Friends at Horses for Sources(www.horsesforsources.com ) have published their next analysis of the huge survey we worked on together. Read their comments on the focus of Cloud Computing on work culture.
As HfS discuss, the study suggests business executives fear major cultural change and change in working practices, whereas for IT executives the fears are more about curtailment of their value as technology-enablers within businesses.
Read their blog entry for full details.
Interesting analysis of microsoft’s place in the cloud today… And its change of focus to bring azure front and centre in it’s offering.
Microsoft Woos Toyota, Duels Amazon.com in Cloud Bet – Bloomberg.
Interesting analysis of the new AWS pricing model –
Free Isn’t The Half Of It. AWS Pushes Cloud Economics Further | Forrester Blogs.
One of the significant concerns in entering the cloud is the potential for lock-in with a cloud provider (though clearly you otherwise remain locked-in with your own IT department as the sole provider).
The cost of moving from one provider to another is a significant obstacle to cloud penetration – if you could change provider easily and painlessly you might be more inclided to take the risk. Various services have emerged to try to attack this problem – CloudSwitch being one which created a considerable buzz at the Structure 2010 conference. Their service aims to provide a software means to transfer enterprise applications from a company’s data centre into the cloud (and between cloud providers). Whether it can live up to expectations we have yet to know, but CloudSwitch is attempting to provide a degree of portability much desired by clients – and probably much feared by Cloud Service providers whose business would reduce to utility suppliers if they are successful.
But this links into another interesting conversation I was having with a media executive last week. They mentioned that since cloud virtual machines were so cheap they often (effectively) host services across a number of suppliers to provide their own redundancy and thus ignore the SLA. If one service goes down they can switch quickly (using load balancers etc) to another utility supplier. Clearly this only works for commodity IaaS and for relatively simple content distribution (rather than transaction processing) but it is a compelling model… why worry about choosing one cloud provider and being locked-in or risking poor SLA – choose them all.
The key focus of SalesForce.com CEO Mark Benioff talk was on identifying the difference between “Cloud 2” and none-cloud marketing efforts leveraging the cloud to sell boxes. He highlighted his three tests for Cloud Compting
1) Efficiency – that any cloud offering should offer 1/10th the cost of existing solutions and thus enable new entrants into marketplaces. For example he highlighted that only 1500 Dell servers are used to service the 77000 useres of SalesForce.
2) Economic – that solutions should be economically efficient
3) Democratic – That they should allow SME business to enter the market.
Nothing particularly exciting here.
I hosted a panel on Cloud Computing at the SSIT 10 Global Outsourcing Workshop last week. The rather basic slides are available here: http://www.pegasus.lse.ac.uk/presentations/CloudPanelSSIT.pdf to see the video of the panel see http://tinyurl.com/2vmjaqs
In a recent Article Dustin Owens (2010) argues that elasticity defines the benefit of Cloud Computing. He states “Elasticity could bring to the IT infrastructure what Henry Ford brought to the automotive industry with assembly lines and mass production: affordability and substantial improvements on time to market.” (p48). The article is useful and focuses primarily on security however it was the comparison with Henry Ford which got me thinking.
It is a bold statement and deserves further analysis. In particular it is unclear what Ford brought the motor industry – certainly increased penetration, increased usage, increased availability all of which are positive. Arguably though it also brought with it urban sprawl, oil-dependence, reduced wages and Tailorism. One can imagine similar problems with the cloud. Urban sprawl might be similar to flattening organisational sizes and increasing risk. For those companies whose data-centre provides competitive advantage will see an increased landscape of small competitors capitalising on the Cloud to compete – the sprawl. Our oil-dependence will similarly remain – Cloud computing hides the electricity and environmental impact of our actions in data-centres hidden from view. Purchases are unlikely to know what percentage of costs are electricity – and are unlikely to care. Finally reduced wages and Tailorism. Prior to Ford those involved in developing cars were highly skilled and worked across the line – Ford reduced this movement of skill, and Fredrick Tailor developed this into scientific management. One can see similarities in the cloud provider with increased specialism among staff within these very large data-centres. With this comes risks – the generalist is better able to respond to radical architectural change and innovation. The generalist also has a more interesting job (a failure of Scientific Management). All this is speculation at the moment – I await my first Model T Cloud.
On another level however this comparison is interesting. because it is worth remembering that Ford was overtaken by General Motors for the simple reason that Henry Ford was against debt and demanded people pay in cash, whereas GE realised that borrowing to buy a GE car was beneficial. With the car you’re earning potential rose as you could travel for work and you were thus better able to afford the car.
