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Can IBM Build a Strong Cloud Partner Ecosystem?

May 4, 2011 1 comment

Despite all of the hand wringing surrounding Amazon.com’s service outages last week, it is clear to me that cloud computing is dramatically changing the delivery models of computing forever. We simply will not return to a model where organizations assume that they will consume primarily their own data center resources.  The traditional data center certainly isn’t going away but its role and its underlying technology will change forever.  One of the ramifications of this transition is the role of cloud infrastructure leaders in determining the direction of the partnership models.

Traditionally, System vendors have relied on partners to expand the coverage of their platforms. With the cloud, the requirement to have a strong partner ecosystem will not change. If anything, partners will be even more important in the cloud than they have been in traditional computing delivery models.  This is because with cloud computing, the barriers to leveraging different cloud-based software offerings – platform as a service and Software as a Service are very low. Any employee with a credit card can try out just about anything.  I think that the Amazon.com issues will be seen in the future as a tipping point for cloud computing. It, in fact, will not be the end to cloud but it will change the way companies view the way they select cloud partners.  Service management, scalability, and reliability will become the selection standard – not just for the end customer but for partners as well.

So, I was thinking about the cloud partnership model and how it is evolving. I expect that the major systems vendors will be in a perfect position to begin to reassert their power in the era of the cloud.  So, I decided to take a look at how IBM is approaching its partnership model in light of cloud computing.  Over the past several months, IBM has been revealing a new partnership model for the cloud computing market.  It has been difficult for most platform vendors to get noticed above the noise of cloud pioneers like Amazon and Google.  But this is starting to change.  It is not hard to figure out why.  IBM believes that cloud is a $181 billion business opportunity and it would like to grab a chunk of that opportunity.

Having followed IBM’s partnering initiatives for several decades I was not surprised to see a revamped cloud partnering program emerge this year. The new program is interesting for several different reasons.  First, it is focused on bringing together all of IBM’s cloud offerings across software, developer relations, hardware, and services into a single program.  This is important because it can be intimidating for an ISV, a Value Added Reseller, or a systems integrator to navigate the complexity of IBM’s offerings without some assistance.  In addition, IBM has to contend with a new breed of partners that are focused on public, private, and hybrid cloud offerings.

The new program is called the Cloud Specialty program and targeted to cover the entire cloud ecosystem including cloud builders (hardware and software resellers and systems integrators), Service Solution Providers (software and service resellers), Infrastructure Providers (telecom providers, hosting companies, Managed Service Providers, and distributors), Application Providers (ISVs and systems integrators), and Technology Providers (tools providers, and appliance vendors).

The focus of the cloud specialty program is not different than other partnering programs at IBM. It is focused on issues such as expanding the skills of partners, building revenue for both IBM and partners, and providing go to market programs to support its partners.  IBM is the first to admit that the complexity of the company and its offerings can be intimidating for partners.  Therefore, one of the objectives of the cloud specialty program is to clarify the requirements and benefits for partners. IBM is creating a tiered program based on the different types of cloud partners.  The level of partner investment and benefits differ based on the value of the type of partner and the expectation of those partners.  But there are some common offerings for all partners. All get early access to IBM’s cloud roadmap, use of the Partnerworld Cloud Specialty Mark, confidential updates on IBM’s cloud strategy and roadmap, internal use of LotusLive, networking opportunities. In addition, all these partners are entitled to up to $25,000 in business development funds.   There are some differences.  They include:

  • Cloud builders gain access to business leads, and access to IBM’s lab resources. In exchange these partners are expected to have IBM Cloud Reference architecture skills as well as cloud solutions provider and technical certification. They must also demonstrate ability to generate revenue. Revenue amounts vary based on the mix of hardware, software, and services that they resell.  They must also have two verified cloud references for the previous calendar year.
  • Service Solution Providers are provided with a named relationship manager and access to networking opportunities. In exchange, partners are expected to use IBM cloud products or services, demonstrate knowledge and skills in use of IBM cloud offerings, and the ability to generate $300,000 in revenue from the partnership.
  • Infrastructure Providers are given access to named IBM alliance manager, and access to business development workshops. In exchange, these partners are expected to use IBM’s cloud infrastructure products or services, demonstrate skills in IBM technology. Like service solution providers they must use and skills in IBM cloud offerings, have at least $300,000 a year in client references based on two cloud client references
  • Application Providers are given access to a named IBM alliance manager, and access to business development workshops. They are expected to use IBM cloud products or services, have skills in these technologies or services, and a minimum of $100,000 a year in revenue plus two cloud client references.
  • Technology Providers get access to networking opportunites, and IBM’s cloud and services assessment tools.  In exchange, these partners are required to demonstrate knowledge of IBM Cloud Reference architecture, have skills related to IBM’s cloud services. Like application providers, these partners must have at least $100,000 in IBM revenue and two client references.

What does IBM want? IBM’s goals with the cloud specialty program is to make it as attractive as possible for prospective partners to chose its platform. It is hoping that by offering financial and technical incentives that it can make inroads with cloud focused companies. For example, it is openings its labs and providing assistance to help partners define their offerings. IBM is also taking the unusual step of allowing partners to white label its products.  On the business development side, IBM is teaming with business partners on calls with prospective customers.  IBM anticipates that the impact on these partners could be significant – potentially generating as much as 30% gross margin growth.

