Gartner recently made the following prediction about the growth of the Software-as-a-Service (SaaS) delivery model for IT solutions:

“Worldwide SaaS sales will eclipse $8.5 billion, up 14.1 percent from 2009 sales of $7.5 billion. More telling, this rapid increase in both customers and SaaS vendors means that on-demand applications will make up a larger percentage of total enterprise software sales this year and for the foreseeable future.” (Forecast Analysis: Software as a Service Worldwide from 2009-2014, July 2010, Gartner)

Challenges with Rapid Growth

There are over 1800 SaaS-based solutions on the market today. Several have become familiar names in corporate settings such as Salesforce.com, NetSuite and Intuit. As these SaaS offerings mature and the benefits become more widely recognized, many more organizations are going to adopt a broad assortment of SaaS and cloud based solutions.

The adoption of these solutions creates a new set of problems that many departmental users are reluctant to recognize.  The concern is around governance and the potential risks to the business resulting from a proliferation of SaaS and cloud-based solutions due in part to the ease with which they can be purchased and deployed. There are similarities growing between now and the late 1990’s and early 2000’s, when it seemed every department had their own little app with an Access database or had projects with their own independent web developers. The difference today is that instead of undocumented databases on desktop PCs, you’ve got sensitive corporate data being generated somewhere out in the “cloud”. This proliferation of SaaS and cloud solutions exposes the larger organization to risks around data security, business continuity, access controls, regulatory compliance, contract management, and a host of other issues. In the past, application sprawl was contained within the company’s 4 walls and/or held in the IT budget so you could attempt to manage it. Today with SaaS, it can live out in the cloud and be easier to purchase under the radar.  

What’s needed to protect your SaaS?

You need a consolidated governance platform that can efficiently manage all those SaaS and cloud based solutions. Only when you provide consistent policy enforcement and management can you adequately protect your business IP, ensure regulatory compliance, and perform consistently across your customer SLAs. Generally speaking, enforcing governance implies a reduction in usability or convenience, but when a policy-driven governance approach also greatly improves automation and efficiency, you can have your cake and eat it too. Additionally, you can cover not just your SaaS, but also PaaS, IaaS, and internal and external cloud service providers with a governance and management solution that can improve the service delivery lifecycle for each of them.

Why is Now a Better Time than Ever to Release your Inner IT Creativity

IBM recently interviewed over 1500 CEOs and industry leaders in a report titled, “Capitalizing on Complexity” that had the CEOs prioritize their organization’s criteria for success.  Interestingly enough, the single most important criteria selected by the CEOs was “creativity” to enable business model innovation.  That’s right - not buy more companies, attending more leadership training, or driving costs down further - but creativity.

Creativity - The Good and Bad in an IT Group

If as the CEO of a company, you only consider IT as a cost center in need of cost reductions then you’re bottling up an area of opportunity that is truly the fuel for your enterprise’s creativity engine.

Unfortunately, IT creativity is sometimes considered dangerous. It is assumed that a creative IT department is a group prone to taking unnecessary risks, or will get itself into trouble by wanting to “invent everything here”.  Also, there is the specter of spiraling costs because of a lack of standards or control.

Allowing Your IT Group to Be Creative Doesn’t Mean They Do Everything Themselves

Its important to address what jobs, and therefore, what projects we want our internal creativity to influence. There is significant opportunity to move more of the IT function closer to the business to be more creative and minimize the manual, repetitive and mundane functions significantly.  Many IT organizations are trying to make the shift, but are held hostage with the majority of their current budget and resources consumed by maintenance and support of their IT infrastructure.

Information technology can in fact be a tremendous catalyst for unleashing creativity.  Just in case you’re thinking that I might be a little colored in my opinion of IT, let’s take a quick walk through some major IT milestones:

1970’s: Mainframes with timesharing

1980’s: Personal Computing and distributed access to productivity tools, along with a tremendous uptick in application development.

1990’s: Real portability of computers and the Internet or “Information Age” was born

2000’s: Virtualization, handheld devices, Cloud computing and an application explosion or what I like to call the “Real Democratization of IT”.

