Public vs. Private Cloud Computing: A Decade Long Look

 

Rob Ederle in his article in Datamation.com entitled 2010: The Year and Decade of the Cloud has an interesting theory on the circuitous nature of the computing populace and the nature of the industries that feed into this arena.  Enderle surmises that we have come, or will be coming, full circle in our approach to computing in this second decade of the 21st century. He notes that we started this journey with huge centralized computing and dumb terminals, and now with the surge in growth of Smartphones and Smartbooks, we may be headed back to that original configuration, but this time in “The Cloud”. Enderle’s advice for companies to survive is to change their approach of how they view the market. Larger vendors ensconced in the large systems approach may have a leg-up on their competitors who were more user-focused; however, these larger vendors must accommodate these user’s demands or risk alienating them. Similarly, the more user-centric vendors must adopt the large centralized systems approach or be left behind. Enderle foresees the most likely way these vendors, large systems vendors and more user-centric vendors, will survive and evolve is through partnerships. He predicts Google as a likely survivor if this decade of cloud computing pans out the way he envisions it.

Ederle gives us a quick definition of what he calls Services-Based Computing, otherwise known as “The Cloud”. He takes a retro look back and states that is what IBM started. I’m not sure if I buy a direct correlation to what was the IBM leasing/services model and what the new cloud computing will become, but I at least understand where he is going with this perspective.

Ederle’s article makes an interesting observation and distinguishes between “Public” cloud computing and “Private” cloud computing. It is easy to guess, and Ederle’s article is quite clear, that the Public brand of cloud computing would be lower cost while the Private brand will be more concerned with security, but at a higher cost.  As a neophyte when it comes to cloud computing (well I guess most of us are neophytes at this point in time), I am not sure I can make the distinction between Private cloud computing and a Managed Hosting arrangement, or is this a distinction without a difference? Further in his article there is a discussion how the enterprise vendor (i.e. the large centralized systems vendor) must meld its strategic efficiencies with the more user-centric vendors who have the knack for responding to the needs of the line managers who have become the new decision makers when it comes to technology spending.

Ederle’s solution, or at least his prediction, is that companies will need to form partnerships with each partner having the right mix of Public and Private components. He concludes his article by stating that the companies that exit the new decade of cloud computing will not resemble anything like they were when they entered this new decade.

 

Licensee's Bill of Rights by Forrester's R. Ray Wang

 

 

So I’m sitting at my desk buried in work one day last week. As an aside, it appears that my writings on SaaS have sparked some interest and so I have been putting together some SaaS agreements for a couple of new clients. My email alert lets me know that an email has just arrived. It is an email from R. Ray Wang, Vice President of Forrester Research Inc. I have been reading a lot of Wang’s writings and research and have been quite impressed to say the least. I have even Blogged on some of his writings. He had a few kind words to say about my Blog and then he attached the latest update to the Enterprise Software Licensee’s Bill of Rights. I promised him that I would read this latest research work and mentioned in my email reply that it would probably be a treasure trove of vital and current information. Well I did read it and my comment hit that nail on the head. As a practitioner for over 20 years, with the last 10 years concentrated in this crazy world we call software licensing, this is a must read. As a Licensee, whether prospective or a veteran of ERP negotiations, perhaps a higher standard is in order, such as mandatory reading material. Here are some highlights from this latest work as detailed by R. Ray Wang:

  1. Surveyed 71 vendors and 101 end users.
  2. Built best practices from personal experience of 1000 contract strategy interactions.
  3. Resulted in the inclusion of 11 new rights that support new deployment options, cost savings, client best practices, and vendor lock in avoidance.
  4. Suggested seven simple steps to successfully negotiating enterprise software contract.

Of course reproduction of this research work is strictly prohibited. Regardless of the prohibition, space constraints in this Blog prevent me from adequately commenting on all the salient points. I do not think Wang or Forrester would mind if I whetted your appetite the best way I know how – with Wang’s own words in the Executive Summary.

For Business Process & Applications Professionals

Executive Summary 

July 7, 2009

 

An Enterprise Software Licensee’s Bill Of Rights, V2

 

Forrester Redefines 47 Basic Rights That Licensees Should Expect From Vendors

 

This is the 10th document in the “Building A Long-Term Apps Strategy” series.

