Compute Costs are cut in half; every 18 months, Fiber costs are dropping, storage costs are dropping, but why is IT still expensive?
500 Billion dollars are wasted a year in IT. How? Around half of all IT projects fail, and over half of commercial software features are not used.
Jim Whitehurst, The CEO of RedHat presented an interesting vision during the Interop NYC Keynote. First off he did not spend time discussing RedHat products, but focused on his macro view of the IT Industry. It went something like this:
IT Vendor Feature Lists + Buggy Software = Vendor/Customer Tension and Failed Projects
He has a unique viewpoint as he presided over Delta airlines during their bankruptcy process. He was able to squeeze dollars out of catering contracts and every area of the company, except IT. IT was locked into multi-year contracts they didn’t need and was dealing with buggy software and failed projects.
He stated that commercial software quality (defects per 1,000 lines of code) has not improved over the last 30 years. However Open Source quality is much higher than commercial quality and continues to improve. He categorized Open Source on the level with the Kaizen revolution in manufacturing.
His view of the future includes Open Source (of course) but also Public Cloud Computing. RedHat is one of the building blocks behind many clouds (Salesforce.com for one) but they are also adding functionality to make it easier for the end customer to leverage the public cloud. They are adding a layer that will abstract cloud differences and make it easier to pull in elements of various public clouds with a common Cloud API.
His prediction is that today an Enterprise developer spends 2/3 of their time “Trying to figure out how to do something” and not delivering business value. He estimates that a common Cloud API will make them 3x more productive.
“If you are paying for it when it is turned off, it isn’t a cloud. I can put a goat in my front lawn and it can eat the grass, but I can’t call it a lawnmower” - A public cloud evangelist reflecting on the private cloud.
The Private Cloud seems to be gaining traction within the halls of Enterprise IT and was a hot topic at Interop NYC 2010. But do Private Clouds exist? What are their shortcomings, and what does this mean for the Public Cloud?
I live in the Public Cloud world and spend my days with Force.com/Salesforce, Amazon Web Services and Google. I tend to agree with the their viewpoint that private clouds are not really clouds at all. However I was struck with how popular the idea of private clouds were to those at the Interop NYC 2010 conference. This seems to validate the opinion that companies are asking IT “What is our cloud strategy?” and they are flocking to the private cloud as it seems like a safer and more importantly “comfortable” option for IT to pursue. This demand is also driven by vendors who see this as a good opportunity to sell more hardware and management software to IT. This trend seems to ring true with the global SI’s as Dan Elron from Accenture stated that the private cloud makes up around 80% of Accenture’s cloud revenue and is “growing like gangbusters”.
We all know that IT budgets are tight and are asked to do more with less and generally have a large backlog (usually years) of projects that are waiting in the wings. I can’t imagine that many IT departments are going to have the budget or time to fully embrace a private cloud initiative. If only 20-30% of IT has embraced virtualization (which has been around for ~10 years), how will they be able to turn that into a private cloud? I’m sure a few are diving in head first, but many more are probably trying private clouds in small ways or adding a level of self service over any virtualization they may have.
I heard a statistic during one session where the speaker shared that without virtualization you achieve about 10% utilization on your hardware. If you add virtualization it goes up to around 30-35%, and if you add a private cloud on top of that it goes to ~38% utilization. Why so low? The real issue behind these numbers is that almost all companies have some degree of spiky demand. Either there is more demand during working hours to handle the 9-5 end users, or more demand overnight for batch processing. Either way, virtualized, private cloud or bare metal, the hardware needs to be sized for that demand plus a certain amount of overage. That leaves troughs. Times where that capacity is not used or needed no matter how virtualized that hardware is configured.
The challenge with virtualization and private cloud isn’t just the technical aspects, it really centers around process and change management. Many companies use slow hardware provisioning and IT backlog as a mechanism to kill projects or ideas that should never see the light of day. Most IT departments are built around these delays and moving server provisioning to minutes from months can have unintended consequences. Sys Admin’s suddenly are trying to manage 5 to 10x the number of virtual servers if developers have easy access to provisioning their own servers. I’ve seen companies put processes and artificial delays in place to handle these types of issues and it lessens the advantages that can be achieved.
I’ve lived in the public cloud world for the last six years and certainly understand the benefits and shortcomings of the various leaders in this space. However I recently had an opportunity to speak on a panel at a Datacenter Dynamics conference around the topic of “The future of the data center” to provide a “cloud viewpoint”. I’ve been away from that world for awhile and I was struck how hard it really is to create and run a data center. You need to be an architectural expert (where to put cooling, raised floor, pillars, generators) and electrical engineer (how to power it, add redundancy, cooling, cabling) and a system administrator (server setup, configuration, management, backup). While my fellow panelists debated whether or not the mechanicals (fans, cooling, etc) needed to be on a UPS or not before temps hit critical mass during a power failure, I just thought about how much I love not having to worry about any of that with the cloud. At the end of the day, why do you want to have your own data center and worry about all of those types of details?
