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Thursday, January 15, 2009

2009 Prediction - Rise and Fall of the Private Cloud

#6 in our series of 2009 predictions

2009 Prediction

Here’s the rub: Private clouds are just an expensive data center with a fancy name. We predict that 2009 will represent the rise and fall of this over-hyped concept. Of course, virtualization, service-oriented architectures, and open standards are all great things for every company operating a data center to consider. But all this talk about “private clouds” is a distraction from the real news: the vast majority of companies shouldn’t need to worry about operating any sort of data center anymore, cloud-like or not.

• Private clouds are sub-scale: There’s a reason why most innovative cloud computing providers have their roots in powering consumer web technology—that’s where the numbers are. Very few corporate data centers will see anything close to the type of volume seen by these vendors. And volume drives cost—the world has yet to see a truly “at scale” data center.
  
• You can’t teach an old dog new tricks: What do you get when you move legacy applications as-is to a new and improved data center? Marginal improvements on your legacy applications. There’s only so much you can achieve without truly re-platforming your applications to a cloud infrastructure… you can’t teach an old dog new tricks. Now that’s not entirely fair…. You can certainly teach an old dog to be better behaved. But it’s still an old dog.
  
• On-premise does not equal secure: the biggest driver towards private clouds has been fear, uncertainty, and doubt about security. For many, it just feels more secure to have your data in a data center that you control. But is it? Unless your company spends more money and energy thinking about security than Amazon, Google, and Salesforce, the answer is probably “no.” (Read Craig Balding walk through “7 Technical Security Benefits of Cloud Computing”)
  
• There’s no secret sauce: There’s no simple set of tricks that an operator of a data center can borrow from Amazon or Google. These companies make their living operating the world’s largest data centers. They are constantly optimizing how they operate based on real-time performance feedback from millions of transactions. (check out this presentation from Jeff Barr and Peter Coffee at the Architecture and Integration Summit). Can other operators of data centers learn something from this experience? Of course. But the rate of innovation will never be the same—private data centers will always be many, many steps behind the cloud.
  

There’s also something very suspicious in all this discussion of private clouds…. private clouds are advocated mainly by companies who make their money from selling or operating data centers, and risk losing their shirts as real cloud computing drives more and more computing onto shared infrastructure. I understand why these companies are reluctant to embrace true cloud computing: Imagine being the junior partner in IBM Global Services pitching a client to develop an application on Amazon, Google, or Salesforce. Not only are you taking money out of the pocket of your colleagues in hardware and software….. you are also taking money out of the pocket of your colleagues in professional services, since integration and app development are so much easier using on-demand platforms.

• Cloud Providers: This is an easy one… companies that plan on being in the business of providing cloud computing capabilities to others need to think about how to effective provide their own cloud. But we’d argue that very few companies actually need to be in this business (e.g., we believe most on-demand BI vendors should be running on public cloud infrastructure).
  
• Highly regulated industries: Government regulation will always lag behind commercial application of technology. There will inevitably be instances where nervous politicians or policy makers write up requirements that can only be met through a private cloud.
  
• Companies in the process of moving to a public cloud: Of course, no company of any significant size can move its IT infrastructure to the cloud all at once. In fact, Appirio specializes in helping companies figure out what the right first step is away from their on-premise infrastructure. For the IT infrastructure that hasn’t yet moved, it definitely makes sense to think about how to use “private cloud” technology. But that means the private cloud is a temporary stop-gap, not the “future of enterprise IT.”
  

Labels: 2009-Predictions, Amazon S3, BI, Cloud Computing, Force.com, Google, IBM, On Demand, PaaS, remove, SaaS

Friday, December 26, 2008

2009 Prediction: Business Intelligence goes SaaS

#7 in our series of 2009 predictions

2008 recap

Business intelligence is an unsolved problem. At every company we’ve ever worked with, managers lack the information they need to make intelligent decisions.  Why is this, after the rise (and eventual fall) of an entire industry around business intelligence technology?  Will Cloud Computing change the sorry state of business intelligence for customers?

2008 saw a number of next-generation BI providers move their offerings from niche to mainstream.  Companies like PivotLink, LucidEra, Good Data, and Panorama announced a maturation in their offerings and important customer wins.  Even Business Objects and Cognos were able to advance their on-demand offerings from within their on-premise parents. 

