“Cloud is more hyped than the Dot Com boom!”
It’s a quote I’ve heard recently, and perhaps you too believe this might just be the case. Of course it’s only in IT that it counts right? Your average man in the street doesn’t care where they access their information….
“Dot Com-esque” though?
As with many of these technological shifts, people are looking in the wrong place. Back in the early 2000’s WiFi was touted as the next best thing. There was a similar flurry of vendors developing roadmaps and hiring professionals. Companies like Cisco and Compaq developed architectures that showed CIO’s and CFO’s impressive ROI and productivity gains. Internal IT staff became equally vocal about security risks and threats to the business.
Today of course, it seems the entire discussion is moot. My kids open their laptops and expect to be online. They are. Even when we’re driving across the veldt in South Africa. I haven’t worked for a company, or at a client office devoid of WiFi for over 6 years. Why? Well because every laptop and mobile device comes with WiFi as standard.
As laptops were refreshed, and people started connecting to their information at home, via open networks in an adjacent building, or at a local coffee shop, the productivity gains became compelling enough to convince organisations to implement WiFi. Compelling enough for hotels, airports, and coffee-shops to use it to drive additional revenue.
Didn’t we see similar trends with the adoption of mobile phones? Initially the domain of executives, then consumers picked them up, suddenly enterprises were managing fleets of mobile phones.
What about Internet access, Social networking trends, and more recently Smartphones?
The lessons here:
“Business people are consumers too.”
So what does this foretell about the Cloud in the Enterprise? I see two trends driving enterprises to the cloud:
The first is mainstream mobility. As applications walk off the desktop and out the front door of the organisation, there is less need for that expensive infrastructure and back-end server room. Also, as people get access to new services not available in the office, they will adopt them. An interesting retail example here is Amazon vs Borders – The Amazon smartphone app allows you to scan a barcode and purchase an item directly from Amazon. This means that the Amazon “shop front” is in every one of their competitors stores!! eBay has similar functionality in their apps.
That’s genius! But the point is, if your customers can purchase goods and services from anywhere, even your competitor stores, you’d better have the systems in place to cater for that. Make no mistake, mobility enables this practice, but cloud computing is essential to sustain it competitively.
Is the same true for enterprise value chains? If your staff could access critical systems away from the office, would more work get done? If they were no longer tied to a desk, would it be more cost effective to pay for sw by usage, and bypass the headache of access control?
Questions to ask:
- Describe your value chain?
- Where is there friction, or opportunities to give people access to information closer to the work?
- How does licencing cost, infrastructure lead times, or location of access exacerbate this?
- Is your IT department a cost or profit centre? A business enabler or blocker?
The second is software vendor investment.
Speak to anyone in the know, and they’ll define Cloud Computing as three essential tiers: Infrastructure as a Service (IaaS); Platform as a Service (PaaS); and Software as a Service (SaaS). Right now there’s a lot of promise to start the journey to the cloud by shifting current infrastructure to IaaS providers; porting current internally developed applications to PaaS providers; and replacing some purchased applications entirely with SaaS.
But make no mistake, ultimately this is a SaaS play. As ISV’s come to grips with the annuities, and low cost of sale of a subscription model, they will divert more development into niche enterprise systems. Already you can start virtually any business by providing your staff with a laptop and a phone. Then simply rent email, CRM, accounting, call centre, manufacturing and delivery services. If, say, you’re a local News provider, and you could rent access to an enterprise scale, tier-1, multichannel editorial system and take on Fairfax or News Ltd, wouldn’t you? More to the point, if you’re one of the 2 companies in the world that develop such systems, wouldn’t you want to increase your market size, not to mention ongoing revenues with such a service?
An example of this is MYOB committing $90m to cloud computing R&D. When they turn on full functionality, every accounting firm, small business, and CFO will seriously consider this service. Quite apart from the reduced cost, is the removal of all of the current accounting software headaches – tax table and software version upgrades, closing accounts for month end runs, and the inherent business risk of systems failure.
Do you think Business Units will be prepared to wait for 6 weeks, and pay for servers, switches, and storage, when they need a marketing campaign, or to provide a new online customer service? Especially when they can simply rent the service they need for the time they need it?
Questions to ask:
- How much does licencing, staff, and infrastructure cost per application?
- Are there Cloud Services already available that provide the same functionality?
- If there was an earthquake that took out your office, how long before your core systems were online again?
- Is Data Sovereignty and Privacy really an unresolvable issue? (Like WiFi security was mooted to be)
- What is any migration cost likely to be?
- Are your SW vendors seriously considering Cloud Computing solutions, and if so, what is their roadmap?
Bigger hype than the DotCom Boom
If you’re in IT, what does your career path look like? Have you really considered how cloud is going to change everything?