Lotus redux: a transformation in process

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

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

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.

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

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.

The DNA of the Cloud Power Partnerships

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.

Predictions for 2010: clouds, mergers, social networks and analytics

Yes, it is predictions time. Let me start by saying that no market change happens in a single year. Therefore, what is important is to look at the nuance of a market or a technology change in the context of its evolution. So, it is in this spirit that I will make a few predictions. I’ve decided to just list my top six predictions (I don’t like odd numbers). Next week I will add another five or six predictions.

1. Cloud computing will move out of the fear, uncertainty and doubt phase to the reality phase for many customers. This means that large corporations will begin to move segments of their infrastructure and applications to the cloud. It will be a slow but steady movement. The biggest impact on the market is that customers will begin putting pressure on vendors to guarantee predictability and reliability and portability.
2. Service Management will become mainstream. Over the past five years the focus of service management has been around ITIL (Information Technology Infrastructure Library) processes and certification. There is a subtle change happening as corporations are starting to take a more holistic view of how they can effectively manage how everything that has a sensor, an actuator, or a computer interface is managed. Cloud computing will have a major impact on the growing importance of service management.
3. Cloud service providers will begin to drop their prices dramatically as competition intensifies. This will be one of the primary drivers of growth of the use of cloud services. It will put a lot of pressure on smaller niche cloud providers as the larger companies try to gain control of this emerging market.
4. It is not a stretch to state that the pace of technology acquisitions will accelerate in 2010.  I expect that HP, IBM, Cisco, Oracle, Microsoft, Google, and CA will be extremely active. While it would be foolhardy to pick a single area, I’ll go out on a limb and suggest that security, data center management, service management, and information management will be the focus of many of the acquisitions.
5. Social Networking will become much more mainstream than it was in 2009. Marketers will finally realize that blatant sales pitches on Twitter or Facebook just won’t cut it.  We will begin to see markets learn how to integrate social networking into the fabric of marketing programs. As this happens there will be hundreds of new start ups focused on analyzing the effectiveness of these marketing efforts.
6. Information management is at the cusp of a major change. While the individual database remains important, the issue for customers is focus on the need to manage information holistically so that they can anticipate change. As markets grow increasingly complex and competitive, the hottest products in 2010 will those that help companies anticipate what will happen next.  So expect that anything with the term predictive analytics to be hot, hot, hot.

What are the unanticipated consequences of Cloud Computing- Part I

Maybe I am just obsessed with cloud computing these days. I guess that after spending more than 18 months researching the topic for our forthcoming book, Cloud Computing for Dummies, I can be excused for my obsession.  Now that I am able to take a step back from the noise of the market, I have been thinking about what this will mean in the next ten years. Consequences of technology adoption are never what we expect. For example, in the late 1970s and early 1980s no one could imagine why anyone would want a personal computer. In fact, the only application people could imagine for a PC was a way to store recipes (I am not making this up). Keep in mind that this was before the first PC-based spreadsheet was designed by Dan Bricklin and Bob Franston(That’s them in the picture) . No one in those days could have predicted that everyone from a CEO to a three year old child would own a personal computer and its use would change the way we conduct business.  (I never did find a recipe storing application).

The same logic can be applied to the Internet. While the Internet has been used 40 years ago by researchers, it was not a commercially viable option until the mid-1990s. In the early days of the Internet it was a sophisticated communications technology with a command line interface. Once the browser came along, businesses tended to use it to share price lists, marketing materials, and job postings. There were certainly message boards but only for the real techies. There were environments such as The Well which was the first online community used primarily by academics and wild-eyed researchers.

In that context, I was thinking about what we might expect to happen with cloud computing? There is a lot to say, so I decided to break this into two parts — each one will have three consequences. Here are today’s top three:

1. Cloud computing will begin to change the way we think of an application. To be truly useful to large groups of individuals and businesses requires economies of scale in terms of massively scaled workloads. The only way to accomplish this is either to cherry pick a few big workloads (like email) or to branch out. That branching out is inevitable and will mean that vendors with cloud offerings with componentize their software offerings into modular services that can be mixed and matched with other services.

