Natural Advantage created for the Service Industry by Cloud Computing

The BIT Conference at UCLA Anderson had some great speakers and diverse mix from academia and industry. Two must see talks here
1. Terry Kramer on the wireless industry
2. Ravi Kalakota  on Renovation as compared to Innovation

I was honored to be part of an industry panel. Here is my presentation

Natural Advantage Created for Service Providers by Cloud Computing

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Creating a Two Sided Market in Insurance using Technology

Several people including me had big hopes on Pay-Per-Mile insurance. I even categorized this innovation as an Insurance 2.0  innovation and termed it as part of the next-gen insurance model. After all , Pay-Per Mile gives the ability for carriers to track your driving usage and you as the consumer are passed down the savings. Several agencies had research published   claiming that the miles driven could reduce by 10% and a savings of $270 could be achieved. Carriers like Progressive and vendors like On Star launched their products with a lot of fanfare only to find that consumers did not really opt-in for the plan.

The problem, in my opinion, for the limited success of the product is that the benefits to consumer in pay-per-mile insurance product are not clearly articulated and more so, not proven. Knowing that there is a big brother watching you and that your costs could go either-ways (up or down depending on the usage)  makes the consumers shy off going to a pay-per-use plan. Instead a better approach for carriers could be to provide a free value added service in return for the customer's allowing the carriers to track the usage patterns. Essentially creating a two sided market where one feeds the other

So here is an example of how this could be achieved. Refer to the diagram below.

In my sample next generation insurance company model below(refer diagram), I am creating a two-sided marketplace between the Commercial Auto (Tow Truck ) and the Personal Lines Auto (Consumers). Each side is feeding the other and also deriving value by joining this new entity. Consumers -Like the ability to have an efficient tow truck dispatch capability on their cell phones. The Tow Truck carriers would not mind sharing their location data when they are shown that they get new business referrals via this technology.

Spring Roo and AppEngine

I don't really get what springsource is trying to do with the Spring Roo product. Seems like it is trying to be the Java equivalent of the RAILS/GRAILS world; Fast and quick way to develop applications.

But does the approach truly work? I don't think so.

So I decided to look under the hood and build an application. I tried the much publicized Google AppEngine/ Spring Roo Integration. While I could build the scaffolding of the application very quickly, I did not see much value in what Roo did for me. Here is what it does :
1. Builds the Object to Database connection layer with finders and getters based on just the Entity Object definitions.
2. Builds a generic GUI for Data Entry and View.

Now - if you are in the RDBMS world - there is probably some value to automatically creating the scaffolding around capturing the Data Access layer with a tool like Roo. But , if you are working with AppEngine , I dont see the value. Building the Data access layer in AppEngine is super easy already there is not much other tools can do here. You just define your objects with JDO/JPA annotations and you are done. Why would I make comprises in the choice of a programming model when I don't get much from Roo's efficiency. Note that Roo uses JPA only with No DAO layer and uses Aspects.(not everybody in the world likes Aspects including myself)

I liked the idea of building a generic gui for your object model. If this idea would work with any Object Model I create. i.e not something that was generated via SpringRoo then I would be interested in it. Since the gui is more of a testing tool for your Object Model - there is value in having such a gui as a backdoor entry to your data. But the GUI cannot be used even as a starting point for true real-world applications.

IMHO - the only way I see Spring Roo fit into my world if it targets its positioning as the "Microsoft Access for the Cloud" .Afterall , what MS access gives you is an ability to define Tables(Entities) , Edit Data Items and Report on them.  Trying to target Spring Roo as a potential Web Application development paradigm does not fly with me.

The Business IT Alignment Problem -2009

Here is an interesting piece of information I found on the Gartner website . Gartner published the 2009 results of Business and IT Priorities based on a survey of about 1500 CIOs.

I have taken the Gartner Table and mapped the business priorities to what the IT priority should be if the IT was truly aligned with the business needs.

Seems like the Business IT Alignment issue is not getting any better.

The Cloud is ready but the Enterprise is not

Seems like the whole world is talking about Cloud Computing Adoption in the Enterprise. What surprises me more is that some folks with a good sized audience are saying that as the technology is ready and the cost cheap, Enterprises will start replacing their applications with Cloud based apps.

I don't think so.