There is a clear pattern here. Change and creativity in IT is at the core of many of the most explosive waves of growth and opportunity for businesses. The issue is how do you position IT to be most effective for your enterprise? Each company will have to grapple with that question to find the right answer, but suffice it to say, for most companies, it means moving your technical staff up the value stack. If your team is like most IT organizations, their budget is probably split 70/30 with the 70 focused on “maintenance” activities. The 70/30 equation needs to be reversed.

Enabling enterprise creativity requires a well conceived IT strategy that highlights the use of very responsive, flexible, and scalable IT operating models and infrastructure.  It doesn’t mean that you need to hire an army of IT talent and try to beat Microsoft, Google, Apple, or whoever your industry goliath is. An effective global use of technology does mean that you find a way to provide IT services in a just-in-time fashion.  Your IT resource needs to be like the camera in your phone, it’s ready whenever you need it, where ever you happen to be. In the past many important Kodak moments were missed because we didn’t have a camera ready. Your IT needs to respond to business creativity and innovation like the camera in your phone - instantly, easily, and inexpensively.

Instantly, Easily, and Inexpensively - How the Heck Do We Do That?

It starts with IT leadership. If you don’t expect your IT team to be creative, then you might get good cost management and solid availability of applications but not much else. If you do ask your IT team to be creative, then you need to demonstrate you mean it by putting in the right reward systems.  Next, you’ll have to think beyond having solid infrastructure and highly available applications. Enabling an instant, easy to use, and inexpensive IT environment doesn’t happen overnight, but the tools and resources are available and largely proven; and for many industries and organizations the time is right.

Help your IT team make the move to an “Agile” infrastructure and “Everything as a Service” IT operating  model.  This is more than just new tools. It’s a new way of delivering and enabling the creativity locked in your organization. If you want to react instantly to new ideas and business opportunities, then you need an IT environment that can keep up.

If the CEO needs to be creative, then why lock up the single best tool for helping to build on those creative ideas? Go ahead and release your organization’s inner IT creativity. You might be very surprised at the positive impact on your business.

Say it isn’t so, how could modern client server virtualization have gone from nothing, to golden, to plumbing in just 12 years.  I’ve spent the better part of the last 7 years of my career helping companies take advantage of virtualization. I’ve implemented it in SMBs, consulted with large enterprise and strategized on its impact on data center design. As an IT guy the introduction of virtualization to the market was the best thing to happen since the Internet, I mean I love this stuff.  However, now it seems like the shine, the thrill, the oohs and aah’s are fading, why is that? What’s happened in the last year to make me believe I should consider virtualization differently? I mean hypervisors, Vmotion, dynamic resource scheduling, and dynamic power management, they’re all still useful and important, right?

Where are we in the lifecycle of the virtualization market?

I see the virtual software market as having two phases so far. Phase I brought us more for less, more virtual servers vs. physical, greater functionality and dramatic improvements in the flexibility and usefulness of our infrastructure. In Phase II virtualization created the foundation for the cloud movement. New features like dynamic workload management, automatic scale and server architecture abstraction. Phase III will likely be when we see virtualization truly commoditized. So the importance is there, but not necessarily as a change agent.

What does the next 24 months look like?

Today the market for virtualization is still going gang busters and until the vast majority of application workloads have been moved to the cloud the virtualization market will stay strong.  However, the horizon for the importance of innovation at the virtualization layer will hit in about 18-24 months, if it hasn’t hit already.  After 24 months innovation in the cloud software, server & CPU markets will have overtaken virtualization through the sheer number of companies involved.  There are hundreds of companies making products for the “Cloud” market, there are less than 10 real server virtualization players.  Today technologies that would have seemed like miracle tools just two years ago are readily available from dozens of new players.  We’ve got tools that will move workloads, spin up VM’s, help you move from one cloud to another, distribute load based on demand, provide cross site availability, automate network provisioning and so on. We’ve got new server manufacturers that are building solutions that don’t need virtualization and chip manufacturers that are building virtualization into the chip. Innovation in the cloud hardware and software market will far outstrip the ability of the three to five primary virtualization players to keep up. Sure, we’ll all still need our VMs, but we won’t need to care anymore about who’s VMs they are. There are even cross platform management and VM visibility tools available, making innovation in tools like VMware’s excellent Virtual Center less important.

