5 things that prepare the CIO for innovation

Last week, Amazon (NASDAQ: AMZN) held their annual re:Invent conference in Las Vegas. Gigaom’s Barb Darrow summarized her Top-5 lessons learned from the conference here. Specifically for CIO’s, there were a number of things coming from the conference that every CIO should take note of. One of those is to prepare for innovation. It is not a matter of if; it is a matter of when.

Innovation is not a destination, but rather a journey. The path is not always rosy and presents a number of challenges along the way. The upside is an outcome that positions the CIO, the IT organization and ultimately the company in a unique position among their competitors.

There are a number of core items that prepare the CIO for advancing down the innovation path:

  1. Keep it simple: The world of Information Technology (IT) is getting complex, far more complex, and not simpler. Yet, the importance to become agile and responsive to changing business demands is ever-present. The IT organization must find ways to streamline their processes across-the-board. We all know the KISS principle.
  2. Create innovative culture: Innovation is not innate for most. Current culture may actually inhibit innovation within the organization. Understand that culture must change. A good friend and CIO, Jag Randhawa wrote the book “The Bright Idea Box: A Proven System to Drive Employee Engagement and Innovation.” Jag outlines a process that he found to be successful and applicable to many different types of organizations.
  3. Avoid constraints: It is easy to find ways to avoid problems. Preparing for innovation can cause disruption. However, questioning the status quo may be exactly what the organization needs. Look for ways to address constraints whether from technology or from conventional thinking.
  4. Find leverage: IT is not able to do everything. In the past, it was necessary for IT to do everything (relatively) since there really was no other alternative. Fast-forward to today and there are many more options available. Identify what is strategic and should be a focus for IT. Find leverage for the other points to avoid distraction and paralysis.
  5. Seek difference: Being different is often a scary proposition. Many see differentiation as a sign of risk. The thinking that there is safety in numbers. But the thinking must change. Differentiation is something not just to be cherished, but sought out! Look for opportunities to change and provide differentiation.

The combination of these mantras set the stage for a different perspective and line of thinking. Are these the end-all, be-all list of steps? No. But they present a good short-list to start with. Start small and do not expect the changes to happen overnight. It will take time and reinforcement.

Many of the discussions taking place last week at AWS re:Invent spoke of innovation and new ways of thinking. They spoke of a future state for IT. Consequently, traditional thinking had a hard time gaining a platform for discussion.

Connecting the dots

Yet, much of the challenge traditional enterprises have is around connecting the dots between current state and future state. For the CIO, setting the stage, cadence and direction is much of the challenge. It is a lot of work, but still needs to be done.

The first step is in setting a vision that aligns with the business strategy. Understand the core business of how the company makes and spends money. Seek out ways to provide innovative solutions. Start out small, learn from the experience and grow. Look for ways to streamline how IT operates and continually improve IT’s position to become more innovative.

Innovation is about the journey, not the destination. Innovation is an opportunity for differentiation that must be accepted and celebrated. Innovation presents a significant opportunity for companies from all industries. And IT plays a key role in driving today’s innovative processes.

 

Originally posted @ Gigaom Research 11/18/2014

http://research.gigaom.com/2014/11/5-things-that-prepare-the-cio-for-innovation/

CIOs are getting out of the Data Center business

More than three years ago, a proclamation was made (by myself, Mark Thiele and Jan Wiersma) that the data center was dead. Ironically, all three of us come from an IT background of running data centers within IT organizations.

At the time, it was an event in London, England where the attendees were utterly dumbfounded by such a statement. Keep in mind that this event was also a data center specific event. To many this statement was an act of heresy.

But the statement had truth and the start of a movement already at foot. Ironically, companies in leading roles were already starting down this path. It was just going to take some time before the concept became common thinking. Even today, it still is not common thinking. But the movement is starting to gain momentum. Across the spectrum of industries from healthcare to financial services, CIO’s and their contemporaries are generally making a move away from data centers. Specifically, moving away from managing their own, dedicated corporate data centers.

