Modified on by AmyHAnderson
And finally, the system needs to be viewed as a dynamic, interconnected network of constituents. Although it doesn’t need to be difficult to decipher, an ecosystem is necessarily more complex than a simple partnership.
Partnerships are one to one relationships. They can be as structured as a strategic alliance, where the two parties make formal revenue commitments and drive sales jointly, or as casual as two sales reps meeting for coffee occasionally. But’s driven by two organizations with common objectives and a belief that mutual revenue will result from interacting with each other.
Effective partnerships happen when the two companies are highly aligned with each other. Corporate cultures, organizational styles, and compensation programs are complementary, making it easy to work with each other. Distributors and resellers have built their businesses around aligning to the vendors with whom they partner, epitomizing the approach to partnering.
Partner programs are one to many relationships. Vendors build programs to provide benefits to groups of partners. Programs help categorize partners by how they specialize and by their level of commitment to the vendor. Partners derive value through financial benefit, influence with the vendor, and non-monetary support such as technical enablement.
When a vendor develops a set of partner programs, it’s easy to mistake that collection of programs for an ecosystem. But unless the constituents in the programs have independent and systematic access to each other, there is no ecosystem.
A true ecosystem is a set of many to many relationships between partners in the “feeding system” and the influencers in the “energy flows.” As described in Part 2, the flow of money and the exchange of ideas are critical to a sustaining a vibrant ecosystem.
And as the ecosystem matures, there is less need for a single orchestrator to direct the activities of each constituent. Two parties may work together on a project or deal that has benefits that reverberates through the ecosystem. This is fundamentally what differentiates an ecosystem from a set of partner programs.
Open source computing models provide the basis for a mature ecosystem. Open systems have long been heralded as the antidote to vendor lock-in, but in reality, the true value of open computing is the fluidity of ideas, and increasingly the opportunity for new economic models.
For example, when a vendor makes a service available as an API, there are several ways to monetize that service, either through direct sales, revenue sharing, or advertising. Highly mature online communities, fueled by social business, create the platform for this exchange that benefits the entire ecosystem.
Summarizing all three parts
In summary, any organization looking to build an ecosystem needs to start with a three-pronged plan:
Define the whole and the sum of the parts
Who are the constituents?
How do they interact?
People and assets required from each constituent
Who is creating the assets?
What are the assets?
Who is doing the selling?
Money and content
How does the money flow through the ecosystem?
What kind of content needs to flow through the ecosystem and what channels will the content require?
Answering these questions is a lot harder than it sounds. But as the industry moves into this next paradigm of computing, getting these answers right will be critical to every vendor’s success.
In this three part series, we're looking at what the phrase "ecosystem" means and how it applies to the IT industry. The term ecosystem is borrowed from the biological sciences, where it refers to a collection of living and nonliving organisms that are linked together through nutrient cycles and energy flows. In Part 1, we applied the notion of living and nonliving organisms to a partner ecosystem. Next, let's focus on nutrient cycles and energy flows. In a partner ecosystem, these two systems for sustainability translate to two units of measure: one is money, and the other is influence. The two systems function separately, but in harmony with each other.
In a natural ecosystem, a nutrient cycle is a nice way of describing how the bigger creatures eat the smaller creatures. In partner ecosystems, the notion of the big devouring the small seems impolite at best and counter-productive at worst. In fact, the whole metaphor of an ecosystem arguably breaks down when a hierarchical nutrient cycle is applied to a network of partnerships.
But if we look at nutrient cycles as feeding systems, the metaphor becomes useful again. Even if the participants in an ecosystem are not devouring each other, they must find ways to feed each other. In the world of IT, money is the food, and if we can follow the money, we can watch the ecosystem in action.
In a traditional IT business model, with perpetual licenses and renewable maintenance streams, it’s easier to follow the money because “feeding times,” if you will, happen at regular intervals. Just as how bears scavenge campgrounds at roughly the same time every night, renewal license models based on long-term capital expense investments, will result in regular feeding times. And the resulting revenue flows are relatively simple to track.
But in a world of subscription-based licensing funded by operational expense investments controlled by a number of Line of Business managers, following the money is like following a cardinal, watching it eat small amounts all day long from a number of feeders scattered over a wide range of locations, and often sharing the feeders with several other species.
