While I covered the idea already back in October followed by an update with news from revevol I now had the chance to talk to Google directly on the Cebit. The Google exhibit itself was pretty much Google+ focused.
I had the chance though to talk to a contact focused on the enterprise market. After an interesting discussion around Google Apps and privacy, data processing agreements and the roles of resellers in the legal discussion (more on one of the following posts) we discussed Google+ for the enterprise.
For those who have not come across this term yet I will try to explain it quickly. Much like social networks have transformed the way consumers interact, new methodologies of collaboration start to get into the enterprise world. Imagine the same tools you use in the consumer world to be used with your colleagues. Digital collaboration beyond email is a requirement that will challenge more and more IT departments in the coming years. So one of the ideas in this space is to create encapsulated Google+ for enterprise customers where the core groups are the employees of the company.
No News on any Release Date
As reported earlier something like this is in test with some customers and partners already but there was no note so far as to what the challenges are and when it will be available in the market. I have no update on any date, apart from a “Maybe in 2012”, and please keep in mind that even the consumer Google+ is still in beta. I have learned though about some of the challenges that are being reported as part of the dogfooding (as in eat your own dog food) process.
Federation is a major Challenge
Let me start by explaining what I do mean by federation. You can think about levels of collaboration. The first level is the inner core group (the employees of a company). The second level would be a number of contacts outside of the own company but on the same platform and the third level is people outside and on different platforms.
While Google has successfully managed to create the first level view of Google+, an encapsulated version for an enterprise customer, it is struggling with the second level. As an example a user of Google+ for the enterprise in a company can start hangouts with coworkers within the same company. But it is not possible today to start a hangout that consists of users from one company and of users of another company as this would mean bridging them beyond their own encapsulated version of Google+. Secondly the very same challenge is in place towards the consumer version of Google+.
Just to give you an idea, (even if the scope of the service is completely different) look at Microsoft Lync. Here you do have your inner community can decide federate with other companies running Lync as well and also federate with internet or in other words consumer using live messenger.
The third level is even not considered I believe and I have just mentioned it for the sake of completeness. I can well imagine that Google rather wants to pull people over to their platform than to allow federation to users of other software like e.g. Chatter by Salesforce.com or Yammer.
Early User Reporting to unveil more Holes
The Google team expects to get further small and big requests out of the dogfooding internally and with selected partners and customers. One important challenge is that the consumer version is still on beta. An enterprise service would need to be released, covered by contracts and given SLA’s. It seems that this will take some additional time.
Overall it was good to see and to hear that Google is actively working on the transformation of Google+ into the enterprise world. And by the way I also believe that this explains pretty much the advantage Google+ has over Facebook. It is focused on collaboration rather private tidbits. Maybe the whole comparison of Facebook and Google+ does not make sense at all, and all parties calling either one dead have just not grasped the differences.
Other features and integrations limited by geographies
We also discussed briefly why Google Voice will not be available anytime soon in Europe. It would be a great addition to Google+ for consumers and enterprise alike and challenge classic UC players in the enterprise space. It is though due to the diversified marketplace in Europe that Google is struggling. While in the U.S.A. one negotiation settles the rights for all of the U.S.A. in Europe they need to sit down in each country separately. On top of that the local telecommunications players (Telefonica, vodafone and Deutsche Telekom were mentioned explicitly) are play hardball and do block Google from introducing Voice around Europe. I tried to address other features, like ripples not being available for German-speaking users, but as I said before I talked to an enterprise focused contact it would have not been fair to grill him on the consumer features.
More CEBIT reports to come:
Fujitsu Global Cloud and Business Solution Store
Microsoft’s vision for the digital city
CEBIT tidbits collection
We do see a lot of discussions about cloud services, data privacy and the Patriot Act. Apart from a general trust discussion one of the major points is the question whether data privacy laws require customer audits or not. Actually audits are an issue for both the service provider and the customer.
The Service Provider Point of View
Cloud services are designed for scalability and masses of customers. Some even do mix consumer and enterprise services but let’s assume we are looking at a pure enterprise service. Customer initiated audits are an issue to any large-scale cloud provider. Let’s play with some numbers here, you have about 1500 customers on your service (not that many if you take Google Apps or Microsoft Office 365) and let us assume you have a contracting with contract duration of 36 months. If we now assume each customer is legally bound to do one customer initiated audit within the contract time frame you would have more audits to fulfill than days are in 36 months. Your data center probably will look a lot more like Disney Land with groups being led through it than a professional operation. Also given the fact that an audit is more than just a friendly visit it creates costs by eating up headcount as well as needing extensive preparations and post processing.
If your business is bespoke outsourcing the deal size as well as the cost model would allow you to factor these audits and the effort into you cost model. With a large-scale model and even worse an on demand business model which would allow very short contract durations it is simply not doable from an economic standpoint. In case you are an enterprise that wants to move hundreds of thousands of users into the cloud you will encounter more flexibility towards individual contracts on the supplier side. But the majority of customers does not fall into this category.
