Appirio

Wednesday, July 29, 2009

Lost withOUT the Cloud - NY Times on Cloud Computing

Mark Tognetti

Recently Jonathan Zittrain, a law professor at Harvard, and the author of “The Future of the Internet — And How to Stop It” published an op ed piece “Lost in the Cloud” in the New York Times. The article was forwarded to me by a number of IT security colleagues along comments like “I told you that cloud computing is risky.” I’ve ordered Professor Zittrain’s book, ironically from Amazon, a cloud computing pioneer, to more fully explore his ideas. But in the meantime, let's take a look at the "real dangers" that Zittrain claims come with the cloud.

The typical fears: financial stability, security and data privacy in the cloud

In the article, Zittrain cites the typical fears about financial stability, security and data privacy and backs these up with examples about online subscription services going out of business, the recent hack of a Twitter employee’s account, the Feds abusing the authority granted by the Patriot Act and the admittedly egregious Internet monitoring by the Chinese government. Each of these examples has more nuance than suggested, and represent a phases of growth vs. being "showstoppers."

1) Financial stability/long-term viability of online services: My local newspaper or manufacturing company is just as much, if not more, at risk of going out of business (they just stopped printing a Monday edition) than a reputable cloud provider. Last check, iTunes and Google, are a safer bet. As with any business relationship, choose your partners carefully and have a backup plan... but don’t fail to act.

2) Security of online services: The Twitter hack was great example of user naivete about strong passwords, but any company that provides remote access to their internal systems would be equally vulnerable. In addition to teaching users how to make good password choices, options exist to improve login security via multi-factor authentication from companies like Ping Identity and MyOneLogin. What the cloud does is provide more transparency around "what is secure" across people, processes and technology. It also provides a better view of where risk lies so that companies can take the right actions. For security addressing only the subset you know about doesn't make things better - in this case ignorance is not bliss.

3) Data privacy: Without debating what constitutes appropriate governmental access to private data, it is fair to say that governments can overstep their bounds. I agree with Professor Zittrain that my data on the cloud should be afforded a degree of legal protection equivalent to my data stored in my house. As with any disruptive technology, the cloud will require adjusting (or perhaps rewriting) existing laws and regulations. His comments that “With a little effort and political will, we can solve these problems” certainly rings true. Cloud providers will need to develop corresponding capabilities to ensure compliance with the intent of regulations.

A more concerning fear: does the cloud really reduce our ability innovate?

The most concerning statement by Professor Zittrain is that the cloud puts “the freedom to innovate" at risk. His concern about the cloud is that “the vendor of a platform has much more control over whether and how to let others write new software”. His cited examples are Facebook and Apple. Perhaps SAP and Oracle would be his examples of inspiring innovation ?

I grew up with the PC revolution. I wrote my first line of code at 12 on an Apple II which my parents paid several thousand dollars to acquire. I worked within the limitations of 48KB RAM, 140KB floppy disk drives, and Apple BASIC (with the occasional peek in to 6502 Assembly to do the tricky stuff). Today, because of the cloud my 8-year-old son has virtually infinite access to compute power, languages, databases, open source tools, etc. for free or pennies to use. Not only does he have significantly greater freedom to innovate, he will be able to innovate much more rapidly than his old man, because the cloud has eliminated the burden of building, maintaining and understanding the infrastructure (hardware, operating system, etc.) required.

Professor Zittrain’s concern is that the market could settle in to a handful of “gated” cloud communities who control the availability of new code. He believes that software developers are writing “less adventurous, less subversive, less game-changing code under the watchful eyes of Facebook and Apple”. But, as Professor Zittrain himself cites, far less restrictive development environments exist in Amazon Web Services, Salesforce's Force.com, Google App Engine and Google Android to name just a few. Although the ecosystem of cloud providers will certainly evolve over the next decade, I cannot imagine that we will end up with a few “gated” providers that are anywhere close to the level of restriction imposed by today's enterprise software vendors and architectures. The Internet and the cloud change the drivers for the vendor - it still wouldn't be in their best interest to stifle innovation (as David Schatsky explains in his response to Professor Zittrain).