 

 

by R “Ray” Wang

with Paul D. Hamerman, Andrew Magarie, and Ralph Vitti

 

 

“Of all the assets that an enterprise acquires, enterprise software brings with it the most unusual, onerous, and restrictive set of constraints. In most cases, licensees may not resell, reuse, or share their license. Licensees often encounter numerous grievances across the software ownership life cycle from selection to implementation, utilization, maintenance, and retirement. Poor economic conditions have kept vendors from raising prices for now; however, rapid vendor consolidation has eliminated choice and customer leverage in the market. Upon economic recovery, enterprises can expect price increases in software categories where only a handful of solution providers compete. Fortunately, advances in new deployment options (e.g., software-as-a-service, platform-as-a-service, cloud computing, managed services, and virtualization) may slowly shift the pendulum in favor of the customer. Forrester’s updates to its 2006 Enterprise Software Licensee Bill Of Rights (LBoR) reflect these new best practices from more than 1,000 interactions. CIOs, business process and apps professionals, enterprise architects, and procurement experts should immediately review and incorporate these best practices into their vendor relationships, contract strategies, and packaged apps strategies.”

 

 

For information on hard-copy or electronic reprints, contact Client Support.

 

R. Ray Wang’s Blog is A Software Insider’s Point of View.

  

Oracle Purchase of Sun: "A Game Changer"

 

In late April 2009 Oracle announced its $7.4 Billion purchase of Sun Microsystems. As you can imagine, this deal will have a significant impact on the IT industry, but just how much of an impact remains to be seen. Invariably acquisitions of this size and nature will be examined for any possible anti-trust issues such as anti-competitive influences on the market-place. This process by regulators will be done here and abroad and the end-result may be the necessity to sell-off some assets of the newly combined business. If you are looking for an excellent in-depth analysis of this deal I highly recommend Bruce Guptill’s article in SandHill.com The Impact of Oracle – Sun. In it Guptill sees a totally changed IT Industry with Oracle emerging as a “portfolio” company with the following abilities and offerings:

·         Hardware

·         OS

·         Middleware

·         Applications

·         Development tools

·         Databases

·         Production environments for Hosting

·         SaaS

·         On-premise subscription services; and

·         Consulting solutions (vertical and horizontal).

 

Although Sun is primarily a hardware vendor, Guptill sees this as a play for Sun’s software capability. He quotes Oracle’s CEO, Larry Ellison, “Sun's Java programming language and Solaris operating system were the main attractions for Oracle”; and specifically as regards Java, “the single most important software asset we have ever acquired.”  Guptill believes this asset alone places Oracle at the epicenter of the industry. Sun has also played a key role in open source by opening Java and Solaris to developers and this should give Oracle the ability to influence such software development especially in the following specific vertical markets: financial services, government, academia, and high-performance computing. Lest we forget the hardware business, Sun’s server and storage revenue have been estimated at an annual amount of $7 billion and $9 billion respectively. All of the Sun components, from software to hardware, should provide Oracle the foundation to build its SaaS and Cloud Computing services.

Can Oracle successfully integrate the services and hardware businesses that come with the purchase of Sun? Guptill tells us to be on the lookout for Oracle Management to sell of some of these hardware lines, or alternatively as mentioned above, regulators may force Oracle to divest itself of some of these assets.

Guptill concludes his article with a brief description of the impact such a purchase has on several stakeholders and competitors. For example:

For Sun: This probably means the demise of Sun CEO Jonathan Schwartz who had pushed for the IBM acquisition of Sun rather than Oracle. Sun Chairman, Scott McNealy, although a friend of Larry Ellison, will probably go as well since a ship needs only one captain.

For MySQL: It should fit nicely into the Oracle family as a web server database engine.

For IBM: This was a lost opportunity at more profits and the ability to rein in Oracle competition. Also Sun’s capabilities would have enhanced IBM’s Cloud Computing efforts, but now this advantage goes to Oracle.