Another reason why providers are not in favor of customer initiated audits is the exposure of their architecture, processes and operational models. If you compare the ways multi tenancy is set up for Google Apps and Office 365 you can discover huge differences. The details of this setup are guarded as trade secrets by both providers. Doing hundreds of audits raises the risk of exposure of these trade secrets to the competition. If you have trade secrets yourself imagine how you would feel if these would be exposed.
So what to do? As a provider you still need to fulfill legal obligations and enable your customers to legally purchase the service. You want to build trust with customers and authorities alike. The only way to solve this would be an external audit of your services on a regular base and the full access to the audit reports for all your customers. Make sure the auditing company is well known, trusted and operates in all the markets you address with your cloud service.
Why Audits are a Nuisance for Customers
A business wants to make money in the first place and there is a clear focus on its very own business needs. So auditing a service provider is not generally an initial top priority on a customer’s to do list. There are good reasons for this.
First of all there is a need to understand what an audit is. An audit especially if driven by a local data privacy regulation is in place to check and document the service on several levels. Starting with physical measures like perimeter security through environmental controls and facilities like air conditioning, disaster recovery measures through to processes for operations, data privacy and finally even into HR processes like background checks etc. Not to forget the whole IT architecture, setup, procedures and so on. Even well-staffed IT departments of large enterprises do struggle to take on this extra workload apart from knowledge gaps to be closed.
As a result the customer would have to involve a third-party and pay them to audit on their behalf. This creates extra cost probably not being factored into the business case for cloud computing in the first place. The question then is, if you involve a third-party anyhow, why not agree with the service provider on the third-party in advance or in other words accept that there are no individual audits and rely on the third-party hired by the service provider?
It might be that you do not trust the service provider to hire a neutral auditor and to not influence the audit. If you do not trust the provider at all maybe you should not worry about audits and look for other places to get a service. In general the auditing companies are well-known as is the scope for these audits. Your obligation as a customer is to ensure that you do get the full audit reports and get a clear view on any shortcomings and actions being taken to correct these. You need to understand the value of audits and to what degree they fit your local requirements. Let me give you an example. Many providers claim to be SAS 70 certified but miss to mention whether that is a Type I or Type II certification. There is a huge difference between these two and only by investing time into understanding these, you as a customer can fulfill your obligations.
Special Case: Audits by Authorities
Apart from some regulations preventing the use of public cloud services more or less (e.g. in Germany §202 STGB limiting health and life insurances amongst others or the Sozialgesetzbuch §80 with regards to PII of Hartz IV recipients) there are some rules and regulations specific to certain verticals. Let me pick another German example, banking. Banking is ruled by a specific banking law (Kreditwesengesetz, KWG) and there is a regulation authority (BAFIN). §25a of this law is stating a general right to audit for BAFIN. You cannot escape this. Not complying would result in losing your bank license. So in case you are a bank and do want to use public cloud services you better ensure that your contract enables audits by authorities. And also discuss and document who covers the costs that arise on the provider side. You do not want to be presented a bill in a situation where there is no room for you to negotiate.
The experience shows that providers are willing to create exceptions for audits by authorities in the contracts and I believe that is a wise choice given the fact how unlikely these audits are.
Why are audits a general discussion theme then?
It seems the whole audit piece can be solved by third-party audits. Nonetheless audits or the lack of right to customer initiated audits seem to be the key blocker for cloud computing especially in Europe.
The right to audit is a nice excuse to IT departments in fear. Also often these discussions do take place without involvement of the legal department or external legal advisory. But to speak in general it is a fault of the providers and the authorities alike not being able to clearly communicate the rules and the approach. This leaves room for speculation and confusion where none should be.
It may sound easy but it still is a huge effort, so do neither underestimate the data privacy / audit discussion nor use it as an excuse.
In the first part of the future of mobile I had a look at how the operators will need to change. Now we will have a look at where the device story is going in preparation for the Mobile World Congress in Barcelona next week. In the past few years we have seen some trends that change the world of formerly known mobile phones big time. These trends included things like:
- Touch screens
- Applications on the mobile device for fun and business likewise
- Always on (the net) devices
- First devices became smaller and smaller but with touch the latest is that devices become large
And on top of that the mobile device is the perfect cloud device.
So where will it be going. Many predictions do say that gesture control will be the next big thing. This is something that started with the WII games console but only really became true with Microsoft Kinect. This sensor bar was first available for the Xbox360 game console but is now available for the PC as well. On the forefront of these predictions is Mercedes-Benz. This is a surprise but their vision is that you can e.g. control the radio via gestures, wink left and right for previous and next track and up and down to tweak the volume. I am not sure whether this is really a great idea. I imagine the old lady running into the front of the nice Mercedes with the notion “The driver waved me over the road and then ran over me”. So maybe gestures are an interesting way of controlling a GUI but not in all surroundings. The same applies to mobile devices I do believe.