Enterprise data center assets

And by data center, we are talking about the physical critical facility and equipment that is the data center. We are not talking about the servers, storage or network equipment within the data center facility. These data center assets (the facility) are moving into a new phase of maturity. While still needed, companies are realizing that they no longer need to manage their own critical facilities in order to provide the level of service required.

Moving along the spectrum

As companies look at alternatives to operating their own data centers, there are a number of options available today. For many years, colocation, or the renting of data center space, was the only viable option for most. Today, the options for colocation vary widely as do alternatives in the form of cloud computing. Companies are moving along a spectrum from traditional corporate data centers to public cloud infrastructure.

 

DataCenterCloudSpectrum

It is important to note that companies will not move entire data centers (en masse) from one mode to another. The specific applications, or workloads, will spread across the spectrum with some number leveraging most if not all of the modes. Over time, the distribution of workloads shifts toward the right and away from corporate data centers.

In addition, even those moving across the spectrum may find that they are not able to completely reduce their corporate data center footprint to zero for some time. There may be a number of reasons for this, but none should preclude an effort to reduce the corporate data center footprint.

Additional cloud models

For clarity sake, Platform as a Service (PaaS) and Software as a Service (SaaS) are intentionally omitted. Yet, both ultimately play a role in the complexity of planning a holistic cloud strategy. As with any strategy discussion, one needs to consider many factors beyond simply the technology, or in this case facility, when making critical decisions.

Starting with colocation

Last year, I wrote a blog titled “Time to get on the colocation train before it is too late.” The premise was foretelling the impending move from corporate data centers to colocation facilities. While colocation facilities are seeing an uptick in interest, the momentum is only now starting to build.

For many IT organizations, the first step along the spectrum is in moving from their corporate data center to colocation. Moving infrastructure services from one data center to another is not a trivial step, but a very important one. Moving a data center will test an IT organization in many ways that highlight opportunities for improvement in their quest to ultimately leverage cloud computing. One of those is in their ability to fully operate ‘lights out’ or without the ability to physically enter the data center. The reason is that unlike the corporate data center that was down the hall, a colocation facility may physically be 1,000 miles away or more!

Where to go from here

Plan, plan, and plan. Moving a data center can take months to years even with aggressive planning. Start by thinking about what is strategic, differentiating and supports the corporate strategy. Consider the options that exist in both the colocation and cloud marketplace. You might be surprised how far the colocation marketplace has evolved in just the past few years! And that is just the start.

The opportunities for CIO’s and their IT organization are plentiful today. Getting out of the data center business is just one of the first moves that more and more CIO’s are starting to take. Move where it makes sense and seize the opportunity. For those already down this path, the results can be quite liberating!

 

Originally posted @ Gigaom Research 11/10/14

http://research.gigaom.com/2014/11/cios-are-getting-out-of-the-data-center-business/

The importance of the long tail and a market of one

One could ask what does marketing have to do with the CIO and the IT organization as a whole? At the IBM Insight conference last week, this very issue came up on my interview on SiliconANGLE’s theCUBE. The short answer is everything. Marketing and the go to market (GTM) strategy are vital to a company’s strategy in delivering solutions.

Align with business

If IT is to play a significant role in a company’s growth, the connection between IT and marketing must get closer. Much closer. Marketing is just one organization that needs the true value of IT to flourish. But marketing is also one organization that is primed today for leveraging technology to further the effectiveness of the marketing efforts.

One challenge facing IT organizations is in their ability to react with speed. Meaning, how agile they are to changing business demands? This isn’t just a problem about technology, but rather one about process and people. There are technology solutions that assist with the move to a more agile organization. However, realize that it is the intersection between technology, people and process that gives many a moment of pause. Today’s problem is with enablement and engagement…and with speed.

Market of one and the long tail

For a long time, the emphasis was in determining the broader market interests. Where were the masses of customers and prospects moving and how could the company get ahead of the needs? Analytics, reports and bright minds were put to task to determine the best direction to take.

Fast forward to just a few short years ago. While mobile phones are not new, the advent of smartphones are relatively new. Couple that with mass adoption and a bevy of apps to do just about whatever is needed. The combination is a potent innovation cocktail that led many a company to righteous fortunes.