Our conclusion: the cloud will drive enterprise IT innovation

The ability to innovate has and will be lost without cloud. The contrast between consumer and business driven technology innovation over the last decade is a staggering proof point - online banking and trading, job search, finding where I am going and what to do, e-commerce, social networking and a score of other innovations ranging from mission critical to just fun have made it nearly impossible to remember how we survived pre-Internet. The cloud can bring that level of innovation and productivity to enterprise IT. After all, its hard to imagine my eight year old or anyone in the future workplace settling for less than the near infinite scale and freedom cloud computing.

Labels: Cloud Computing, CloudComputing, SaaS

Monday, June 15, 2009

What Force.com Free Edition & Force.com Sites Mean for the Enterprise

Balakrishna Narasimhan

The Challenge
We've written before about the benefits of moving your application portfolio to the cloud. The benefits can range from cost savings and a higher level of innovation to strategic advantage in the case of business-critical applications. With the worsening economic conditions, the maturation of companies like Salesforce and the growing drumbeat of successes at large enterprises, more and more CIOs at large enterprises want to evaluate cloud computing.

Labels: Cloud Computing, Force.com, salesforce.com

Thursday, April 16, 2009

Cloud Computing Savings - Real or Imaginary?

The venerable management consulting firm, McKinsey & Company, released a thought-provoking analysis yesterday on cloud computing economics. The piece has generated a fair bit of attention because it's been taken to mean that migration to cloud platforms is actually more expensive than what large companies currently spend on their own datacenters.

As usual, the problem is not in the analysis or the research but in the question that is being asked. The question that the McKinsey analysis answers is about the comparative economics between running your datacenter on your own hardware vs. running it on Amazon's hardware (offered as a service). We aren't going to question their analysis or numbers (we'll leave that to experts like Vinnie Mirchandani), but we also don't think this really answers the question about what cloud platforms can do for a business.

Cloud platforms exist at three levels (Click here to enlarge image)

At the lowest level, infrastructure-as-a-service is purely computational power for rent, which is what services like EC2 offer. It abstracts the physical infrastructure but you still need to do the work of mounting a database and an app server on the infrastructure, building and maintaining your app, etc. Therefore, the only savings are those that come from the delta between how efficient your datacenters are vs. those that Amazon runs. As you talk about large, well-managed datacenters that are operating at scale, it's plausible that savings are not significant.

It's at the next level, Platform as a Service, and beyond, that we start to see significant savings. Once you move up the stack to PaaS, there are significant savings because you no longer need to run a datacenter (physical or virtual as in the Amazon case) or maintain infrastructure software (database and app servers). Within our 150+ customers, we see savings of over 30% on operating costs and 2-3x improvements in time-to-market when building on cloud platforms. For example, for a publishing client, we built a custom application that automated the entire publishing process in less than 6 months. Their estimate for doing this using on-premise platforms was over 3 years. In terms of ongoing cost/productivity improvements, they have estimated a 50-75% reduction in the time and effort it takes to add new products. Additionally, since the application is built on the Force.com platform, upgrades are seamless and the platform gets better over time, all for no additional cost.

At the highest level of the stack, the benefits get multiplied further, since you get all the benefits of PaaS, plus you get freed from 22% maintenance and costly (to implement) upgrades every 3-5 years. The savings have been well documented: 25-40% in terms of implementation costs (by freeing yourself from the clutches of the dreaded Globals SIs) and operating cost savings, e.g.,50%+ savings running your mail on Google vs. Exchange.

Cloud platforms provide savings at each layer of the stack, and McKinsey's analysis focuses on just the lowest levels of the stack, thus missing most of the savings potential.

We have seen the benefits of cloud platforms first-hand at over 150 customers, including companies like Avago, Genentech, Japan Post, Qualcomm, Starbucks and Dolby. Once customers experience the benefits of cloud platforms - quantifiable savings, rapid time to value and innovation that drives the business, they seldom want to go back. This is why 90%+ of customers plan to increase their spending on cloud platforms. In these economic times, there is no greater vote of confidence for cloud platforms than that!