Neal Stephenson lately had an interesting view on what happens if people from the time of 1910 would be transported to the 60s he would be completely confused while someone from the 60s transported into our time would be able to adjust as there have been no major changes. Keeping this story in mind imagine what it would look like if the people in the street instead of operating their touch screens would wave in the air. It would look like a lot of madmen on the run. It would be the exaggeration of “Texting While Walking”. I just cannot see this happening. But what can I see happening? Actually there is a lot you could think about. The mobile phone embedded in a tooth is an old spy movie idea but isn’t that something we almost have already in the sense of headsets? So SciFy and spy movies it is to look at? Why not, since it was Star Wars that set the rules for the design of tablets (only they forget to claim a patent on it). Google is just rumored to create another movie fantasy for real and bring it to the market. The glasses that create an augmented reality and even create a controllable menu through head tilts for scrolling and clicking. Compared to gestures as described above these head movements are reported to be almost indistinguishable for passing people. While I do see applications in museums or tourist in a new city and even navigation system purposes (more on bikes rather than in cars) I do struggle to see each and everybody with these glasses. But on the other hand nobody would have ever imagined all the people with mobile phones and smartphones so it could well be that this is the next step.
If you keep thinking SciFy, holographic projections would be a nice thing and only that the power needed is preventing this so far. The need for power might as well be lowered as well as more clever solutions to store power in mobile devices. So that is not that far off. Also with 3D entering the film making market and filmed content being the #1 content on mobile devices 3D will probably be the next step there as well. And if you extrapolate 3D where will you end up? Holographic projections will be that next logical step. One issue though remains with holographic projections and that is privacy. Imagine sitting in the subway and the guy next to you projecting the latest movie, maybe “Mission Impossible XII – the Zimmer frame mystery”, while the lady next to you watches the latest Bollywood movie and you trying to get a grip on the news. Not to forget that advertisement probably will pick this up first which will be a major nuisance? This would not happen with the augmented reality glasses though as they create an individual view that combine local position with personal favors.
So if gesture control is not mega breakthrough on the device front? Will it be the “one device suits all needs” story? The computing power within the devices is growing and the question arises why one would need a computer next to it. Some early tries to use e.g. a Samsung Galaxy Nexus as a computing device are going on. Actually it is quite a good idea but then again we see the multitude of devices exploding with different form factors for phones and tablets. This is an indicator that probably one device for all will not happen (who wants to pull out a full-blown tablet to answer a call?). But actually it can reduce the number of devices and surely is a trend to watch. One of the huge challenges resulting from this will be the extended version of the headache “Bring Your Own Device” requests create in enterprises already today. So for this trend to become reality not only the devices need to evolve but also the methods and tools to manage these.
It will be interesting to see when content creation applications will appear on these devices which are content consumption mainly so far. It could well be that Windows 8 can bridge the consumption vs. creation barrier with a nice integration of Microsoft Office. On the other hand lots of content nowadays is created within social networks and here Google is on the forefront of thing. They do have the mobile space in sight as well as the social networks. Especially with the upcoming inroads into social collaboration with in companies (Google+ for the Enterprise) Google is in a pole position for success.
Let me come back to the story of the device in the tooth or the implant. There are two reasons I do not believe in this vision. First of all it opens all the floodgates towards a tracking and controlling even Orwell would have not imagined. In 1984 there was this little unobserved space in the apartment. This would not have happened with an embedded device. So I believe privacy concerns will, rightly prevent this. Secondly something that is embedded cannot add to the image. You cannot show it off unless you open your mouth for inspection or carry your X-Rays around. And let’s face it one piece of the success of the iPhone is that people perceive it as cool and it is a showy object.
Finally let us look at drivers for inventions. One driver for sure is the western world where feature phones just would not generate revenue and growth anymore. So innovation is the driver for future success. But as we have seen above the area of innovation is kind of limited. Sure you could create the bracelet-phone with the ear-ring headset but these are just alterations of what is already there. Software makers are looking into approving the UI and the control features and hardware makers will embed these into TV set, etc. But as explained earlier the use on a mobile device might not be the cleverest way for gesture control and while we are at it, voice control has been around for a while and even with the success of Apple’s SIRI it cannot be called out as the next generation of mobile device control. It would be interesting though to talk the own house much like Sheriff Carter does in Eureka.
The second driver is what goes on in Asia and Africa. Have a look here for a view on the African story. The emerging areas will certainly shape the devices of the future.
I could only guess but given the fact that these areas often start their journey on a completely different infrastructure foundation other needs will emerge. One trend for sure will be the mobile phone as the most trusted device for financial transactions. While in the Western World this is unthinkable due to the well-established backbone of banks, in the so-called third world this might be different. Another thing these areas probably will call for is more resilient devices rather than the pretty but highly sensitive devices sold currently. Another software feature needed in the future will be a user management on the device. Today a phone is bound to one user. This probably would not be sustainable in the poorer parts f the world but with the phone also being a computing device a user management would make absolute sense. A logical consequence would be providers evaluating the way they create and submit claims. Maybe the SIM card is not the right way to do so anymore.