What was the secret sauce? And what does this have to do with the modern IT organization? Everything. The reality is that companies are now creating programs that target individuals, not just groups. The world is now about personalization and the market of one.

Technology gets intimate

If that headline doesn’t get your heart racing… The reality is that technology has become very intimate in multiple ways. Personalization and intimacy are hallmarks of today’s wearable device and smartphone. On a smartphone, we choose our own apps, alerts, settings and personalization through custom cases, wallpaper, etc. Wearable devices take it to the next level. Now there are devices that know what activities we do and when. Just think about that for a moment. They are monitoring a suite of sensors to watch our behaviors and provide feedback.

These are just simple examples of how the Internet of Things (IoT) is making its way into our everyday lives. And it is just the start.

Presence and timing

Mobile devices are now able to detect where you are and timing of different activities. For example, stores are able to determine where in the store you’re located and your purchase habits. Should the store offer you a coupon via the app or text message? Would that entice the customer to actually make the purchase they otherwise might have passed over? The concept of presence and timing with regards to mobile and data is becoming even more intertwined.

Putting it together

Bringing things full-circle, addressing the ‘market of one’ is simply not possible using traditional methods. These new ways of customer engagement require new ways of thinking…and new technology methods. Just about every company is moving to a data-centric model. But even that doesn’t tell the whole story.

The challenge is that IT organizations are buckling under the growing complexity. Not only do they need to move to a data-centric model, but fast. As they organize systems, processes and people in such a way, automation and enablement become more of the norm. Think DevOps.

From the IBM Insight conference, it was clear that we are only in the infancy of where our increasingly data-centric world is headed. If we (as CIOs) hope to drive toward a model of extreme customer engagement, change is needed quickly.

Think about it from the other perspective. We (as customers) are looking for personalization to our needs, when we want it. This is a great opportunity for the CIO and IT organization to participate in the process. Remember, it is about the long tail and the market of one.

 

Originally posted @ Gigaom Research 11/2/2014

http://research.gigaom.com/2014/11/the-importance-of-the-long-tail-and-a-market-of-one/

 

IBM connects the dots between data, cloud and engagement

At this week’s IBM Insight conference in Las Vegas, IBM brought out the big guns to demonstrate their chops in the data analytics space. Insight is IBM’s conference dedicated to their solutions around data management and analytics. While there are some highlights, other areas are still evolving.

Setting the stage and connecting the dots

Things kicked off with IBM SVP of the Information and Analytics group, Bob Picciano, talking about the important interconnection between data, cloud and engagement.

  • Data is the ‘What’
  • Cloud is the ‘How’
  • Engagement is the ‘Why’

Bob’s messaging paints a good picture of how the technology and data play a central role to the ever-changing IT organization. Engagement is the key to business relationships with customers. The CIO and IT organization need to fully understand how they engage with customers today and how that will evolve over time. Where are the opportunities? How can IT help create deeper relationships with customers? Data and cloud will play a leading role.

Relationships comes in all sizes

The way companies connect with their customers will vary greatly. To that point, there are some core themes here at Insight that mirrors the varied ways. Two of the key areas are social engagement and mobile. Ironically, traffic at the mobile booth seems anemic compared with the social engagement area, which saw constant traffic. In order for IBM to truly capitalize on the changing marketplace mobile will need to take a stronger position.

Getting social, but still a ways to go

Social media plays a central role in customer engagement for many organizations. The impressive thing is that the #IBMInsight hashtag was trending high on Twitter’s list for much of the day. As a data geek, one is always thinking about the value of those metrics. Trending at the top of Twitter is pretty impressive until you start to look at the finer details.

Running data through Tweet Binder provides a bit of clarity (report). Almost 50% of tweeters used Twitter clients for iPhone, iPad or Android speaking to the importance of mobile in social media. Looking a bit further, 61% of tweeters only tweeted a single tweet while 77.51% of tweeters tweeted only one or two times. That is not a good showing for attendees that should be well versed on the impact of social media and demonstrates there is still a ways to go.

