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.

Making Finance boring

Two of my close friends sent me this link to the New York Time .The post basically says that we ended up in this financial crisis because smart-guys ended up in the field of Finance. This is not the first time I have heard this. Nobel Laureate - Paul Krugmen has been talking about making banking boring.

What if the Smart Guys, referred to by Calvin Trillin in his post, went into the bio-tech industry and created a monster that ended up eating the world OR if they went into material sciences and ended up creating a different kind of nuclear bomb in search of alternative energy.

The problem is that smart guys are capable of doing *extreme* things successfully more so than other normal guys and they need to be regulated in all fields. Regulation failure was the key problem in my opinion. Assuming that the markets are perfect and that they would behave rationally was the biggest mistake that led to the crisis. Markets are made up of people and people have Animal Spirits . However hard we try to respond to things rationally like Captain Spock , we have ultimately shown that over period of time we behave just like how we behaved centuries ago.

The key to avoid any crisis, such as Financial crisis, is to not let a system go unmonitored for an extended period of time . Although the oversight and sometimes the inefficiency added by such monitoring is costly incrementally, In the long run, it acts as a good insurance policy against a systematic failure.

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.

US governments view on Cloud Computing

Here is an interesting viewpoint on cloud computing from an actual large scale buyer,the US govt, as compared to vendors who corrupt the definition of CC to align with their product/service positioning. The view points have varied from as diverse as - James Governor calling -"If there is a consultant in the room it is not a cloud" and Mckinsey saying that only the IaaS piece is cloud computing.

The US Govt issued an RFI for procurement of Infrastructure as a Service and articulated a very clear definition of the cloud and what they are looking for.

Here is what the Fed say's :
________________________________________________________________
"Cloud computing is a pay-per-use model for enabling available, convenient, on-demand network access to a shared pool of configurable computing resources (e.g., networks, servers, storage, applications, services) that can be rapidly provisioned and released with minimal management effort or service provider interaction. This cloud model promotes availability and is comprised of five key characteristics, three delivery models, and four deployment models."

They go on to describe the 5 key characteristics of
On-demand self-service , Ubiquitous network access , Location independent resource pooling , Rapid elasticity and Pay per use.

the Delivery models of SaaS , Paas and Iaas and the Deployment models of Private , Community, Public and Hybrid Clouds.
______________________________________________________________

I like their view point as it is an inclusive definition and does not restrict to Infrastructure only while also preserving the key tenets of CC like pay-per-use , location independence and rapid elasticity.

Seems like they are asking the right questions and are actually ahead of the Enterprise's in their thinking. The cool thing about this RFI is that it will potentially serve as a template for other Large Enterprises for procurement of Cloud Services. Funny how the govt has is becoming the leader in tech adoption in 2009 .

Summer of the Java Cloud

For those widget company ideas (like here and here), which are typically worked upon by some developer as a hobby - paying $75 per month to Amazon,with the added overhead of managing your systemimages , seems too much.

I am to glad to see that java in the cloud with pay on true usage shaping up. After all Java is still the most popular language around. The options on the horizon include
a) Stax
b) App Engine for Java
c) Sun Cloud

On Pricing:
Most of the widget company ideas start off as a hobby and get a life if the idea has potential so to expect a developer to pay $900 per year(the base version of Amazon EC2) on something that is just an experiment is way to much. The starting price has to be free

It seems to me that google has the best handle on this market -The innovation sourcing market. They have a free entry point but then tie you down to their proprietry and great tools. Note that to a developer GREAT is a more important than propreitry and to the google business managers PROPRIETARY is more important than great. Not to say that one can substitute or replace the other. Ley us see what sun microsystems comes out with - They promise on interoperability but will they be able to give something great within the constraints of interoperability.

Note: I must also say that I recognize that sun's and google's customers are different and their Cloud strategy will have to align with their customer's needs. For Google it is all about recruting developers as franchise's of their advertising business. For sun it is really about Enterprise and Datacenter