And then there are the two most important features of all.
- The one neither me or anybody else has thought about so far – the true innovation
- The power off button
Let’s start with a simple example. Apple has been in the press now since mid of 2009 when the first press reports about suicides at the production facilities appeared. Ever since the work conditions are a constant theme in the press and in social media. So from an ethical point of view it was and is at least questionable to go for Apple products. Especially as child labor is part of that story as well.
Has this had any impact on the sales of Apple products?
While on the one hand the western world criticizes China and third world countries for the abuse of workers in general and kids in particular, the products and those who benefit from the work conditions are idolized, as long as they belong to the western culture. Sounds hypocrite to you? Yes, but who am I to judge. I do have an iPod myself (though bought before 2009) and I must admit my buying decision did not factor in working conditions in the past, neither for technology nor for other products like clothing. Ask yourself, did you consider investigating whether there are reports about abuse and factored that into your decision?
That is the consumer side of things. What about enterprises. Lots of enterprises do have strict rules with regards to their corporate ethics. They ensure that their own standards apply even in a globalized world. But they do stop at just the point where the consumer and the corporate world merge. Apple devices are getting a stronger foothold in the enterprise world due to “bring you own device” approaches as well as being cool products that “improve” the image of the user. But this is where enterprises might take a stronger stand to defend their own ethics. I yet have to discover a report about a company banning Apple products until the work condition disputes have been solved.
Let’s move beyond Apple as this post is not about bashing Apple. They are just the most prominent example. The point is that some rules need to change. And maybe some other tactics need to be called out.
Add work conditions in production to your RFPs
I have not seen any RFP (request for proposal) so far that includes questions about work conditions and asks for guarantees in that area. It is time for enterprises to include these topics into their decisions. We are talking about corporate ethics being extended beyond just the employees employed directly but towards the complete supply chain.
If we expect that world changes for a better than the only leverage is buying power. Laws, in a globalized world, will only change slowly if ever. Companies are there to create profit. You can improve profits in two ways – more sales or less cost. Companies will try to achieve both and that is just about right. But there is a balance or in other words connection in between these two. You can impact one by changing the other. This is where a company will start to decide what will be better in the long term, minimized cost but reduced sales, or optimized but not least cost while a steady sale is ensured.
For enterprises this is a step that can be achieved much easier by setting rules for procurement of goods and services that include work conditions in the whole delivery chain. Consumers though need to take individual decisions and with campaigns like in Germany that proclaim, cheap is cool, and the more dominant image of a product, it will be more difficult to turn this around. But if you think of it, there is another way to attack this.
The Trigema example
Trigema is a German based company that produces and sells clothing. The reasons why I mention it here is the way they do advertising. Rather than putting the price in the foreground or product features not to speak of prominent figureheads, their main strategy is to emphasize that their production is completely domestic. It is a completely different approach but imagine e.g. Nokia advertising the Lumia 800 with a slogan like “Produced in the European Union, 100% free of child labor”. Imagine this not somewhere on the bottom in fine print but bold and center. Would that put the competition on the spot? Even if the product might be slightly more expensive it would be something to be talked about.
It is a little bit like Deutsche Telekom and T-Systems putting an emphasis on the fact that their cloud services, for consumers and enterprises alike, are delivered solely from Germany and therefore out of grasps of the U.S.A. and their Patriot Act.
So what?
A common reaction is that all the companies are the same and there is none the better. This is indeed an impression one could get. This is why I believe actually that an aggressive advertising strategy could pay off. And also it is not until one starts by and for himself something changes. By setting an example, individually and also as an enterprise, things hopefully change for better.
I really like the Superbowl half time advertisement “Halftime in America“. It got me thinking why products that sell with a incredibly high margin like the iPhone and the iPad, are regarded as American products? Wouldn’t a little less margin and a production in the U.S.A. or even a slightly higher price work as well? Would that not address many areas and improve not only the products delivery ethics but also create jobs? But again I sound like I hold a grudge against Apple, which I do not!
Will I myself make these consideration part of a decision? I will try to and probably not always succeed. Does this mean I would not go for Apple products, just to come back the dominant example from above? I am not sure. But I am sure I will keep an open eye on developments and reports about improvements or lack of.
Editorial Note: This is not one of the typical posts on http://www.cloud-discussions.com. Therefore it is featured as a weekend special. Please browse through other posts on http://www.cloud-discussions.com as well.
The world of mobile communication is changing. First we have seen new players shaking up the device market. Then we have seen disruptive changes in the mobile communication tariffs. We have seen mobile providers unbundling the communication cost from the handset cost. Flat rates were introduced and the traffic has changed. It has shifted from voice towards data or to be more precise towards video. In the future it is expected that two-thirds of the traffic on a mobile device will be video content.
How do the mobile operators react? How can they react?