Nutrient systems imply that the participants feed each other. And certainly it is true that in order to sustain the partner ecosystem, every participant needs to contribute to the sustainability of the whole. And every participant needs to derive benefit from the system. So the members don’t need to be devouring each other in order to feed off of each other.
Energy flows in the natural world correlate nicely to the flow of content and ideas between influencers in a partner ecosystem. All participants are influencers to some degree, but analysts, online communities, and pundits are primarily focused on tracking and documenting the exchange of ideas between participants. These people and organizations facilitate the flow content throughout the ecosystem. How these participants get paid is independent of the flow of money that we follow in the “nutrient system” previously described.
Although energy ebbs and flows naturally, one of the challenges in maintaining a vibrant ecosystem is sustaining a high level of content flow. It’s easy to create buzz with a product launch or large event, but it’s far more challenging to sustain interest over time. To keep everyone engaged, the content exchange has to be fresh and relevant. Developer communities have demonstrated how sustain interest through constant innovation, candid online discussions, and a willingness to share content.
As the IT community moves from a traditional, in-house delivery of applications to a open, cloud-based delivery of integrated solutions, the ecosystems that support these communities must expand and transform. Companies like IBM need to move away from “feeding bears” and learn how to “feed birds.”
Modified on by AmyHAnderson
Two years ago, IBM launched the Cloud Specialty. From the beginning, we declared the Specialty—like all IBM Specialties—to be an elite program for partners interested in a deeper investment with IBM. The press and analyst communities received the program with enthusiasm.
The Specialty is built around five partner models for cloud. These models address all partner types, such as ISVs, SIs, VADs, and VARS, and focus on what partners want to do with IBM and cloud. Rather create separate programs for different types of partners, we created a single program with multiple paths, thus allowing each partner to find the right fit for their business’s cloud strategy.
Like any IBM Specialty, the partners demonstrate skills, revenue, and references related to a particularly technology and in exchange, IBM provides marketing benefits. Because the program is elite, the requirements for partners are meant to be challenging, and the benefits from IBM are meant to be generous.
Two years ago, private cloud was in full swing and public cloud—at least for large enterprise clients—was in the early adopter stage. So not surprisingly, the Cloud Builder path, which targets private cloud builders, was immediately popular. For the most part, Cloud Builders came out of traditional VADs and VARs and were accustomed to the requirements of a specialty. We assumed that paths designed for public cloud partners would soon follow in popularity and adoption.
But public cloud partners, by and large, have a different heritage. These partners are traditional ISVs and SIs, and many of them resisted the rigors of the requirements. Many found the certification tests onerous and irrelevant, and still others struggled to publicly identify clients who saw their cloud implementations as a competitive advantage. And too often, they concluded that our generous benefits were not worth the cost of qualification. As a result, the application provider and technology provider paths never took off the way we expected.
Meanwhile, entry level programs built around the Ready For concept have flourished with these same partners. In a Ready For, the partner documents their solution in production and in return, IBM provides a badge, or mark, and make the solution available in a catalog. The Ready For SmartCloud Services program in particular has had very broad appeal.
Our partners have voted with their keyboards, and IBM is responding. We are in the process of revising our Cloud Specialty to focus on Cloud Builders and MSPs. The MSP Initiative is a great place to start on working with IBM in variety of geos and industries. Partners interested in working with IBM as a SaaS provider should pursue the Ready For SmartCloud Services program.
Most importantly, these program changes do not diminish the viability of the five partner paths. We will continue to use these paths as the basis for our discussions about what we can do together and how we can jointly drive success for our clients.
How have the five paths helped you? Please let us know how our programs and partner models are working for you.
It’s been two weeks since IBM announced its new
program for Managed Service Providers (MSPs). We’ve been working with these types of
businesses for years, but with the launch of this program, IBM is acknowledging
how MSPs are at the forefront of using cloud computing to reinvent business.
Throughout the industry, the term “MSP” is broad and
vague. Its roots trace back to the
Application Service Providers of the late nineties. Back then, we had some notion that increased
bandwidth could enable small businesses to get out of running their own data
centers and simply pay an offsite service to manage their applications. Over time, this notion blossomed into a
business model where service providers add value through their expertise in
application usage, systems management, and business process.