Will the effort work? It is indeed an ambitious program. IBM will have to do a good job in explaining its huge portfolio of offerings to the prospective partners. For example, it has a range of services including CastIron for cloud integration, analytics services, collaboration services (based on LotusLive), middleware services, and Tivoli service management offerings.  In addition, IBM is encouraging partners to leverage its  extensive security services offerings.  It is also trying to encourage partners to leverage its hardware systems. One example of how IBM is trying to be more attractive to cloud-based companies like Software as a Service vendors to to price offerings attractively. Therefore, it is offering a subscription-based model for partners so that they can pay based on usage – the common model for most cloud platform vendors.

IBM is on the right track with this cloud focused partner initiative.  It is a sweeping program that is focused on provides a broad set of benefits for partners. It is pricing its services so that ISVs can rent a service (including IBM’s test and development cloud) by the month — an important issue in this emerging market.  It is also expecting partners to make a major investment in learning IBM’s software, hardware, and services offerings. It is also expecting partners to expand their knowledge of the markets they focus on.

Lotus redux: a transformation in process

February 3, 2011 1 comment

I have attended Lotusphere for many years so it is very interesting to watch the transition. When Lotus Notes was first introduced in the late 1980s, it was a seminal moment in the evolution of collaborative computing. During those first few years, Lotus was able to establish a rich ecosystem of partners and really define the market for collaborative computing — before the general market even had time to think about the necessity for such a platform.  But a lot has changed.  Fast forward to 2011.  Today the ideas of collaboration platforms is now the norm. Individuals, virtual teams, and big corporations depend on collaboration platforms to get business done. For many years it was clear that Microsoft with its office franchise and SharePoint had captured the market. However, with the advent of cloud computing and Google’s push into Google Apps that the market dynamics were changing. Now, add social networking on top of that with services like Twitter, Facebook, and LinkedIn and the world gets a lot more interesting.

So, what does this have to do with Lotus? Actually a lot.  Companies that I have been talking to are frantically looking for ways to combine the spontaneity of social networking platforms with structured collaboration with customers, partners, and prospects. They are looking for new ways to expand their business flexibility and opportunities. This is where Lotus has an interesting opportunity. Lotus has traditionally sold Notes and Domino to the high end of the Mid-market and the enterprise market primarily as a communications platform — i.e. electronic mail.  That is what the typical user sees. But under that interface is complex applications that capture a lot of company intellectual property.  Over time, IBM has added a lot of sophisticated offerings for collaboration such as Quickr and Connections. Now add LotusLive, IBM’s cloud collaboration platform into the mix and things get interesting.  In addition to this new generation platform that brings together the traditional Notes environment with more dynamic collaboration and cloud computing, IBM is enabling analytics on the platform with tools from Cognos.

At the same time, IBM is being realistic this time around. It knows that it cannot displace Microsoft Sharepoint so it is enabling customers to make Sharepoint a component in an IBM driven collaboration environment. Likewise, it is allowing integration with various wireless smartphone environments as well.

But if I were to put a bet on one product that I think will have the greatest potential to bring IBM into the mainstream of social networking — or more specifically social business is LotusLive.  LotusLive in combination with the underlying sophistication of the Notes and Domino platforms, productivity solutions (Symphony), and partnerships and linkages with third party SaaS platforms will drive IBM’s place in the collaboration market.

IBM clearly has challenges getting existing customers comfortable with change and helping them to move their valuable assets to the new world.  But the components are in place. There are also important innovations coming out of the labs that will propel the environment forward.  IBM will have to gather a lot more partners and more adoption from customers who aren’t currently customers. But the opportunity is waiting.

Predictions for 2011: getting ready to compete in real time

December 1, 2010 3 comments

2010 was a transition year for the tech sector. It was the year when cloud suddenly began to look realistic to the large companies that had scorned it. It was the year when social media suddenly became serious business. And it was the year when hardware and software were being united as a platform – something like in the old mainframe days – but different because of high-level interfaces and modularity. There were also important trends starting to emerge like the important of managing information across both the enterprise and among partners and suppliers. Competition for ownership of the enterprise software ecosystem headed up as did the leadership of the emerging cloud computing ecosystem.

So, what do I predict for this coming year? While at the outset it might look like 2011 will be a continuation of what has been happening this year, I think there will be some important changes that will impact the world of enterprise software for the rest of the decade.

First, I think it is going to be a very big year for acquisitions. Now I have said that before and I will say it again. The software market is consolidating around major players that need to fill out their software infrastructure in order to compete. It will come as no surprise if HP begins to purchase software companies if it intends to compete with IBM and Oracle on the software front.  But IBM, Oracle, SAP, and Microsoft will not sit still either.  All these companies will purchase the incremental technology companies they need to compete and expand their share of wallet with their customers.

This will be a transitional year for the up and coming players like Google, Amazon, Netflix, Salesforce.com, and others that haven’t hit the radar yet.  These companies are plotting their own strategies to gain leadership. These companies will continue to push the boundaries in search of dominance.  As they push up market as they grab market share, they will face the familiar problem of being able to support customers who will expect them to act like adults.