While talking to some of the Interop panelists who spoke during the private cloud summit another trend emerged. It turns our that several of them don’t actually have a private cloud, but “they are working on it”. No one was able to articulate what it really takes to build one beyond using some of the newer offerings from VMWare or other vendors plus a lot of custom development. There is no clear answer today and it is made worse by the “Cloudwashing” going on by all vendors who are quick to state the cloud benefits of their particular solution.
So what does all this mean for the future of the private cloud? My prediction is that it’s future is bright for the short term. It “feels safe” for IT, is being pushed by vendors such as VMWare and IBM and is validated by global SI’s who see it as a great vehicle for long term consulting contracts. Longer term I think everyone will realize that it has limited benefits and but it will be a stepping stone toward the public cloud. As Allistair Croll put it during his closing remarks, the future is the Hybrid Cloud.
Amazon’s Web Services have been getting better and better, but typically by incremental amounts. Up until now, it’s been a slow trickle of improvements to a solid suite of offerings. Cheap storage, cheap computing power, cheap access to PCI compliance, etc.
This new offering however, may truly be a game-changer for their web services division. Amazon’s Virtual Private Cloud lets companies create their own isolated set of EC2 instances and connect them to their own existing IT infrastructure through a VPN connection.
What does all that mumbo-jumbo mean to the business management people? Simple. Now you can augment your IT’s infrastructure without huge capital expenditures. EC2 already runs Windows Server 2008, SQL Server, Oracle Database 11g, IBM DB2, IBM Websphere and many more.
Amazon’s immensely powerful infrastructure is available as a service at prices that will make you wonder if you should bother with your own hardware anymore.
By now we should recognize the signs of a major shift caused by a new, “disruptive” technology. After all, we have seen it happen so many times before. The only difference is that today the shifts are quick and dramatic, catching off guard anybody that dares to stand flatfooted. So what is causing the tremors this time? Cloud computing! And it is already hitting with a force that is off the scale, especially for organizations that are not looking for it or prefer to live in the “legacy” world of on-premises business computing strategy and applications.
Perhaps “Video Killed The Radio Star” is not the appropriate analogy to communicate a dramatic shift in computing technology, but for some reason that tune keeps playing in my head whenever I think about this evolution in computing. MTV was a dramatic shift that stopped careers for those unwilling to accept it. It opened the door for a new breed of performers that were willing to adapt. Yet it was only the pinnacle of the iceberg for all the technology changes that followed – from CDs replacing cassettes and vinyl, to iTunes and single song downloads.
Cutting edge performers had been putting out music videos since the Beatles’ Yellow Submarine, not to mention the entire Monkeys TV show (which drove their albums to the top of the charts!). But it was the new technology of cable television and MTV that was the game changer. Cloud computing is the cable television of IT world. IT directors and departments will either have to grasp and ride the movement of computing to web service providers such as saleforce.com, Amazon Web Services and Google Apps, or find themselves and their employers on the clearance shelf of the business world because they have become irrelevant in the market, just like 8-track tapes.
The newspaper industry has experienced this shift as a result of technology change that helps to illustrate this point. The static newspaper has been driven down by the dynamic web page and email alerts for news. You don’t have to own, staff, and maintain huge printing plants running around the clock in order to sell and deliver the news today. Corporate size is not the advantage in distributing the news as it once had been thanks to the internet. Wireless and handheld access to the Internet has further made the hard copy delivery model a competitive disadvantage. The result has been a proliferation of news and information sites, and a long line of newspaper bankruptcies. The down economy has served to accelerate this phenomenon. Think about this analogy as it relates to cloud computing. You can read other Model Metrics blogs from our technologists that explain in detail how we are leveraging salesforce.com, Amazon Web Services (the business unit) and Google Apps to create an elastic, powerful, and extremely cost effective new world order of computing.
Google “Amazon Web Services” if you want another perspective. My thoughts here are to sound the alarm. There is a change coming and you need to look up now to “the cloud” to take advantage of this opportunity to achieve competitive advantage, and in some cases survival, before it is too late.
Video killed the radio star…Cloud computing is going to kill traditional IT. Those that look to the cloud will be the new winners.
First blog since Dreamforce… not good! The marketing guys are all over me. “You have to blog consistently.” Of course they’re right, but who has the time! Inauguration was yesterday, pretty amazing times. So now that Obama is in and the recession will be coming to an end, banks will become stabilized, the capital markets will bounce back, and general goodness will proliferate throughout the world, it’s time to blog and get ready for a great 2009. Maybe he’ll need a quarter or two…
Anyway, things are moving fast. Salesforce’s year end is approaching at the end of January, so things are crazy. A million deals, trying to help the SFDC guys to pull them in. Since Dreamforce, we have seen custom development opportunities on the Force.com platform explode. Some of our customers and prospects are simply looking to add a bit of functionality such as in-line dashboards with the slick Adobe Flex look. Others are extending application functionality to expand the footprint of Salesforce in dramatic ways within their organization. We have seen huge demand for platform applications of all sorts, especially portals, call center applications, and now Salesforce Sites for building websites of top of Salesforce.