Labels: Cloud Computing, EC2, McKinsey, PaaS

A View from the Tipping Point

Dave Orrico

Read the Press Release On Dave Orrico and Jim Emerich Joining Appirio Leadership

Over the last 20+ years I have had the privilege of helping sell and deliver technology to many fantastic companies. When I first joined salesforce.com, I knew something was different. SaaS (which is quickly morphing into cloud computing) was something much more than just another technology change. It was a new model that forced a renewed focus on customer service and once again put the customer (not the vendor) at the center of value. Nearly six years have passed since then, in which I had the opportunity to interact with leaders at many of salesforce's most strategic accounts - Dell, ADP, Bank of America, Cisco, Citibank and many others. The business benefits we were delivering to these companies were remarkable when contrasted with the legacy alternatives, but I was even more struck by how the SaaS model made it so much easier to align a company around serving the customer. Because we earned the customer's business through subscriptions (vs. big up front licenses), I never had to fight uphill internally for my customer's best interest.

The market is finally starting to see something that Marc (Benioff) has been saying for some time - that salesforce.com's success is about more than it being a great company. In fact, it's the fundamental advantages of cloud computing for both the vendor and the customer that have allowed it to prosper. Google Apps, Amazon Web Services, even Facebook are using those same core tenets to expand their services to the largest companies in the world.

We've reached the tipping point. It's becoming clear that most companies will eventually shift to this new model, and this is what made Appirio such an exciting opportunity for me. Here is a company focused from its inception on answering not "if people will make the switch to the cloud", but "how can we help them get there." While at salesforce.com, I admired Appirio's passion and commitment to cloud computing; and their focus on building trusted advisor relationships with both their partners and their customers.

I joined Appirio to help accelerate this transformation to the cloud and to create a new breed of company that could pragmatically answer customers' tough questions on how they can get there (benefits of the cloud). I truly believe we are at a transformational point in the evolution of IT; analogous to the change and benefits that the Internet brought to us as individuals. The Internet has had a profound impact on the the way we find things, shop, create and even interact. Cloud computing can have the same level of impact on business. I want Appirio to be your trusted advisor in your journey to the cloud, and help unshackle your entire business from the constraints of the past.

Labels: appirio, Cloud Computing, salesforce.com

Tuesday, April 07, 2009

Google's Campfire for App Engine Warms the Cloud Ecosystem

Labels: AppEngine, Cloud Computing, Google

Monday, March 02, 2009

Whose cloud is it anyway? Appirio's takeaways from presenting at TechCrunch's Cloud Computing Roundtable

Ryan Nichols

You can watch the entire three hours of the event here.

You can also watch it on co-presenter's ooyala's neat player.

Labels: Cloud Computing, Google, PaaS, SaaS, salesforce, Tech Crunch

Wednesday, February 25, 2009

C is for Cloud: Appirio raises Series C from GGV and Sequoia

Chris Barbin

Given today's headlines, we're humbled to announce our Series C funding from GGV Capital(formerly Granite Global Ventures) and Sequoia Capital.  Amidst all the uncertainty confronting business and IT in today's economic climate, one thing remains certain: enterprise IT is moving to the cloud.  That single idea is at the core of Appirio's business, and is an idea that's worth investing in precisely because we're in the worst spending environment any of us can remember.

The headlines for most venture-backed startups are grim: "Tech start-ups call it quits," writes the Wall Street Journal, as GigaOm describes "VCs sowing panic in their portfolio companies."   We remember the buzz created by Sequoia's all-portfolio meeting last fall, featuring a picture of a slaughtered pig with all the fat removed. 

Why is Appirio growing so dramatically in this environment?

• Our market: Far more important than anything about Appirio's business is the market opportunity that we've targeted.  Cloud computing will disrupt $1 trillion of IT spending-- great things happen when you're able to accelerate an industry transition of this magnitude.
  
• Our model: New markets call for innovative business models.  Traditional wisdom says you have to choose whether to be a services company or a product company.  We believe that the availability of web platforms makes a truly hybrid business model not only possible, but advantageous.  Consider our new product offerings in 2009, Services Management and Facebook Referral Management --  neither would have been possible without the opportunity to directly serve and learn from leading customers in these markets.  Our model of delivering high end professional services, innovative software products and compelling cloudsourcing solutions is what we like to call a 'next generation IBM without the baggage of hardware'.  Customers need alternatives to the Global SI's and traditional enterprise software - our hybrid model directly addresses that need and has delivered repeatable results for our customers.
  