Customer support, in fact, will bubble to the top of the issues for emerging as well as established companies in the enterprise space – especially as cloud computing becomes a well-established distribution and delivery platform for computing.  All these companies, whether well established or startups will have to balance the requirements to provide sophisticated customer support with the need to make profit.  This will impact everything from license and maintenance revenue to how companies will charge for consulting and support services.

But what are customers be looking for in 2011? Customers are always looking to reduce their IT expenses – that is a given. However, the major change in 2011 will be the need to innovative based on customer facing initiatives.  Of course, the idea of focusing on customer facing software itself isn’t new there are some subtle changes.  The new initiatives are based on leveraging social networking from a secure perspective to both drive business traffic, anticipate customer needs and issues before they become issues.  Companies will spend money innovating on customer relationships.

Cloud Computing is the other issue in 2011. While it was clearly a major differentiator in 2010, the cloud will take an important leap forward in 2011.  While companies were testing the water this year, next year, companies will be looking at best practices in cloud computing.  2011 will be there year where customers are going to focus on three key issues: data integration across public, private, and data centers, manageability both in terms of workload optimization, security, and overall performance.  The vendors that can demonstrate that they can provide the right level of service across cloud-based services will win significant business. These vendors will increasingly focus on expanding their partner ecosystem as a way to lock in customers to their cloud platform.

Most importantly, 2011 will be the year of analytics.  The technology industry continues to provide data at an accelerated pace never seen before. But what can we do with this data? What does it mean in organizations’ ability to make better business decisions and to prepare for an unpredictable future?  The traditional warehouse simply is too slow to be effective. 2011 will be the year where predictive analytics and information management overall will emerge as among the hottest and most important initiatives.

Now I know that we all like lists, so I will take what I’ve just said and put them into my top ten predictions:

1. Both today’s market leaders and upstarts are going to continue to acquire assets to become more competitive.  Many emerging startups will be scooped up before they see the light of day. At the same time, there will be almost as many startups emerge as we saw in the dot-com era.

2. Hardware will continue to evolve in a new way. The market will move away from hardware as a commodity. The hardware platform in 2010 will be differentiated based on software and packaging. 2010 will be the year of smart hardware packaged with enterprise software, often as appliances.

3. Cloud computing models will put extreme pressure on everything from software license and maintenance pricing to customer support. Integration between different cloud computing models will be front and center. The cloud model is moving out of risk adverse pilots to serious deployments. Best practices will emerge as a major issue for customers that see the cloud as a way to boost innovation and the rate of change.

4. Managing highly distributed services in a compliant and predictable manner will take center stage. Service management and service level agreements across cloud and on-premises environments will become a prerequisite for buyers.

5. Security software will be redefined based on challenges of customer facing initiatives and the need to more aggressively open the corporate environment to support a constantly morphing relationship with customers, partners, and suppliers.

6. The fear of lock in will reach a fever pitch in 2011. SaaS vendors will increasingly add functionality to tighten their grip on customers.  Traditional vendors will purchase more of the components to support the lifecycle needs of customers.  How can everything be integrated from a business process and data integration standpoint and still allow for portability? Today, the answers are not there.

7. The definition of an application is changing. The traditional view that the packaged application is hermetically sealed is going away. More of the new packaged applications will be based on service orientation based on best practices. These applications will be parameter-driven so that they can be changed in real time. And yes, Service Oriented Architectures (SOA) didn’t die after all.

8. Social networking grows up and will be become business social networks. These initiatives will be driven by line of business executives as a way to engage with customers and employees, gain insights into trends, to fix problems before they become widespread. Companies will leverage social networking to enhance agility and new business models.

9. Managing end points will be one of the key technology drivers in 2011. Smart phones, sensors, and tablet computers are refining what computing means. It will drive the requirement for a new approach to role and process based security.

10. Data management and predictive analytics will explode based on both the need to understand traditional information and the need to manage data coming from new sales and communications channels.

The bottom line is that 2011 will be the year where the seeds that have been planted over the last few years are now ready to become the drivers of a new generation of innovation and business change. Put together everything from the flexibility of service orientation, business process management innovation, the wide-spread impact of social and collaborative networks, the new delivery and deployment models of the cloud. Now apply tools to harness these environments like service management, new security platforms, and analytics. From my view, innovative companies are grabbing the threads of technology and focusing on outcomes. 2011 is going to be an important transition year. The corporations that get this right and transform themselves so that they are ready to change on a dime can win – even if they are smaller than their competitors.

Eight things that changed since we wrote Cloud Computing for Dummies

October 8, 2010 3 comments

I admit that I haven’t written a blog in more than three months — but I do have a good reason. I just finished writing my latest book — not a Dummies book this time. It will be my first business book based on almost three decades in the computer industry. Once I know the publication date I will tell you a lot more about it. But as I was finishing this book I was thinking about my last book, Cloud Computing for Dummies that was published almost two years ago.  As this anniversary approaches I thought it was appropriate to take a look back at what has changed.  I could probably go on for quite a while talking about how little information was available at that point and how few CIOs were willing to talk about or even consider cloud computing as a strategy. But that’s old news.  I decided that it would be most interesting to focus on eight of the changes that I have seen in this fast-moving market over the past two years.