Many of these applications leverage Amazon’s new web services as well as Google technologies. The mashing up of all these cloud technologies has definitely arrived and we as a company are really starting to be known as the cloud guys and not just the salesforce guys. Of all the cloud players outside of salesforce, Amazon is definitely the most interesting (no offense to Google, Adobe, Facebook, etc.). Salesforce is the place to start for entry into the cloud, but once in, it’s time to leverage all these other technologies and bring the things they do great back into Salesforce and to the huge benefit of users, customers, or partners.
So what’s cool about Amazon? Roughly 30% of their revenue now comes from outside their core business of selling their own books. We get asked all the time about what they’re doing and how it can be leveraged. Here’s my quick two cents:
EC2 – Host your data center on Amazon, leverage it for databases and mail servers, use it as a disaster recovery site, and leverage vast amounts of computing power. This isn’t the most exciting offering to talk about, but you can have access to Amazon’s amazing infrastructure for pennies.
S3 – This is what most people think about when they think about Amazon Web Services. This is simply storing documents with Amazon, again, for pennies. You can easily pull images of documents into Salesforce or wherever else, so the user doesn’t even know where it’s located, they just know it’s easy to access and you know that it’s cheap.
DevPay and Fulfillment Services – Now we’re getting into some more exciting areas. DevPay enables you to leverage Amazon’s shopping cart and billing system for launching a store. You can even sell subscription plans, not just a fee per order. Fulfillment Services is really interesting. This may not be a true cloud app, but you can actually send Amazon your inventory and they’ll store it in their distribution centers, which of course are the best that money can buy. They handle packing and shipping when someone buys from you, whether from your website or from there’s. You can focus on sales and marketing, they focus on the boring stuff that they do better than anyone else. Very cool!
Mechanical Turk – This is definitely my favorite. Amazon calls it artificial artificial intelligence. It’s basically a workforce in the cloud. Some tasks computers just aren’t that great at. So you can send a task up through Amazon to the Turkers and for pennies they’ll complete the task. These are people located all around the world, who, for 2 cents or 5 cents or 1 dollar, depending on the task, will do something you ask of them. It could be looking at an image and transcribing it into data. When Steve Fossett’s plane went down, they leveraged the Turkers to look at satellite maps and help in their search, scanning for the plane. Companies also leverage it to clean data, analyze catalogs and competitive coupons, etc.
Anyway, hopefully it won’t be another two months and change before I blog again! Definitely check out the Amazon stuff and let me know what you think. On a sidenote, some of our team was out in Seattle meeting with the Amazon crew. Amazingly nice and wickedly smart people with huge visions. Thanks again to all those guys. To circle back to Obama and the future, leveraging the cloud is also the right thing to do from a green standpoint. Amazon and salesforce already have the servers and the data centers. No need to build the infrastructure yourself and incur all the electricity costs along with everything associated.
We just closed down our booths at Dreamforce and are all heading back to our respective cities. Based on credible sources Dreamforce attendance was just a few people shy of the expected 10,000. That is a very interesting number considering some of the economic news as of late and companies that have travel bans, spending freezes, etc… This really speaks to the power of SaaS (software-as-a-service) and PaaS (platform-as-a-service) and the value companies see in the cloud even in tough economic times.
This Dreamforce was very different than in years past for more reasons than just the growth in attendance. The entire first day’s keynote was purely around the platform and force.com enhancements. Depending on what tracks you attended you almost wouldn’t remember that salesforce.com has a CRM product. With the advances in APEX, Visualforce and now Sites they have put together a very viable platform that can be used in a wide variety of situations.
We have received a lot of great feedback for our new products that we unveiled at Dreamforce, or shortly before so. Everyone loves the idea of Search2GO (demo) and searching for data within salesforce.com from their iPhone for any edition of salesforce.com (other than Group edition). It was exciting to talk to someone from Japan by our mobile booth who is a big fan of Expense2GO and has been using it since it launched with the AppStore back in July. It really proves the international support of the iPhone and force.com when you see users from all over the world storing data in their local language and currency.
We were fortunate to have early access to force.com Sites as well as the Amazon toolkits and the timing worked out perfectly as we could use them as the foundation for our new Lasso2GO product suite. We are very impressed with what you can do by leveraging best-of-breed services from force.com and Amazon Web Services to build cloud platforms that were not possible before these platforms existed. It was exciting to see Charlie Bell (VP of Infrastructure for Amazon.com) on stage with Marc Benioff and Adam Gross and have them showing off our upcoming CardLasso application. I’m looking forward to applying this same technology stack to our customer base as we help them build new applications we haven’t even imagined.
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