• Our team: There's something special created when you assemble a team of professionals passionate about transforming an industry.  We've been able to quadruple the size of our team in the last 12 months (and remain hiring now), because our #1 goal has been to hire the best and brightest change agents in the industry.  "The Appirio Way " comes through in every interaction we have with customers and partners, whether through sales, services, support, or R&D. 

Its a cliche that the easiest time to raise money is when you don't need it.  Appirio's business model is strong and our services business has been profitable since our founding in October 2006.  We create substantial value for our clients and share in the rewards of their success.  

But it is still "early days" in the business of accelerating the adoption of on-demand in the enterprise, and we're excited to have our new partners at GGV Capital on-board.  GGV specializes in deploying expansion capital, and today's investment from GGV and Sequoia Capital will be invaluable in our continued efforts to invest in products built on Force.com & Google App Engine, supporting and evolving our team of cloud computing professionals and investing in and innovating along side our strategic partners Salesforce.com, Google and Facebook. 

Consider, for example, our other announcement today-- Appirio's expansion into Japan, the second largest IT market in the world, barely penetrated by traditional packaged application vendors.  We believe that Japan has the opportunity to completely leapfrog on-premise packaged software and migrate directly to custom applications developed on an on-demand platform.  Being part of this process (and the largest Force.com deployment in the world) is tremendously exciting. 

We invite you to get involved.  Schedule a discussion with us, take a trial of one of our products, look into joining our team, or even just contribute an idea.  The transition to cloud computing is one thing to be certain of, even in these very uncertain times.  We look forward to working together!

Labels: Cloud Computing, Google, PaaS, SaaS, salesforce, Sequoia-Capital

Thursday, January 15, 2009

2009 Prediction - Rise and Fall of the Private Cloud

#6 in our series of 2009 predictions

2008 Recap

2008 saw massive hype around the concept of a “private cloud,” roughly defined as a adopting the technology and practices from public cloud providers for a single company behind the firewall. “Private clouds are the future of corporate IT” declared Gartner. “Private Clouds Take Shape,” gushed InformationWeek, citing the funding of companies like Elastra and Parascale. “Get off my cloud” said eWeek, questioning the security of public cloud environments compared to private clouds.

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.

The idea that somehow companies can use “private cloud” technology to offer their employees web services similar to Google, Amazon, or salesforce.com will lead to massive disappointment. Here’s why:

• 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.

That’s not to say that there’s no place for the technology behind private clouds. In certain cases where it simply isn’t an option to utilize a public cloud, this technology can have a significant impact. But those use cases are few and far between, and the benefits to be achieved are insignificant relative to the benefits of moving to a public cloud. Here’s who should be thinking about private clouds:

• 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.”
  

Implications for customers.
Of course any customer with a data center should be thinking about how to use the technologies behind “private clouds” to improve their efficiency. But this should be a minor element of your long-term IT strategy. The most important thing any IT department can do in 2009 is chart out a thoughtful plan to migrate significant portions of your IT infrastructure to the public cloud. Don’t let “private clouds” be a distraction from that goal.

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?

Which of our predictions do you agree or disagree with? Please let us know by voting in our poll or commenting below.

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

Thursday, December 18, 2008

"Cloud of Clouds" - the first in a series on our 2009 predictions.

2008 Recap

In 2008, we saw the early seeds of a "cloud of clouds" emerging. It started in April with Salesforce and Google announcing integration between Google Apps and Salesforce to bridge the gap between Google's productivity applications and Salesforce. Later in the year, at Dreamforce, Salesforce expanded the idea of a "cloud of clouds" by announcing integrations with Facebook (for social graph information) and with Amazon (for raw computing infrastructure). Salesforce ended the year with a bang, by announcing Force.com for Google App Engine. In a period of 12 months, Salesforce laid the seeds of a "cloud of clouds" bringing together the strengths of multiple, complementary, on-demand platforms to create a "virtual platform" for the industry.

2009 prediction

The "cloud of clouds" expands around connected platforms. We'll see increasing investment from Microsoft, IBM, and other traditional software players in new but siloed cloud platforms. At the same time, proponents of a more open approach like Amazon, Facebook, Google, Salesforce will push more and deeper “cloud connections” like they did this year - creating a more heated debate between the value of siloed versus federated platforms.