Change One: IT is now on board with cloud computing. Cloud Computing has moved from a reaction to sluggish IT departments to a business strategy involving both business and technology leaders.  A few years ago, business leaders were reading about Amazon and Google in business magazines. They knew little about what was behind the hype. They focused on the fact that these early cloud pioneers seemed to be efficient at making cloud capability available on demand. No paperwork and no waiting for the procurement department to process an order. Two years ago IT leaders tried to pretend that cloud computing was  passing fad that would disappear.  Now I am finding that IT is treating cloud computing as a center piece of their future strategies — even if they are only testing the waters.

Change Two: enterprise computing vendors are all in with both private and public cloud offerings. Two years ago most traditional IT vendors did not pay too much attention to the cloud.  Today, most hardware, software, and services vendors have jumped on the bandwagon. They all have cloud computing strategies.  Most of these vendors are clearly focused on a private cloud strategy. However, many are beginning to offer specialized public cloud services with a focus on security and manageability. These vendors are melding all types of cloud services — public, private, and hybrid into interesting and sometimes compelling offerings.

Change Three: Service Orientation will make cloud computing successful. Service Orientation was hot two years ago. The huge hype behind cloud computing led many pundits to proclaim that Service Oriented Architectures was dead and gone. In fact, cloud vendors that are succeeding are those that are building true business services without dependencies that can migrate between public, private and hybrid clouds have a competitive advantage.

Change Four: System Vendors are banking on integration. Does a cloud really need hardware? The dialog only two years ago surrounded the contention that clouds meant no hardware would be necessary. What a difference a few years can make. The emphasis coming primarily from the major systems vendors is that hardware indeed matters. These vendors are integrating cloud infrastructure services with their hardware.

Change Five: Cloud Security takes center stage. Yes, cloud security was a huge topic two years ago but the dialog is beginning to change. There are three conversations that I am hearing. First, cloud security is a huge issue that is holding back widespread adoption. Second, there are well designed software and hardware offerings that can make cloud computing safe. Third, public clouds are just as secure as a an internal data center because these vendors have more security experts than any traditional data center. In addition, a large number of venture backed cloud security companies are entering the market with new and quite compelling value propositions.

Change Six: Cloud Service Level Management is a  primary customer concern. Two years ago no one our team interviewed for Cloud Computing for Dummies connected service level management with cloud computing.   Now that customers are seriously planning for wide spread adoption of cloud computing they are seriously examining their required level of service for cloud computing. IT managers are reading the service level agreements from public cloud vendors and Software as a Service vendors carefully. They are looking beyond the service level for a single service and beginning to think about the overall service level across their own data centers as well as the other cloud services they intend to use.

Change Seven: IT cares most about service automation. No, automation in the data center is not new; it has been an important consideration for years. However, what is new is that IT management is looking at the cloud not just to avoid the costs of purchasing hardware. They are automation of both routine functions as well as business processes as the primary benefit of cloud computing. In the long run, IT management intends to focus on automation and reduce hardware to interchanagable commodities.

Change Eight: Cloud computing moves to the front office. Two years ago IT and business leaders saw cloud computing as a way to improve back office efficiency. This is beginning to change. With the flexibility of cloud computing, management is now looking at the potential for to quickly innovate business processes that touch partners and customers.

Cashing in on the cloud

June 15, 2010 1 comment

I have been spending quite a bit of time these days at Cloud Computing events. Some of these events, like the Cloud Camps are wonderful opportunities for customers, vendors, consulted, and interested parties to exchange ideas in a very interactive format. If you haven’t been to one I strongly recommend them.  Dave Nielsen who is one of the founders of the Cloud Camp concept has done a great job not just jump starting these events but participating in most of them around the world.  In addition, Marcia Kaufman and I have been conducting a number of half and full day Introduction to Cloud Computing seminars in different cities.  What has been the most interesting observation from my view is that customers are no longer sitting on the side lines with their arms crossed. Customers are ready and eager to jump into to this new computing paradigm.  Often they are urged on by business leaders who instinctively see the value in turning computing into a scalable utility.  So, for the first time, there is a clear sense that there may well be money to be made.

While a lot of the focus lately has been on software developers, it is interesting to look at the channel as a huge opportunity to bring the cloud into a broader set of business customers.  I recently helped to run a couple of workshops with Sandy Carter, vice president of Software Group Channels for IBM.  Channel partners and distributors will be an increasingly important part of the cloud ecosystem. These companies typically have the organization and ability to reach into specialized customer markets with solutions.  These workshops are very interesting for a couple of reasons.  First, many distributors and channel partners are looking for guidance and direction about what the cloud is and what it means for these business.  Second, once these partners understand what resources are available to them they are in an excellent position to become a conduit for change.  The two workshops that IBM aptly named “Cool Cloud Cash” brought cloud computing into sharp focus for these partners.  These are savvy business leaders.  Once they understand how they can leverage cloud computing software, hardware, and services they start to see dollar signs.  In a sense, the channel is the most important avenue to bring cloud computing to the rest of the market — not just the early adopters.  IBM has a renewed focus on channel partners and is focused particularly on expanding its cloud partner ecosystem. One important aspect is new certifications in cloud computing. Given the fact that this is an immature market, it is important that distributors and channel partners are able to demonstrate to their customers that they have deep knowledge. It is especially important that platform vendors like IBM work closely with partners since they are both selling and representing them in the market.