In cloud computing the same might also be true. The argument behind Cloud Computing has always been that start-up ventures do not need to purchase the expensive IT equipment they can focus on Opex not CapEx. Similarly SaaS offers reduced CapEx costs. But one might also imagine a growth of financial services industries around the cloud. For example providing short-term loans to allow small companies to ramp up websites in response to incredible demand (and perhaps insuring against this). Or allowing small media enterprises to rent cycles for rendering films as a percentage of future profits. Finally, and perhaps most importantly, if computing is a commodity we are likely to see spot-markets and commodity markets spawn. Can we imagine CDOs developing based not on sub-prime mortgages but on poorly used processor cycles within the cloud… or imagine insuring against a Denial of Service Attack such that when one occurs you can ramp up website services to respond, but not have to pay for the processor cycles! I can see many small companies taking out such insurance for their websites (if anyone profits from this – then donations received with thanks 🙂 ).
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Owens, D (2010) “Securing Elasticity in the Cloud”, Communications of the ACM 53(6) 48-51 doi:http://doi.acm.org/10.1145/1743546.1743565
Brynjolfsson, E., P. Hofmann, et al. (2010). “Economic and Business Dimensions Cloud Computing and Electricity:Beyond the Utility Model.” Communications of the ACM 53(5): 32-34.
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This paper argues that technical issues associated with innovation, scale, and geography will confront those attempting to capitalise on utility computing. They take the utility model of computing (i.e. that cloud computing is analogous to the electricity market) and identify key challenges.
In particular they identify the following technical challenges:
1) The pace of innovation of IT – managing this pace of change requires creative expertise and innovation (unlike utilities such as electricity which, they argue, are stable).
2) The limits of scale – Parallelisable problems are only a subset of problems. Scalability of databases has limits within architectures. APIs e.g. using SQL are difficult for high-volume transaction systems. Further large companies can benefit from Private Clouds with little advantages, and greater risks, if they go to the public cloud.
3) Latency: The speed of light limits communication. Latency remains a problem. For many applications performance, convenience and security considerations will demand local. [While not mentioned in the article it is interesting to note that this problem is being attacked by http://www.akamai.com/ who specialise in reducing the problems of network latency through their specialist network]
They also identify the following business challenges:
1) Complementarities and Co-Invention: “Computing is still in the midst of an explosion of innovation and co-invention First that simply replace corporate resources with cloud computing, while changing nothing else, are doomed to miss the full benefits of the new technology” (p34). It is the reinvention of new services which are key to the success of cloud. IT enabled businesses reshape industries – e.g. Apple quadrupled revenue by moving from perpetual licence to pay-per-use in iTunes, but this demanded tight integration of EPR and Billing which would have been difficult within the cloud given their volumes.
2) Lock-in and Interoperability: Regulation controlled energy monopolies, and electrons are fungible. Yet for computing to operate like electricity will require “radically different management of data than what is on anyone’s technology roadmap”. Information is not electrons – cloud offerings will not be interchangeable. “Business processes supported by enterprise computing are not motors or light-bulbs”.
3) Security – We are not concerned about electrons as we are with information. Regulators, laws or audit is not needed. New security issues will need to be faced (see (Owens 2010) for interesting debate on security).
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Owens, D (2010) “Securing Elasticity in the Cloud”, Communications of the ACM 53(6) 48-51 doi: http://doi.acm.org/10.1145/1743546.1743565
Joe Peppard, in a recent EJIS paper (Peppard 2007), makes the point that utility computing (along with outsourcing and ASP) are premised on a gap between IT function and the customer/user. “They assume the user is the consumer of IT services, failing to acknowledge the value derived from IT is often not only co-created but context dependent” (ibid, p 338).
Joe suggest that this is founded upon the ontological position that “IT is an artefact that can be managed”, and subsequently that the value of IT is in its possession. This leads to the obvious claim that rather than focusing on IT management, we should focus on delivery of value through IT. This brings our perspective of IT function (and of Cloud Computing within the enterprise) from the realm of cost-saving efficiencies (as Carr 2003 might suggest) to a focus on contextual practice – supporting work. As Joe’s the article argues “to seek not to management IT per se, but to manage to generate value through IT”.
Carr’s (2003) argument is thus that the IT function is not needed since this is outsourced to the ASP/Cloud provider. But a more subtle point might be that it needs to instead be pervasive – IT installed within business functions (so as to better contextualise Cloud Services within business practices). While IT services prior to the Cloud increasingly focused on getting the “plumbing” of the organisation correct (i.e. ensuring the email worked, installing ERP, networking the systems), with the use of Cloud services their role must be focused on improving the integration of Cloud services into the work practices of users – focusing on both social and technical practices which can be supported or enhanced through IT.
We remain fixated on the CIO and IT department as our focus for Cloud Computing. This seems odd. For what if this role of contextualising IT is better suited to users (who are increasingly technologically proficient particularly around Cloud Services (e.g. SalesForce / GMail)). With the Cloud users are increasingly powerful actors able to engage with, and even procure, IT infrastructure for themselves. How this might influence the role of IT within the enterprise is far from clear but it will certainly lead to new battles and new challenges.
References:
Binary Blurring 