Everybody is searching for the killer application and this did start long before the introduction of smartphones. The term “Content is King” has been around for a while as well. It seems like the killer app has been found – it’s video. But does that do the mobile operators any good? Do they own the rights on publishing videos in the internet? Do they operate video platforms like YouTube or Vimeo? No, they do not. So how can they jump on the wagon to profits in the future and avoid be marginalized to “stupid” bandwidth providers?
Content
One approach is to force an entry into the content world. Deutsche Telekom and T-Mobile are a good example. They acquired the rights for the internet presentation of the German Bundesliga. That is quite an exclusive content. On the backbone of this and its IPTV offer for DSL customers Deutsche Telekom is building a package of content that could compete with the likes of Apple (Itunes), Google (YouTube) and Amazon that have had a head start on the content side of things. The weak spot of the Telekom approach is that so far it is a rather regional strategy. Even while the Bundesliga is a global product, though not as global as the Premier League, it is not enough to generate a global pull towards their mobile products.
So content is a market already claimed and making inroads there will be difficult.
A second part of the Deutsche Telekom approach is the so-called “Telekom Cloud”. A central space to store user-generated content. This is much more the idea of a digital locker rather than a sharing platform like YouTube. But being device independent, it is a competitive approach to the iCloud offering of Apple. It sounds like a great idea in the first place but over time there will be comparable offers in the market that will be neither tied to a network provider (fixes and/or mobile) nor to a hardware manufacturer. The digital locker will become a feature but not a differentiating factor.
Better Infrastructure
The race is always on. It is the drive for who has the maximum bandwidth, has a global delivery capacity and who can drive down complexity and therefore costs. New models will emerge that go hand in hand with the move towards video content. Local caches in the domain of the provider to deliver videos and other content faster are one approach. Even constant pre-streaming towards mobile devices will be a way to make life easier, especially when mobile tariffs are not driven by amount of transferred MBs or GBs anymore. So as a mobile operator you could try to be on the bleeding edge of technology to keep your customer base. You could ensure that you create a continuum with fixed communications and broadband at home. But on the bottom line this way is very investment heavy and still bears the risk to be marginalized to a mere infrastructure provider.
Mobile Advertising
This is the killer application of the new century. The company that figures out the solution to this will be leading the pack. Why, you wonder? Isn’t there already mobile advertising in the play? Have you not seen an ad lately while playing Tap Zoo or Poker on your iPhone? True, but let’s face it, nobody yet has successfully opened Pandora’s Box of mobile advertising.
Mobile advertising in people’s minds is like small pop ups in applications, a short spot prior to your video content being streamed or even a voice message like “This conference call is brought to you by Old Spice”. And with the majority of these kinds of approaches to mobile ads we are unhappy at least. I do wonder why the more subtle ways of e.g. in game advertising from console games have not yet found their way towards games on mobile devices. I keep thinking about more clever ways to attack this.
The company that solves mobile advertising challenge will drive the future of mobile revenue generation. The company should make sure to get a patent on it first. It cannot be that difficult if Apple gets a patent on “slide to unlock”. It has to be the top priority for all mobile operators! Otherwise the risk to become irrelevant in the future is extremely high. If someone like Google or even Microsoft cracks this, the role of the vodafones, Deutsche Telekoms, Verizons, KPNs, and so on will be reduced towards providing bandwidth. I am not even sure whether their brands will remain in the public domain or whether they will become kinds of white label infrastructure providers in the background. That could be a profitable business but I believe it is not what these companies aim at.
One example of the “how to cash in on mobile” discussion has come up lately is the upcoming IPO of Facebook. Their weak spot has been identified on the mobile site of things.
“We do not currently directly generate any meaningful revenue from the use of Facebook mobile products, and our ability to do so successfully is unproven,” the company said in its review of the risks it faces.
Have a look here for a good summary of the mobility challenge of Facebook: http://www.nytimes.com/2012/02/06/technology/facebooks-mobility-challenge.html?_r=1&pagewanted=all
And what does that mean for consumers?
The consumer focus will shift over time. The key question will not be who is the first on LTE or the cheapest. The question will be who has the rights to the content I want or need. What happens if the rights move from one provider to the other? Will that impact my device or my contract? This shift will be happening within the coming years. It will require the consumers to rethink their strategies of purchasing contracts. Even nowadays the drivers have changed already with flat rates where you can get flat voice to all mobile networks and to the fixed line network and flat mobile internet starting at around 20,-€ a month. Some predict the drivers will be the devices but as we see with iPhone, exclusivity towards networks does not stand in the long-term. So the device will not be the decisive factor for consumers to choose one network over the other.
Interesting times
It is not easy to drive this post to a conclusion as I do see tendencies but do not have all the answers. But I can say: Watch the Space. It will be interesting to see how all these changes play out. We will see further consolidation, new players and shifting market models. It is a climax of what has been discussed in the mobile operator world at least for the past ten years.