IBM’s hardware sneak attack

April 13, 2010 5 comments

Yesterday I read an interesting blog commenting on why Oracle seems so interested in Sun’s hardware.

I quote from a comment by Brian Aker, former head of architecture for MySQL on the O’Reily Radar blog site.  He comments on his view on why Oracle bought Sun,

Brian Aker: I have my opinions, and they’re based on what I see happening in the market. IBM has been moving their P Series systems into datacenter after datacenter, replacing Sun-based hardware. I believe that Oracle saw this and asked themselves “What is the next thing that IBM is going to do?” That’s easy. IBM is going to start pushing DB2 and the rest of their software stack into those environments. Now whether or not they’ll be successful, I don’t know. I suspect once Oracle reflected on their own need for hardware to scale up on, they saw a need to dive into the hardware business. I’m betting that they looked at Apple’s margins on hardware, and saw potential in doing the same with Sun’s hardware business. I’m sure everything else Sun owned looked nice and scrumptious, but Oracle bought Sun for the hardware.

I think that Brian has a good point. In fact, in a post I wrote a few months ago, I commented on the fact that hardware is back.  It is somewhat ironic. For a long time, the assumption has been that a software platform is the right leverage point to control markets.  Clearly, the tide is shifting.  IBM, for example, has taken full advantage of customer concerns about the future of the Sun platform. But IBM is not stopping there. I predict a hardware sneak attack that encompasses IBM’s platform software strength (i.e., middleware, automation, analytics, and service management) combined with its hardware platforms.

IBM will use its strength in systems and middleware software to expand its footprint into Oracle’s backyard surrounding its software with an integrated platform designed to work as a system of systems.  It is clear that over the past five or six years IBM’s focus has been on software and services.  Software has long provided good profitability for IBM. Services has made enormous strides over the past decade as IBM has learned to codify knowledge and best practices into what I have called Service as Software. The other most important movement has been IBM’s focused effort over the past decade to revamp the underlying structure of its software into modular services that are used across its software portfolio. Combine this approach with industry focused business frameworks and you have a pretty good idea of where IBM is headed with its software and services portfolios.

The hardware strategy has begun to evolve in 2005 when IBM software bought a little hardware XML accelerator hardware appliance company called DataPower. Many market watchers were confused. What would IBM software do with a hardware platform?  Over time, IBM expanded the footprint of this platform and began to repurpose it as a means to pre-packaging software components. First there was a SOA-based appliance; then IBM added a virtual machine appliance called the CloudBurst appliance.  On the Lotus side of the business, IBM bought another appliance company that evolved into the Lotus Foundations platform.  Appliances became a great opportunity to package and preconfigure systems that could be remotely upgraded and managed.  This packaging of software with systems demonstrated the potential not only for simplicity for customers but a new way of adding value and revenue.

Now, IBM is taking the idea of packaging hardware with software to new levels.  It is starting to leverage the software and networking capability focused on hardware-driven systems. For example, within the systems environment, IBM is leveraging its knowledge of optimizing systems software so that it applications-based workloads can take advantage of capabilities such as threading, caching, and systems level networking.

In its recent announcement, IBM has developed its new hardware platforms based on the five most common workloads: transaction processing, analytics, business applications, records management and archiving, and collaboration.  What does this mean to customers? If a customer has a transaction oriented system, the most important capability is to ensure that the environment uses as many threads as possible to optimize speed of throughput. In addition, caching repetitive workloads will also ensure that transactions move through the system as quickly as possible. While this has been doable in the past, the difference is that these capabilities are packaged as an end-to-end system. Thus, implementation could be faster and more precise. The same can be said for analytics workloads. These workloads demand a high level of efficiency to enable customers to look for patterns in the data that help predict outcomes.     Analytics workloads require the caching and fast processing of   algorithms and data across multiple sources.

The bottom line is that IBM is looking at its hardware as an extension of the type of workloads they are required to support.  Rather than considering hardware as as set of separate platforms, IBM is following a systems of systems approach that is consistent with cloud computing.  With this type of approach, IBM will continue on the path of viewing a system as a combination of the hardware platform, the systems software, and systems-based networking.  These elements of computing are therefore configured based on the type of application and the nature of the current workload.

It is, in fact, workload optimization that is at the forefront of what is changing in hardware in the coming decade. This is true both in the data center and in the cloud. Cloud computing — and the hybrid environments that make up the future of computing are all predicated on predictable, scalable, and elastic workload management.  It is the way we will start thinking about computing as a continuum of all of the component parts combined — hardware, software, services, networking, storage, collaboration, and applications.  This reflects the dramatic changes that are just at the horizon.

Why we about to move from cloud computing to industrial computing?

April 5, 2010 7 comments

I spent the other week at a new conference called Cloud Connect. Being able to spend four days emerged in an industry discussion about cloud computing really allows you to step back and think about where we are with this emerging industry. While it would be possible to write endlessly about all the meeting and conversations I had, you probably wouldn’t have enough time to read all that. So, I’ll spare you and give you the top four things I learned at Cloud Connect. I recommend that you also take a look at Brenda Michelson’s blogs from the event for a lot more detail. I would also refer you to Joe McKendrick’s blog from the event.

