Why all workloads don’t belong in the cloud

I had an interesting conversation with a CIO the other day about cloud computing. He had a simple question: I have an relatively old application and I want to move it to the cloud. How do I do that? I suspect that we will see a flurry of activity over the coming year where this question will be asked a lot.  And why not — the cloud is the rage and who wouldn’t want to demonstrate that with the cloud all problems are solved.  So, what was my answer to this CIO? Basically, I told him that all workloads do not belong in the cloud. It is not because this technically can’t be done. It can. It is quite possible to encapsulate an existing application and place it into a cloud environment so that new resources can be self-provisioned, etc. But, in reality, you have to look at this issue from an efficiency and an economic perspective.

Cloud computing gains an economic edge over a traditional data center when it supports a relatively small simple workload for a huge number of customers. For example, a singular workload like email or a payment service can be fairly optimized at all levels — the operating system, middleware, and the hardware can all be customized and tuned to support the workload. The economics favor this type of workload that support large numbers of customers. The same cannot be said for the poor aging Cobol application that is used by 10 people within an organization. While there might be incremental management productivity benefits, the cost/benefit analysis simply doesn’t work.

So, the answer is pretty simple. You just can’t throw every workload into the cloud. It is not a panacea for all IT problems.  Organizations that are trying to figure out what to do with these pesky old workloads need to look at three options:

1. Decide if that workload is still supporting business objectives in a cost effective manner. If it does the job, leave it alone.

2. That old workload might be better supported by traditional outsourcing. Let someone else keep the application alive while you move into more mission critical tasks.

3. Think about rebuilding that old workload — either by encapsulating key elements and placing them within a modular flexible environment. You might even discover that there are components that are actually useful across the organization. When you discover that sharing components across divisions/department is a productive and pragmatic approach, you might be ready to move those workloads into the cloud.

Can we free process and data?

I am still at IBM’s Information on Demand conference here in Las Vegas (not my favorite place..but what can you do). In listening to a lot of discussions around strategy and products I started thinking about one of the key problems that customers are facing around business process and managing increasingly complex data. What companies really want to do is to have the flexibility and freedom to leverage their critical data across applications and situations. They also want to be able to change processes based on changing business models.

This is the core issue that companies will be facing in the coming decade and will be the difference between success and failure for many  businesses.  Here’s an example of what I mean. Let’s take the example of a retailer in a competitive market. Let’s say our retailer had five or six applications: Accounting, Human Resources, supply chain management, a customer support system, and a customer facing e-commerce system. Each of these systems has an underlying database; each one manages this data based on the business process that is the foundation of the best practices that is the value of these packages. Even if each of the packages are the best in their markets there is a core problem since each solution is a silo. Processes that move between these systems tend to fall through the cracks.  This is why we, as customers of such retailers, are often frustrated when we call about a product that wasn’t delivered, doesn’t work, or requires a change only to discover that one department has no ability to know what is happening in another area. For most companies the dream of single view of the customer is aspirational but not practical right now. In reality, it is hard for companies to mess with their existing applications. These solutions are customized for their business environment; they were expensive and complicated to implement — and change is hard. In fact, companies only change when it is more painful to stay with the status quo than it is to change. In a retail scenario, companies change their approach to process and data management when they must change their business model because the current processes will lead to failure. Retailers are currently faced with emerging approaches to selling and managing customer relationships that are challenging traditional selling models.  Look what a company like Amazon.com or Netflex have done to their slower moving competitors.

A number of customers I have spoken with understand this very well. They are looking at ways to separate their core data assets from the underlying applications. Many of these customers are at the forefront of implementing a service oriented architecture (SOA) approach to managing their software assets. They are increasingly understanding that the secret to their future success is the knowledge they have about their customers, their needs and future requirements within their own set of offerings and those from partners. These companies are setting a priority of making this data independent, secure, and accurate. These business leaders are preparing for inevitable change.  At the same time, I have seen these customers creating SOA business services that are, in essence, codified business processes. For example, a business service could be a process that checks the credit of a potential partner or links a new customer request for service to the set of applications that confirms the request, orders the part, and notifies a partner.