MSPs, then, do much more than keep the data center running:
they provide expertise that businesses of all sizes—not just small
businesses—simply cannot maintain on their own.
For example, Doug Mow, Senior Vice President of Sales and
Marketing at Velocity Technology Solutions, explains that what clients value
about Velocity’s managed service is their deep expertise on Infor
applications. There are several
functions that most businesses only perform once or twice a year, such as
processing bonuses or adjusting payroll deductions. For on premise environments, teams often have
to relearn how to perform these functions every time they do them. But an MSP like Velocity performs these
functions regularly on behalf of many clients, thus increasing efficiencies for
MSPs bring expertise and economies of scale to their
customers. In turn, IBM brings affordable,
robust technology, worldwide marketing reach, and business transformation
support to the MSPs. For more
information on how we’re working with MSPs to reinvent business, visit our MSP
Virtual Briefing Center.
Today is an exciting day for IBM's
Cloud Computing initiative. Hopefully, you're confirmed your
registration for one of our 40 partner events that we're hosting
worldwide. 20 of those events will take place in one 24-hour period,
starting at 9 am on the East Coast of the US. The rest will be
rolling out over the next three weeks. Just in case you missed the
invitation, it's not too late to register:
In all of these events, we'll be
introducing you to a great new way of describing our cloud computing
strategy to your clients: the cloud adoption patterns. It's widely
accepted that IBM's breadth of cloud offerings is unmatched in the
industry, but it's not always easy to make sense of it all for your
clients. With these adoption patterns, you now have a way to quickly
hone in on what your clients need most and then identify a project
that delivers results for them and revenue for you.
Based on more than 2,000 cloud
computing engagement with clients, IBM has determined that when
clients approach cloud computing, they typically adopt it in one of
Cloud Enabled Data Center:
service management, automation, provisioning, and self service
capabilities for private and hybrid clouds.
Cloud Platform Services: Integrated
stack of middleware optimized for automated deployment and management
of heterogeneous workloads that dynamically adjusts.
& IT as a Service: Capabilities
provided to consumers for using a provider’s applications running
on a cloud infrastructure.
Cloud Service Provider:
reliable, highly secure and scalable platform for creating, managing,
and monetizing cloud services.
When a client sees these four adoption
patterns, it's a straightforward discussion to determine which
pattern most closely matches their business goals. In this way, we
avoid a technology-led discussion and instead focus on the client's
Once we establish the most logical
adoption pattern, the next step is to identify a project to get
started. Under each of the adoption patterns, we have created 3-7
projects that a client can undertake for cloud computing. The
projects are discrete and tangible, and designed to deliver near-term
results for the client. It is only after we identify a project that
we start talking about offerings and products from IBM. In this way,
we can leverage the breadth and depth of our offerings without
overwhelming a client.
As part of our cloud launch today,
we've opened our Cloud Computing Virtual Briefing Center. Please
visit the center for video presentations on the client adoption
patterns, webcasts on the projects, and a host of papers, brochures,
and podcasts that explain all aspects of the products and services
that we're launching today.
I look forward to working with all of
you in delivering cloud solutions to our clients.
This week I'm in Bangalore attending several partner meetings. One of these was with an application provider who has a very strong business in the telco industry. Their primary delivery model is on premise, but the private cloud portion of their business is at 15% of revenue this year and expected to grow to 40% over the next three years. In the course of talking about how the business will transition to the cloud, the CTO shared an interesting observation: cloud computing creates a desire for a menu of applications.
To explain further, in a traditional IT environment, a customer establishes a requirement for a certain capability. They form a team to define objectives and requirements, establish a budget, issue an RFP, and select a provider for the application. The key to this process is the budget. With traditional computing, there are only enough resources for a fixed solution, both from the perspective of capital expenditures and the people required for deployment. But when a businesses decides to acquire their application capabilities as a service, they are moving to an operational expense model, which frees them from having to associate new functionality with the cost of operations. This, in turns, gives the business the flexibility to consider complementary functions that can be rolled into the new service.
So, the CTO tells us, when a prospect engages with his company to evaluate a specific application, if the delivery model is private cloud, the customer invariably asks about additional capabilities and applications. This is not only an opportunity for the partner in question, it's an opportunity for the larger ecosystem.