1. Customers are still figuring out what Cloud Computing is all about.  For those of us who spend way too many hours on the topic of cloud computing, it is easy to make the assumption that everyone knows what it is all about.  The reality is that most customers do not understand what cloud computing is.  Marcia Kaufman and I conducted a full day workshop called Introduction to Cloud. The more than 60 people who dedicated a full day to a discussion of all aspects of the cloud made it clear to us that they are still figuring out the difference between infrastructure as a service and platform as a service. They are still trying to understand the issues around security and what cloud computing will mean to their jobs.

2. There is a parallel universe out there among people who have been living and breathing cloud computing for the last few years. In their view the questions are very different. The big issues discussed among the well-connected were focused on a few key issues: is there such a thing as a private cloud?; Is Software as a Service really cloud computing? Will we ever have a true segmentation of the cloud computing market?

3. From the vantage point of the market, it is becoming clear that we are about to enter one of those transitional times in this important evolution of computing. Cloud Connect reminded me a lot of the early days of the commercial Unix market. When I attended my first Unix conference in the mid-1980s it was a different experience than going to a conference like Comdex. It was small. I could go and have a conversation with every vendor exhibiting. I had great meetings with true innovators. There was a spirit of change and innovation in the halls. I had the same feeling about the Cloud Connect conference. There were a small number of exhibitors. The key innovators driving the future of the market were there to discuss and debate the future. There was electricity in the air.

4. I also anticipate a change in the direction of cloud computing now that it is about to pass that tipping point. I am a student of history so I look for patterns. When Unix reached the stage where the giants woke up and started seeing huge opportunity, they jumped in with a vengeance. The great but small Unix technology companies were either acquired, got big or went out of business. I think that we are on the cusp of the same situation with cloud computing. IBM, HP, Microsoft, and a vast array of others have seen the future and it is the cloud. This will mean that emerging companies with great technology will have to be both really luck and really smart.

The bottom line is that Cloud Connect represented a seminal moment in cloud computing. There is plenty of fear among customers who are trying to figure out what it will mean to their own data centers. What will the organizational structure of the future look like? They don’t know and they are afraid. The innovative companies are looking at the coming armies of large vendors and are wondering how to keep their differentiation so that they can become the next Google rather than the next company whose name we can’t remember. There was much debate about two important issues: cloud standards and private clouds. Are these issues related? Of course. Standards always become an issue when there is a power grab in a market. If a Google, Microsoft, Amazon, IBM, or an Oracle is able to set the terms for cloud computing, market control can shift over night. Will standard interfaces be able to save the customer? And how about private clouds? Are they real? My observation and contention is that yes, private clouds are real. If you deploy the same automation, provisioning software, and workload management inside a company rather than inside a public cloud it is still a cloud. Ironically, the debate over the private cloud is also about power and position in the market, not about ideology. If a company like Google, Amazon, or name whichever company is your favorite flavor… is able to debunk the private cloud — guess who gets all the money? If you are a large company where IT and the data center is core to how you conduct business — you can and should have a private cloud that you control and manage.

So, after taking a step back I believe that we are witnessing the next generation of computing — the industrialization of computing. It might not be as much fun as the wild west that we are in the midst of right now but it is coming and should be here before we realize that it has happened.

Why hardware still matters– at least for a couple of years

February 9, 2010 3 comments

It is easy to assume that with the excitement around cloud computing would put a damper on the hardware market. But I have news for you. I am predicting that over the next few years hardware will be front and center.  Why would I make such a wild prediction. Here are my three reasons.

1. Hardware is front and center in almost all aspects of the computer industry. It is no wonder that Oracle wants to become a hardware company. Hardware is tangible. It’s revenue hits the bottom line right away. Hardware can envelop software and keep customers pinned down for many, many years. New generation platforms in the form of hardware appliances are a convenient delivery platform that helps the sales cycle. It is no wonder that Oracle wants a hardware platform. It completes the equation and allows Oracle to position itself as a fully integrated computing company. Likewise, IBM and HP are focused on building up their war chest full of strong hardware platforms. If you believe that customers want to deal with one large brand..or two, then the winners want to control the entire computing ecosystem.

2. The cloud looms. Companies like Amazon.com and Google do not buy hardware from the big iron providers and never will. For economic reasons, these companies go directly to component providers and purchase custom designed chips, board, etc. This approach means that for a very low price, these cloud providers can reduce their power consumption by making sure that the components are optimize for massively scaled clouds.  These cloud vendors are focused on undercutting the opportunity and power of the big systems providers. Therefore, cloud providers care a lot about hardware — it is through optimization of the hardware that they can threaten the power equilibrium in the computer market.

3. The clash between cloud and on premise environments. It is clear that the computer marketplace is at a transition point. The cloud vendors are betting that they can get the costs based on optimization of everything so low that they win. The large Systems vendors are betting that their sophisticated systems combining hardware, software, and service will win because of their ability to better protect the integrity of the customer’s business. These vendors will all provide their own version of the public and private cloud to ensure that they maintain power.

