Ten months ago, we delivered the Cloud
Business Model Readiness Assessment for ISVs, a tool that not only helps
ISVs determine where they are in their cloud journey, but also shows the most
profitable next steps. Co-developed with
TechStrategy Labs, this tools
focuses on the business model transformation required to fully maximize profits
for a cloud solution.
Commonly referred to as the Business Model Self-Assessment,
the tool is an online survey available to all IBM Partnerworld Members. Once logged in with a valid Partnerworld
userid and password, ISVs answer about 20 multiple choice questions related to
the ISV’s SaaS technology, cloud business model, and pricing structures. Once submitted, the results are run through
an analytics engine that produces a customized four-page report for the
ISV. The report includes an assessment
of the ISV’s current SaaS model, as well as recommendations for next steps.
Like any tool, the self-assessment is not a silver bullet
that guarantees success in the cloud.
The report does not contain a magic formula for generating profits from
from nothing. But when used correctly,
the report can provide insights that help a business focus on profitable action
For example, I recently worked with an ISV in the data
warehousing space. Their solution provides
insights to retailers and relies on integrating data from multiple sources,
both inside and outside a business. It’s
easy to recognize why a cloud delivery model is ideal for this type of
application, but prioritizing the technology investments required to get there
is less obvious.
The ISV completed the self-assessment a few days before our
scheduled meeting. We all reviewed the
report in advance of the meeting, and we agreed to use the report as a working
agenda for our meeting.
The discussion was insightful and productive. Based on their input, the report showed they
had not done any virtualization of their solution, but they had completely
enabled mutli-tenancy. We honed in on this part of the report, and quickly discovered that they had
misunderstood our definition of multi-tenancy.
With that question quickly resolved, we were able to turn our attention
to their business model.
Although it might seem
that this ISV should first focus on virtualizing their infrastructure, the financial modeling section of the report revealed that they would achieve significant cost savings through a
more systematic approach to their significant data integration issues. IBM’s Websphere
Cast Iron product set is ideal for their requirements, and they are
currently investigating how to best put this offering to work for their
business. Once they have solved the data integration issues, they will then turn their attention to virtualization and multi-tenancy. One of the many golden nuggets in this report was the realization that although virtualization is important, it's lower on this ISV's priority list than data integration.
Importantly, this partner is free to run the self-assessment
tool as many times as they desire. As
they adopt new cloud technologies, they can play with various cost and pricing
scenarios to see how these investments improve their business.
The SaaS Business Model Self-Assessment tool is available to
all application providers who have Member level status on Partnerworld. Please feel free to use it, and we’ll be
happy to meet with you and talk about the results. And comment here on how the tool is working
By creating a cognitive computing system that could play
Jeopardy, IBM charmed the world with Watson, the system that beat two top
champions of the quiz show. Since that
famous game in February, 2011, IBM has engaged Watson on more practical
pursuits, including solutions for the healthcare and finance industries.
But we’re also using Watson to solve our own problems. In an organization as large as IBM, one of
the biggest challenges is knowledge sharing.
In IBM, it is generally true that for any technology question, there is
at least one person in the company with the correct answer. But finding that person is too often
Over the years, there have been several solutions to this
knowledge sharing problem. The
proliferation of wikis and online communities is the most current attempt to
provide a repository of knowledge and expertise. While these tools are immensely helpful and
go a very long way toward solving the knowledge sharing problem, users still
struggle to navigate this vast data source.
Successful navigation requires some prior knowledge of who the experts
are, and their ontology, or how they logically structure and organize their
So we know we have experts, data, and answers to just about
every question. But we can’t find a tool
to help us sift through that vast store of information.
Watson excels as culling through pedabytes of information and
deriving meaning from disparate sources.
Watson can associate people with areas of expertise, and can place
information in a historical context.
Watson, therefore, is the ideal cognitive system for IBM’ers
trying to solve problems for clients.
But Watson requires care and feeding to get to that
seemingly magical state of expertise.
The data store is built by submitting thousands of questions and
providing links to the correct answers.
It also helps to give Watson a data corpus for a subject area, even something as broad as cloud computing.
Imagine, if you will, that you had the opportunity to submit
questions and answers for Watson about cloud computing, What questions would you want Watson to be
able to answer? There are obvious
questions, like “What is cloud computing?” and there are thousands of questions
related to the technical depths below the umbrella phrase of “cloud
computing.” But what about less obvious
questions? For example, is there
agreement on who first coined the term “cloud computing?”
In the next few weeks, I’ll be contributing to the database
of cloud computing questions for Watson.
If you have questions you think I should include, feel free to post them
In a recent CNBC interview, Marc
Benioff, CEO of Salesforce.com, said that the future of IT will
belong to those firms who are investing in social, mobile, and cloud.
Then he went on to point out how well his company has invested in
these areas and how poorly his rivals are investing.
In an October 22, 2011 New York Times
editorial, columnist Thomas Freidman wrote about a
recent visit to Silicon Valley and reported on an IT revolution
“driven by the convergence of social media...with the proliferation
of cheap wireless connectivity and Web-enabled smartphones and 'the
cloud'...” Again: social, mobile, and cloud.
From IBM's perspective, the
social-mobile-cloud sound bite is 75% correct. Cloud computing,
mobile technologies, and social business are inextricably
intertwined, and IBM also believes that those companies investing in
these technologies will be tomorrow's IT leaders. But IBM has a more
complete view of the future, and it's based on our last 100 years of
From the 2011 IBM CIO
Study and the CMO
Study, as well as several third party studies, analytics is one
of the top investment areas for executives who control IT spending.
The social-mobile-cloud sound bite completely misses that point.
True, the cloud makes the explosive growth of analytics possible, and
the explosive use of mobile and social gives everyone more to
analyze, but it is an oversight to leave analytics out of a vision
for what is hot now and what is driving the future.
In addition, IBM describes the future
through what we call the 2015 roadmap, and it has four elements:
growth markets, analytics, cloud computing, and Smarter Planet.
Taken together, these initiatives encompass social business, mobility
enablement, and cloud computing, and put them in the context of a
global market. The roadmap is also more complete than the sound bite
in that it includes a timeline and revenue targets. It's one thing
to say that the future depends on investment in a few technologies,
and it's another thing to publicly commit to a deadline for showing
actual results from those investments.
The roadmap is not merely a technology
statement. IBM's success over the last century is due in no small
part to being able to nurture compelling technologies and create
markets for them. We look forward to working with our partners
turning these exciting new opportunities into success stories for our
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.