What this means for customers

Customers will face a choice in 2009 about where to focus their investment in cloud computing. Companies like Microsoft and IBM are building cloud offerings that recreate the old software paradigm using new infrastructure (both offerings warrant a prediction of their own, coming soon). This will offer customers some incremental cost-savings and slightly more flexibility, but does not enable anything fundamentally new.

What is unique about the "cloud of clouds" is the ability to connect realms of software that have never been connected in the past, e.g., business applications, collaboration applications and social applications. This enables increases in both efficiency (through improved productivity) and effectiveness (through insight and new connections between information). A few examples:

• Allow communication and collaboration in the context of business information: On-demand solutions offer the potential to finally bridge the gap between the tools that businesses need to run and the tools that people use to get things done. Imagine an account team communicating and collaborating in the context of their live customer data. That's the power of bringing together Salesforce and Google.

• Bring social graph information into sales and recruiting: Imagine a sales person seeing how they are connected to a prospect before they send out a critical email. This would result in a far superior interaction and most likely a higher close rate. Imagine an employee using Facebook to identify the best candidates for their company's open job positions. These employee referrals are likely to be of a significantly higher quality than typical applicants. That's the power of bringing together Salesforce and Facebook.
  

So, the choice for companies is clear. Closed clouds offer the opportunity for more of the same done slightly better, while the Salesforce/Google/Facebook/Amazon "cloud of clouds" offers the opportunity for order of magnitude improvements in core business processes!

What do you think?

Which of our predictions do you agree or disagree with? Please let us know by voting in our poll or commenting below.

Labels: 2009-Predictions, cloud, Cloud Computing, cloud of clouds, remove, Salesforce for Google Apps, Software as a Service

Thursday, December 11, 2008

Gartner Says SaaS is Taking Off!

The Stats - Accelerating Adoption

According to Gartner, 90%+ of enterprises expect to maintain or increase their investments in SaaS. Even more interesting, ~40% of the organizations that Gartner surveyed are changing their IT environments completely from on-premise to cloud-based solutions. This end-user trend is reflected in the tepid financial performance of the SAPs and Intuits of the world while Salesforce, Concur, Taleo and others continue to grow at 40%+ (Ray Wang has an excellent analysis of this here).

The Business Drivers - Lower TCO while Increasing Flexibility and Innovation

We believe strongly that 2008 represented an inflection point in the adoption of cloud computing in large enterprises. This trend has only accelerated with the current financial conditions. As Nick Carr has observed, on-premise architectures are inherently wasteful (80% of server capacity, 65% of storage capacity are unused) and represent a fantastic opportunity for savings. However, the benefits of SaaS and cloud computing go far beyond savings alone. The "black magic" of SaaS is that companies can reduce TCO while increasing flexibility and innovation.

At Appirio, we experience this every day. We have a completely server-less internal architecture which has enabled us keep our IT costs at <2% of our revenues while scaling smoothly from 20 employees a year ago to nearly a hundred employees today. In addition, we have access to new innovations instantly. For example, a few weeks ago, Google rolled out video messaging in Gmail. Since we use Google apps within our domain, we had access to significantly enhanced functionality from one day to the next with no added cost or administrative overhead. Almost unimaginable in the traditional software world!

Our Prediction - Large Enterprises will Migrate Much More than Mail and CRM to the Cloud

SaaS is past the trial phase in many enterprises. Gartner notes that 40% of enterprises have 3+ years of experience with SaaS platforms. Companies have now experienced for themselves the benefits of SaaS within specific areas like CRM or messaging. We're seeing within our client base that companies are ready for a more holistic cloud computing strategy. We're increasingly working with large enterprises to quickly map their portfolios and develop roadmaps for large-scale migration to the cloud. Happy to see that Gartner agrees that this trend will accelerate in 2009!