So, here is the problem. These customers are implementing this new model of abstracting data and process based on specific projects or business initiatives.  These projects have gotten the attention of the C-team because of the impact on revenue. But, in reality, the real breakthrough will happen when the separation of data and process are the rule, not the exception.

This is going to be the overriding challenge for the next decade because it is so hard. There is inertia to move away from the predictable packaged applications that companies have implemented for more than 30 years. But I suggest that it will be inevitable that companies will begin to understand that if they are going to remain agile and change processes when they anticipate a competitive threat. These same companies will understand that their data is too important to leave it locked inside an application linked tightly to a process.

I don’t have the answers about what the tipping point will be when this starts to become a wide spread strategy. I think that the cloud will became a forcing action that will accelerate this trend. I would love to start a dialog. Send me your thoughts and I promise to post them.

What’s different about SOA two years later? Why we wrote a second edition of SOA for Dummies

It seems like just the other day that our team was busily finishing the first edition of SOA for Dummies. But it was two years ago since that book came out. A lot has change in that time. When we first wrote the book, we heard from lots of people that they really didn’t know what SOA was and were happy to have a book that would explain it to them in easy to understand language.

Because so much has changed, we were asked to write a second edition of SOA for Dummies which is coming out on December 19th.    What has changed in those two years?  Well, first of all, there have been a lot more implementations of SOA. In fact, in that edition, we were happy to have gotten 7 case studies.  Many of the customers that we talked (both that were featured in the book and those who took the time to speak with us without attribution) were just getting started. They were forming centers of excellence. They were beginning to form partnerships between the business and technical sides of their companies. They were implementing a service bus or were building their first sets of services.

In this second edition, we were fortunate to find 24 companies across 9 different verticals willing and able to talk on the record about their experiences implementing SOA.  What did we learn? While there is a lot I could say, I’d like to net it out to 5 things we learned:

1. Successful companies have spent the time starting with the both the key business services and business process before even thinking about implementation.

2. Companies have learned a lot since their initial pilots. They are now focused on how they can increase revenue for their companies through innovation using a service oriented approach.

3. Many companies have a strategic roadmap that they are focused on and therefore are implementing a plan in an incremental fashion.

4. A few companies are creating business services extracted from aging applications. Once this is done, they are mandating the use of these services across the company.

5. Companies that have been working on SOA for the last few years have learned to create modular business services that can have multiple uses. This was much harder than it appeared at first.

There are many other best practices and lessons learned in the case studies.  It is interesting to note just as many companies that said yes also were not able to participate because management felt that they didn’t want competitors to know what they were doing.

The bottom line is that SOA is beginning to mature. Companies are not just focused on backbone services such as service buses but on making their SOA services reach out to consumers and their business partners.

We have also added a bunch of new chapters to the book. For example, we have new chapters on SOA service management; SOA software development, software quality, component applications, and collaboration within the business process lifecycle.  Of course, we have updated all existing chapters based on the changes we have seen over the last few years.

We are very excited that we had the opportunity to update the book and look forward to continuing the dialog.

The ten reasons why software companies lose in a losing economy?