This CTO has succinctly expressed something that we hear in a variety of ways from all of our partners: cloud computing implicitly increases demand for application capabilities. An obvious case in point is the plethora of applications on Facebook. When users don't have to install and maintain the applications themselves, they are more willing to install not just one or two, but numerous complementary functions. Of course, anyone who runs a data center would probably say Facebook makes it too easy, but that aspect can be controlled through policy and technology.
More importantly, the increased appetite for a menu of capabilities isn't met by merely providing a nifty catalog of applications. Application providers will meet their customer's needs by participating in a well-structured ecosystem of partners. Catalogs are merely an interface, the real benefit of complementary applications comes from an understanding of how applications fit together, as well as where and when a given partnership makes the most sense. And that requires a partner who can coordinate these relationships without unnecessary interference. Fostering an ecosystem in this way is exactly what IBM is doing with the Cloud Specialty.
With the partners in our program, we are helping them grow marketshare by connecting them to each other. The process is fairly manual for now, but look for tools coming later this year that will help automate some aspects of the program. But complete automation is not the goal, we are not trying to build an online matchmaking service for partners. We intend to provide the worldwide, cross industry market perspective that helps partners make sense of the opportunities they see.
Every partner that we're meeting with this week is on the cloud journey and has exciting plans for how cloud is expanding their marketshare and growing revenue. And in every case, IBM has a role to play in bringing our ecosystem to bear in building our mutual success. We look forward to growing our business with our partners.
August 12 was the 30th anniversary of the PC. While some of our colleagues won't remember the Charlie Chaplin ads and the sleek design of those first PCs, it was revolutionary for anyone who had been working with "real" computers. (And yes, boys and girls, the first PCs seemed sleek to us!) Pundits and analysts predicted that these machines would change the world. Curmudgeons grumbled that this PC was just a flash in the pan, that PCs could never do the work of the multi-million dollar systems running on raised floors.
Today we find ourselves in a revolution with similar commentary: pundits are talking about how cloud coupled with mobility changes everything, while so-called curmudgeons in the data center caution against blind faith in an unproven technology. The realities of this emerging technology will play themselves out over the next few years, but one thing does seem certain: cloud computing is taking us out of the PC era.
Cloud computing is inextricably linked to the mobile devices that untether us from the ubiquitous laptop. This new computing environment is not simply a replacement technology for PCs. It represents a new attitude toward technology, where the humans--with all our propensity for social interaction and non-linear thinking--are driving technology, rather than the other way around. Applications are linked and mashed and delivered to suit the needs of individuals and groups, whereas previously people had to adjust their behavior in order to access the application.
In both Mark Dean's article
and at the Cloud conference
I attended in June, experts have been calling this the "post-PC era." But that's only because we haven't thought of a better name. This era of computing is about more than just cloud or mobility technologies, and it's more comprehensive than social networking. It's about a people-centric, on demand approach to computing. As with other eras of computing, a better name than post-PC will eventually surface. I, for one, would not deign to name an entire era, seeing as how I have a hard time naming cats. But regardless of what we call this, it is a great time to be in the computing industry.
eWeek is reporting today
that a "vast majority" of small business owners are unaware of cloud computing. In a survey conducted by Newtek Business Services, 71 percent of the 1800 respondents said they had never heard of cloud computing. Of those had heard of it, only 26 percent could describe what it was. There were two other questions in the survey, related to offsite backup and data security. Most respondents were not using any form of offsite backup, but they believed that their onsite servers were secure.
The implied conclusion is that someone needs to get busy educating those small business owners. After all, we can't have them left behind as larger businesses move to the cloud.
But if the survey had asked just one more question, we might be able to draw a different conclusion. It would be insightful to know how many of these same business owners are using any of the following:
- an online meeting tool such as gotomeeting, Webex, or LotusLive
- an online CRM tool such as Salesforce or SugarCRM
- an accounting package that provides online interactivity with a bank
I suspect that the combined use of these types of tools would be much higher than 26 percent, and then we could conclude that small business owners are already in in the cloud.
If the promise of cloud computing is true, small business owners shouldn't have to know what it is. They shouldn't have to be able to describe it. Instead, they would be able to to say things like, "I reduced the fixed costs of running my business and optimized on the variable costs that fluctuate with my customer base."