I remember it quite well. A few years ago a appeared on the stage where one of the very first slides had an analyst statement that CIOs without a cloud strategy would be out of role within 12 to 18 months. That was a very bold statement and I believe looking back it is fair to say it was not true. I have not heard of a single CIO being fired due to a lack of a cloud strategy. I admit this could have three reasons:
- All CIOs created a cloud strategy
- I am not well-connected enough get the word that hundreds of CIOs were actually fired
- The importance of a cloud strategy was lower than expected at that time
I do actually believe it is the third statement that is true. The question whether you do have a cloud strategy or not is just the wrong question. At that time cloud was discussed and perceived as something separate. Something you must consider to keep your edge. If you ask me this view was driven by two major influencing factors. First there was the hype carried by the media and some professionals and secondly by a strange but still existing technology focus.
Another example for the visor being misaligned is a discussion I had with some sales folks from a combined software/SaaS vendor. I was asked what I do perceive as the strongest competitors for the SaaS offering. My answer was and still is the following:
- “do nothing” / upgrade of existing environment
- Classic hosters / outsourcers
- Competing cloud vendors
This got the confused big time. The first statement was explanatory for many difficulties in selling cloud successfully. Nobody goes out and asks “Can I get two kg of cloud”. They do have a recipe in mind and would take whatever helps them to cook the meal best. In other words the customer thinks in workloads in the first place and would (should) consider all delivery options.
This is the reason why I strongly advice customer that they do not need a separate cloud strategy.
What you need to make sure as a customer is that you embed cloud computing as an optional route to go into your IT strategy, into your sourcing strategy, into you application development strategy, etc. If you want you can go the extra mile and pull the cloud pieces of these areas together in one document and call that you cloud strategy but that is really more a less an internal marketing effort.
If you start with the cloud strategy in top of your mind and try to go down to the bottom of all your accountabilities in IT you will create complexities and additional work you do not want. The way I do suggest customer enables them to look at workloads, create segments where cloud delivery can add value and embed these into your broader IT strategy. The key word to gain benefits from cloud computing is segmentation (more here: https://clouddiscussions.wordpress.com/2012/01/19/the-silver-bullet-to-cloud-computing-segmentation).
So the bottom line message is:
Cloud Computing is another arrow in a CIO’s quiver
As the strategy is the combination of arrows in the quiver there is no need for a separate cloud strategy. Just make sure it is included in all the other related IT strategy discussions.
Identifying usage scenarios for cloud computing is a challenge for providers and IT departments alike. Due to that the public discussion on cloud computing mainly gravitates around technology or data privacy. Another blocker really is a row of misconceptions. One of these misconceptions seems to be quite dominant in the range of SaaS – All or Nothing. But even in the other areas, platform and infrastructure, there is no clear view on usage scenarios yet.
Learning #1: Sales Approach
Sell through examples is really what will win in the end. Do not sell by explaining that you got the best technology but come up with usage scenarios (example scenario). Create customer reference stories around great ideas how to use the service. You have to make sure that you create a story explaining the business benefits rather than e.g. the migration story. Even if your migration story puts you ahead of competition it is important to get a picture about the usage scenario into your customers head in the first place. Why worry about migration if I just do not know what to use the service for.
Learning #2: Segmentation is what creates opportunities
For all kinds of public cloud services (from IaaS through PaaS to SaaS) the silver bullet is segmentation. The reasons for that is that unlike in the past where one size fits all was an approach due to limited delivery options/capabilities and lack of scale, the cloud computing approach of “on demand” lowers the entry barrier. To consider cloud computing and build a plan you need to look at your workloads and user groups and analyze them in detail. You will have to come up with a make or buy decision where buy will probably include more than just pure cloud computing. They key piece is to identify workloads that would fit the cloud delivery approach. This could be guided by any of the following areas of consideration:
- Data privacy
- Continuous demand versus peaked demand
- Level of standardization / need for customization
- Cloud as the primary delivery option or an add-on
- Cost
- Service Levels
- Lead time on demands / lead time on delivery readiness
Let me give you two examples to go a little bit beyond theory. The first example is about a company designing complex products like cars. There are many calculations and simulations to be. You can bet that there is computing power already in place to do the number crunching from variants of the gearbox through to virtual crash tests.
But the reality is that the departments in need of a complex calculation job need to file the request and wait to get a slot granted. Often this could take several weeks just due to the sheer amount of jobs needed. Here cloud computing could help significantly. You might want to look at the jobs and try to understand where you would be able to speed up things by using external capacities in the cloud. Where can you gain flexibility and business agility by combining your internal forces with the computing power in the cloud? It is not about replacing the local number crunching completely but to shave of peaks or react on short-term needs in a more flexible way. As a result you can shorten your lead times on new products while reducing the cost (direct – investment in additional computing equipment; indirect – less idle time or distraction for the teams involved by shorter lead times on results). On top of that segmentation of jobs also allows you to cater for security needs as you can ensure that the top-secret jobs run in-house while less critical ones can run in the cloud.
This example even works in areas usually restricted from using the cloud. In Germany health insurances, amongst others specific business, are not able to generally go to the cloud with PII due to the law (§210 STGB). They might still do it with anonymized data for risk assessment or statistical calculations. Again a usage scenario opens an opportunity in a vertical that seems not be a market at all. Which would be Learning #3: Be creative.
