Sunday, July 20, 2008

Cloud Computing - What does it really mean for your Business?


Over the past three months I have been meeting with customers and getting some really interesting questions, like what is this new buzz word, "PaaS"? Someone told me at a board meeting that their company was going to start leveraging cloud computing, is that SaaS? As the CIO should I be considering a SaaS strategy? SaaS Department? Cloud? Have you heard of adlizard, they are the next SaaS application for advertising companies? SAP will Host their CRM product too, isnt that the same thing as SaaS and multi-tenant architecture?

What is the real problem:

Interesting question that has several derivatives. Cost, Cost of data centers, bandwidth, power, people, etc.

Basically in 199x many companies invested in significant client server architecture that was the evolution of application development and moving from a mainframe based "glass house" to the future of computing. In moving to this model, many companies have invested Billions of dollars in Data Centers, IT resources, software development and application software. What they are left with is expensive, non-performing systems, processes and frustrated business users which impact the bottom line of every company.

Today, CIO's are looking back over the past two decades and realizing that the applications that were once created to solve business problems, created more problems then they really solved. They also realize that the soaring costs to support the monster they created is almost impossible to keep feeding while the demand from their end users grows exponentially. What they want it is a simple interface like or facebook for those serious social networkers. Could you imagine coming to your virtual workspace in facebook everyday? It would be just like your cubicle in your office at work, only virtual with applications like SFDC, Clickability, or Xeequa displaying the latest metrics of your business.

Now CIO's are looking for ways to reduce cost, reduce complexity and they are looking at SaaS, PaaS, Utility Computing, etc.

What is this thing called Cloud Computing:

Cloud computing is a set of web based services ranging from web 1.0 to web 2.0, from complete applications to storage services and spam filtering. Included in this definition is grid computing or utility-style computing from providers like Amazon, OpSource and SaaS providers such as, Xactly, Clickability, and Eloqua.

What you get with web services:

Today, cloud computing can be one way
increase your computing capacity or add functionality or capabilities on the fly without investing in new infrastructure, training new personnel, or licensing new software. Cloud computing is an extension of Web 2.0 Services reaching into the IT organization and extending IT's existing capabilities. Unfortunately, IT must plug into tnese web based services as silo's in the cloud, but SaaS/PaaS (platform as a Service) aggregators and integrators like Boomi and Pervasive are emerging to create one stop shopping for web services like the Opsource Service Bus has done for ISV's moving to a SaaS/PaaS model.

What you no longer need:

By extending web based services, IT organizations can begin to reduce the data center foot print by removing servers, applications, IT support resources, and minimize or reduce cost of power, internet bandwidth and telephony.

What are your options for adoption:

There are several options ranging from SaaS Platforms which would be considered application platforms like, Xactly, Eloqua, Zuora (on-line Billing System), Sierena(mashups) to Utility based platforms like Ec2(elastic Cloud computing from Amazon), S3 for storage to aggregators like Opsource or integrators like Boomi and Pervasive.

The current Breakdown of the "Cloud" or Web Services:

1. SaaS
This type of "Web Services" or "Cloud Computing" delivers an application through a browser to customers around the world using a multitenant architecture. Customers can focus on business continuity while reducing upfront investments on servers or software licensing. One of the best examples of this SaaS architecture is, they exemplify the capabilities of a SaaS based mutitenant architecture. Another emerging player in this space is Workday and Coda. Interestingly enough, Coda is rebuilding there entire app on, leveraging the platform. Another much needed player in this space is a true SaaS based architecture for billing and Zuora has come to the rescue with an innovative approach to managing your billing from A to Z. We also have the emergence of SaaS desktop applications, such as Google Apps and Zoho Office to create a new SaaS type model.

2. Platform as a service
Another SaaS variation, this form of cloud computing delivers development environments as a service. You build your own applications that run on the provider's infrastructure and are delivered to your users via the Internet from the provider's servers. Like building blocks, these services are constrained by the vendor's design and capabilities, so you don't get complete freedom, but you do get predictability and pre-integration. Prime examples include's, Coghead and the new Google App Engine. For extremely lightweight development, cloud-based mashup platforms abound, such as Yahoo Pipes or

3. The Grid or the "Cloud"
This form of "cloud computing" is getting new life from companies like, Sun, IBM, and others who now offer storage and virtual servers that IT can access on demand. Early enterprise adopters mainly use utility computing for supplemental, non-mission-critical needs, but one day, they may replace parts of the datacenter. Other providers offer solutions that help IT create virtual datacenters from commodity servers, such as 3Tera's AppLogic and Cohesive Flexible Technologies' Elastic Server on Demand. Liquid Computing's LiquidQ offers similar capabilities, enabling IT to stitch together memory, I/O, storage, and computational capacity as a virtualized resource pool available over the network.

4. API's Heaven... Somewhere in the clouds
API's allow SaaS providers to extend their applications as web services for use between applications via the web. It also allows web developers to extend their own applications functionality over the Internet as a web service. They range from providers offering discrete business services -- such as Strike Iron and Xignite -- to the full range of APIs offered by Google Maps, ADP payroll processing, the U.S. Postal Service, Bloomberg, and even conventional credit card processing services.