So what’s next for the big names in virtualization? 

Companies like Microsoft, Citrix, VMware & Red Hat must develop visions and technology strategies that transform them from being bit part providers to strategic partners. A great example of the potential risk is how HP missed the Internet boom in the late 90’s. They bought several web technology companies, but couldn’t transform their acquisition strategy into a coherent vision for the enterprise (of course HP has the diversity and scale that allowed them to survive this vision misstep). I think in each case these companies are making an attempt at transforming, but none of them have effectively spelled out how they will combine their virtual roots with an “Everything as a Service” IT business model for the enterprise.  VMware bought Zimbra and SpringSource and both companies have interesting potential. However, there’s been no vision spelled out for what these technology and services oriented acquisitions mean for their core customers in the long run. Microsoft has started saying “Cloud first” revenue second (indicating a strong focus on moving business and software delivery to the cloud), and both Microsoft and Citrix have tools for managing heterogeneous virtual environments. However, none of these moves really tell a customer what they need to hear, which is “why”. Why are we doing what we’re doing, why are the things we’re doing creating an ecosystem that supports enterprise IT transformation to an everything-a- a- service model. We have to remember that business enablement is the goal, not new technology. Again, the key point here is that cloud, virtualization, and other IT solutions are a means to an end, not an end in and of themselves, unless you’re Microsoft, Yahoo, or Google.

 Historical Industry Parallels in Technology Trends

Over the last 10 years “cell” technology has gone from being "the" reason for a phone to being “oh ya”. The technology is still critical, but it’s the ecosystem of the modern smart phone that has turned it in to something much more useful than just a tool for making calls. These market changes in where value from cell phones comes from parallels the hypervisor.  In 2005 the hypervisor was the clamshell phone, now it’s the underlying enabler for so many other solutions, like cell technology is to an iPhone.

Where Will the Early Players Land

I believe we’re seeing the dawn of a new age of Agile IT and its unfortunate but likely true that some of the companies that enabled this new age (VMW, RHAT, MS, Citrix) won’t necessarily be the long term winners.  As the dominant player with the strongest product set VMware has the most to lose and the most to gain in this changing market. RHAT seems most at risk as they are primarily focused on the nuts and bolts of infrastructure operations.  Citrix & MS working together is interesting and their efforts to provide multi-platform management are also important. Will each of these companies continue to play a part, sure? The question is will it be a strategic enterprise part or a bit part similar to a commodity piece of hardware?

It would seem that the obvious answer to the question above would be names like HP, IBM, Microsoft, Google, & last but definitely not least Amazon.  However, I would argue that there may be other less obvious names that have an excellent chance of becoming the next cloud provider powerhouses.  

The following are three (3) groupings of potential  cloud providers by general segment:

Group A: Google, Amazon, Intuit & Microsoft

Group B: HP, IBM, Dell, Acadia

Group C: Savvis, AT&T, Deutsche Telecom, Tata, Telecom Italia, British Telecom, NTT, etc..

Authors Note: The list of vendors in each of the above groups is not meant to be exhaustive, but merely representative of their industry segments.

What are some of the basic requirements for being a cloud service provider?

Having a well thought out strategic approach to data centers and available power, space & cooling (PSC) capacity is a minimum (floor space). Other requirements include access to a global network, service & delivery staff, a large customer base and an ability to manage to the well defined deliverables of a Service Level Agreement (SLA).  

So who Seems to Fit the Above Requirements Best and What is the Importance?

While there are a number of characteristics that are common between each of the three groups, there are 4 primary areas that make Group C stand out.

• Historical background providing highly reliable services over the network (from home user to large enterprise)
• Excellent understanding of high availability and change management as well as clearly defined Service Level Agreements (often with financial penalties for missed service levels)
• A well managed and owned network
• Cloud hardware and software solution agnostic

“Owned Network”?

That’s right, when you own the network you control performance and delivery of the IT service. Cloud by its very nature is extremely dependent on the network.  However, it’s not just the performance and availability that’s important, it’s cost management. The network is a well understood sunk cost for the vendors in Group C. The providers in the other two groups would have to buy from Group C or build it themselves from scratch.  