Labels: appirio, cio, Cloud Computing, CloudComputing, Innovation, SaaS, salesforce.com, Software as a Service

Monday, December 08, 2008

Force.com for Google App Engine: Apps "Native" to a Cloud Community

Salesforce.com made two fantastic announcements today at their CloudForce event in New York. The first is Force.com for Google App Engine (demonstrated on stage by Marc Benioff and our own Narinder Singh using an extension of our work with Harrah's). The second is Force.com Checkout for native apps (Appirio Adoption Accelerator is one of the 19 apps in the pilot). These announcements illustrate two important elements of Salesforce's platform strategy: "Connecting the cloud" and "Go Native." We think Salesforce is uniquely positioned to bring these two concepts together into a powerful platform. Here's what we mean:

Labels: Amazon Web Services, AppExchange, Cloud Computing, facebook, Force.com, Google, Google Apps, Microsoft Azure, On Demand, PaaS, SaaS, salesforce.com

Friday, November 21, 2008

What IS the "Hidden" Cost of Google Apps?

In a recent article published on CNNMoney.com called "The Hidden Cost of Google Apps," Jonathan Blum discusses an 12-person experiment his company undertook with Google Apps. In the article, he outlines both the collaborative benefits of apps as well as some of the shortcomings. The premise of the article is that "throwing out" your current messaging and calendar solutions and replacing them with Google Apps is a potentially disastrous thing for a company to do.

Labels: Cloud Computing, Google, Google Apps, Microsoft Exchange, Microsoft Office, Software as a Service, Video Chat

Monday, November 17, 2008

Microsoft and On-premise - Billions of Dollars Behind Google and Growing?

Narinder Singh

What would it take Microsoft to add such a capability into their traditional Exchange platform? How long until end users at customers would actually benefit from it?

1. Microsoft would have to build and test it - Given all the different versions of their software, hardware, OS combinations facing Microsoft, they would have to make some very tough choices or severely limit the options they supported. Given the precedent of Vista compatibility, this enormity of this can not be underestimated. Conservatively, it would take them more than 10x the effort for Google to do the same thing within Exchange.

2. Customers would have to then get the new version and upgrade all Exchange instances - With Google, it basically was a couple clicks and it worked. For Exchange / Outlook customers they would have to upgrade or install completely new software. If they wanted to chat with those outside their company, they would have to hope those folks had also upgraded.

With an estimated 500M Outlook users, lets assume that the fully loaded cost of the upgrade (license, support, rollout on the server and to each client) will be just $10 per user (an incredibly conservative number in our opinion). That means it would cost businesses at least $5 billion to gain the functionality Google just rolled out in a day. The likely case is that this would also take years to take hold, severely limiting the benefits because not everyone was on the same version immediately. You would have to wait for your friends company's to rollout the "new version" so that you could video chat cross company (or naively hope that Microsoft actually built it using a standards based approach).

3. They would have to fix security and synchronization problems - What major new capability released from Microsoft doesn't create new security holes? Lets say that 500M users represented 5M companies each of whom had to spend an additional $1000 (1-2 days over a year) to deal with the security patches, and the subsequent synchronization to OS, SQL Server, Exchange version, that would be needed. That's another $5 billion down the tubes. For Google, even when problems do arise, they are fixed by Google, once, for all customers (without the customer having to take any action).

So what's the answer? Microsoft will 'never' effectively add video chat to their on-premise Exchange platform. Instead they will try to mimic Google and eventually create an add on that leverages a single multi tenant platform to support this kind of capability. So what you say? Ray Ozzie already admitted Microsoft had to change dramatically, "It's (cloud computing) a transformation of our strategy." The real world challenges of attempting to "embrace the cloud" while preserving and even promoting their legacy is simply too much for even Microsoft to bear.

At a recent private event of medium size enterprise CIOs, one of the most senior Microsoft executives was left struggling to explain why a company should continue to invest in Exchange when Google was providing a broader (and growing) set of capabilities for 1-2 orders of magnitude less expense than Microsoft (Google Apps for mail, calendar, chat, docs, and sites lists for $50/user/year). The realities of attempting to preserve revenues from a legacy solution while promoting the new model is too much inner conflict for even Microsoft to wade through. As we have said before, the most likely path for company's like Microsoft to "transition to the cloud" is to set up an independent unit that can compete freely with their own solutions.

In the last year, Google has added more innovation to the messaging and collaboration space than Microsoft has in the last decade. To do this at a fraction of the cost for themselves and customers highlights the radical difference and inherent conflicts in on-premise vs. on-demand. With the current economic conditions, we expect to see a large set of studies and research that drill home the simple fact that real multi-tenant SaaS/PaaS solutions deliver much more value for a dramatically lower cost for both the provider and consumer. IT is simply too important and too costly to be left with solutions of a pre-Internet world.