Cloud Computing Adoption in the Fortune 50, the ones which have an IT budget > 1 billion , is going to be two step process. Step1) Outsource your IT Infrastructure to Infrastructure Managed services provider like CSC , HP/EDS or even HCL and Step2) Finally adopt Saas and IaaS on a case by case basis once you have some sort of a pay per use model working for the Enterprise with the Managed service provider.

You cannot just switch to SaaS applications overnight(or even in an year) , nor are most applications built for use in a virtual environment. I would not be surprised to find that most large enterprises have more than 80% of their applications that cant even be moved to VMWARE without modifications, forget about moving to cloud.

What I am seeing in the Enterprise is that they like the Pay per use model. This not only fixes their internal IT finance issues(like which BU pays what , what are the allocations to the department etc) , but also moves IT to an expense category as compared to Capital expenditure. As a result, I do see a strong push to outsource IT infrastructure , mostly to Managed Service providers with some cost savings , though not as much as what they can save by moving to cloud computing. Now the managed service providers,who typically have their own data centers, are pushing hard to at-least not have dedicated boxes for each application. i.e move to vmvare type solutions.

So my guess is that once the applications move to a virtual environment as a step 1 and the Enterprises start paying for the IT infrastructure in a monthly model , switching to cloud with solutions like CloudSwitch would not be very difficult. It would be like moving from one cable tv operator for your home to another. Although the switch is not 100% smooth like putting in a new appliance , you can still switch with about 2-3 hrs of work

If Oracle firewalls mysql

Interesting post today here.

The discussions :

Ellison has offered to create a separate entity within a combined Oracle/Sun to house MySQL which would be “firewalled” off from the rest of the company, possibly with its own board of directors

I hope this does not happen. Not for the sake of Oracle(ORCL) but for the sake of mySql. I was earlier led to believe that Oracle will in-fact not kill mysql. Open source is not going away and unless they bought sun just to kill sun , the sun software suite is all open source , open source is strategic to oracle also. So , this made me believe that oracle will figure out a way of dealing with mySQL just as IBM figured out eclipse and rational studio relationship.

Now if they end up creating a firewall between mySQL and Oracle with a separate board of directors, then we should surely expect mySQL to die. Oracle will ultimately own mySQL and if it cannot monetize it without hurting Oracle RDBMS it is going to kill it(in time).

Update: dec 07 - Apparently Oracle says that the new york post report is false.

Update : Jan 17: More thoughts from Marc Fleury here http://www.thedelphicfuture.org/2010/01/save-mysql.html

With the recent trend to somehow treat OSS software as public property.(Refer Yahoo boss and the mysql stuff) it is only going to hurt the OSS movement. It will negatively impact the OSS acquisition appetite for Enterprises as they might have to bundle in the cost of Liability insurance when in acquisition talks.

Not a good approach.

The OSS route was developing into - I along with others write some software , get some adopotion and then redemption with an Acquisition . Now the redemtion part is questionable.

Enterprise IT - The future sales model

In his blog post , Mike Speiser, argues that Small to Medium Business segment is the next growth engine for Software and that Enterprise IT Providers should look out for disruption in their space led by the consumer web revolution.

While I agree with the conclusion of Mike (refer my earlier post that made similar conclusions here) , I do not agree with some of his arguments.

Mike's key argument is that with cost of sales going down ,as a result of the realization of the vision of self service technologies and next-to-zero software distribution costs, it creates an opportunity for new startup's to take advantage of this and hence this is the engine you should be looking at.

I would argue that there is more nuance to selling into SMB than having great self service technology and a cost model based on SaaS. Although people think SMB and Consumer segment are similar as a result of the fragmented nature of the markets , there are actually some significant dissimilarities. SMB's make decisions in groups typically influenced by a large Enterprise facilitator. i.e Doctor's would buy office software that works with the files their hospital uses. Insurance agents will typically buy their Insurance carrier recommended IT software. In a lot of cases Enterprise IT vendors sell to associations and groups ,realizing the actual sale with the SMB business; as a result the assumption that you cannot have direct sales for SMB is not true. Assuming that having better self service capabilities makes their life simpler is also not necessary true. Their life gets simpler with more factors like better integration with their affiliates.

So to play in the SMB technology space you need to have a platform provider that aligns all the relevant players. Microsoft has been this platform provider untill now. People like SAP understood this and focused on the Enterprise Solutions that integrated the SMB into the Enterprise processes but did not enter the SMB space per se.

Google is trying to be the new platform provider as a result of the platform moving to the web. So the opportunity now exists for start-up's the bet on the success of this platform and hence be successful.