Tablet Wars

Early in my career I had the good fortune to work with Dick Hackborn while he was still running the LaserJet printer business for Hewlett-Packard. Hackborn was a very smart guy, and one of the business and marketing strategies he most often employed was “never attack a fortified hill.”

What he meant was that it’s rarely a good idea to enter a market that has many competitors, with mature product lines and lots of loyal customers.

I thought of Hackborn’s fortified hill this week when I read that Apple had sold more than 1 million iPads in the first month they were on the market. That’s a lot of tablets. And Apple’s users are among the most loyal in any industry. So you think that competitors would think twice about entering the tablet market. Wrong.

Instead, competitors are entering the market as fast as they can.

Already in the market with Apple is the WeTab from German-based Neofonie, Fusion Garage’s JooJoo, and France-based Archos 9. Other expected entrants into the tablet market are Toshiba, Dell and other PC manufacturers. HP has already given sneak peaks at its Slate, which is Flash enabled (unlike the Apple iPad) and runs Microsoft’s Windows 7. Google also is rumored to be working on a tablet.

Google, Microsoft and the Palm OS (recently acquired by HP) will all vie for the operating system of choice on the new tablets.

But the question remains, what will it take to avoid getting slaughtered as these companies attack Apple’s fortified hill.

The key to success will most likely lie in their ability to create easy to use APIs designed to attract as many application developers possible. Apple has an unbelievable head start with more than 140,000 apps. Most industry analysts are betting that HP will have the best shot at battling Apple for tablet supremacy, while others are leaning toward Google.

Here at 3Point, we provide our clients with business and marketing strategy, so when we view the “tablet wars” through our marketing lens, it’s hard to bet against Apple. After all, they beat all odds when they attacked the fortified hill of MP3 players with their iPod, and won with an all-out marketing campaign. I’m betting they’ll be just as fierce protecting their iPad fortified hill.

Little Johnny, Say "Hello" to the Cloud -- Your New Classroom

I've lived in Massachusetts my entire life and I've never heard of Greenfield, Mass., a town of less than 20,000 souls situated in the western part of the state and home to the Franklin Country Fair, the Pioneer Valley Symphony Orchestra, Greenfield Community College and its newspaper --The Greenfield Recorder. Technically, Greenfield is part of Franklin County, and frankly, as a native of eastern Massachusetts it might as well not exist at all. No offense to Franklin County and all the other counties west of Suffolk and Essex counties in Massachusetts. But if you're from eastern Massachusetts, you know what I mean.

But hold on a second. The Greenfield of 2010 isn't your grandfather's Greenfield.

This week, Greenfield announced that it will be the first town in the Bay State that intends to open, as early as this fall, a virtual school catering to children in grades K-8. The virtual school, and others that are sure to follow, will be allowed to operate via a state-wide education law that went into effect in January. The law encourages innovation in the classroom and gives the authority to local school leaders to develop public schools that are virtual.

Little Johnny, say "hello" to the cloud, your new classroom.

Virtual classrooms aren't entirely new. States such as Colorado, Texas and Arizona have been experimenting with virtual public schools for some time and have been attracting an increasing number of students for reasons that include convenience as well as students' desire for a curriculum that is more challenging that what is offered in some of the brick and mortars.

And what makes all of this possible is technology, and in almost all cases it's cloud computing technology that is responsible for delivering the classroom to the bedroom.

Less than a month ago, for example, the Oregon Department of Education announced that any school in the state is free to use Google Apps for Education, a free suite of applications (email, calendar, online documents, etc.) based on cloud computing technology. Google claims more than seven million students are using Google Apps. And as you might imagine, Microsoft is right there as well with it's own suite of cloud-based services for education - Microsoft Live@edu.

It will be sometime before virtual schools are widespread. Many school districts question the viability and effectiveness of virtual schools, especially at the elementary school level when children are still developing social skills. My wife, a public middle school teacher, echoes this same concern.

For now, students enrolled in a virtual school still have to spend some number of hours inside a school building. However, overtime, I'm sure these restrictions will also ease as advancements in cloud computing technology will one day allow the watchful eye of a caring teacher to be right there with the student slogging through another MCAS (Massachusetts Comprehensive Assessment System) exam -- right there, virtually.

