TWIS#23- Cloudonomics, SaaS / Cloud ROI and the latest Multi-tenancy shenanigans
TWIS #23- This Week in SaaS
- Brilliant presentation video on Cloudonomics by Amazon VP James Hamilton- why Cloud is here to stay, plus some super geeky (but very interesting) details on data centres.
- My Cloud ROI deck from the Cloud Circle conference this week plus Eric Norlin on why agility is the real driver of ROI
- Enterprise Irregular and Salesforce VP Anshu Sharma on the 5 Big Trends he Missed and You Probably Did Too- from Silicon Valley leaders
- Great Mobile sector analysis by Ewan MacLeod plus Mashable on what’s driving mobile network traffic
- The Multi-Tenancy debate lives on! This time with a new name SaaS-Querade!
- Highlights from the Startup Lessons Learned Conference- IMVU video
- McAfee breaking customer computers- take that on-premise vendor FUD!
- In other news, Boomi, Salesforce, SaaS channels, Ingram, Microsoft, Apple, Apps Marketplace, Symantec, Freemium, Cloud myths and Facebook is trying to take over the world….
A really busy week!
I’m going to be at infosec Europe Tuesday – Thursday, if you’re there I’d love to meet you- please come and say hello! I’ll be around the Mimecast stand and going to SaaS / Cloud related events. If you want to find me- email me email@example.com
My main focus will be getting a “state of the nation” on what people feel about SaaS / Cloud security- has it really crossed the chasm or do people still feel there is an issue? I’ve got some good questions from readers- if you’ve got something you want asked- email me.
Also on Thursday this week for those of you that can’t make it to infosec, I’m doing a webinar with my boss, Peter Bauer on Extending your Microsoft Exchange Servers with Cloud Services 2.00pm BST / 9.00am EST. Peter is a real world SaaS CEO, running a company with over 550,000 end users and it’s an opportunity to get to understand how the cloud is meeting the premise in a very real way plus to ask questions of Peter and me. See you there Thursday- or feel free to email me your questions in advance if you can’t make it on the day.
If you’re in Dallas and free tomorrow- there are still some spaces for Lincoln Murphy’s FREE SaaS and Web App pricing round table- he’s doing a broadcast to the UK but you’ll be able to take part in person- you need to get in there very quick as space is limited to 6 people.
One of the most crucial aspects of any startup is to figure out how to make money. Oddly, this is a very overlooked and misunderstood element in startups with many deciding to put it off until later; but often later is too late. Or they just copy 37Signals pricing…
Finding out how your customers buy (what channels they go through), what they’ll pay, and how they will pay are very important to understand early. You can build the greatest product that meets the requirements of your target market, but if your pricing is off, your distribution methods are misaligned with your market, or your customers simply cannot pay you, it doesn’t matter. Since Software-as-a-Service (SaaS) and Web Apps have inbuilt support for e-commerce and pricing metrics, knowing all of this early in the process will ensure you’ve built a product that will adequately support your customer base in all areas.
To that end, I have been invited (on very short notice) to moderate a Pricing roundtable discussion by SaaS and Web App founders and CEOs this coming Tuesday 4/27/2010 at 10AM. The event is in actually in England but I will be joining via a teleconference link at the Tandberg offices in Dallas, Texas. There is room for 6 people to join me and to participate in the event. There is no charge to attend this event.
If you are in Dallas, are currently involved in a post-beta (ie. in the market) startup or later-stage SaaS or Web App company and would like to discuss your Pricing and Distribution strategies while learning from others experience as well, please RSVP here.
This is a great opportunity to meet Lincoln in person and get some valuable knowledge for free.
I couldn’t resist- after a week of travel chaos in Europe 😉
Rick Chapman is running his SaaS survey in Europe– if you’re a European SaaS provider- I would encourage you to fill it out.
James Hamilton, a VP at Amazon, did a brilliant talk at Mix 10 a few weeks ago– if you haven’t seen it, its well worth a view- if only for a detailed understanding of why cloudonomics work from a vendor perspective and why cloud vendors are going to be around for some time, plus some super geeky (but very interesting) detail on the economics of data centres. Well worthwhile watching- here’s the intro:
High-scale cloud services provide economies of scale of five to ten times over small-scale deployments, and are becoming a large part of both enterprise information processing and consumer services. This talk details the costs, and cost advantages, of high-scale, cloud services. We begin with an inventory of the infrastructure costs, tracking power distribution and losses from 115kV at the property line through all conversions into the data center to final delivery at semiconductor voltage levels. We then look at the mechanical systems responsible for transporting heat from the servers through to heat dissipation outside of the data center. We conclude with a detailed discussion of cloud computing cost advantages.
As I mentioned last week- I delivered a conference presentation on Cloud ROI last week- it was good to meet a few readers who came. I haven’t yet done the voiceover- but here is the deck:
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.
I had an opportunity to meet an interesting set of Silicon Valley leaders last week, and I realized what a loser I am. Okay, so not really – but I did miss out on a couple of trends while I focused on cloud computing and social – trends closer to what I do for a living. I thought I would look back and give you a list of big trends I missed or didn’t pay enough attention to, and what I plan to do about it:
- Energy Management (or Carbon Apps)
- Social Gaming and Virtual Goods
- Video over Internet
The list is even longer – I didn’t pay enough attention early on to multi-core processors, SSDs, connected devices revolution, — the list is long. What trends have you missed?
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.)
One of the biggest criticisms leveled against Cloud Computing, in general, and SaaS, in particular, is the reliance on third party for the availability of applications. It is true that SaaS forces you to rely on the third party vendors because the resources lie on the datacenters elsewhere as opposed to your local machine or on-premise datacenters. But, I do not agree that SaaS cannot be trusted just because we have our applications and data elsewhere. In my opinion, it is pure FUD than anything else.Our reliance of third party providers dates long back into the human history. Even in the traditional computing world, we have to rely on many third party vendors from electricity to run the business to proper functioning of computing resources to operating system to software. Even though they are located on premise, there is some sort of reliance on third party vendors and service providers. When we buy a software from a traditional vendor, we trust them to work the way we want (unless it is open source), we trust the vendors to make timely security patches and updates, we rely on the update to work flawlessly, etc.. Once upon a time we relied on the vendors to send the updates and patches through media. We trusted that the vendors will send in time, the carriers will deliver it properly and the media will work flawlessly. Once internet became part of our lives, we trusted the vendors to send the patches and updates through the internet so that our software are updated regularly. In short, we have been relying on third party for many of our computing tasks forever. As the vehicle of delivery changes and matures, we rely more and more on such third party providers to save time and cost. Now, with the maturation of internet and internet capable devices of many form factors, we are trusting third party providers to deliver the applications and other computing services through the internet for consumption. This is a normal progression in any technological evolution. Trying to spin it in any other way is pure FUD.
- 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.
Have a great week!