The second example is a straightforward SaaS collaboration example. Most discussions around the pickup of cloud based email or collaboration tools start with a look at the whole user base. By applying this view many discussions are dead in the water from the very beginning.
But by looking at the segmentation of the existing user base and even beyond that, e.g. users without access to IT at all, opportunities to utilize the cloud will appear. It is just a different view that will let you see beneficial scenarios. You could cater for the different needs with the most fitting offering and also cut down cost while not cutting down functionality. The people who need very high reliability and total privacy are being served locally and are happy to pay a premium, the general workforce can be served from the cloud in different forms of usage and the group without access to IT so far may go for a kiosk user model. You might want to think in workloads as well as where you have people working in shifts without an own PC and without the dependency on client software. These users might be totally happy with a web-based cloud standard offering at a lower price point. Also you might want to just use cloud computing for specific maybe temporary usage scenarios. So you create something that might live for some months but instead of buying hardware and software you just use cloud computing for a few users.
If you think about it this where cloud computing starts to deliver real value beyond just cutting costs. It also clearly shows that the so famous “one size fits all” approach of some cloud providers may not the best choice for your enterprise. In the example of Google Apps this was recognized by some partners who have created hybrid solutions and scenarios. So sometime you have to look beyond just the cloud provider to find a solution that fits. But as the mantra for every great cook is “preparation is everything”, you should analyze your need and maybe look at ways of using cloud computing that might not be obvious in the first place.
Is it not what we all get drilled into us each and every day that cloud computing is just cheaper and saves a whole lot of money. Some providers even drive this to the extreme and advise customer to drop functionality (one size fits all) for the sake of the least cost in market. The question now is not whether the individual cloud service is cheaper but whether you should take that at face value and take your decisions just based on this.
Sounds like outsourcing, doesn’t it?
It surely does to me. I remember when I stepped into the outsourcing business the major line of reasoning has been cost savings on all fronts. Over time customers have learned either through own experience or by watching other projects fail that cost saving, while it has an impact into the overall business case, should not be the only driver towards a decision. There are other bits and pieces of equal importance and it is about expectation management as well as clear contracting on top of these.
Why do I bring outsourcing to a discussion about cloud computing? The reason for that is that cloud computing services do fall into the same category. The services with the label cloud are an additional sourcing option for a CIO and should be evaluated with the same methods. Have a look here for some details on evaluating SaaS proposals: https://clouddiscussions.wordpress.com/2011/09/23/how-to-evaluate-saas-proposals/
Why cost comparisons fail
First of all, the biggest roadblock prior to a deal is the cost base to compare with. Often the internal cost base is unclear. The people creating the cost analysis might be biased in fear of losing their jobs or just for the fact that they believe a substantially higher cost on internal delivery would make them look bad. The cloud provider on the other hand is inclined to paint a best case picture in order to win a deal. But reality will bite back and that best case picture will not come true. And actually I believe nobody is to blame for that as some things are just not clear at the time the contracts are signed. It is though up to the customer to think ahead, evaluate the risks about missing the best case scenario and create some reserve funds (money and time).
The second thing that comes into play are secondary cost saving expectations like easy access to skilled resources in outsourcing or a reduced effort with regards to service provider management. A cloud provider needs to be managed pretty much in the same way as a hosting or outsourcing vendor. And this stands even in case of online information instead of service manager meetings. In addition you might want to consider even to plan slightly more for this and go for an extra offering that will make the cloud service look slightly more like an outsourcing. Have a look here for some ideas: https://clouddiscussions.wordpress.com/2011/09/12/where-the-cloud-needs-to-learn-from-classic-outsourcing/
The next area of uncertainty is the migration as well as updates. While you can get a good grip on potential migration cost you need to make an effort to do so. Thorough testing and detailed planning is needed before you can really get a good estimate on the costs. And do not forget to include the cost for these tests into the business case. Updates are a little harder to plan for. While the cloud service provider will tell you that they take care of all the updates and that it will be without extra cost for you this is only half the truth. Surely updates will be cheaper per se but you cannot determine the timing any more. The update takes place when the provider says so. The deeper your integration is, you might be forced to upgrade your internal environment as well, You might not have done that in an on premise environment. Examples are updates needed to your directory services as it is federated with the cloud or certain versions needed to use the service outside of the web interface. So you might face the need to update client software as an example.
Another factor to weigh in is the network element. With a cloud solution even traffic that was formerly internal only now is routed over your internet connection. Does this connection in speed, bandwidth and availability stack up to your expectations and the cloud service? Remember in SLA chains it is the weakest link that counts. So what are the additional costs for the network you need to calculate?
What are the reasons for going into the cloud then?
What is the difference between a good date and a bad one? It is your expectations. Rushing to the cloud for cost reasons only is a little bit like going out in expectation of a hot date and your
imagination just setting the completely wrong expectations.
