Cloud Computing Trend – Minus the Hype

If you subtract the hype, cloud computing is moving as a tortoise – slow and steady, more slow than steady. Will it win the race? May be; but not next year. The question is where we will be one year down the line.

[You need to read this post in conjunction with my earlier post where I had raised 4 questions and answered 2 of them. Here is the answer to the question 3 & 4]

3. If the current trend continues then where will it be in one year time?

  • Basic premise of (1) economy of scale, (2) pay what you use and (3) better utilization through sharing will remain intact – though some reports challenging the extent of cost saving will emerge.
  • Amazon will extend its lead over others with the most comprehensive offering on IaaS – competitors will try to carve out their own niche.
  • Google will not make much headway in the enterprise segment – perpetual beta does not gel with enterprise.
  • Microsoft will do just enough on office suite to keep competition at bay – but not too much to cannibalize its core office business.
  • Same will happen with major ERP vendors – they will make just enough noise but stop short on cannibalizing their core business.
  • Every vendor will look for a pie in the private & hybrid cloud – but the actual adoption will be very low the talk will shift to governance being the key.
  • Critical concerns (both real and perceived) like (1) security, (2) privacy, (3) SLA and (4) compliance also remain – like credit card usage on net objections will slowly go away – but tipping point will not be 2011.

Established software vendors find themselves at the crossroad – not sure if they want to welcome cloud or shun it. This is what Forrester has to say – “…the vendors realize that license revenue models are no longer a reliable engine of growth, particularly in a mature segment such as ERP. The enterprise applications vendors, therefore, must evolve to recurring revenue models and do so fairly quickly (three to five years) …” [Reading between the lines – fairly quick (3 to 5 years) = nothing next year & recurring revenue models = as a user you pay more in the long run] (see this & this)

What is the chance of a “Black Swan” appearing in 2011? I think it is low. In 2012 or 2013 – may be.

4. What happens if you take no action on the specific technology for next one year?

You can happily ignore the cloud unless you …

  1. …have a compute intensive application needs to run once in a while – cost saving potentials are great (unless you have to upload/download large amount of data)
  2. …are an internet startup – cloud will save you from the dilemma of how much to invest on hardware
  3. …are planning to revamp your CRM solution – after all this is one of the trigger point of the cloud hype
  4. …expect large number of tablets (iPad and others) getting used in your organization – you will need an alternate to Microsoft Office
  5. …are considering a new email solution – there are published reports showing cost effectiveness of cloud over in premise
  6. …need to overhaul you data centre – virtualization and related management technologies can improve utilization

However, there is no harm in experimenting with different technology options available.

Here are some more details on specific categories of cloud which may interest you:

Category Interesting tidbits
Email For hosted email solution, here is an analysisfrom Forrester which claims that email in the cloud is cheaper not only for small but also for midsized companies. Additionally, Google offering comes out much cheaper than the others. This is a good report to read if you are contemplating new email solution.What it does not talk about is when it will make sense to chuck your on-premise email for cloud based one.
CRM Most of the adoptions in this category are on and around CRM solutions. Everybody knows that has been the leader in this category. There are more than 300 case studieslisted in their side but most are around CRM solutions. Most users while evaluating a CRM solution will definitely look at the hosted offerings.Have a look at the HP case study which claims 40% saving.
ERP SAP had launched “Business by Design” on 2007. However, if you go through the case studies(Select Category = “360 Degree Customer Video” & Solutions = “SAP Business ByDesign”) you will find on eight of them.There are others who offer hosted ERP solutions. Here is a list of eight others. Out of these, only NetSuite and Plex Online talk about the hosted solution on the home page. Also, here is an offering from India: “Ramco – OnDemand ERP”. They have eleven case studies listed on the site.

If you are planning to evaluate new ERP solutions see if you can defer the decision by one year – situation may be different.

Office Suit Though Google launched Google Apps in February, 2007 – it has not made much headway (see this). Same goes with the other interesting hosted office suite from Zoho. The main thrust of Google has been on the ability to collaborative editing of documents. Unfortunately, there are not many scenario where that becomes a killer feature.On the other hand Microsoft has recently released Office 365 (see this review & this) which is quiet well received. This game is for Microsoft to lose. So far, they have been playing it right – releasing just enough features in the cloud to be ahead of competitor – but not too much to cannibalizing its existing business. (this will through more light on their strategy)

2011 may be the year of tablets with iPad and many other competitors available in the market. Not many of them will run windows hence will not be able to run Microsoft Office. This will provide a fillip to cloud based office offerings and people will seriously start looking at them.

PaaS There are 3 major platforms but none of them have taken off. Each will cater to its own niche and limitation.

  • GAE for creating APIs and Add-ons,
  • for customizing and
  • Azure for extending existing .Net applications.

You can look at them only to supplement any other move to cloud.

Azure has close to 50 case studies, one example of bespoke ERP solution.

VMWare is attempting to standardize Java for cloud (see this). Heroku may be the dark horse with a platform for Ruby.

Though I am a fan of Google I cannot help but refer to the post where one user has recorded all his cribs (here is the summary). He has been advised that he should have gone through the well documented limitations. [BTW: If you are looking for workarounds – have a look at this]

IaaS Amazon, by far, has the most comprehensive and usable offering – in terms of ranges of CPU size, types of storage etc. Majority of the cloud tool makers ensure compatibility with AWS.Contrary to popular perception, Microsoft Azure can also be used just as a windows machine running any software that runs on Hyper-V. However, their niche seems to be tight integration with Visual Studio, especially for .Net applications and developer productivity. (here is an interesting deal)

Rackspace is trying to drive adoption by open sourcing their cloud platform so that organizations can make use of that platform for private cloud.

Private Cloud There seem to be enough evidence to show that virtualization can improve server utilization. However, managing a large virtual infrastructure can become very complex. Here is a post from CA– the last para talks their products but rest of the post gives a good outline of the challenges involved.But, have you ever wondered why this class of technologies gets grouped under Cloud Computing? After all, this technology does not meet 2 of the 3 requirements of cloud computing (economy of scale & pay as you use). It is only about better utilization through sharing.
9 Responses to “Cloud Computing Trend – Minus the Hype”
  1. I appreciate your aggregation of the topics cloud computing has stirred up, and this blog has been a great review of the bigger picture as a point of reference. I like your analysis.

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