Cloud Computing – It Ain’t Over Til It’s Over

October 1, 2008 Appirio

Narinder Singh

Recently, a plethora of attempted clarifications (such as those seen in the Wall Street Journal and Information Week), confusion, and even an angry Larry Ellison rant in CNET News have weighted in on the latest hot topic, “what, exactly, is ‘cloud computing?'” But the increasing volume level says more about the medium of the argument and the participants, than the it does about the topic’s essence. Really, it’s just insider talk among “thought leaders” and tech companies, which likely leaves Main St. CIOs scratching their heads.

Let’s not focus on the semantic question of “what is cloud computing?” Instead, let’s shift to “what your company should do.” The wit and wisdom of Yogi Berra seems appropriate as a guide to help explain the causes of the perfect storm around cloud computing.

“The future ain’t what it used to be”
Just a few years ago, many predicted the tech industry, and particularly business software, would go the way of the auto industry. A few gigantic players would survive, around which supplier ecosystems would develop. However, innovative providers discovered that if they ran all their customers’ systems on a single multi-tenant instance, they could achieve huge advantages – hence the advent of on-demand, Software-as-a-Service (SaaS), and Platform-as-a-Service (PaaS). These providers were able to rapidly develop and innovate for their entire customer bases.

As this market matured, customers discovered that SaaS provided a better functional fit, it was faster to rollout, and it was generally more accepted by end users. Inevitably, if you spend more time on strategy, requirements, business process and adoption, while spending less time on hardware, operating system configuration, software installation and configuration, you end up with projects that better meet business needs.

The future of how businesses used technology was changed forever. Although this is now widely understood, we are still very early in terms of impact on IT and business. This set the stage for the current attention and debate surrounding “cloud computing.”

“If you can’t imitate him, don’t copy him”

Cloud computing confusion is sometimes sown intentionally – because of vendor envy for missing the buzz. Large on-premise companies know they have missed the “news cycle” for something that has the powerful combination of hype and reality on its side. So they try to re-spin existing terms in order to re-assert their leadership, leading to interesting tricks like Larry Ellison, Oracle’s CEO, cleverly deriding the term “cloud computing” as overused, while simultaneously wrapping the Oracle seal around it.

“Our similarities are different”
While on-premise laggards attempts at catch up fuel their interest in the cloud, successful SaaS companies have an equally compelling, but very different rationale for promoting “cloud computing.” They know they have a winning value proposition, but, relatively speaking, a small part of the market dialogue. They fear a repeat of the past – where SAP, Oracle, IBM and Microsoft hijack leadership around an important market trend (see the browser, java, B2B/SOA, open source) that they’ve been living and breathing for years.

So in a classic judo turn, they also promote “cloud computing.” But they turn it into a powerful weapon by using it as the theme that connects business software with mainstream consumer Internet disruptions like Google, Yahoo, Amazon and Facebook. Suddenly, they have a way to further differentiate themselves from their laggard on-premise competitors, with a future tied to the Internet.

Happily, this spin has the added benefit of being true (which is always a plus!). The consumer Internet has conclusively shown the power of collaboration. Now businesses want to be unshackled from the constraints of legacy software that was designed to be physically and emotionally closed.

“You can observe a lot by watching”

With both the laggards and innovators supporting buzz creation around “cloud computing” the race is on. Will clarity or confusion rule the day? Businesses are looking at cloud computing (which for today we’ll assume to be a superset of all SaaS, PaaS, and on-demand solutions) as a way of doing things that had never been done beyond their four (virtual) walls. Unfortunately, too many vendors are simply trying to tie the movement back to their past strengths so that any change is incremental.

Our advice to all organizations and their CIOs is simple:

1. Use the cloud computing hype to discuss broader related changes in your organization. The business press is saying that “business must think differently about IT.” This is a real chance to focus broader discussions around cloud computing into the very real, concrete benefits of SaaS/PaaS/etc.. Appirio launched Business Model Prototyping to jump on this opportunity. We think companies can use SaaS/PaaS and other learning from the consumer Internet to dramatically reshape their businesses.

2. Start with the concrete. The “cloud computing” discussion makes for good blogging, but it’s not directly helping your business or feeding your kids. Real impact comes from translating the trend into action. Do this with projects that prove quick value or clear measurable milestones in a slightly longer journey, and highlight a sharp contrast with the old way of doing things.

3. Force vendors to be specific and timely. We’ll be seeing lots of vendors starting to parade their products and services under the banner of cloud computing. We’ll see more arguments over what cloud computing is, and how to understand it. Customers cut through the hype by forcing vendors to be specific in how they will help, where they will help, and on what timeline. Force discussions around initiatives that have a quick time to benefit and very clear milestones. Protect your company from being a victim of hype with low hopes for success. As Yogi Berra supposedly once said, “If you don’t know where you’re going, chances are you will end up somewhere else.”

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