5. Integration in the Cloud
I remember talking to several of the integration players three years ago about the power of the cloud and needing to have integration capability in a SaaS based model. Today Pervasive and Boomi are taking this challenge head on. Pervasive is one of the oldest technology players in this space who continues to be innovative and delivering smart technology to solve complex integration problems. Another player in this space is Boomi, Bob Moul and his team have created a great multi-tenant architecture with smart "atoms" for those still lagging in the client server world. We also are seeing aggregator's emerging in this space as well with innovative companies like OpSource where Treb Ryan and John Rowell are leading the way in this space . If you are an ISV looking for a clear path to becoming the best of breed in SaaS, Opsource should be on your radar.

So everyone is asking the question, Why "Cloud" computing?

It's simple:

• Scalable
• Flexible
• Reliable
• Fast Setup
• Affordable Enterprise Solution
• Environmentally More Efficient

Cloud computing increases capacity or adds capabilities on the fly without investing in new infrastructure, training new personnel, or licensing new software. Cloud computing extends IT's existing capabilities while reducing cost of infrastructure, support, etc.

How do you get started or enhance your current SaaS strategy?

Call the Wolf! How do we enable cloud computing? Here at Bluewolf we start with a project charter and then blueprinting your business to define the criteria and SaaS strategy that needs to be developed for your organization. Based on those criteria, it will fall into one of the 5 cloud computing buckets or a combination of the cloud computing buckets. Once we understand the scope of the application then we can price the application, then design, and deploy using the Agile approach.

If you are looking for more information on SaaS and how companies are moving in this directions, take a look at this report by Aberdeen Research:


Tom said...

Lonnie – Great blog. Right topic. Right time. I have a two observations.
1. Caveat Metaphor
I think you did a wonderful job of providing easy to understand definitions of some of the big trends in IT, and was interested the they are typically called out via literal descriptors like “platform as a service”. Cloud computing is a conceptual metaphor, as is “grid computing”. I found it fascinating that you had them grouped together since to me Cloud computing is the conceptual metaphor for delivering computing services in the era of Web 2.0 that Grid Computing was to Web 1.0.
Conceptual metaphors act as powerful literary tools, and in the case of high technology serve as a way to capture some very complex ideas and present them in a simple and efficient way. But because of this, they can also be dangerous. A conceptual metaphor like “cloud” and “grid” act as a force multiplier in the technology hype cycle.
Gartner is typically credited with pulling together the model of hype or awareness of a new IT trend. The model starts the awareness with a technology trigger, which rises rapidly to the peak of inflated expectations, then crashes into the trough of disillusionment, and then eventually rises again more slowly through the slope of enlightenment to the plateau of productivity. The conceptual metaphor increases the speed and magnitude of the peak of inflated expectations, and similarly the trough of disillusionment.
I’ll point out that Grid was the HOT trend a decade ago. Everyone wanted to do GRID computing, and end up with “on-demand” resources that would flow from an Ethernet cable like electricity on the grid…… Today grid computing as a term has been pretty well niched in high performance computing, while the core technologies are being adapted and pulled under the new umbrella of “cloud computing”.
The good thing is that “cloud computing” is a much better metaphor than “grid computing”. I’m not sure if the technology is much different but clouds are much better than grids to describe access to computing, storage and communication resources that aren’t locally owned and managed but are available when you want/need them. I had a conversation about this with Dr Jaron Lanier the Interdisciplinary Scholar in Residence at CET US Berkeley. Jaron pointed out that among other things clouds were feminine, unconstrained and beautiful while grids were masculine, rigid and industrial. My personal observation is that computing doesn’t work like electricity and the grid metaphor ended up confusing things, while the term cloud is more abstract and should avoid the false connotation that arose with the term grid.
What’s important here is to be aware of the hype cycle and not get distracted from the ultimate goal which is the plateau of productivity. Your recommendation of “blueprinting” or mapping current business process and IT and developing a roadmap to adopt and adapt some of the new methods in IT is the right way to stay factual and avoid the hype.

2. It’s all About the Benjamin’s
Your blog mentioned cost, cost , and cost and called out the key vectors of OpEx that confront most IT organization. I think this is the tip of a much bigger economic iceberg that really differentiates the new Web 2.0/SaaS/Cloud technologies from their predecessors.
I the past era of client/server or Web 1.0 the application was developed by the vendor on a specific hardware and operating system platform and then re-hosted on other platforms that customers might have in their own IT shop. The vendor would then have to ensure that the application worked well, was ported correctly to each HW/OS platform and then train the IT practitioners how to best use their widget. This was/is an enormous cost to the vendor and served/serves as a barrier to entry.
It adds ZERO value to the customer.
All of the cost to port, validate, tune and train simply allows the application to work. It’s the equivalent of the IT cost to Keep the Lights On (KTLO).
The problem is that when all of this cost is applied to KTLO or simply delivering a product that works there is less resource available to add features, make the user interface truly usable, customize the interfaces to fit the workflow of the specific business. In fact in the packaged SW model most of the consulting money went to re-tool the workflow to fit the assumptions made by the packages SW vendor.
My assertion is that over time the OpEx advantages which are significant and justify the initial investment will be over whelmed by CapEx benefits . The new technologies allow a better application of resources and allow IT to achieve the holy grail which is to be a cog that drives differentiated business value.

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Harinath said...

The blog seems to be more informative on Cloud computing which is one of the popular computing technology. I came to know more about the computing technology by participating in the conference Cloudslam 2010 which is the world's 2nd annual and virtual conference on Cloud computing.

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Mike Bosch said...

Really very much loved reading this article.