The Economy 2.0

I’ve been following Umair Haque for a couple months.  I was tipped by Fred Wilson ala AVC fame.  At first I thought he was a new age socialist, which he is.  However, I think his meaning gets stronger under todays circumstances.  His old rules vs new rules perspective literally makes me look and think sideways.  Five, maybe 10 years ago, I would have immediately dismissed these mother and apple pie perspectives to yet another progressive hippy with modern glasses.  But hang on here, now, now with literally bedrock companies collapsing on a quarterly basis, you can’t help but question if another approach is needed.

All of his ideas tend to wax the assumption of a connected world, which is great.  I get it.  The world isn’t *totally* connected as we think, but I’m following.  But Umair takes the Web 2.0/social network further by asking and requesting companies to embedd new rules of engagement with their customers and community.

Listen for yourself.  Below contains a video to a recent talk he gave in Sweden.  He’s not the most charismatic speaker, he glosses over details left right and center, but the core….listen to the core of his argument.  I’m a moderate in most things from sports to beer, but this fresh thinking is seriously f*&king sweet.

Video link.

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Do clouds have doors and locks?

You can’t go a day without a dozen or so pundits preaching the value and virtues of the cloud.  Most folks seem to accept its enevitable conclusion, that all things software will eventually be powered by a “cloud infrastructure” – just as soon as we can define what the cloud means.  I think this diagram is one of the best logical descriptions going right now.

I don’t see a whole lot of conversation about how ISVs or enterprises can tap into the cloud without getting locked into a particular cloud provider.  If you go down the list of major providers, and remove the IaaS services(which is really a hop and a skip from datacenter hosting with better pricing) , each PaaS, SaaS is a full fledged lock-in strategy for ISVs & enterprises.

If I’m an ISV and I want to write a brand new application, I must decide a couple things right out of the gate:

1.  Which language I am willing to write it in?

2.  What VM environment do I use?

3.  Do I need associated data within the providers environment(ie. google, AWS, salesforce.com, etc.)?

4.  Do I want to attract other ISVs already inside the providers cloud for easy interoperability?

I was at a Virtual Appliance conference and a member of the audience asked Amazon, “when will you provide the tools and capabilities that are compatible with industry standards so I can write my application using your PaaS services and then take it elsewhere(or expand it) as I need?”  The Amazon rep could only say, use our IaaS service and you can build whatever you want.  I don’t think that answer won the room over.  But, its early days……so does anyone really care?

If an ISV needs some basic services for their application in the form of a database, a webservice, authentication, caching, load balancing, storage, etc. these are all unique per cloud provider.  Google, Azure, AWS, Salesforce, etc.  Then you have to decide, python, php, java, .Net….So what do ISVs do to now to build on the RIGHT cloud the first time without getting locked in?  Or should they build/port(like this VMware to Xen conversion) their app to each cloud platform for maximum coverage?

Again, its early days and most ISVs will have to pick or simply go with EC2 and IaaS to avoid the analysis.  However, I don’t think standards are the immediate answer to conundrum.  Discussion is needed in order for the next generation of applications to move past this “cloud lock-in” debate.  Standards always seem to be viewed as limiting, and I think I agree with this for the most part, but de facto standards seem to move quickly among like minded smart people who are trying  to accomplish the same thing.  I hope in this world of connectedness, that a cloud application service abstraction can be born(or possibly a startup like Gigaspaces) to avoid one cloud vendor becoming the only one on the block.

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Henry Ford could have built a faster horse, but didn’t

I’m not one to hunt for famous quotes, they sort of grab my attention dependent on mood and timing.  I was reading something related to cloud technologies and came across a good one from Henry Ford:

If I listened to my customers they would have asked me to make a faster horse

Visionaries always look smarter AFTER they’ve conquered the world.  Most game changing technologies come from the mind of an expert who has vision.  Better mouse trap technologies(Google algorithm combined with better advertising engine) vs. never before seen technology(Netscape Navigator) have certain qualities that I think make it easy to read whether they are truly innovative or just iterative.