Labels: Cloud Computing, Google Apps, Innovation, Microsoft Azure, SaaS, Video Chat

Wednesday, October 22, 2008

Waiting for the On Demand Generation?

Labels: Cloud Computing, Dreamforce, On Demand, SaaS, salesforce, Software as a Service

Tuesday, October 14, 2008

Good News for Cloud Computing: Nicholas Carr is getting boring

Ryan Nichols

We’ve always been a big fan of Nicholas Carr’s presentation on the Big Switch … he's delivered it at several Salesforce "Tour De Force" events earlier this year, and gave it tonight before a panel in Palo Alto on whether Cloud Computing is “Ready for the Enterprise.”

There’s a lot that we love in Carr’s pitch:

• We love the stats: In the average IT organization, 80% of server capacity is wasted, 65% of storage capacity is wasted, and 70% of IT labor cost is spent on upkeep of legacy applications. Clearly a ripe opportunity to capture the benefits of centralized cloud computing.
• We love the imagery: the image of a huge water wheel, created as a source of major competitive advantage for a steel company, abandoned to rot in the woods just 2 decades later. His message that on-premise servers are on that same path is right-on.
• We love the scope of his talk, with the emphasis on the broader economic implications of cloud computing. Carr points out that what’s most interesting is not the new infrastructure itself, but what gets built on top. The electricity industry itself quickly became a utility… but the market for electric-powered appliances became highly innovative for decades. As a company that builds on the cloud, we love that message.

We were expecting some fireworks in last night's talk: It was sponsored by the German American Business Association, and was hosted by SAP… not exactly the epicenter of cloud computing. And one of the panelists was Steve Lucas, the former head of On-Demand BI at SAP, who recently left to lead the Force.com business at Salesforce.com. Carr himself is a controversial figure, having gone from the IT industry’s biggest foe for suggesting that “IT Doesn’t Matter” to IT’s biggest friend by backing “The Big Switch” to cloud computing.

But there was remarkably little disagreement among the panel, composed of speakers
from SAP, Salesforce, VMWare, and T-Systems: Salesforce, of course, has built its business around the trends that Carr is talking about. VMWare loves the role that virtualization plays in enabling cloud computing providers. T-Systems positioned itself as an enabler of cloud-based applications. Even SAP acknowledged that “we believe that there will be certain edge processes that will be enabled by the cloud,” which is a bold step forward coming from SAP.

Is it just us, or has this entire conversation gotten a little boring? Where are the dissenters, aside from the attention-getting headlines from the free software federation? Carr saw nothing but nodding heads from the audience when he asserted that “the biggest question for enterprises is what do we move to the cloud and when do we move it.” Nobody argued with his assertion "we’re just at the beginning of a transition to cloud computing in the enterprise.”

My realization? "Boring" is probably a great phase for cloud computing in today's environment. The elephant in the room was this month’s financial crisis, finally raised by the audience in Q&A. “Boring” technologies do well in the enterprise during tough economic times.

Lucas emphasized that Salesforce has a simple subscription model that is going to get more appealing to companies in a recession. When the economy is bad, the last thing a company wants to do is write a big, difficult-to-justify license check. He quoted the CIO of a financial services firm he met with in New York in the midst of last week's financial crisis-- “We’re looking at Salesforce because we need to better leverage our IT investment. We have 88,000 servers in our organization, and want to reduce that number.”

Is cutting servers boring? Maybe. But good for customers and, ultimately, the cloud computing ecosystem.

Labels: Cloud Computing, Force.com, Nicholas Carr, on-demand, SaaS, SAP

Wednesday, October 01, 2008

Cloud Computing - It Ain't Over Til It's Over

Narinder Singh

Recently, a plethora of attempted clarifications (such as those seen in the Wall Street Journal and Information Week), confusion, and even an angry Larry Ellison rant in CNET News have weighted in on the latest hot topic, "what, exactly, is 'cloud computing?'" But the increasing volume level says more about the medium of the argument and the participants, than the it does about the topic's essence. Really, it's just insider talk among "thought leaders" and tech companies, which likely leaves Main St. CIOs scratching their heads.