So, in my view there will be an incredible focus on hardware over the next two years. This will actually be good for customers because the level of sophistication, cost/performance metrics will be impressive. This hardware renaissance will not last. In the long run, hardware will be commoditized. The end game will be interesting because of the cloud. It will not a zero sum game. No, the data center doesn’t go away. But the difference is that purpose built hardware will be optimized for workloads to support the massively scaled environments that will be the heart of the future of computing. And then, it will be all about the software, the data, and the integration.

3.

Oracle + Sun: Five questions to ponder

January 27, 2010 3 comments

I spent a couple of hours today listening to Oracle talk about the long-awaited integration with Sun Microsystems. A real end of an era and beginning of a new one. What does this mean for Oracle? Whatever you might think about Oracle, you have to give the company credit for successfully integrating the 60 companies it has purchased over the past few years. Having watched hundreds and perhaps thousands of acquisitions over the last few decades, it is clear that integration is hard. There are overlapping technologies, teams, cultures, and egos. Oracle has successfully managed to leverage the IP from its acquisitions to support its business goals. For example, it has kept packaged software customers happy by improving the software. Peoplesoft customers, for example, were able to continue to use the software they had become dependent on in primarily the same way as before the acquisition. In some cases, the quality of the software actually improved dramatically. The path has been more complicated with the various middleware and infrastructure platforms the company has acquired over the years because of overlapping functionality.

The acquisition of Sun Microsystems is the biggest game changer for Oracle since the acquisition of PeopleSoft. There is little doubt that Sun has significant software and hardware IP that will be very important in defining Oracle in the 21st century. But I don’t expect this to be a simple journey. Here are the five key issues that I think will be tricky for Oracle to navigate. Obviously, this is not a complete list but it is a start.

Issue One: Can Oracle recreate the mainframe world? The mainframe is dead — long live the mainframe. Oracle has a new fondness for the mainframe and what that model could represent. So, if you combine Sun’s hardware, networking layer, storage, security, packaged applications, middleware into a package do you get to own total share of a customer’s wallet? That is the idea. Oracle management has determined that IBM had the right ideas in the 1960s — everything was nicely integrated and the customer never had to worry about the pieces working together.
Issue Two: Can you package everything together and still be an open platform? To its credit, Oracle has build its software on standards such as Unix/Linux, XML, Java, etc. So, can you have it both ways? Can you claim openness when the platform itself is hermetically sealed? I think it may be a stretch. In order to accomplish this goal, Oracle would have to have well-defined and published APIs. It would have to be able to certify that with these APIs the integrated platform won’t be broken. Not an easy task.
Issue Three: Can you manage a complex computing environment? Computing environments get complicated because there are so many moving parts. There are configurations that change; software gets patched; new operating system versions are introduced; emerging technology enters and messes up the well established environment. Oracle would like to automate the process of managing this process for customers. It is an appealing idea since configuration problems, missing links, and poor testing are often responsible for many of the outages in computing environments today. Will customers be willing to have this type of integrated environment controlled and managed by a single vendor? Some customers will be happy to turn over these headaches. Others may have too much legacy or want to work with a variety of vendors. This is not a new dilemma for customers. Customers have long had to rationalize the benefits of a single source of technology against the risks of being locked in.
Issue Four: Can you teach an old dog new tricks? Can Oracle really be a hardware vendor? Clearly, Sun continues to be a leader in hardware despite its diminished fortunes. But as anyone who has ventured into the hardware world knows, hardware is a tough, brutal game. In fact, it is the inverse of software. Software takes many cycles to reach maturation. It needs to be tweaked and finessed. However, once it is in place it has a long, long life. The old saying goes, old software never dies. The same cannot be said for hardware. Hardware has a much straighter line to maturity. It is developed, designed, and delivered to the market. Sometimes it leapfrogs the competition enough that it has a long and very profitable life. Other times, it hits the market at the end of a cycle when a new more innovative player enters the market. The culmination of all the work and effort can be short as something new comes along at the right place at the right time. It is often a lot easier to get rid of hardware than software. The computer industry is littered with the corpses of failed hardware platforms that started with great fanfare and then faded away quickly. Will Oracle be successful with hardware? It will depend on how really good the company is in transforming its DNA.
Issue Five. Are customers ready to embrace Oracle’s brave new world? Oracle’s strategy is a good one — if you are Oracle. But what about for customers? And what about for partners? Customers need to understand the long-term implication and tradeoffs in buying into Oracle’s integrated approach to its platform. It will clearly mean fewer moving parts to worry about. It will mean one phone call and no finger pointing. However, customers have to understand the type of leverage that single company will have in terms of contract terms and conditions. And what about partners? How does an independent software vendor or a channel partner participate within the new Oracle? Is there room? What type of testing and preparation will be required to play?