But most business still lack basic access to critical information.  For most people in most companies, it takes a request to IT (and perhaps a call to your implementation parter) to do something as simple as add a field to a report.  In our eyes, this is a market ripe for disruption from cloud computing in 2009.

2009 Prediction

Despite the fact that on-demand business intelligence has been slow to take off, there are fundamental problems in business intelligence that, in our view, can only be solved through cloud computing.  We believe that the increased availability of cloud computing platforms in 2009 will make BI the next application category to reach the tipping point of on-demand adoption, fueled by data from SaaS applications. 

Why BI?

BI is a classic “bursty” application.  BI requires infrequent access to massive computing power-- a perfect application for cloud computing.

Thanks to Google, users have been trained to expect nearly instantaneous access to any piece of information.  Instead of spending hours formulating a carefully crafted query to run once, users expect to be able to navigate iteratively through their business information.  They expect to run an initial search, see what comes back, and explore from there. 

This is simply not possible with any legacy BI system: vendors brag about achieving sub-minute response time… a far cry from the sub-second response time that an interactive application requires. 

As a result, BI's impact in the enterprise has been limited... only a few power users are able to use it effectively.  The impact and value of BI would be exponentially greater if business users could search and navigate their company's data in the same way they search and navigate the information on the internet.  

Why can't in-house IT departments deliver this level of performance and usability using legacy BI systems?  In part, the issue is infrastructure.  BI infrastructure is overpriced and tremendously under-utilized.  Many BI systems sit completely idle 90% of the time, only to be hammered on well beyond capacity in the days (or hours) leading up to a management meeting or end-of-quarter analysis.

These are perfect conditions for the shared infrastructure of cloud computing. Shared computing power is the only way that companies can deliver the responsiveness their users demand without a prohibitive investment in hardware.  On-demand BI vendors, with their roots in modern web-based technologies and user interfaces are well positioned to create usable BI applications that will finally unlock the value from companies' transactional data.

Why BI from SaaS data?

We also predict that the winner in on-demand BI will emerge from an initial strength in analyzing data from SaaS business applications.  Why?  Analyzing data from SaaS applications overcomes 3 of the key barriers to adoption for on-demand BI: Security, transformation, and integration.     

Security:  Your business data are your crown jewels, and nobody wants to be the first to put that into a shared infrastructure.  That’s why we think that data generated by on-demand business applications is the likely starting point for on-demand BI…. After all, this data already lives in shared environment. 

Transformation: Query, reporting, and analysis is not the hardest part of BI—getting data into a format suitable for analysis is a far harder challenge, especially for an on-demand solution that’s trying to bring together information from behind the firewall.  This is less of an issue for BI running off SaaS applications where the data is already in the cloud. 

Integration: Most analytical applications require bringing together business data from multiple sources.  Most modern SaaS applications offer more open APIs than on-premise software.... on-demand BI has the potential to be better integrated, and therefore more valuable, when paired with a SaaS application.

Implications for customers

Of course, it will be difficult for customers to justify investing in an entirely new BI infrastructure, especially since most are still trying to justify the investment they made in their last round of on-premise BI infrastructure and 2009 looks to be a year of frozen or slashed IT budgets.

That’s why we expect to see on-demand BI enter the enterprise from the line of business, not the IT department.  Business users will be fed up by the inability of their IT department to support their basic demands for information.  If they’re already using a SaaS solution, they’ll be tempted to try an on-demand BI solution that they can get running without IT support, out of their operating budget (exactly how on-demand CRM initially penetrated the market).   

This is what we expect to see in 2009:  Low ticket, low risk, on-demand BI solutions, built on cloud platforms, with adoption driven by business analysts hungry for information. 

Our advice for enterprise IT?  Let it happen.  There isn’t yet a clear winner in on-demand BI, and you have much to gain and little to lose from these experiments.  These are not requests you’ll be able to service in 2009 anyway, and early experimentation will leave you well positioned to jump on a winning solution.  

What do you think?

Labels: 2009-Predictions, BI, Business Intelligence, Cloud Computing, PaaS, remove, SaaS