There are many good reasons to move to the cloud from added flexibility to simplicity and not forget cost. Rather for the best cost you should look for the service that fits the requirements best and be quite detailed on your cost expectations. Actually even though I have painted a rather black picture I do believe that cloud computing delivers cost savings. But you need to use it in an area that makes sense. Imagine you decide to go for cloud services, do a migration and rather than have a happy bunch of users and watch the savings stack up you need to revert back. That would involve additional cost for another migration and rather than savings you have created additional cost. Search for LA police department and their failed attempt to move to the cloud!
Bottom line is that it is really about a clear management of expectations from the beginning on the customer side and a need to plan for a little bit worse that the best picture scenario on the provider side.
Do you know what one of the biggest concerns is when you consider outsourcing your own IT department? It is the question where to store the documents outside the reach of the IT people you want to outsource. You might argue that accessing data unauthorized is against the law and the contract but let’s face it, people in fear of their job would not be stopped.
Another scenario but also very risky is data security during contract negotiations, let’s assume for an M&A project. You do spend a lot of time to secure your internal data integrity. But the moment you communicate with the outside world all your security is gone. You send contract drafts to lawyers and the other party. You have lost complete control whether the data is being sent to a private consumer email address from there on. Heck the recipient could even be on a consumer email system without you knowing and there goes your high level of security.
In the old days of outsourcing (not only IT outsourcing) whenever there was a transfer of assets but especially a transfer of employees (TUPE, §613a, etc.) there was tight control over the data. To assess the data of the assets or the employees you had to enter a room where there were printouts of the data and where not allowed to take any information away. Nowadays with digital information this has changed. Information is being sent around, copied, worked on, etc.
Imagine you are in charge of an RFP process. You have several bidders that need information. You get questions from these bidders. You have to organize meetings. You have to provide a method of receiving information from the bidders. Even if you have organized yourself let’s say with the help of Microsoft SharePoint internally (which is a huge step already) you still struggle with the external parties. Sending out documents or receiving these per email may just fail due to document sizes. You are not sure whether your email is received and read. You are forced to communicate through “old means”.
Does any of the problem statements above sound familiar to you? You might want to consider a SaaS solution to break out of the misery. Let me explain how.
Think of a place in heaven in the cloud where you have a safe document repository, a way to communicate (email, message board, IM) and full control which individual has access to what content. You would not have to wait for your internal IT to argue, purchase HW and license, set it up and make an internal system to you which then would not be available from the outside. Your investment is limited as you purchase the place in the cloud for a limited time only and you would pay per user.
This is what cloud collaboration solutions like Office 365 from Microsoft or Google Apps, to name the two biggest, can deliver. You’ll get an enclosed environment where you can give access to internal team members as well as external support staff and even bidders. You can create separations so that shared content is available to all but also have drawers of information only available to a limited group. The integration of email and instant messaging gives you save means of communication without involving your own IT department or information leaving the controlled environment. You avoid that anybody misses important information by having this one stop shop and through the built-in integration of mobile platforms even reach people on the road.
Not only do you limit the direct operational cost compared to setting this up through your own IT department if they would be able to do so at all. You also increase the productivity of the teams involved internally and externally. This usually results in better and faster negotiations but surly in less miscommunications. On top of that you are reducing the risk. Which risk you ask? Actually you reduce several risk types.
- The risk of exposure of confidential information towards media
- The risk of exposure of confidential information to internal audiences
- The risk of data getting lost or being hacked on accounts (e.g. consumer mail) outside of your control
- The risk of missing to notice important information which might result in delayed timelines as well as economical disadvantages.
- The risk of not giving all bidding parties identical information and therefore one or more parties an unfair advantage which might result in legal action against you.
You might wonder why this status quo today in negotiations is not getting data privacy officers on the barricades, why legal departments do not intervene or why the CIO has not addressed these business risk through IT yet. Let me ask slightly provokingly, is it due to:
- Lack of alternatives
- Lack of risk awareness
- Involved individuals being from a generation rather wanting to stick to “that’s how we have always done it!”
- A wrong perception about the cost involved
It cannot be one thing for sure. It is not the external parties not playing along. In my experience there are already so many terms around the whole process of bidding and negotiations enforced that the usage of a cloud communication platform would rather be welcomed then damned. Actually I do believe there is an additional reason. Nobody ever thought about using the cloud in this way!
The whole cloud discussion gravitates around technology. The appliance of cloud services to solve real life business challenges is an approach and skill set barely used. If we want the cloud to succeed as a success this is what is needed. I do have a row of simple but eye-opening scenarios for SaaS and I continuously think about ways how cloud could support real life challenges. Join me in that quest. If you have ideas or want to learn about mine reach out.
The WordPress.com stats helper monkeys prepared a 2011 annual report for this blog.
Here’s an excerpt:
A New York City subway train holds 1,200 people. This blog was viewed about 6,500 times in 2011. If it were a NYC subway train, it would take about 5 trips to carry that many people.
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