“Agnostic”

I’m a firm believer that using cloud solutions should provide the buyer with the ultimate in vendor and solution choice, and with limited risk of lock-in.  Each of the providers in Group A&B is to some extent locked into solutions, largely of their own making.  I’m not trying to say their solutions are bad, quite the contrary, many of them are quite good. However, even the most beautifully gilded cage, is still just a cage.

Does That Mean We Shouldn’t Buy Cloud Services from any of the Companies in Group A or B?

This doesn’t mean you should never buy cloud services from Amazon, HP, or Microsoft. What is does mean is that you should do your best to avoid a situation that forces you to only use one of them. You won’t necessarily have to go to a telecom provider to avoid vendor lock-in, but you should have more options there.

Of course there are more questions that need answering regarding vendor lock-in or the avoidance thereof.  The Telecom provider doesn’t necessarily develop the cloud offering, instead they can become effective resellers of the best of the available solutions. This won’t happen by accident, they’ll have to partner with companies that can help them implement a cloud management platform. The appropriate  management and orchestration engine would ensure the customers have access to any or all the services they need, regardless of who created the service (I.e., Salesforce.com, Intuit, Google, Amazon, Microsoft, etc).  By having the flexibility to choose from the available solutions, the customer also has the option of moving from one to the other as necessary to avoid risk or cost. 

A slightly more controversial opinion on the subject of avoiding vendor lock-in is that you carry a higher risk to your business if you put all your eggs in one technology basket. In other words, if you have all of your business running on one company’s solution you run the risk of having the entire environment affected by a vendor specific architecture or service issue.  

What’s the Takeaway?

You should consider telecom providers as logical partners in your efforts to move more of your applications and infrastructure into the cloud. This doesn’t mean you won’t have to do your due diligence with each potential provider.  The telecom companies have (in most cases) excellent backgrounds in providing highly available and well managed services.  However, they’re still going to need the right tools to make a broad set of cloud options available to their customers while avoiding vendor lock-in. This applies to your internal operations as well, if like many customers you’re considering maintaining “private internal” cloud capabilities you’re still going to want a strong policy, governance, and management engine.  With this engine in place you’ll be able to guarantee the freedom of choice for your hardware and software and you’ll have a “common” tool for efficiently and safely utilizing your cloud solutions whether they are internal or external or both.

Happy Cloud Computing!

The Dictator is Ruling the House of Information Technology with an Iron Fist

The ENIAC mainframe was introduced in 1946. As the first electronic computer it was a huge leap forward in how humans got work done. At the time of its invention the ENIAC was the best way to crunch numbers in the world, yet only a very small and very exclusive group of people had access to it. This is truly the era of the “haves” and “have nots” as far as Information Technology is concerned. Through the subsequent 50 years we’ve gone through phases of making IT available to a wider audience. In the 70s most large companies and universities had a mainframe or access to one. However, as a percentage of the business population this was still a pretty exclusive group, who mostly had limited access to a shared resource. In the 80’s we began the era of distributed computing. Now pretty much any company or individual with a little cash could have full time access to some level of compute capability, from desktop PCs to mainframes, minis and towers.  At this point while technology access is fairly widespread, barrier to entry is still pretty high. The average cost of a desktop was $2,500 and software and support could add another $1000. The average mom and pop shop or home computer user couldn’t afford that kind of spend on something that would be used for writing letters or doing the occasional spreadsheet. 

Fast forward from the 80’s to the year 2000 and the Dictator is Now Allowing Peaceable Assembly

By 2000 the relative cost of a PC had dropped to under $1000 as compared to the late 80’s prices vs. income and inflation. As you might have guessed, this dramatically broadened the accessibility of computing. There is also the little thing called the internet that came to life between the 80s and 2000. The internet lowered the barrier to entry by making information and applications available to anyone who could get on the internet and had a computer or could rent time at an access point terminal. This combination of yearly decreases in the cost of PCs and wide access to the internet continues to this day, making it a little bit easier for the average Sue/Joe to take advantage of the benefits of readily available IT tools.