I have been thinking about the software industry and what is going to happen to companies in this really lousy economy. There will clearly be companies that don’t weather the storm — either because their venture capital backers get nervous or because their customers do.  But, as in every downturn, there will be companies that figure out how to do the right thing and actually thrive. There will also be companies that simply have a business model for another time and will not make it.  So, I thought that I would put together a list of the characteristics of the software companies that will fail:

1. My technology is so revolutionary everyone will want it. I see too many companies that don’t actually know what problems their technology solves for customers. If it doesn’t solve pain — don’t bother.
2. The platform we offer to our customers is a complete architecture and we’re going to build an ecosystem. Software companies that think they can offer a complete platform to customers — even if they have only a few dollars in revenue.  This isn’t the time to try to do it all. Anyone, no one will believe you. Pick something you do well and stick to it!
3. We don’t plan to try to partner with the big players; it’s too hard. In tough economic times, customers want to know that there is someone big and powerful behind the scenes…just in case.
4. We’d love to partner with a large vendor if they are willing to put our product on their price list and sell for us. Keep dreaming. Big vendors will partner but only if there is something in it for them. If you can fill a hole in their product line you have a good chance but you have to be realistic.
5. We sell a great tool. Everyone needs tools but they are commodities. So, unless a software company has a deep channel, this plan won’t work.  I have seen too many really nice tools companies go out of business. It takes a lot of energy to make one sale to a customer. If the return on the sales effort is only $199.00, it will takes a long time to get to a million.  And in tough economic times, customers will put a software company throught the same due diligence process for a $200 item as they would for a $20,000. Everyone is afraid to make a decision.
6. Our technology sells itself. Just a few months ago companies were talking about how they wanted technology that would foster innovation. Now that desire hasn’t changed and probably won’t. However, customers want to know that they can get a fast return on investment.  Therefore, successful vendors are structuring their offerings in a modular way so that customers can quickly prove value.
7. We sell an entire turnkey environment. The days of big all encompassing implementations are over — at least for now.  Customers need to be able to implement just what they can afford or get budget for. If it is successful, they want to be able to add the next chunk…next year.
8. We are implementing precisely what our customers tell us they need. I know that it is important to listen to customers. However, there are important lessons to remember. Customers do not always say what they mean. They don’t always know what they want. They might be asking a software company to add functions that are specific to the way their company operates and may not be wise for the market overall. So, to avoid failure, listen but make sure that you are not walking into a trap. Look beyond fear and to what will make your buyer successful in their jobs.
9. We are thinking about Software as a Service (SaaS)…but… In scary times, it is easier to stay with what you know and not make waves. But customers will buy SaaS offerings because there is no capital expenditure needed. If you don’t know how to do this, partner with someone who does. It is going to become the normal way that many software offerings are provided now and even more so in the future.
10. We are limiting our outreach in the market. It is too expensive to advertise or market. We’re going to wait until things get better. While these are scary times it is not wise to hide.  While companies are hiding smart software companies are out there doing a lot of low cost but very effective marketing initiatives. It takes some hard work, but prospects will notice because everyone else is really quiet

There is no doubt that there is lots of uncertainty out there. There will be a lot of companies who don’t know how to position, price, and partner. There will be lots of companies that simply don’t know how to prove to prospects that they are worth betting on.  I suspect that the companies that survive will be the ones with great business models, interesting and accessible innovation and a lack of fear.

Cloud Computing: a work in progress or a silver bullet?

I have seen some research recently that suggested the CIOs are not seriously thinking about Cloud Computing. Is this a leading indicator on this emerging market or is it looking in the rearview mirror? I vote for the rear view mirror theory. Here is why. If you are the typical CIO, you are thinking about everything from your budget, how to reduce energy costs in your data centers, proving to the CEO and CFO that your investments are indeed showing a return on investment or at least giving you a competitive weapon. In our research we are in fact seeing that many CIOs that are implementing new infrastructure and plans for new efficient data centers and innovative Service Oriented Architecture are making progress.
However, when I see research about doubts about clouds I can come to only one conclusion: fear of the unknown. What is a cloud? A cloud is an Internet based set of services based on a Software as a Service (SaaS) approach. Typically a single vendor controls this hardware, networking, software, and management environment.
Many CIOs and IT managers simply don’t understand what this means. It isn’t their fault. I have yet to see an article or announcement from a major vendor that makes it clear what a cloud really is (other than something that might mean rain). If I were a CIO struggling with all of the problems of a down market and requirements to make everyone happy I would be skeptical too.
Is Cloud Computing simply another word for outsourcing infrastructure? I believe that many CIOs will see it this way. After all, like outsourcing, clouds mean that computing is no longer on premise. There are obviously key differences between Cloud Computing today and outsourcing. The most obvious difference is the rationale for use. Today companies tend to use clouds for a specific test environment or to in essence host an application by a trusted supplier.
Over time, I think that CIOs will come around and accept that Cloud Computing is actually a valuable approach that is cost effective and trustworthy. However, in my view, it is going to take careful planning to gain the trust of business oriented CIOs. Here are what I think are the top challenges for achieving commercial clouds.