For SAP: Guptill sees the advantage going to SAP in the interim while Oracle’s sales teams learn how to integrate Sun products into the Oracle family. I am not so sure I agree. In light of SAP’s recent sales history any advantage may be illusory. See SandHill.com Software News Summary article SAP Struggles. The title tells it all.

For Hardware Vendors: For those that have partnered with Oracle in the past the loss could be significant.

For Users: Future investments in Sun hardware may be put on hold as the install base waits for reassurances on the direction of the server and storage lines of business.

Never a dull moment.

 

SAP Partners with IBM and INTEL

Alex Goldman reports for InternetNews.com on two interesting collaborations announced recently by SAP in his article SAP Taps IBM, Intel to Cut Datacenter, SMB Costs. Here’s a brief synopsis:

Ability to create an in-house cloud:

The two giants have been collaborating since 1999 on this particular project. Although the product is not yet generally available, SAP and IBM demonstrated it at the CeBIT trade show. The idea is simply to spread SAP’s utilization across the servers in an enterprise which lessens underutilization of servers while also allowing for spikes in usage. This should be attractive to companies trying to get the most out of their current infrastructure. The technology demonstrated is based on the RESERVOIR cloud computing project. The goal is to make it easier for datacenters to be able to adjust their services to meet demand at different times. 

Xeon-based systems for SMB’s:

Another SAP announced partnership is with Intel. SAP’s Business One customers (i.e. SMB’s) are to be the beneficiaries this time. SAP plans to develop applications for use on Intel's 64-bit Xeon architecture. The end result is a faster deployment for SMB’s using Intel Xeon based systems.

The Green Effect:

The current “Green” craze is not lost in the two announcements above. The parties involved are proud to state that both moves reinforce the output of lower carbon emissions in customers' datacenters.

 

What Customers Want from their Software Vendors


Maryann Jones Thompson interviews Sybase CEO John Chen in an Op-Ed in SandHill.com. Thompson artfully takes the reader through the strategy and growth of Sybase and allows Chen to discuss his stewardship of the company from 1998 to the present.  What I found of particular interest was Chen’s response when asked why Sybase was slow to embrace SaaS, Open Source, and other new technologies.  Chen responded as follows:


“In the 1980s during the transition from mainframes to UNIX, everyone forecasted the death of mainframes. Then NT arrived and the end of UNIX was proclaimed. Now people are talking about open source or SaaS in the same way. But the reality is that every new technology and every new method will have its audience – but it won’t wipe out the previous ones.”


To me this answer is right on and makes good business sense.  Chen’s approach seems to fit quite nicely with another SandHill.com Op-Ed piece written by M.R. Rangaswami entitled Old Rules for a New Era.  It appears that Rangaswami has a similar view vis-à-vis Chen’s recognition that new methods come online and attain their own audience.  I think implicit in Chen’s comment is what Rangaswami discusses regarding the fact that today’s IT Buyers struggle with the ever-changing new models and technologies such as SaaS, Cloud, and SOA.  Yes, the future does look bright as these new products come to market and affect the technology strategies of today’s global enterprises.  However, the proliferation does have its drawbacks. Just how can the software vendor get its products noticed?  In essence the question becomes ‘Just what is it that the IT Buyer wants’.  The answer to this question is alluded to in the subtitle to Rangaswami’s article, “Software vendor success will not be determined by a specific technology or model but by meeting customer expectations”.  Here are those expectations as developed by M.R. Rangaswami:


  • Reliable – Products will be expected to work out-of-the-box and continue to do so as they interoperate with other products. Heavy integration work will not be expected or tolerated.

  • Secure – Software must be secure beyond today’s acceptable levels. Vendors must provide guarantees and incentives to convince buyers of this heightened security.

  • Fast – Solutions have to be able to be deployed quickly and offer a speedy time-to-value. If it can’t be on-demand, then it needs to be close.

  • Simple – The hallmark of next-generation software will be its ability to be intuitive for its users – as intuitive as an online application aimed at consumers. No training should be required. It must also be simple to purchase and deploy.

  • Innovative - Buyers will expect vendors to continue to innovate their solutions. They will value new approaches to solve the same problems as well as attempts to solve entirely new business problems.