TWIS#23- Cloudonomics, SaaS / Cloud ROI and the latest Multi-tenancy shenanigans

Alright, I admit it! This whole public-private-hybrid cloud debate the clouderati love to go back and forth about just — *yawn* — never really — *yawn* — did much for me. Only you crazy engineering types could get so worked up over the purity of a definition. 

Same thing for the whole “capex/opex” cloud benefit speech. I see it at every single cloud event running today — you know, the “why the cloud will improve your bottom line” panel (or some variation on that theme), and wow I have something approaching zero desire to hear about that.

But until this morning, I could never figure out why. And then I read this piece. In it, Lori MacVittie lays out an amazing argument as to why “the benefits of cloud computing” (as in “public cloud”) aren’t about cost (or efficiency of cost) as a driver. As it turns out, *agility* is probably the key driver in the cloud, with a cost factor coming into play in the private cloud. Let me elaborate a bit.

Agility: This is the one that’s always made sense to me. You want an agile architecture, right? I mean, there’s not a C-level person on the planet that wakes up and says, “you know what we need? An IT architecture that makes us react to change as slowly as possible.” Agility should live at the infrastructure and platform level (an obvious, if not easy, benefit of cloud computing), but it *also* should live at the application layer. In ALL of these cases (infrastructure, platform and application), what makes agility work is “glue” — which is to say, when your architecture allows you to easily connect, disconnect, plug and play, whatever you call it (glue together the networks, data, people and applications), then you’re agile. Forget cost, the pure operational benefit of an agile architecture is self evident. Agility gives you the greater chance of survival in a world that seems to have become a constant stream of black swans.

Cost in the private cloud: This benefit makes perfect sense to me. At the infrastructure level, the private cloud collapses the network administrator (1 function), the security administrator (1 function), and the compliance administrator (1 function) into 1 function (3 into 1), thereby reducing the IT hours in the equation of cost. But it occurs to me that gluecon’s view of the application layer (essentially, one that’s been around since the dawn of SOA), namely, that we need business IT architectures to resemble our webby architecture — in fact, we need it to *become* the same as the web architecture — also lowers the cost of application development, deployment, scalability and interoperability. In other words, I’m wondering does the “cost benefit” of cloud computing happen at the infrastructure layer via a private cloud, at the platform layer via a hybrid cloud and at the application layer via a public cloud?

Anyway you slice it, the issue is not some cheap-hit panel on the “business benefits” of the cloud. It’s actually just *slightly* more nuanced than that. Every engineer in the space knows this instinctively. It’s why you won’t find them hanging around those kinds of panels. It’s why you *will* find them at gluecon.

A recent study by Ground Truth, a mobile measurement firm, revealed that approximately 60% of the time spent on the mobile Internet is spent on social networking sites and apps. Users spent only about 14% of mobile Internet time on portals, the second most popular category.

“The disparity of time spent between social networking and the next category, portals, which account for 59.83 and 13.65 percent of time spent respectively, is a vivid illustration of the impact social networking has on Mobile Internet traffic in a given week,” observed Vice President of Marketing Evan Neufeld

Customers who don’t see through the fakery will get stuck with old, expensive solutions

Lately, my phone and calendar are getting filled with calls from vendors who want to tell me all about their re-purposed, on-premise applications. The calls have a few familiar aspects but they’re all masquerades. And, mostly, they’re bad for software users.

First, the pattern:

An on-premise vendor, seeing softness in new license sales numbers, starts to (finally) realize that Software as a Service (SaaS) is real. So, the vendor decides that a ‘hosted’ ERP application is a close enough facsimile to a SaaS solution. All the hosted product needs is a bit of SaaS marketing and it’s a done deal. Right? Wrong!

A dear friend of mine is a software marketing pro. She told me that her ERP product is about to get a big splashy marketing campaign announcing its SaaS credentials. I immediately said that this can’t be as its an old school ERP product that the vendor sometimes hosts. She replied that whether the solution is hosted by the vendor or in someone else’s cloud is immaterial to a customer.

That’s really wrong on a number of fronts. To begin with, a hosted on-premise product is likely not a multi-tenant solution. Multi-tenancy permits a vendor to apply a software upgrade once and have it automatically work for dozens or hundreds of customers simultaneously. In a single tenant solution, the software vendor must apply the changes one customer at a time. The latter approach is very expensive and potentially error-prone.

My good friend said that this argument (multi-tenancy) is immaterial to the customer as the responsibility for applying upgrades is the vendor’s problem not the customer’s. Again, this is wrong.
This leads to the second point: When solutions are not multi-tenant, they will be more expensive to upgrade and the vendor must either pass those costs on to the customer or the vendor must be willing to offer few upgrades to the product. Seriously, who wants a product with a built-in cost disadvantage? Who wants a product that a vendor is disinclined to upgrade? No one does. Multi-tenancy is a necessary component to true SaaS solutions if the customer is to get frequent upgrades and a lower cost solution.

…The hype machinery is also going full-bore to convince software buyers that SaaS-enabled applets or bolt-on applications around older on-premise applications are a great value or proof that the vendor is delivering on SaaS. That, too, is a bit of a stretch as the cloud-based applications may possess different technical architectures than the on-premise applications they are supposed to work with.

Those architecture differences could make configuration changes a challenge. Suppose you want to tailor the new cloud-based application. Will its configuration changes work with the old on-premise product? Probably not. Those changes will need to be replicated with a different set of tools in the on-premise application. And, that’s assuming those changes are even possible in the older products.
This spring brings an exceptional level of FUD (fear, uncertainty and doubt) to the applications world.

And, I fear the FUD will continue to grow at an exceptional rate. Software buyers really need help now. The misdirection and misinformation may create too many opportunities for bad decisions.
Sir Walter Scott may have had it right in 1808 when he said “Oh, what tangled web we weave. When first we practice to deceive.” I think he’d want to update those lines today….. (Emphasis Ed.)

• Big congrats to Rick, Bob and the team at Boomi for launching trust.boomi.com – Boomi joining the ranks of tier 1 providers who have an “open kimono” policy about issues.
• Salesforce buys business information provider Jigsaw for $142m cash- starting to spend their pile of cash on beefing up their core offering- data providers watch out!
• Great post by Ben Kepes on SaaS Channels- yup we need ‘em! Even Ingram is saying to resellers “The cloud is coming. Are you ready?”
• Microsoft’s earnings are in- Windows 7 helping them on to a 34.5% boost in income to $4bn, on a revenue of $14.5bn. Not bad eh?
• As was Apple’s earnings- not to shoddy their either at revenues of $13.5bn and profits of $3.07bn…
  Read more: http://techcrunch.com/2010/04/20/apple-by-the-numbers-iphone-sales-more-than-double-mac-holds-up/#ixzz0mEKA9Fmu
• Nice to see Google promoting apps in their marketplace- essential to help them earn their fee.
• Symantec reckons 51% of all malware ever detected was in 2009! And yet SaaS and Cloud seems to be free of it
• A rather attention grabbing headline- (it worked) Why the Freemium model is a lot like dating- flowtown digs into some key aspects of Freemium- advice that might actually stick!
• Amazon tries to debunk the top 5 myths of cloud computing
• And in case you care about Facebook’s attempt at dominating the web, you can read about that start here.