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.
I am still at IBM’s Information on Demand conference here in Las Vegas (not my favorite place..but what can you do). In listening to a lot of discussions around strategy and products I started thinking about one of the key problems that customers are facing around business process and managing increasingly complex data. What companies really want to do is to have the flexibility and freedom to leverage their critical data across applications and situations. They also want to be able to change processes based on changing business models.
This is the core issue that companies will be facing in the coming decade and will be the difference between success and failure for many businesses. Here’s an example of what I mean. Let’s take the example of a retailer in a competitive market. Let’s say our retailer had five or six applications: Accounting, Human Resources, supply chain management, a customer support system, and a customer facing e-commerce system. Each of these systems has an underlying database; each one manages this data based on the business process that is the foundation of the best practices that is the value of these packages. Even if each of the packages are the best in their markets there is a core problem since each solution is a silo. Processes that move between these systems tend to fall through the cracks. This is why we, as customers of such retailers, are often frustrated when we call about a product that wasn’t delivered, doesn’t work, or requires a change only to discover that one department has no ability to know what is happening in another area. For most companies the dream of single view of the customer is aspirational but not practical right now. In reality, it is hard for companies to mess with their existing applications. These solutions are customized for their business environment; they were expensive and complicated to implement — and change is hard. In fact, companies only change when it is more painful to stay with the status quo than it is to change. In a retail scenario, companies change their approach to process and data management when they must change their business model because the current processes will lead to failure. Retailers are currently faced with emerging approaches to selling and managing customer relationships that are challenging traditional selling models. Look what a company like Amazon.com or Netflex have done to their slower moving competitors.
A number of customers I have spoken with understand this very well. They are looking at ways to separate their core data assets from the underlying applications. Many of these customers are at the forefront of implementing a service oriented architecture (SOA) approach to managing their software assets. They are increasingly understanding that the secret to their future success is the knowledge they have about their customers, their needs and future requirements within their own set of offerings and those from partners. These companies are setting a priority of making this data independent, secure, and accurate. These business leaders are preparing for inevitable change. At the same time, I have seen these customers creating SOA business services that are, in essence, codified business processes. For example, a business service could be a process that checks the credit of a potential partner or links a new customer request for service to the set of applications that confirms the request, orders the part, and notifies a partner.
So, here is the problem. These customers are implementing this new model of abstracting data and process based on specific projects or business initiatives. These projects have gotten the attention of the C-team because of the impact on revenue. But, in reality, the real breakthrough will happen when the separation of data and process are the rule, not the exception.
This is going to be the overriding challenge for the next decade because it is so hard. There is inertia to move away from the predictable packaged applications that companies have implemented for more than 30 years. But I suggest that it will be inevitable that companies will begin to understand that if they are going to remain agile and change processes when they anticipate a competitive threat. These same companies will understand that their data is too important to leave it locked inside an application linked tightly to a process.
I don’t have the answers about what the tipping point will be when this starts to become a wide spread strategy. I think that the cloud will became a forcing action that will accelerate this trend. I would love to start a dialog. Send me your thoughts and I promise to post them.
I have just gotten back from the Object Management Group’s SOA Consortium meeting. This is a very good advocacy group consisting of primarily corporate customers with a few collection of assorted vendors and integrators. It is a very thoughtful and pragmatic group. I have been a member of the steering committee for the past year and enjoyed participating in the weekly conference calls. We have discussed important issues ranging from maturity models, to SOA governance, to many different best practices. Learning from each other is a powerful theme and focus.
What made this meeting fun for me was being able to share the podium with Sandy Carter, head of marketing for SOA for IBM. We both presented our observations about the direction of SOA for the group. I thought I would share some of Sandy’s comments and then some of my own.
Sandy’s talk focused on two major areas: the learnings from more than 5700 SOA engagements at IBM and the overwhelming requirements for SOA skills and ROI experience with SOA engagements.
So, here are some of the key takeaways from Sandy’s talk:
1.While everyone talks about how programming skills are being outsourced, IBM’s extensive surveys have shown that the an overwhelming number of the respondents found that the biggest inhibitor to the adoption of SOA is the lack of skills — primarily the ability to understand technology tied to the needs of the business. IBM found that 80% of these companies are going to increase their SOA resources this year and 60% of the companies are planning to retrain their existing staff for SOA.
2. Sandy mentioned a new study IBM had sponsored by the London School of Economics that found that companies that implemented SOA increased revenue by 2% — companies that focused on changes in automating business process increased revenue by 18%. Pretty powerful numbers.
3. In another study focused on interviewing hundreds of CEOs, IBM found that SOA is top of mind with the hundreds of CEOs that IBM interviewed. Sandy pointed out in her talk that these CEO from some of the largest companies in the world see the direct link between SOA and business agility.
One of the most interesting issues that Sandy mentioned in her talk was the emerging a Service Science major at major universities. IBM has established a partnership with 200 Universities to help create this new discipline. Teaching MBA students about the SOA principle of creating a service oriented approach to business/technology is critical I would love to see this type of program grow dramatically. I think that many universities are still stuck in the 1980s when it comes to teaching about the intersection of technology and business.
My talk at the meeting centered on SOA lessons from 2007 and predictions for 2008. I’ll give you a synopsis of what I said about this year. My next entry will be a full set of predictions for next year.
My main observation about 2007 was that it was a year of learning about SOA. Our book, SOA for Dummies had just been published at the very end of 2006. It was becoming clear that there was a hunger for information about what this new technology approach was all about. So, 2007 was a year for learning. No market or technology can mature without starting with a lot of missteps. It was also a year when people made lots of mistakes including:
1. Let’s code thousands of cool web services and see what happens — guess what…no one knew what to do with them!
2. Let’s create a corporate wide SOA implementation this year — what’s wrong with boiling the ocean? (too obvious to make a comment on this one)
3. If we implement an Enterprise Service Bus we are all done with SOA…right? — wrong!
4. Hey, we are reusing a service in the same application but we’re not getting very much value….(try reusing in a different application)
Clearly, these aren’t all the mistakes we made in 2007 but it gives you an idea of what I have been seeing. One of the biggest issues that I saw in 2007 was the lack of collaboration between the business and technical sides of the business. In addition, there was simply too much political jocking for control.
But before you think that I am just in a negative mood…I saw many big successes with SOA in 2007. Many companies are understanding that SOA is, in fact, a business strategy based on codifying business services that represent best practices for business policy and process. These companies are taking a long view — not expecting instant results. Many of these organizations are finding strong returns on investments but they would rather not tip off the competition. Before starting one SOA project, our team had to sign three different non-disclosure documents!
I think that we are at the end of the over hyped stage of the SOA market. It is inevitable in any new market that it begins with unreasonable expectations. When customers start using the approach to solve real problems, it is always harder than the hype would suggest. The reality is that transforming software from purpose driven, single use applications to flexible, agile, and reusable services that are loosely coupled is hard work. In fact, the fact that we are getting over the hype phase actually means that SOA is real!