Building an ecosystem

Walking the expansive show floor, it is apparent that IBM has worked to build their ecosystem. There are plenty of vendors that provide complementary products based on IBM technology along with plenty of consulting shops too. The interesting point here is that there are not many larger technology companies other than IBM exhibiting. This could be a side effect to IBM’s wide portfolio of services and solutions and a feeling of competitiveness among vendors. Unfortunately, it does not represent the varied needs of the average enterprise customer.

Summary in a nutshell

Putting it all together, IBM is making good waves to support the enterprise around data and analytics. They have made a good start, but still have a ways to go. The solutions still have a traditional IBM ‘feel’ and with rare exceptions span into the newer territories. There was a showing of IBM’s BlueMix platform, but not too much beyond the large enterprise perspective. Even the cloud area competed with the size of the infrastructure areas.

The reality is that turning a company the size of IBM is hard. In addition to size, there are cultures that need adjustment too. But it seems IBM has started to make good strides in some specific areas with ostensibly more to come. It will be interesting to see how IBM addresses solutions going forward and starts to truly pull the different components (data, cloud, engagement) together.

 

Originally posted @ Gigaom Research 10/27/14

http://research.gigaom.com/2014/10/ibm-connects-the-dots-between-data-cloud-and-engagement/

There comes a point when it is not just about storage space

Is the difference between cloud storage provides about free space? In a word, no. I wrote about the cloud storage wars and potential bubble here:

The cloud storage wars heat up

http://avoa.com/2014/04/29/the-cloud-storage-wars-heat-up/

4 reasons cloud storage is not a bubble about to pop

http://avoa.com/2014/03/24/4-reasons-cloud-storage-is-not-a-bubble-about-to-pop/

Each of the providers is doing their part to drive value into their respective solutions. To some, value includes the amount of ‘free’ disk space included. Just today, Microsoft upped the ante by offering unlimited free space for their OneDrive and OneDrive for Business solutions.

Is there value in the amount of free space? Maybe, but only to a point. Once they offer an amount above the normal needs (or unlimited), the value becomes a null. I do not have statistics, but would hazard a venture that ‘unlimited’ is more marketing leverage where most users only consume less than 50GB each.

Looking beyond free space

Once a provider offers unlimited storage, one needs to look at the feature/ functionality of the solution. Not all solutions are built the same nor offer similar levels. Enterprise features, integration, ease of use and mobile access are just a few of the differentiators. Even with unlimited storage, if the solution does not offer the feature you need, storage value is greatly diminished.

The big picture

For most, cloud storage is about replacing a current solution. On the surface the amount of free storage is a quick pickup. However, the real issue is in the compatibility and value beyond just the amount of free storage. Does the solution integrate with existing solutions? How broad is their ecosystem? What about Single Sign On (SSO) support? How much work will it take to implement and train users? These are just a few of the factors that must be considered.

 

Originally posted @ Gigaom Research 10/27/14

http://research.gigaom.com/2014/10/there-comes-a-point-when-it-is-not-just-about-storage-space/

The enterprise CIO needs a comprehensive strategic plan and quick

Originally posted @ Gigaom Research 10/20/2014

http://research.gigaom.com/2014/10/the-enterprise-cio-needs-a-comprehensive-strategic-plan-and-quick/

There are many who profess to know what goes on within the mind of the CIO and across the IT organization as a whole. The challenge is: If you have not been responsible for the role, it is increasingly difficult to truly understand the complicated world that encompasses enterprise IT organizations. Could they be simplified? In a word, yes. But that is easier said than done. One needs an appreciation for the demands coming from not just technology, but also from other organizations within the company and the IT organization itself. But even that statement does not provide the full depth of the complexity facing today’s CIO.

The CIO balancing act

Today’s CIO is facing a balancing act between legacy solutions, methodologies and the modern-day buzzword bingo. Whether from cloud computing, big data analytics, data center complications, new architectures, new programming languages or just simply (relatively) the changes in the business direction, the complication is far and wide. And even if a CIO agrees and wants to move to a new solution like cloud, there may be other limiting factors to consider.

IT as a strategic weapon

Strategy is not a new or foreign concept to the IT organization. The vast majority of CIOs and IT organizations have a well-defined strategy that outlines how the IT organization supports the company as a whole. At times however, strategy becomes a victim to the interrupt-driven nature of IT requests. Always being one to want to please, the latest request becomes the newest focus for the team.