2. The prices that vendors will charge for cloud computing services will drop dramatically over the next few years. As prices drop it will become a lot more economically viable to substitute on premise environment for the cloud environment. Today this is not the case; large companies supporting thousands of users in an application environment cannot justify the movement to a cloud platform. What if the costs drop to the point where the economics (with the right workloads) favor cloud based services? When this happens there will be a tipping point that we might not even notice for a few years. But I predict that it will happen. We are already seeing Amazon dropping prices for its EC2 environment based on the competitive threat from Microsoft Azure services announcement.

3. The cloud will change the way we manage data. The traditional way we think about data neatly stored in specific databases to handle a specific business problem will inevitably change.  This won’t be an overnight change but it will happen. Data will increasingly be seen as a reusable resource that can be used in lots of different situations. There will continue to be strategic line of business applications but they will be more systems of record that keep track of the final result of actions that take place dynamically in the cloud. The value of data is not in its tight packaging as we have been used to for decades but it the flexibility to move, transform, and leverage data. The watch word for data in this new model will be Trusted Data in the Cloud.

I would love to know what you think of my top three choices; send me your comments and I will add them to my list for tomorrow.

As we deal with the cloud hype it is too easy to be dismissive and cynical. But we always treat complicated new trends that way — until one day they become the normal way of business and life.

Ten things I learned while writing Cloud Computing for Dummies

I haven’t written a blog post in quite a while. Yes, I feel bad about that but I think I have a good excuse. I have been hard at work (along with my colleagues Marcia Kaufman, Robin Bloor, and Fern Halper) on Cloud Computing for Dummies. I will admit that we underestimated the effort. We thought that since we had already written Service Oriented Architectures for Dummies — twice; and Service Management for Dummies that Cloud Computing would be relatively easy. It wasn’t. Over the past six months we have learned a lot about the cloud and where it is headed. I thought that rather than try to rewrite the entire book right here I would give you a sense of some of the important things that I have learned. I will hold myself to 10 so that I don’t go overboard!

1. The cloud is both old and new at the same time. It is build on the knowledge and experience of timesharing, Internet services, Application Service Providers, hosting, and managed services. So, it is an evolution, not a revolution.

2. There are lots of shades of gray with cloud segmentation. Yes, there are three buckets that we put clouds into: infrastructure as a service, platform as a service, and software as a service. Now, that’s nice and simple. However, it isn’t because all of these areas are starting to blurr into each other. And, it is even more complicated because there is also business process as a service. This is not a distinct market unto itself – rather it is an important component in the cloud in general.

3. Market leadership is in flux. Six months ago the market place for cloud was fairly easy to figure out. There were companies like Amazon and Google and an assortment of other pure play companies. That landscape is shifting as we speak. The big guns like IBM, HP, EMC, VMware, Microsoft, and others are running in. They would like to control the cloud. It is indeed a market where big players will have a strategic advantage.

4. The cloud is an economic and business model. Business management wants the data center to be easily scalable and predictable and affordable. As it becomes clear that IT is the business, the industrialization of the data center follows. The economics of the cloud are complicated because so many factors are important: the cost of power; the cost of space; the existing resources — hardware, software, and personnel (and the status of utilization). Determining the most economical approach is harder than it might appear.

5. The private cloud is real.  For a while there was a raging debate: is there such a thing as a private cloud? It has become clear to me that there is indeed a private cloud. A private cloud is the transformation of the data center into a modular, service oriented environment that makes the process of enabling users to safely procure infrastructure, platform and software services in a self-service manner.  This may not be a replacement for an entire data center – a private cloud might be a portion of the data center dedicated to certain business units or certain tasks.

6. The hybrid cloud is the future. The future of the cloud is a combination of private, traditional data centers, hosting, and public clouds. Of course, there will be companies that will only use public cloud services for everything but the majority of companies will have a combination of cloud services.

