive efficiency, productivity and control.

Smart Business Services – cloud services delivered:

1: Private cloud services, behind your firewall, built by IBM.

2: Standardized services on the IBM cloud

Smart Business Systems – purpose-built infrastructure

3. IBM CloudBurst: Pre-integrated hardware, software and service offerings

On June 16, 2009 IBM will introduce all three choices for two specific workloads: development and test and virtualized desktops. There will be both public and private delivery options for both.

IBM Smart Business Test Cloud Services

IBM is unveiling a secure private environment for clients to test cloud applications before sending them to production in their enterprises. The Smart Business Test Cloud includes a pre-integrated set of services, from planning through management, for a test environment implementation. Delivered through hardened services methods for the design and deployment of integrated cloud solutions, the offering can leverage existing investments in hardware, software, storage, and virtualization management, or utilize the newly announced IBM Cloudburst as the infrastructure solution.

Based on initial IBM projections, Smart Business Test Cloud can potentially save clients as much as 50 to 75 percent on capital and licensing expenses, and as much as 30 to 50 percent on operating and labor costs through automated provisioning and configuration of virtualized test resources. Additionally, these services can improve quality and testing quality by reducing defects from faulty configurations and poor modeling by as much as 15 to 30 percent.

The Smart Business Test Cloud can include strategy consulting, design, implementation, operation and management from IBM Global Technology Services.

IBM Smart Business Test Cloud Services also support IBM CloudBurst – with this capability, IBM can help clients rapidly set up a cloud platform with CloudBurst, then provide full customization and integration for a comprehensive, on-premise test environment in private cloud environment. The new services also gives clients the option of leverage their existing systems and storage for a complete cloud solution.

IBM Smart Business Test Cloud can help clients:

· Reduce costs by over 20% — operating cost reductions through automation

· Improve provisioning time from days to minutes – faster cycle of innovation

· Improve quality by automating configuration and better modeling of the production environment.

· Reduce risks associated with human error

· Reduce or avoid capital expenses by driving higher utilization and efficiency of existing assets

IBM Smart Business will also include a public cloud version of the Test Cloud, IBM Smart Business Development & Test on the IBM Cloud.

IBM Smart Business Desktop Cloud

IBM is delivering new private cloud services to allow end-users greater levels of self-service, while ensuring they maintain the highest levels of quality and security in accessing the critical information they need remotely, from any device, anywhere.

IBM Smart Business Desktop Cloud gives end users with internet enabled PCs and other devices the ability to access applications and data through a centrally managed computing environment. The private cloud offering helps clients quickly scale their IT infrastructures to address business demands, while significantly reducing the cost and complexity associated with managing the traditional “close to the box” user environment.

The IBM Smart Business Desktop Cloud helps clients provide anytime, anywhere access for more efficient desktop management, improved security and compliance, enhanced user productivity, and lower end-user IT support costs, including power and cooling for green initiatives.

IBM Smart Business Desktop Cloud is available in two implementation strategies: Project Based Services, for organizations that are interested in client virtualization and need help with strategy, planning, design, and implementation of a virtual desktop solution; and, Managed Services, for organizations that are interested in client virtualization and would like IBM to not only design and implement a solution, but also manage the virtual desktop operations.

IBM partners with a number of virtualization software vendors, including Citrix, Desktone, Quest, VMWare and Wyse to provide the most optimal solution for customers, including virtual clients, server-based computing and OS and applications streaming.

Today’s cloud-based solutions are complemented by IBM’s on-premise virtual desktop offering, announced last year, which includes a combination of Verde’s Virtual Bridges, Ubuntu Linux and IBM’s Open Collaboration Client Solution Software (OCCS), based on IBM Lotus Symphony, IBM Lotus Notes, and Lotus applications.

IBM Smart Business will also include a subscription public cloud version of the Desktop Cloud, IBM Smart Business Desktop on the IBM Cloud.

For more information about IBM’s cloud computing products and services, please visit

For information on how cloud computing is helping usher in a smarter planet, please visit,

Tap In Systems Manages the Cloud

One of the core predicates to true enteprise cloud computing is manageability. Enterprise IT organizations don’t like surprises, especially the kind that start with an executive calling them about an application failure before they know about it.  That’s why services like Tap In Systems are going to be critical to enterprise cloud adoption.

Tap In Systems is still in private beta at this point, and according to CEO Peter Loh they are making some changes to the system before expanding the beta in the near future.  They are actively seeking beta customers as well, particularly from enterprise organizations. Their beta today has only a few customers, and most are what Loh termed “Web 2.0 companies.”  He did reference an unnamed enterprise customer in the beta running a “core application” with 200 EC2 instances.

Tap In’s core value proposition starts with a simple question – “How can you solve a problem when you can’t determine where it exists?”  Standard application management and monitoring solutions today cannot handle the dynamic IP and non-sensical naming of public cloud infrastructures like EC2.  Tap In not only sees the performance of the system, but also knows the meta data of the instances – including configuration types, memory, and more.

They are also integrating with Amazon’s recently announced CloudWatch API and will be providing a lot of value beyond the core CloudWatch data. Analytics, visualization, and long-term archiving of CloudWatch data are some of the enhancements they are planning.

Of course, Amazon is not their only target cloud infrastructure.  They also have deals with (or plans for this) with 3tera, GoGrid and RackSpace.  Tap In is hoping to have the cloud providers OEM or resell their management tools to users.

Pricing is a reasonable $0.49 per hour of their server, and a single server can monitor 200 instances.  This is a fairly inexpensive price for a system that provides peace of mind for large-scale cloud usage.