One opportunity missed by many organizations is how to transition from being the “hero” to being the sought-after strategic weapon for a company. There is a big difference between the two and it resonates greatly on IT’s intrinsic value to the company. The modern-day CIO is shifting from problem solving to providing business leverage. That is not to say that the IT organization gives up the problem solving. It remains, but is table stakes in today’s IT requirements.

Spanning the industries

The shift in thinking is not relegated to a specific region or industry. Silicon Valley, including its wide geography from San Francisco to San Jose, is not alone in the opportunity. Neither are new upstarts in the web scale category. Every single industry and region has the same challenge. Recall that companies operate in a global economy and need to respond accordingly. Eat or be eaten. Even the incumbent is not immune to the changes sitting at the front door.

Cloud implementation v2.0

One way IT organizations are changing the conversation between IT and Line of Business (LoB) teams is in the introduction of cloud computing. Beyond the common use-cases (CRM, HRIS, Email, etc), the implementations vary greatly. One trend coming up is a move to ‘cloud implementation v2.0’. Organizations were quick to try cloud-based services with very mixed results. In many cases, the attempt was fairly haphazard. IT organizations are now stepping back and rethinking their approach to cloud in a more holistic fashion. Where does it apply, how, why and when? But it goes much broader than that.

Shifting gears to focus on data

In order to understand where to apply cloud, understanding the larger objective is critical. This is where data-centric conversations come into play. In the end, it is not just about the application and data, but also about the value to the company. Add in conversations like Big Data, Analytics, Internet of Things (IoT), Industrial Internet and one can see how the complexity just grew exponentially.

The clock is ticking…

The growing complexity for the CIO and IT organization does not translate to more available time. Quite the contrary. The demands that companies are placing on their IT organization are increasing exponentially. This is where a new strategic vision is needed. In order to respond in a timely manner, CIOs will need to rethink their organization, processes, focuses and technology in a holistic manner. It will take time to evolve to the new model. But timing is of the essence. The demand is here today and is only increasing.

What do cloud consolidation and disruption have in common?

Originally posted @ Gigaom Research 10/13/2014

http://research.gigaom.com/2014/10/what-do-cloud-consolidation-and-disruption-have-in-common/

One thing is for sure, we can expect to see much more of cloud consolidation and disruption happening in the IT space over the coming months and years. Recently, Cisco, EMC, HP and IBM have all acquired startups from the cloud space. And each of these acquisitions was disruptive in their own way.

Cloud, in theory, should not be that disruptive. However, the essence of cloud actually presents a compelling disruptive story that is intoxicating to those whom fully understand the potential. That being said, enterprise IT organizations will leverage a combination of traditional IT services and cloud-based solutions.

Not surprisingly, the recent cloud acquisitions sit closest to the current state of the traditional enterprise. Key to this strategy is to 1) expand the portfolio by offering new solutions and 2) evolve the enterprise (and provider) toward a cloud-based strategy.

Keeping score

For those keeping score, Cisco acquired Metacloud. EMC acquired Cloudscaling. HP acquired Eucalyptus. And IBM acquired SoftLayer. Based on the momentum, one could look toward IBM to make the next move. On the other side, with Cisco, EMC and HP going after private cloud solutions, there is a position to take that it is these three to watch. An additional factor to consider is that a startup may have a great solution, but not enough runway (money) to keep them afloat until the market is ready to adopt. Watch for more of these situations, as the overall IT market takes longer to adopt disruptive solutions such as cloud-based solutions.

Shifting the incumbents

Regardless of who moves first, second, third or fourth, the act of acquiring cloud-based solutions will create a shift in the provider’s overall strategy. For the enterprise CIO, one key to watch will be momentum among the cloud startups. Which solutions are up-and-coming and getting quite a bit of attention by early adopters? Two that come to mind are Docker and OpenStack. If OpenStack were a company, this would be the one to watch. In any case, enterprise IT organizations need to keep close watch of this area.