The DNA of the Cloud Power Partnerships

January 15, 2010 2 comments

I have been thinking  alot about the new alliances forming around cloud computing over the past couple of months.  The most important of these moves are EMC,Cisco, and VMware, HP and Microsoft’s announced collaboration, and of course, Oracle’s planned acquisition of Sun.  Now, let’s add IBM’s cloud strategy into the mix which has a very different complexion from its competitors. And, of course, my discussion of the cloud power struggle wouldn’t be complete without adding in the insurgents — Google and Amazon.  While it is tempting to want to portray this power grab by all of the above as something brand new — it isn’t.  It is a replay of well-worn patterns that we have seen in the computer industry for the past several decades. Yes, I am old enough to have been around for all of these power shifts. So, I’d like to point out what the DNA of this power struggle looks like for the cloud and how we might see history repeating itself in the coming year.  So, here is a sample of how high profile partnerships have fared over the past few decades. While the past can never accurately predict the future, it does provide some interesting insights.

Partner realignment happens when the stakes change.  There was a time when Cisco was a very, very close partner with HP. In fact, I remember a time when HP got out of the customer service software market to collaborate with Cisco. That was back in 1997.

Here are the first couple of sentences from the press release:

SAN JOSE and PALO ALTO, Calif., Jan. 15, 1997 — Hewlett-Packard Company and Cisco Systems Inc. today announced an alliance to jointly develop Internet-ready networked-computing solutions to maximize the benefits of combining networking and computing. HP and Cisco will expand or begin collaboration in four areas: technology development, product integration, professional services and customer service and support.

If you are interested, here is a link to the full press release.  What’s my point? These type of partnerships are in both HP’s and Cisco’s DNA. Both companies have made significant and broad-reaching partnerships. For example, back in 2004, IBM and Cisco created a broad partnership focused on the data center. Here’s an excerpt from a CRN article:

From the April 29, 2004 issue of CRN Cisco Systems (NSDQ:CSCO) and IBM (NYSE:IBM) on Thursday expanded their long-standing strategic alliance to take aim at the data center market. Solution providers said the new integrated data center solutions, which include a Cisco Gigabit Ethernet Layer 2 switch module for IBM’s eServer Blade Center, will help speed deployment times and ease management of on-demand technology environments.
“This is a big win for IBM,” said Chris Swahn, president of sales at Amherst Technologies, a solution provider in Merrimack, N.H.
The partnership propels IBM past rival Hewlett-Packard, which has not been as quick to integrate its own ProCurve network equipment into its autonomic computing strategy, Swahn said.
Cisco and IBM said they are bringing together their server, storage, networking and management products to provide an integrated data center automation platform.

Here is a link to the rest of the article.

HP itself has had a long history of very interesting partnerships. A few that are most relevant include HP’s ill-fated partnership with BEA in the 1990s. At the time, HP invested $100 million in BEA to further the development of software to support HP’s software infrastructure and platform strategy.

HP Gives BEA $100m for Joint TP Development
Published:08-April-1999
By Computergram

Hewlett-Packard Co and BEA Systems Inc yesterday said they plan to develop new transaction processing software as well as integrate a raft of HP software with BEA’s WebLogic application server, OLTP and e-commerce software. In giving the nod to WebLogic as its choice of application server, HP stopped far short of an outright acquisition of the recently-troubled middleware company, a piece of Wall Street tittle tattle which has been doing the round for several weeks now. HP has agreed to put BEA products through all of its distribution channels and is committing $100m for integration and joint development.

Here’s a link to an article about the deal.

Oracle  probably has more partnerships and more entanglement with more companies than anyone else.  For example,  HP has a  longstanding partnership with Oracle on the data management front. HP partnered closely with Oracle and optimized its hardware for the Oracle database. Today, Oracle and HP have more than 100,000 joint customers. Likewise, Oracle has a strong partnership with IBM — especially around its solutions business. IBM Global Services operates a huge consulting practice based on implementing and running Oracle’s solutions.  Not to be outdone, EMC and Oracle have about 70,000 joint customers. Oracle supports EMC’s storage solutions for Oracle’s portfolio while EMC supports Oracle’s solutions portfolio.

Microsoft, like Oracle, has entanglements with most of the market leaders. Microsoft has partnered very closely with HP for the last couple of decades both on the PC front and on the software front. Clearly, the partnership between HP and Microsoft has evolved for many years so this latest partnership is a continuation of a long-standing relationship. Microsoft has long-standing relationships with EMC, Sun, and Oracle — to name a few.

And what about Amazon and Google? Because both companies were early innovators in cloud computing, they were able to gain credibility in a market that had not yet emerged as the center of power. Therefore, both companies were well positioned to create partnerships with every established vendors that needed to do something with the cloud.  Every company from IBM to Oracle to EMC and Microsoft — to name but a few — established partnerships with these companies. Amazon and Google were small, convenient and non-threatening. But as the power of both companies continues to –grow,  so will their ability to partner in the traditional way. I am reminded of the way IBM partnered with two small companies — Intel and Microsoft when it needed a processor and an operating system to help bring the IBM PC to market in the early 1980s.

The bottom line is that cloud computing is becoming more than a passing fad — it is the future of how computing will change in the coming decades. Because of this reality, partnerships are changing and will continue to change. So, I suspect that the pronouncements of strategic, critical and sustainable partnerships may or may not be worth the paper or compute cycles that created them. But the reality is that the power struggle for cloud dominance is on. It will not leave anything untouched. It will envelop hardware, software, networking, and services. No one can predict exactly what will happen, but the way these companies have acted in the past and the present give us clues to a chaotic and predictable future.