Many Clouds Ahead: Strangely, Future Seems Sunny

This has been quite a week (or two) for cloud computing.  If I were a "good" blogger, I'd put this into three or four different posts, but then you might lose the point I'm going to try to make.  So you'll have to read this like an article, not a blog post.

Eyes Up

The first thing to keep in mind is that we have some semantic confusion, as is usual in this stage of a new market, around just what is a Cloud.  We are now pretty sure that what we used to call Grids and what we now call Clouds are the same thing.  But we also have things called "Platforms" which seem to be very much like a kind of cloud (and are sometimes called clouds) and then there is SaaS itself which looks very much like a Cloud with some application software (and some SaaS vendors describe their offering just that way).  I'd say we can agree that a Cloud is managed computing power, often with applications, accessed across the Internet.  And I'll agree that a company can have its own Cloud, if it wants one.

IBM has finally enunciated a vision for its cloud computing which makes sense for IBM and its customers.   It offers a very high-end version of cloud computing (virtually unlimited amounts of power, up to and including z (mainframe) systems, backed by its Tivoli system management.  These clouds can be used as part of a large shared infrastructure, where the customer has access to a large pool of computing resources to handle peak activity but doesn't need to pay for all of this infrastructure all of the time.  Some customers (governments in China and Vietnam, for example), are buying and implementing their own Blue Clouds which they will use to support particular projects such as university research or computing for high-tech start-ups.  And, of course, IBM can create a Blue Cloud for an individual Very Large Enterprise, managed by IBM outside the firewall or by IBM or the customer inside the firewall.  The choices are broad.

IBM actually offers even more choices which may be less obvious.  IBM provides a platform to ISVs who want to offer SaaS applications. In that, they are very much like other platform vendors like SalesForce.com, eBay, Google, or Amazon.  A major difference here is whether the platform owner is also an application provider (like SalesForce.com), whose ISVs are related to his application offering or whether the platform provider is simply offering managed computing, perhaps with some technical assistance and/or some marketing oomph.  (IBM offers both.) 

It was reported last week that Microsoft is moving to the Cloud.  In this case, Microsoft means it is going to offer at least one of its applications, Exchange, as a hosted application (SaaS) from its own cloud.  Microsoft intends to continue on the road of “SW plus Service,” meaning that you to use a PC on your desk with MS Office to make use of the Internet-based services that Microsoft also provides.  What seems to be moving to Microsoft Clouds is not personal productivity apps (a la Google or Yahoo’s Zimbra), but shared services (Mail, Collaboration, Customer Relationship Management).  Microsoft has been quick to note that this is a big initiative and that in five years they would expect half their customers to use Exchange as a service.  This is not just something for smaller customers, either.  Microsoft already has some large enterprise like Coke, with 75,000 seats.

Microsoft also has other on-line (perhaps Cloud) services such as their Live services and their new Live Mesh service for synchronizing devices of every kind.  They are also testing a consumer version of office which will combine a basic version of desktop MS Office with an array of on-line services.

Last Friday, we spoke with Workday, a SaaS ERP company we’ve been tracking since its start.  It’s stirred up quite a bit of attention, boldly claiming last April that its feature set would be at parity with SAP by next fall.  So far, they are on schedule with their product plans, with hefty HR offerings, including Payroll and Expenses, and a substantial portion of their Financial offerings.  Look at their latest Workday 4.0 Offering at their web site.  More interesting is the fact that although they didn’t expect to move beyond the mid-market into the enterprise until more of their product was completed, they already have a number of large enterprises and more in their pipeline.

Recently I attended a Digital Transformation Forum at Penn State as a guest of its host, John Jordan.  Clouds and SaaS were definitely subjects of discussion.  There was a lot of lively commentary on whether SaaS was for big companies and whether it could provide the customization and security they needed (SAP was an attendee).   I believe companies like Workday and SalesForce.com are going to prove that SaaS is about what the application does (the solution) and not the size of the customer.  But I think we shall see – and soon.

Think of it this way. 

·         You can access a cloud as pure computing power, a place to load an application that needs lots of computing or requires cyclical peaks

·         You can find a cloud that provides a platform with APIs to support an ecosystem of ISVs who provide software that you find appealing

·         You can choose a cloud whose platform includes an application (SalesForce.com) that attracts other ISVs to surround it

·         You can simply find a SaaS vendor whose application is appealing – you don’t care about the cloud behind it, just the application

·         You can build your own cloud, managed by a vendor or your own IT staff for some large-scale purpose

And no doubt, someone, somewhere, is dreaming up some other things to do with clouds

I sense several likely outcomes:

·         A messy period with many clouds, many of them not interoperable because they’re not build to the same standards

·         An interim period of standardization

·         A period of consolidation because we really want to buy our applications in a way that they can be aware of each other and use them in a common environment.  The easiest way to do this is for each of several vendors to provide a cloud with all of the applications you need and some level of integration.  Remember that nothing keeps a cloud/platform vendor from being one of several vendors who offers a popular application if the ISV agrees

·         A higher level of standardization where (just as we do on the Internet today) any application can be used with any other application on the platform and through the portal of your choice.

Comments

[Andrew Skinner]

Amy,

Interesting post that I think addresses a number of signficant challenges facing the "cloud computing" crowd. Not sure if many people have considered the implications.

I would actually think that the economics of cloud computing may shorten the period of instability as many organisations will simply not be able to compete on a per cycle basis with the big players.

My view is that we will very quickly reach a status of Oligopoly with around 4 main players that will eventually result in the internal cloud "raining" out (not sure how clouds die) based on pressure from the CFO.