When I think about cloud computing and all the things its intended to enable, I don’t see visionary nor game changing.  I see evolutionary or, using Clayton Christensen speak,  ‘sustaining technology’.  Simply put, applying existing technology to a new service and wrapping some additional iterative frameworks doesn’t make revolutionary.  Then I read this article summarizing this years CES show and I’m left thinking, really?  I just don’t see anything on there thats all that interesting.  New innovative technology is commonly beaten down by armchair analysts and I don’t see that on the list.

I think the amount of noise new technology gets, to some degree, can provide a litmus to how disruptive it might be.  Obviously, law of averages puts most new ideas to bed well before any true adoption takes place.  But, those that did in fact “change the world” probably have similar attributes.  Without having the time and energy to study all the game changing innovations over the past 100 years, I suspect a healthy percent must have had to overcome significant adversity.

Think for moment when Henry Ford unveiled his first Model T.  The community must have been startled and dismayed at this limited noisy machine.  Comparing it to the existing horse transport must have led to much doubt and ridicule.  The cost, speed, lack of infrastructure and fuel stations, poor reliability, I mean the list is endless.  If I compare this to the cloud model, its receiving limited doubt(beyond LJE), lots of hype, even though many users are still on the sidelines.  If I apply my newly found litmus test, this gives me a clue that the technology is interesting but not disruptive.

Why does disruption matter anyway?   I don’t think it does, I think its merely a reflection of how brilliant the idea and the person is, and in this case, since no one “owns” the cloud idea per se, its all moot anyways.  What a waste!

Still a great quote.

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How can we leverage the cloud?

I used to get this question a lot at my current old company.   How can we, as a user of several operational systems, take more advantage of The Cloud?  This is where the infamous Gartner Hype Cycle, of which there are hundreds of examples, comes into play.   In terms of The Cloud within this cycle, I’d say we are getting higher and higher towards the ‘Peak of Inflated Expectations’.  As more and more technology companies commandeer the term for marketing purposes or shove some new software package onto EC2, expectations get set.  Marketing philosophy aside, I find myself explaining what the cloud can do, what its used for, and why we should use it to more and more folks in my office.

I recommend starting here for a general semantics overview to describe all the aspects of the cloud.  There is no One Cloud for all people.  I agree with the 3 layers of cloud services comprising of SaaS, PaaS, and IaaS.  The mainstream cloud service of Amazon Web Services is a IaaS and PaaS model, depending on which service you buy.

I think for corporate entities that have applications that are not web properties or scientific/analytic computations, the options for leveraging the cloud are relatively slim.   I know of 2 basic services that our company could possibly leverage today for their “operational systems”.  Database Backup service similar to Zmanda(that Ingres would of course build our own) and Outlook attachment offloading.   Not necessarily game changing use of the cloud.

The other alternative is to simply put demo environments on the cloud for our field reps, allowing them to spin up an environment when they need it without crushing their laptops with VMware or similar memory hogging technology.  Again, sort of a ho hum advantage.  This is where the cloud and its messaging will need to go through a marketing maturity model of sorts.  The current drum beat that the Cloud could save energy issues, eliminate system admins, etc. etc. all need to be set in context to some real business value proposition.

A recent webinar I attended hosted by Information Week took a poll of the attendees asking their interests in cloud services.  50% said they were “checking it out, still waiting to jump in”.  For all the hype and attention, the cloud is still a new fangled technology trying to find its way into more and more use cases.  This will continue to take place, in my opinion, until applications have been (re)written to take advantage of the cloud seamlessly(like Mathematica) or ground up cloud apps will come to market(which, you could argue the first gen SaaS players are already there).

I attended a conference last spring(2008) where Simon Crosby(CTO of Citrix / Xen) spoke about the future of Hypervisors and why everyone else was doing it wrong.  Entertaining talk.  Virtualization is to clouds like water is to farming, its simply a must have.  The piece that stuck with me was the current lack of instrumentation and toolkits for Hypervisors to understand the resource load requests of applications *before they request it*.  He went on to say that in order for more packaged apps to work with VMs and Hypervisors intelligently, more sophistication(and a standard) are needed to collect the needed meta metrics for a true dynamic elastic response.  Some applications do this today, but there is no standard, no toolkit to effectively enable developers to write applications  to respond to the benefits of the cloud.  Just like the plug in the wall, the load ebbs and flows depending on what I do.  All the “apps” writing to those plugs fit a standard API and thus the grid can respond to it predictively.