As enterprise IT organizations shift from traditional IT infrastructure to converged infrastructure and onward to cloud-based solutions, the incumbent provider must have an answer to the shift. Let it be noted that the incumbent need not provide all parts of the solution. This is where the ecosystem comes in to create value and fill the gaps in the strategy.

Leveraging innovation

Many ask why the incumbents do not innovate internally and build out their portfolio like they have in past years. With a vibrant industry of up-and-coming potential solutions, there are easier paths to success. Why take the risk and invest significant funding into a number of different strategies only to have one pay off? Instead, watch the space and acquire the right solution that has a proven technology and fits the model well. The key is finding the point when the solution is proven, but not so successful that it demands paying a premium.

For the CIO, this means keeping close tabs on how the cloud space is evolving regardless of the stage of adoption they are at. Cloud solutions impact organization, services, and processes in addition to technology.

Divesting leads to Consolidation

The big breakups of 2014 are leading to further cloud consolidation. Many of the large IT providers have simply gotten too big and too diversified. Divesting is essentially a healthy way to trim their portfolio and refocus the company in leading areas within their industry. Divesting also opens the door to an interesting side effect of acquisition opportunities.

Intersection of cloud consolidation and disruption

Each of the acquisition targets is disruptive in their own right. The market as a whole is also very fragmented with solutions solving a similar problem, but in very different ways. And each company does one thing and one thing very well. The opportunity to explode the solution comes with building out the ecosystem. For the startup, what better way than to sell to a larger organization that has several of the building blocks already integrated and productized. Plus, the alternative of heading toward IPO is just not as appetizing of an equity event as it used to be.

8 Reasons Not to Move to Cloud

Originally posted @ Gigaom Research

http://research.gigaom.com/2014/10/8-reasons-not-to-move-to-cloud/

Cloud-based solutions present the largest opportunity today for the enterprise, business, IT and the Chief Information Officer (CIO). Recent conversations have posed the question about cloud adoption in the enterprise. On the whole, just about every enterprise today is leveraging cloud in some form. It may be a simple application or a complex ERP system. Overall, however, the adoption is fairly anemic. With all of the reasons that drive enterprises to leverage cloud-based solutions, there are a number of reasons that may offer the CIO a moment of pause.

The moment of pause may be temporary or it may be a longer-term situation. In either case, it is important to understand the reasons why in order to respect the decisions. Disclaimer: Not all decisions may make sense to an outsider and some may be a bit irrational. Here are a few of the top reasons organizations may not move an application or workload to a cloud-based alternative.

  1. Application Readiness: The vast majority of applications in use today were never architected with cloud in mind. Sure, the application may have been virtualized, but is it really ready for cloud and offer the same SLA to customers? In one example, a major enterprise firm runs a business-critical app (non-virtualized) running on Windows NT on a tower Compaq Proliant server in their data center. The application cannot be virtualized, let alone migrated to cloud. Are there existing risks to how the application? Yes. But this example is not unique or rare.
  2. Security: The application or more importantly, the data is sensitive and a data breach would present a significant risk to the organization. An extreme example might be secure missions for the government or business-critical Intellectual Property (IP). That is not to say that cloud-based solutions are not secure. But the cloud-based offering that best suits the application may present a challenge (real or perceived).
  3. Cost/ ROI: Yes, cloud is not just about cost savings. However, the all-in cost to migrate and operate an application using cloud-based solutions may not outweigh the option of ‘do nothing.’ For example, if it costs $50k to provide $10k of value, why should it move? Do the other benefits of cloud provide the value? Maybe not.
  4. Priorities: There are risks to moving to cloud and activity required to do so. Does the priority of moving a specific application to cloud overvalue that of other requests coming from Line of Business (LOB) teams? For most IT organizations, their plate is already overflowing and cloud migration creates a conflict in priorities.
  5. Culture: Culture is a hard thing to change. It requires changing many moving parts including the CIO, IT organization, executive team and fellow business units. Bottom line: It does not change overnight. It requires strong leadership, vision and tenacity.
  6. Organization Capability: Is the IT organization cloud-ready? Meaning, how well has the organization truly prepared to consider a cloud-first methodology? As an example, have they adopted a DevOps methodology? Or does the organization look at cloud as simply a different form of virtualization? There are many aspects to consider about the team, their skills and processes before making the move.
  7. Market Maturity: Even if all of the pieces are in place and an application is a good candidate for cloud, the market offerings may not offer the level of maturity required. In tech terms, cloud is just entering it’s teenage years and still rough around the edges. Are there mature solutions in the mix? Yes. But also a number of rambunctious alternatives too.
  8. FUD: Fear, Uncertainty and Doubt. Yes, it is 2014, and it is well and alive in the CIO and IT organization. Is cloud a fad? It is easy to point the finger at FUD and most really despise this issue, but that does not change the fact that it is a reality in some organizations today.