1. A cloud can hide many benefits and many sins. Therefore, a CIO has to be able to get under the hood of a cloud environment so that it is clear what the technology architecture is. Many problems are already surfacing because the existing cloud environment cannot scale and does not have a sophisticated management capability.

2. What exactly does the organization want to use a cloud for? Is it in place of a data center? If so, the CIO needs to do a lot of homework and establish a very well constructed Service Level Agreement with financial incentives and penalties.

3. Does the organization view a cloud as a standalone environment for one use? If so, how does it connect to an existing infrastructure and how easy is it to move data and other content from one site to another?

4. What happens if the cloud fails? Is there a back up plan? This is especially important if employees and/or partners and customers are dependent on the application or system that lives in the cloud. What happens if the cloud supplier goes out of business?

5. How proprietary is the cloud and how does that impact integration? This is important if you decide to leave one environment for another or even decide to bring the application back in-house. For example, some clouds may have designed their own languages for integration that might mean that an organization is stuck with an expensive rewrite.

Conclusion: there are no silver bullets or silver linings. Now, I think that Cloud Computing is going to be a very important transition in the maturation of distributed computing. In the long run, it will provide the type of utility computing that some of us have been talking about for decades. However, like anything else in the technology world, it is not a simple fix to complicated problems. It is an IT infrastructure made up of technology components that have to be managed, scaled, and secured – to name but a few issues. I expect that we will see a lot of failures in the coming year that will seed doubts among potential customers. At the same time, it will open opportunities for smart companies who have the vision to bring the pieces together and make this stage of computing a reality. At least we won’t be bored!

Will Desktop Virtualization Be Huge?

I have been spending a lot of time over the past several months looking at issues around desktop virtualization. While a lot of the focus in the market has been around server based virtualization, I’d put my money behind desktop virtualization. I will even go out on a limb and predict that within the coming year there will a massive explosion in customers implementing desktop virtualization.

Here are the top three reasons that I make this prediction:

1. The cost of supporting PCs for hundreds or perhaps thousands of users is out of control — no upside ROI for a company.

2. In many situations a full PC is overkill. Does a customer support rep really need a PC? How about the increasing numbers of workers who do most of their work over the web? As the growth of Software as a Service continues to expand the need for a PC on every desk with diminish too.

3. Security of data has long been the bain of many security officers. If a user can easily download sensitive customer data onto a desktop problems will and do occur. I have seen too many articles about how a PC was accidentially lost with lots of customer data. While there are other ways of protecting data, many companies are looking at locking down the desktop device so that data storage is not even an option.

4. The capabilities of a thin client environment are growing more sophisticated. It is now becoming practical to implement multimedia on a non-PC. It is also possible to create a powerful environment where there is enough communications power to enable a user with a non-PC device to easily access information quickly.

5. And maybe your desktop capability will be available as a service. Several companies I have spoken with lately are making desktop sophistication available as a service. This is part of the overall movement to a long term cloud computing movement.

I think that once customers move out of the pilot stage with desktop virtualization they will move to wide deployments. I expect that the 100 desktop virtualization experiments that are successful will trigger deployments of 10s of thousands of deployments. Therefore, expect to see a huge surge of adoption within the next few years.