The talk was ages ago, so I do wonder what new is happening in the application development space to enable ISVs and customers to write “cloud aware” applications?

I think time and start up investment will change this in 2009.

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Open source needs to move to Open Business

When simplicity or logic creates new thought, I get excited.  I know I can spend more time than necessary trying to dissect some esoteric principle, partly out of might to achieve some intellectual challenge, partly out of the hope of finding a new perspective.

Umair Haque wrote(Harvard Publishing) a simple yet meaningful post:

“…our research at the Lab notes, the fact is: companies who can build authentic, honest, open, collaborative relationships with consumers are significantly more profitable (and sustainably profitable) than companies who treat consumers deceptively, antagonistically, and manipulatively.

I can’t help but reflect on my own evolution working for an open source software company.  Having spent years at Oracle where code, IP, and competition fed the machine, suddenly at open source it was about something different.  Well sort of.

The code, roadmaps, what we’re working on, our audience, our license practices, etc., all might be different and “open”, but thats about the extent of it.  Customers still don’t know what other customers are spending on our software, who is using what, are we growing, are we saving customers money, who is happy and who isn’t.  There is still a lot of traditional business practices at play that put the customer at the same disadvantage as anywhere else.

So when I read Umair’s simple statement(based on some data that I hope to see produced since there is a reference to a ‘lab’), I can’t help but think about my own personal loyalty experience.  When I buy I repeat for a variety of reasons.  The first is product, then service, then price, and then there are several difficult to tweeze soft benefits like convenience, price, do I like the people, is it clean, do I trust them?  Trust is subconsciously built into many of my most loyal buying decisions.

Think about how many times you need to get ripped off or screwed by a vendor before you stop using their service.  For many its once, for others its a couple times, but most often all will move on in due time based on a combination of poor service and/or a break in trust.  So while we are “thinking differently” in this era of leverage fakery that has cost us literally trillions of dollars, why can’t trust and Open Business be the new economic paradigm?

Most businesses “hide” their worth, their practices, the real goings on for three reasons.  Leverage, greed, and competitive advantage.  Where is the customer found in those 3 statements?  Companies can’t tell you what thee other customers are paying for because not everyone is paying the same price.  They can’t tell you what products are in use because it might highlight a weakness for Wall Street to take material offense with.  They can’t share if their customers are dissatisfied unless the customers take it upon themselves and find some other outlet to socialize.

In an era of broken trust, dreams, and paper wealth, why can’t we sort of start over?  Is it too difficult to envision really well run companies who run “openly” AND succeed?  What would happen if everyone, and I do mean everyone, knew how Apple was doing, or Google, or Microsoft?  Will they be viewed as social softies with stagnant stock prices?  I don’t think so.  I think speculation still works against the strategy and trajectory of the company where future valuation is still worth something.  Open Business can clean the house of those companies that prop up weak product lines with strong ones.

I know at Oracle, the Database option RAC was always a big questionby the analysts, how many are using it?  It was untrackable because it was not represented in the 10k, it wasn’t in Order Entry.  Smart decision if you don’t want to publically track something.  For years analysts would speculate based on personal networks, published case studies(many of which could be propped), and other mechanisms.  The decision to NOT TRACK a product to protect those 3 reasons is not an Open Business.  Its an “opt in” model, companies can choose to join or not.  I wonder then what sort of customer loyalty and collaboration we would see?

More questions, new thoughts, simple logic.

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Solar power is the little engine that could

Occasionally I’ll read a report about how alternative energy plants are doing, either in their capacity, innovations, or future.  I read a new summary from The Oil Drum that certainly puts things in perspective in relatively simple terms.  A large(1,900 acres) solar plant is being planned for development in Phoenix Arizona, a reasonable place to build such a facility.  Unfortunately size and ambitions are not as dramatic as some would hope, but….its a start.