What’s the Problem with This Form of Government

Unfortunately while the pool of “haves” has increased dramatically every decade since the 50’s, there are still a large number of businesses and home users who are still “have nots” or at best “have a little”. There are myriad reasons for this continued disparity of ownership;

• Not everyone has easy access to a broadband connection yet, especially in developing parts of the world. (Like a big portion of the undeveloped world called the US of A)  
•  In major parts of the world there is no support for owning and using a computer. You couldn’t get the power or the broadband necessary to put it to use  
•  The big kicker is SOFTWARE! The cost of software has either held steady or increased with inflation over the years, even as every other aspect of technology has decreased markedly.  

 Cost of Hardware Over Time*

The above graph is relative pricing for all computer hardware and peripherals. Generally speaking the price of a PC has dropped roughly 15% per year over the last 12 years.

Why is the cost of Software still so High and why is that a Continued Roadblock to Wider Adoption of Information Technology

Today we buy software and hardware based on a 100% or 24/7/365 use model. We continue paying for the Oracle license, or for Microsoft Word, regardless of our use characteristics. The average user of any one software package only spends a few minutes or certainly no more than a few hours a day. Paying for 24/7 vs. “paying as you need” means that in most cases we’re paying 5-10X what we really should be paying. How can a 50 person company that is running on a shoestring budget afford world class IT tools, if they have to pay for them even when they’re not being used? Imagine if your finance person could log in to Oracle for an hour a day and 8 hours on the last day of the month and only pay for their use? A perfect example of where this paradigm is beginning to change is in office productivity tools. As a small business or home user you can get access (unsupported) to office productivity tools that have most of the features that the comparable Microsoft products do. While the Google option isn’t perfect, it is certainly a giant leap in the right direction towards democratizing IT. Think about all those pirated copies of MS Office that get spread around. True, it’s a shame that they aren’t being paid for, but it’s probably also true that most of those copies would never have been purchased anyway. Things are pirated for a reason and in many cases it is because the buyer would never be able to justify ownership at full price.

A Small Sampling of the Per License Cost of Some Common Software Packages Over Time

Information on software prices was retrieved from a number of different online sources, and then averaged.

Cloud has the Potential to Make the Land of Information Technology a True Democracy

The advent of cloud is no smaller an opportunity for global business and change than the introduction of the internet. We haven’t begun to understand what new businesses will be created and what business models will change as a result of the wide spread access to cloud based IT services.  However, this change won’t happen by accident. There are still many evil doers out there who are attempting to derail our train to democracy. 

I don’t want to play the name game, but I will say that many of the biggest IT vendors in the market are working very hard to make the cloud business as usual. They’re looking to maintain their margins and lock in their customers. This effort is completely contrary to many of the benefits that should be assumed as part of using  or implementing cloud services.

Be very wary of big IT vendors bearing gifts of “cloud” solutions, “best” hardware platforms, and long contracts.

By its very definition Cloud is a “pay as you need it” IT model. If you’re getting locked in to long contracts, and you’re still making hardware purchases, you’re heading down the wrong road.  Cloud has created a model that should remove the final barriers to a truly democratized IT model. A small business owner should be able to buy the service they need, in the quantity they need. They should also be able to buy a package of IT services that allows them to mimic much larger organizations.  The home user or the user in undeveloped countries should be able to access technologies and solutions through the phone, or similar handheld devices and they should only have to pay for what they use. Maybe an engineering student could really use a tool like Visio, but really only needs it for an hour a day during one semester. Instead of paying $500 for a copy that will rot on his/her computer, they can pay $10 a month for the access period that they need. This same opportunity is true for the world over. Anyone, with even the most basic of access can now work with and experience the benefits of information technology. This “equal access” to IT creates a democratic world, which allows each of us to succeed or fail on our own terms.

 Why Democratic IT Equals Amazing Opportunity

Like the micro loan programs being employed in India brought opportunity to the unserved masses, cloud can bring tools and technology to a whole new set of customers who would otherwise have been denied. Cloud also has the potential to provide a much richer application landscape, giving businesses and home users capabilities that have historically only been available to large enterprises. Imagine what this new found access and capability set will mean to the generation of new business, new ideas and new ways of solving problems. Think of eBay and it’s impact on small/home business and magnify that opportunity across another two billion home users and small businesses. At the large enterprise level the benefits will be in terms of millions of dollars saved, faster time to market and pay as you grow contracts.