Let's not focus on the semantic question of "what is cloud computing?" Instead, let's shift to "what your company should do." The wit and wisdom of Yogi Berra seems appropriate as a guide to help explain the causes of the perfect storm around cloud computing.

"The future ain't what it used to be"
Just a few years ago, many predicted the tech industry, and particularly business software, would go the way of the auto industry. A few gigantic players would survive, around which supplier ecosystems would develop. However, innovative providers discovered that if they ran all their customers' systems on a single multi-tenant instance, they could achieve huge advantages - hence the advent of on-demand, Software-as-a-Service (SaaS), and Platform-as-a-Service (PaaS). These providers were able to rapidly develop and innovate for their entire customer bases.

As this market matured, customers discovered that SaaS provided a better functional fit, it was faster to rollout, and it was generally more accepted by end users. Inevitably, if you spend more time on strategy, requirements, business process and adoption, while spending less time on hardware, operating system configuration, software installation and configuration, you end up with projects that better meet business needs.

The future of how businesses used technology was changed forever. Although this is now widely understood, we are still very early in terms of impact on IT and business. This set the stage for the current attention and debate surrounding "cloud computing."

"If you can’t imitate him, don’t copy him"
Cloud computing confusion is sometimes sown intentionally - because of vendor envy for missing the buzz. Large on-premise companies know they have missed the "news cycle" for something that has the powerful combination of hype and reality on its side. So they try to re-spin existing terms in order to re-assert their leadership, leading to interesting tricks like Larry Ellison, Oracle's CEO, cleverly deriding the term "cloud computing" as overused, while simultaneously wrapping the Oracle seal around it.

"Our similarities are different"
While on-premise laggards attempts at catch up fuel their interest in the cloud, successful SaaS companies have an equally compelling, but very different rationale for promoting "cloud computing." They know they have a winning value proposition, but, relatively speaking, a small part of the market dialogue. They fear a repeat of the past - where SAP, Oracle, IBM and Microsoft hijack leadership around an important market trend (see the browser, java, B2B/SOA, open source) that they've been living and breathing for years.

So in a classic judo turn, they also promote "cloud computing." But they turn it into a powerful weapon by using it as the theme that connects business software with mainstream consumer Internet disruptions like Google, Yahoo, Amazon and Facebook. Suddenly, they have a way to further differentiate themselves from their laggard on-premise competitors, with a future tied to the Internet.

Happily, this spin has the added benefit of being true (which is always a plus!). The consumer Internet has conclusively shown the power of collaboration. Now businesses want to be unshackled from the constraints of legacy software that was designed to be physically and emotionally closed.

"You can observe a lot by watching"

With both the laggards and innovators supporting buzz creation around "cloud computing" the race is on. Will clarity or confusion rule the day? Businesses are looking at cloud computing (which for today we'll assume to be a superset of all SaaS, PaaS, and on-demand solutions) as a way of doing things that had never been done beyond their four (virtual) walls. Unfortunately, too many vendors are simply trying to tie the movement back to their past strengths so that any change is incremental.

Our advice to all organizations and their CIOs is simple:

1. Use the cloud computing hype to discuss broader related changes in your organization. The business press is saying that "business must think differently about IT." This is a real chance to focus broader discussions around cloud computing into the very real, concrete benefits of SaaS/PaaS/etc.. Appirio launched Business Model Prototyping to jump on this opportunity. We think companies can use SaaS/PaaS and other learning from the consumer Internet to dramatically reshape their businesses.

2. Start with the concrete. The "cloud computing" discussion makes for good blogging, but it's not directly helping your business or feeding your kids. Real impact comes from translating the trend into action. Do this with projects that prove quick value or clear measurable milestones in a slightly longer journey, and highlight a sharp contrast with the old way of doing things.

3. Force vendors to be specific and timely. We'll be seeing lots of vendors starting to parade their products and services under the banner of cloud computing. We'll see more arguments over what cloud computing is, and how to understand it. Customers cut through the hype by forcing vendors to be specific in how they will help, where they will help, and on what timeline. Force discussions around initiatives that have a quick time to benefit and very clear milestones. Protect your company from being a victim of hype with low hopes for success. As Yogi Berra supposedly once said, "If you don’t know where you’re going, chances are you will end up somewhere else."

Labels: Cloud Computing, on-demand, PaaS, SaaS