Small Business Owners are not technologists. But we are. And although we love to articulate the finer nuances of cloud computing, (don't get me started on that silly TV ad where editing family photos is "in the cloud") it should not be our mission to indoctrinate this valuable market segment about what constitutes a cloud and what doesn't. Our mission here is to provide the solutions that make their businesses more efficient, profitable, and successful.
Happy New Year!
IBM'ers in the US got Monday, January 3 as our New Year's Holiday, so if you were working today, you probably enjoyed an unusually light email load from your IBM colleagues and friends. Not to worry, the onslaught of communications will resume on Tuesday, January 4. We are all rested, refreshed, and happy to be back at work!
Pundits and analysts across the IT spectrum--those that follow technologies, those that follow sales trends, and those that follow the followers--are in general agreement that cloud computing implementations will increase in 2011. The volume of activity varies depending on who you ask, but everyone agrees that overall levels of activity will increase this year. And in particular, partners of all sizes and from all regions are expressing an increased interest in Private Cloud.
Although a private cloud can take on many flavors, the general idea is that resources in a data center are re-deployed to be more dynamic and flexible. In addition to the virtualization of hardware resources, which many organizations already do, a private cloud allows for a highly dynamic re-allocation of resources across applications.
For example, a large medical organization wanted to run a test of their new backup and recovery environment. Previously, they would have had to acquire a completely identical system to the application they were testing, for what was essentially a one-time test. With a private cloud, they can more quickly deploy an environment that mirrors their production system, run the backup test, and then redeploy the resources for a completely different purpose, probably for a different organization or team. Because a private cloud provides a higher level of systems management--which is available from IBM's Tivoli brand--redeployment of resources is faster than a traditional data center, even one with highly virtualized systems.
For many, building a private cloud seems like a good first step in cloud computing implementations. Large organizations especially continue to express security unknowns as one of their top inhibitors to a public cloud environment, so building a private cloud seems to assuage the security concerns while allowing for the flexibility that cloud offers.
IBM, along with its partners, is ready and able to assist with these private cloud implementations. We're partnering with a variety of partners who can assist you with all aspects of building private clouds, from the concept and design stage to the implementation and ongoing management. And in the first quarter, you'll see us ramp up our activities around private cloud.
Again, welcome to 2011. We look forward to a successful year together.
This afternoon I was talking with Sumitro Sarkar
from TechStrategy Labs
, who provides pricing and cost analysis for cloud implementations. Wall Street media were abuzz today about a "massive sell off" of cloud-computing related stocks, spurred by earnings warnings by two fairly visible cloud-related companies, Equinix and Autonomy. Articles on Barrons, Forbes, and other sites expressed alarm that Equinix adjusted their earnings estimate downward based in part on "greater than expected discounting..." Barrons listed several other data center vendors who posted losses on the day.
Yet IBM closed the day up 0.18. Although Sumitro and I both agreed that there is no measureable correlation right now between the industry's perception of cloud computing and IBM's stock price, there is--at least possibly--some insights to be gleaned from these data points.
The cloud computing market is much bigger than data center vendors. Indeed, UK--based Autonomy, also cited in Barrons as issuing a warning that spurred the sell-off, is a software infrastructure provider. And Autonomy's business is broader than the cloud, so a warnings statement from them is not exactly a bellweather of the state of cloud computing. There are many aspects to cloud computing--from the tools that enable applications on the cloud to virtualization technologies to the applications end users access--so it's a bit dangerous to draw dire conclusions from the stock fluctuations of a few companies in the data center and hosting business.
But there is an even finer point to observe in the Equinix statement. There are discounting pressures on the hosting providers. This is a sign of a market moving out of the nascent stage, and that has a distinct pattern in the computing industry: In order to continue winning business, cloud vendors will need to differentiate themselves and provide demonstrated value. This will be true for vendors across the entire cloud ecosystem. A "me too" approach at any layer of the cloud will not suffice, regardless of the discounts provided.
There is plenty of room at the table for vendors of all sizes and value propositions. There is plenty of opportunity for growth for all the current participants in cloud. But any vendor who wants a long future needs to be absolutely clear who they serve and how they deliver value.