7. Managing the cloud is complicated. This is not just a problem for the vendors providing cloud services. Any company using cloud services needs to be able to monitor service levels across the services they use. This will only get more complicated over time.

8. Security is king in the cloud. Many of the customers we talked to are scared about the security implications of putting their valuable data into a public cloud. Is it safe? Will my data cross country boarders? How strong is the vendor? What if it goes out of business? This issue is causing many customers to either only consider a private cloud or to hold back. The vendors who succeed in the cloud will have to have a strong brand that customers will trust. Security will always be a concern but it will be addressed by smart vendors.

9. Interoperability between clouds is the next frontier. In these early days customers tend to buy one service at a time for a single purpose — Salesforce.com for CRM, some compute services from Amazon, etc. However, over time, customers will want to have more interoperability across these platforms. They will want to be able to move their data and their code from one enviornment to another. There is some forward movement in this area but it is early. There are few standards for the cloud and little agreement.

10. The cloud in a box. There is a lot of packaging going on out there and it comes in two forms. Companies are creating appliance based environments for managing virtual images. Other vendors (especially the big ones like HP and IBM) are packaging their cloud offerings with their hardware for companies that want Private clouds.

I have only scratched the surface of this emerging market. What makes it so interesting and so important is that it actually is the coalescing of computing. It incorporates everything from hardware, management software, service orientation, security, software development, information management,  the Internet, service managment, interoperability, and probably a dozen other components that I haven’t mentioned. It is truly the way we will achieve the industrialization of software.

Oracle Plus Sun: What does it mean?

I guess this is one way to start a Monday morning. After IBM decided to pass on Sun, Oracle decided that it would be a great idea. While I have as many questions as answers, here are my top ten thoughts about what this combination will mean to the market:

1. Oracle’s acquisition of Sun definitely shakes up the technology market. Now, Oracle will become a hardware vendor, an operating system supplier, and will own Java.

2. Oracle gets a bigger share of the database market with MySQL. Had IBM purchased Sun, it would have been able to claim market leadership.

3. This move changes the competitive dynamics of the market. There are basically three technology giants: IBM, HP, and Oracle. This acquisition will put a lot of pressure on HP since it partners so closely with Oracle on the database and hardware fronts. It should also lead to more acquisitions by both IBM and HP.

4. The solutions market reigns! Oracle stated in its conference call this morning that the company will now be able to deliver top to bottom integrated solutions to its customers including hardware, packaged applications, operating systems, middleware, storage, database, etc. I feel a mainframe coming on…

5. Oracle could emerge as a cloud computing leader. Sun had accumulated some very good cloud computing/virtualization technologies over the last few years. Sun’s big cloud announcement got lost in the frenzy over the acquisition talks but there were some good ideas there.

6. Java gets  a new owner. It will be interesting to see how Oracle is able to monetize Java. Will Oracle turn Java over to a standards organization? Will it treat it as a business driver? That answer will tell the industry a lot about the future of both Oracle and Java.

7. What happens to all of Sun’s open source software? Back a few years ago, Sun decided that it would open source its entire software stack. What will Oracle do with that business model? What will happen to its biggest open source platform, MySQL? MySQL has a huge following in the open source world. I suspect that Oracle will not make dramatic changes, at least in the short run. Oracle does have open source offerings although they are not the central focus of the company by a long shot. I assume that Oracle will deemphasize MySQL.

8. Solaris is back. Lately, there has been more action around Solaris. IBM annouced support earlier in the year and HP recently announced support services. Now that Solaris has a strong owner it could shake up the dynamics of the operating system world. It could have an impact on the other gorilla not in the room — Microsoft.

9. What are the implications for Microsoft? Oracle and Microsoft have been bitter rivals for decades. This acquisition will only intensify the situation. Will Microsoft look at some big acquisitions in the enterprise market? Will new partnerships emerge? Competition does create strange bedfellows. What will this mean for Cisco, VMWare, and EMC? That is indeed something interesting to ponder.