Within the next 2-3 years we will begin to see how greater access to IT means opportunity for everyone, the only question is are you going to be a voting member of this new society or a holdover from the good old days of dictatorship.

Warm & Dark – The Data Center of the Future
In five years the vast majority of data centers around today will seem like dinosaurs. You will be able to call up new capacity in days or weeks, instead of months or years. You will manage your environment to an efficiency level only achievable through the removal of dedicated staffing. The question is, how do you get there and how long will it take you? Your data center ownership strategy will be the most critical key to your success.

Data Center Ownership Strategy
I believe there's good news on the future of the Data Center, but it's not going to happen by accident. Unfortunately Data Center environments often lag three to six years behind technology improvement opportunities. There are many reasons for this lag, not the least of which are cost, concern over interruption to operations, and assumptions of risk. However, much of these concerns are also buried in the tradition of our "current" thinking relative to Data Center design and our legacy organizational structures.

Without effective ownership, your company will likely continue to lag behind the technology curve. In a fairly traditional organization you might have an IT Data Center manager whose basic responsibilities are to ensure the space is secure, cable management is efficient and that facility's handles any issues relative to space, power & cooling. Depending on the size of your Data Center the facilities team may be even less focused, there could be 2-4 people that have various duties for Data Center related systems, but there is rarely anyone who owns the Data Center as a system.

My first recommendation to any organization I speak to is to appoint a person to be in charge of the data center top-to-bottom (see Data Center Pulse Stack). Once you've gotten the organizational focus (including budget) issue taken care of you're in position to make real change and maintain the operational and efficiency improvements you've implemented. Today's Data Center planners are often caught in the fixed location thinking relative to their facility and I believe now is the time to seriously challenge that way of thinking.

Challenging Conventional Thinking
The data center and associated infrastructure of today tend to be very fixed (stuck in place or design). The fixed nature of the infrastructure causes many of us to look for improvement options that fit into the "fixed" box we've created for ourselves. This "in the fixed box" thinking is holding us back, but it shouldn't for much longer. Modularity in data center design coupled with portability of environments via virtualization and cloud mean that we have more options than at any time in data center history to affect change with minimal disruption. If you're using the DCP Stack as a guide, you'll also be in a better position to understand how changes you plan might affect Data Center performance as a whole.

Key Considerations
Modularity
Physical design of your entire building infrastructure is key to allowing you to build only what you need when you need it. It should also allow you to build different tiers of protection or performance into your facility one contained capacity unit at a time and to change it back quickly as necessary.

Integration between the Facility and the Compute Infrastructure
Imagine having your facility alert your technical infrastructure of impending problems so that your compute infrastructure can protect itself by shutting down, moving or just optimizing to reduce load.

Portability
In order for the integration of your facility and the compute infrastructure to provide optimal benefit you're going to need a "portable" solution. With portability of the software environments (network, storage & applications) you can distribute your load and provide redundancy and protection for your applications. There are a number of virtualization tools that can provide you with some level of portability. You should also be looking to your partners in the network and cloud software space for their progress on application and environment portability. 

In summary if you've designed your data center of the future appropriately, you will probably have some or all of the following:

• A distributed, but highly efficient data center footprint that is dark most of the time.
• Compute infrastructure that is modular and flexible in how it scales.
• High availability will be designed into the cloud/virtualization layer. This way you are removing the risks associated with failure of any one device.  Low cost of ownership through efficient space acquisition (you should no longer be buying data center space that costs you money for years before being put into use).
• Removal of forced air cooling, including potentially replacing server fans with liquid cooling. At a minimum the use of airside economizers
• Greatly improved flexibility for building what you need, in the quantity you need, when you need it.
• Lastly you can begin to think of your data center capacity as “compute capacity”. Something that you can measure and report on.

Most importantly you will be providing your customer with a lower cost of ownership, higher level of availability, business continuity, and faster time to market.  You will be able to do all of this while being more sustainable. The new agile data center will be more sustainable for your business, for business continuity and for the planet.