Tap In Systems is still very early, with only 5 employees and bootstrap / friends & family funding.  It would seem like this could be a good venture-funding opportunity.

Here are some screen shots:

Event Console

Event List Report

CloudWatch Graph

Trend Graph

“Private Cloud? But that’s just the data center!”

This is a close to actual quote of John Landry, former CTO of Lotus (and a lot of other stuff) at last week’s MassTLC unConference on the Future of Software and the Internet.  This comment came in one of the breakouts on #CloudComputing led by Judith Hurwitz.  John was objecting to the use of the term “Private Cloud” to describe  cloud-like operations inside the corporate firewall.

In many respects, Landry is right.  It is the data center.  But it does change how the data center is managed and accessed by the developers and business.  It’s easiest by looking at a comparison of old vs. new.

Provisioning:  getting servers for your application for dev, test and production

  • Old model:  make a request to IT, wait from a day to several months  and maybe you get your servers (or maybe not)
  • Cloud model:  use a console or API and have the servers you need in minutes

Scaling:  growing or shrinking your capacity based on actual demand

  • Old model: for scaling up, see provisioning above.  For scaling down – don’t bother.  Tell them you expect the demand to increase and “hoard” the servers you have for as long as possible.  Eventually IT may reclaim them and put them somewhere else. If you then need to scale up, see provisioning above.  Note that this model applies in both dedicated and virtualized environments in most enterprises.
  • New model:  for scaling up – assuming the private cloud has the capacity – it should happen automatically (auto-scaling).  For scaling down – same answer.  If Monday’s are always busy, but the rest of the week is dead, you can set your capacity to scale up Sunday night and down Tuesday morning.  Scale is “elastic.”

There are more aspects to explore here, and hybrid clouds which utilize both private and public infrastructures are another interesting issue.  The bottom line is that Landry is right, but he is also wrong.  It’s the data center, but it’s not just the data center as it’s operated today.  It’s a new operations model for the data center – and it does change things.

BusinessWeek Piece on Cloud Computing Misses The Point

Steve Hamm (@stevehamm31) of BusinessWeek got a big article on #cloudcomputing into last week’s issue.  It rightly points out that cloud computing is the big thing and will keep us busy for the next 10 years.  Unfortunately, a lot of the article is misleading or missing key context.

His first example cited is Avon’s use of a smartphone- and PC-accessible system for connecting Avon’s 150,000 “sales leaders” with their reps (sales leaders are the consultants who recruit and run other consultants/reps and get a cut of the “upline” commission).  Nothing in the article explains how this is a “cloud computing” solution.  Remote/mobile accessible applications have been around almost as long as the Internet.  The article doesn’t say, but I suspect that the system serving up all this info is a traditionally developed and deployed one sitting inside the Avon firewall – making it a NOT CLOUD application.  But I don’t know for sure because the article doesn’t say.

Hamm then goes on to parrot the ridiculous Gartner numbers I’ve discussed previously.

His next example is

Blue Cross of Northeastern Pennsylvania, which has started using a cloud computing system to let its 300,000 members find medical histories and claims information with their mobile phones.

Again, another mobile app but no qualification on the cloud.  Is it running in an IaaS framework from Amazon or Rackspace?  Is it built on a PaaS environment like or QuickBase?  Are these SaaS applications hosted in an elastically scalable environment?  At this point, we don’t know.

Then we get treated to a total non-sequitor in the form of a note on the opportunities for chipmakers and handset manufacturers.

The shortcomings spell opportunity for plenty of companies in tech. Chipmakers such as Qualcomm (QCOM) and Intel (INTL) are creating products for portables that pack more capability on a single slice of silicon while reducing power consumption, making it easier to access information in the cloud from anywhere. Mobile-phone makers including Nokia (NOK) and Research in Motion (RIMM) are racing to come out with products aimed at business users that have all the ease-of-use of the iPhone (AAPL).

What the heck does this have to do with Cloud Computing?  I’ll tell you – not much.

Okay, so here’s my favorite totally random observation in Hamm’s article.

One of the most promising aspects of cloud computing is that it enables the creation of so-called virtual personal assistants. These software confections know people’s interests and needs and go off and do useful things for them on the Internet, like suggesting a restaurant for a client meeting or offering reminders of where you have taken the client before. With GPS in smartphones, computing systems know where we are. And with artificial intelligence software, computers can be taught what we expect of them and how to anticipate our needs.

The Internet enables fun apps that can do things for you.  What’s that have to do with what industry people generally consider to be cloud computing (IaaS, PaaS and SaaS)?  Again, very little.  You can deliver this functionality in a traditional in-house data center running on dedicated hardware and it ain’t the cloud.  This is AI, not cloud computing.  Or AI + mobile + location services… but it’s not necessarily running in a cloud environment.

Cloud Computing in Financial Services


Earlier today I received a call from a friend in the IT outsourcing business with deep contacts on Wall Street.  We had a great discussion regarding financial services and cloud computing.  Neither of us had any first-hand evidence of any wide-scale cloud activity in the financial markets, banking or insurance.

That led us to a discussion of how the evolution will play out – with development environments, highly burstable high-performance computing tasks and departmental applications leading the way.  It will be many years before production-level applications from large financial institutions move out of the corporate data center.  At least that’s what it seems.

As with most other market segments, the cloud adoption curve will be uneven in financial services.  Small asset managers, hedge funds and vendors will be the first adopters for mission-critical applications in the cloud.  Decades from now, it’s likely that more the 50% of core applications at larger firms will still be run in-house.  The economics of the cloud may make sense for the bulk of applications that run inside a large firm – but there will always be critical applications that IT will want to control from the wire up.

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