…in the U.S. EIA statistics show that the U.S. consumed 2,885 billion kWh of electricity in 1992; in 2002 consumption was 3,660 kWh. Average growth, then, was 77 billion kWh per year over the 10 years. Thus the electrical energy that would be generated by the Arizona plant would supply only 2.3% (1.8/77) of one year’s growth of U.S. electrical consumption. I do not have electrical consumption broken down by state, but I would guess that Arizona could build a solar plant of equal size every year, and they would barely cover their own growth in electrical consumption.

The article also points out how effective wind engery is in Texas.

EIA statistics for renewable energy in 2007 show that wind-generated energy in Texas was 8.1 billion kWh. Thus it would take four and one-half plants the size of the Arizona plant to match Texas wind energy for 2007

I’m sure if we went back in time with the oil industry, the efficiency and purity of oil refinery has evolved such that you can do much more with less.   The combination of our own ability to self manage energy consumption(77 billion kWh? do we really have to grow like that?) and finding new innovative technologies will help address what we and our planet needs.

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The cloud is all hype – shock horror!!

Chuck Goolsbee wrote this article entitled ‘Don’t buy cloud computing hype – business model will evaporate‘.  Rather doom and gloom but catchy.  I guess that is half the art to pay the bills.  Unfortunately I think the hype of the title should be the thing evaporating.

The article examines the exercise of “What would I put in the cloud(as IT dude) if I had the opportunity to use it?”  So Chuck walks through a couple applications he’d like to push(payment card/ecommerce apps) out there and realizes that security and audit requirements will prevent any meaningful app from being deployed.  Case closed, clouds are hype.  But what Chuck doesn’t spend time on is innovation of auditing, processes, and all the parts in between when an overwhelming value proposition is materialized.

I can’t help but refer to one of my favorite books, The Innovator’s Dilemma by Clayton Christensen.  The book points out that,

“Disruptive products are simpler and cheaper; they generally promise lower margins, not greater profits.  Second, disruptive technologies typically are first commercialized in emerging or insignificant markets”

The intrinsic value of an elastic compute platform is too early in its development to throw the whole concept out the window.  The cloud is of huge value for several (non) ‘insignificant’ markets(ie. google, facebook, adobe).  But the cloud for the enterprise?  I’d say thats a market that is in search of insignificance.  The use cases of apps to be deployed in the cloud for the enterprise market appears small.

But, value drives change, including those stodgy auditor processes and ITIL bigots, both influencers of the enterprise market.  Today, most cloud use cases for the enterprise seem to fall into scientific domains(drug computations, weather models, energy models) or SaaS applications.  In the scientific realm, most of these applications require bursts of compute power for relatively short periods of time. This is not the market that will be responsible for the broader adoption of cloud services.

Emerging technologies take time for customers to understand and adopt.  In software, the applications are always the last to emerge once the HW & software tools have been absorbed.  When the cloud is viewed as a new “software tool”, the innovative customers will define the use cases either through trial and error or real planned innovation.  We know enterprises move slowly and in times of financial uncertainty, this only adds to the uncertainty of “when will the enterprise use the cloud?”.  However, there are always first movers, and if you listen to what Tim O’Reilly is saying about cloud vendors selling the service as a commodity, trying it out might not be too painful.   The first movers will find the edge conditions, the ‘insignificant use cases’ that become real competitive or cost avoidance value and mainstream adoption begins.

Thus, if a compute cloud reaches a degree of value where it becomes a standard through industry examples or pure cost reduction value, how could a security process derail this inevitability?  Or even better, why wouldn’t a new feature enable this value from being realized?  Its way too early to throw the babe out.  There is also the concept of hybrid clouds where users can switch or be split(Data tier/application tier) between an on or off premise facility.  Options are wide and varied.

My interest in cloud computing is directly related to this question, the use case for enterprises.  I’m less interested to know how well Google can scale up and down or Amazon can provision Xen hypervisors for developers or Facebook can support photo sharing.  I’m more interested in how companies like FedEx, ETrade, and Walgreens will leverage the cloud.  The cloud-as-a-feature model might have some legs, which is what I’m currently researching.

So Chuck stirred the pot with a provacative title, here here!  Unfortunately, whats in the pot kind of smells.

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