10. Oracle could look for a services acquisition next. One of the key differences between Oracle and its two key rivals IBM and HP is in the services space. If Oracle is going to be focused on solutions, we might expect to see Oracle look to acquire a services company. Could Oracle be eyeing something like CSC?

I think I probably posed more questions than answers. But, indeed, these are early days. There is no doubt that this will shake up the technology market and will lead to increasing consolidation. In the long run, I think this will be good for customers. Customers do want to stop buying piece parts. Customers do want to buy a more integrated set of offerings. However, I don’t think that any customer wants to go back to the days where a solution approach meant lock-in. It will be important for customers to make sure that what these big players provide is the type of flexibility they have gotten used to in the last decade without so much pain.

Why Sun Microsystems can’t go it alone

Like everyone else, I have been looking what would happen if IBM were to buy Sun Microsystems. I actually thought it sounded pretty good. IBM would get hardware, some database, virtualization, cloud, and operating system software. Oh, and did I mention that they would control Java. But it sounds (at least as I am writing this) the negociations have broken down. Greed is an interesting phenomenon. Prior to overtures by IBM, Sun’s stock price was around $3.00 a share. IBM was offering as much as $9.50 a share.  I actually thought that price was a bit high — but what do I know.

So, what happens now? I suspect this little drama is far from over. It is possible, if rumors are to be believed that Sun’s Chairman Scott McNealy will take over the reigns of the company once again to try to restore the company to its former glory. It has happened before. Steve Jobs returned to put Apple back on the right path. Michael Dell is trying to turn Dell into the innovator that it had been a decade ago.  Will it happen this time? I think that there are some difficulties with this plan, if it is indeed true. A lot has changed since Sun declared in the 1980s that the network was the computer. Clearly, the company leadership was right. I was an observer of the pragmatic and brilliant marketing company that Sun became in the 1980s, when I worked for its competitor Apollo Computer that was later purchased by HP.

Today, the market is quite different than the market Sun and McNealy had successfully finessed.  Today, the market is consolidating around either very strong global leaders such as IBM, HP, Microsoft, Oracle, Cisco, etc. There is a new generation of leaders emerging that had their start in the Internet era such as Google, Amazon, and Facebook and even Twitter. So, is there room for Sun to remake itself in this new world?

I guess that my take is that it will be very hard for Sun to resurface and remake itself. Here are the three main reasons that I have doubts and why I think that shareholders and board members should sell the company to IBM.

1. Sun Microsystems will have trouble regaining hardware leadership.  While it has some reasonable hardware assets, it is not big enough to take on HP or the emergence of Cisco as a hardware players.  Even companies like Google and Amazon play an important role in hardware — in the commodity relm.

2. While it owns some impressive software assets that it has bought over the past decade, Sun has never learned to leverage these assets to propel it into a leadership role.  It has further confused the market by opening sourcing its software. While this might be popular in a down market, it is not enough to create a repeatable revenue stream. I was watching a funny video of Steve Gilmore interviewing current CEO Jonathan Swartz (as a puppet) that I think captures part of Sun’s problems.

3. Is there a single area of technology where Sun can innovate and out shine its competitors? I imagine there might be some hidden jewels that are transformational and will turn the market upside down inside Sun — but I doubt it. I think that as Cloud Computing moves to center stage, Sun could be a player but not a leader. To be successful, Sun will have to find a way to lead in some area.

The bottom line is that I do not see a good future for Sun as an independent company.  I think that the damage has been done. Not only does the company have to regain shaky customer confidence but it quickly has to start making a profit. It is not an easy climate even for the strongest companies.  While it is possible that McNealy will surprise us all and turn Sun from a struggling player in a consolidating market to a leader but it is probably too late.  Customers who are watching this drama unfold will have to be convinced that Sun has staying power — not just for this year for future decades. If Sun tries to maintain independent, I predict a long and difficult path that will not necessarily end in success.