With all of the negativity, there are a number of very valid reasons to hold off on cloud. Timing is everything. Three months from now, the landscape can change to present a different decision.

For those CIOs that see the promise that cloud provides, they will address many of these issues. Some issues may present a challenge for some time to come. Key is to consider the holistic view of cloud, and what it represents in terms of opportunities and challenges. In the end, business leaders do not care how an application is delivered. They just want it delivered. Aside from the reasons above, cloud still provides significant opportunities too.

Could Rackspace start the cloud vertical movement?

Originally posted @ Gigaom Research 10/8/2014

http://research.gigaom.com/2014/10/could-rackspace-start-the-cloud-vertical-movement/

There are plenty of other posts detailing whether Rackspace (NYSE: RAX) should sell or split. I detailed my own thoughts here back in May 2014. With the speculation continuing to twist in different directions, one thought got me thinking. Ideally, the board of Rackspace would do what they felt was best for shareholders. Maybe the current thinking of split or sell is too simplistic. Maybe there is a possibility that takes them from the muddled world of cloud infrastructure players to a relatively niche area that is ripe for the taking. This shift would put Rackspace in a unique position of differentiation.

Leading the cloud verticals

What if Rackspace shifted gears to focus solely on providing services to cloud verticals? We already know that Rackspace does a fine job of their hosting and cloud services. To that end, their ‘Fanatical Support’ is well respected in the industry. Put cloud verticals together with Fanatical Support and it may end up being a fine option for the future of a leading organization. There are still challenges between the hosting and cloud business revenue models to consider. But beyond that, there is a chance to delve into an area that presents a challenge for many would-be cloud customers.

Starting with Healthcare

Across the spectrum of industries, the financial performance of healthcare (+23.7%) has outperformed other industries in the past year with information technology (+22.0%) trailing closely behind. There are a number of use cases in which cloud computing could (and does) provide value to healthcare organizations. Even considering the compliance requirements of the Health Insurance Portability and Accountability Act (HIPAA), cloud services from IaaS to SaaS make sense. Creating a specific vertical of services that is centered around environments with regulatory issues such as HIPAA enable an easier decision for healthcare organizations as opposed to the alternative where they create their own cloud-based solution.

Fanatical Support pivots

One of the core tenants to Rackspace’s value has been their Fanatical Support. Over the years, their Fanatical Support has served as a key differentiator for the company. Considering the specialized needs of different verticals (like healthcare), it would make sense to pivot this support model from general-purpose support to specialized support for each vertical. Again, bringing support back into the fold as a core differentiator and building on their existing successes.

The value of specialization

In the general-purpose cloud market, the services are fairly confusing and muddled. Not to mention the drive toward razor-thin margins. Different cloud providers offer slightly different features, classes of services and ecosystems. By specializing on cloud verticals, Rackspace could lead the charge in building a specific ecosystem around specific verticals. It has long been discussed that cloud verticals is the logical next step for cloud maturity. Pairing their support model with the specialized services needed by each vertical would create a new level of differentiation and potentially different economic model. And this economic model would present an opportunity for growth beyond the general-purpose cloud solutions offered today. Add in the leadership that Rackspace covets in the OpenStack space and the interest only grows further.

Is Rackspace the only provider that could leverage this route? No. But considering the position that Rackspace currently holds and their suite of components, it would be an interesting approach to follow. And it might present an opportunity for the entire company to pivot without considering sale or split. Granted, there is still a good case to be made for going private too.

Is the cloud unstable and what can we do about it?

Originally posted @ Gigaom Research 9/29/2014

http://research.gigaom.com/2014/09/is-the-cloud-instable-and-what-can-we-do-about-it/

 

The recent major reboots of cloud-based infrastructure by Amazon and Rackspace has resurfaced the question about cloud instability. Days before the reboot, both Amazon and Rackspace noted that the reboots were due to a vulnerability with Zen. Barb Darrow of Gigaom covered this in detail here. Ironically, all of this came less than a week before the action took place, leaving many flat-footed.

Outages are not new

First, let us admit that outages (and reboots) are not unique to cloud-based infrastructure. Traditional corporate data centers face unplanned outages and regular system reboots. For Microsoft-based infrastructure, reboots may happen monthly due to security patch updates. Back in April 2011, I wrote a piece Amazon Outage Concerns are Overblown. Amazon had just endured another outage of their Virginia data center that very day. In response, customers and observers took shots at Amazon. However, is Amazon’s outage really the problem? In the piece, I suggested that customers were misunderstanding the problem when they think about cloud-based infrastructure services.

Cloud expectations are misguided

As with the piece back in 2011, the expectations of cloud-based infrastructure have not changed much for enterprise customers. The expectation has been (and still is) that cloud-based infrastructure is resilient just like that within the corporate data center. The truth is very different. There are exceptions, but the majority of cloud-based infrastructure is not built for hardware resiliency. That’s by design. The expectation by service providers is that application/ service resiliency rests further up the stack when you move to cloud. That is very different than traditional application architectures found in the corporate data center where infrastructure provides the resiliency.

Time to expect failure in the cloud

Like many of the web-scale applications using cloud-based infrastructure today, enterprise applications need to rethink their architecture. If the assumption is that infrastructure will fail, how will that impact architectural decisions? When leveraging cloud-based infrastructure services from Amazon or Rackspace, this paradigm plays out well. If you lose the infrastructure, the application keeps humming away. Take out a data center, and users are still not impacted. Are we there yet? Nowhere close. But that is the direction we must take.

Getting from here to there

Hypothetically, if an application were built with the expectation of infrastructure failure, the recent failures would not have impacted the delivery to the user. Going further, imagine if the application could withstand a full data center outage and/ or a core intercontinental undersea fiber cut. If the expectation were for complete infrastructure failure, then the results would be quite different. Unfortunately, the reality is just not there…yet.

The vast majority of enterprise applications were never designed for cloud. Therefore, they need to be tweaked, re-architected or worse, completely rewritten. There’s a real cost to do so! Just because the application could be moved to cloud does not mean the economics are there to support it. Each application needs to be evaluated individually.

Building the counterargument

Some may say that this whole argument is hogwash. So, let us take a look at the alternative. If one does build cloud-based infrastructure to be resilient like that of its corporate brethren, it would result in a very expensive venture at a minimum. Infrastructure is expensive. Back in the 1970’s a company called Tandem Computers had a solution to this with their NonStop system. In the 1990’s, the Tandem NonStop Himalayan class systems were all the rage…if you could afford them. NonStop was particularly interesting for financial services organizations that 1) could not afford the downtime and 2) had the money to afford the system. Consequently, Tandem was acquired by Compaq who in turn was acquired by HP. NonStop is now owned by HP as part of their Integrity NonStop products. Aside from Tandem’s solutions, even with all of the infrastructure redundancy, many are still just a data center outage away of impacting an application. The bottom line is: It is impossible to build a 100% resilient infrastructure. That is true either due to 1) it is cost prohibitive and 2) becomes a statistical probability problem. For many, the value comes down to the statistic probably of an outage compared with the protections taken.

Making the move

Over the past five years or so, companies have looked at the economics to build redundancy (and resiliency) at the infrastructure layer. The net result is a renewed focus on moving away from infrastructure resiliency and toward low-cost hardware. The thinking is: infrastructure is expensive and resiliency needs to move up the stack. The challenge is changing the paradigm of how application redundancy is handled by developers of corporate applications.