How Hard Can the Federal Government Drive the Cloud?

While many of us automatically equate the phrase App Store with Apple's iPhone, there is another App Store that may have far more importance.  It is Apps.gov, the app store launched last September within the federal government.  Created collaboratively between federal CIO Vivek Kundra and the General Services Administration, the store was one of several steps undertaken by the Obama administration to introduce cloud computing and a more modern IT infrastructure in general to the federal government.  The app store was established as a storefront (it is still very limited in its offerings) to let federal agencies quickly identify cloud-based solutions.  It offers four simple choices to the visitor: Social Media apps, Productivity apps, Business apps and Cloud IT services.  Click on one and you are taken to a list of free and paid solutions.  In addition to serving as an introduction to the power of the cloud, the store is intended to make procurement easier and cut acquisition cycle times.

Wait a minute!  Speed, simplicity, ease...we know these are touted as benefits of the cloud, but clearly they are not attributes of government  -- a place where new technologies evolve slower than fine wine ages and end up a generation behind by the time they are selected, funded and deployed. So what's the rush?

First, there is a new administration with a greater emphasis on technology innovation.  Second, money to procure technology is tight and the potential of the cloud is fast approaching a level of maturity that the government finds acceptable.  Further, other nations are moving aggressively to use the cloud and finally, by adopting the cloud in various forms, the government can reduce IT costs and invest or help lead the way in deploying new technology.

Apps.gov may be more symbolic of a greater push throughout the administration and its agencies to move to the cloud.  Cloudbook Magazine cites seven different federal agencies directly engaged in one form of cloud initiative or another.

In addition to Apps.gov from the GSA, these include:

• Federal Chief Information Officers Council
• Defense Information Systems Agency (DISA)
• US Department of Energy (DOE)
• Department of the Interior
• National Business Center (NBC) Cloud Computing
• NASA Nebula
• National Institute of Standards and Technology (NIST)

The adoption process envisioned by government observers will seem familiar to those of us in the private sector:
1. Start by virtualizing data centers, consolidating data centers and operations, and then adopting a cloud-computing business model.
2. Use test beds to demonstrate capabilities, satisfying major concerns about security and privacy protection, and
3. Allow pilots to grow from test beds into agency capabilities.

This represents significant economic opportunity. While federal IT spending is projected to grow at a compound rate of 3.5% to $90 billion by 2014, federal cloud spending will grow almost 8X faster.  Input, an analyst firm tracking the public sector, forecasts 30% annual growth rate in cloud spending during the same period!  Input believes federal spending on cloud computing services will triple over the next five years, growing from $277 million in 2008 to $792 million annually by 2013, reaching more than $1billion by 2014.

The evolution is not without obstacles. Speaking at the University of Washington in March,  Kundra said the federal government, which has 1,100 data centers and more than 24,00 websites, needs to pool buying power rather than work as a loose knit federation. Standards need to evolve faster and security concerns need to be better addressed, but it seems hard to imagine that the efforts underway will be derailed.  But now, the only questions seems to be how quickly will the train leave the station and how many cars will it pull.

Cloud Computing and The Internet of Things

What if things could talk to us?  What if your garbage could tell you it was ready to be emptied?  What if a soda machine on the second floor of Building 7 could tell the supplier it needed more Diet Dr. Pepper for slot D2?  What if a river could tell us it was choking on PCBs that were excessively high and could show us the highest levels occurred next to a particular factory?

Once the domain of science fiction, many of these are happening today.

In a 2006 paper titled, A Manifesto for Networked Objects — Cohabiting with Pigeons, Arphids and Aibos in the Internet of Things, Dr. Julian Bleeker of the Annenberg School of Communications at the University of Southern California, conceived the Internet of Things: 

"The Internet of Things has evolved into a nascent conceptual framework for understanding how physical objects, once networked and imbued with informatic capabilities, will occupy space and occupy themselves in a world in which things once were quite passive." Dr. Bleeker goes on to ask a fascinating question, "When it is not only “us” but also our “Things” that can upload, download, disseminate and stream meaningful and meaning-making stuff, how does the way in which we occupy the physical world become different? What sorts of implications and effects on existing social practices can we anticipate?"

This is a world envisioned by Joel Birnbaum, head of HP Labs in the 1990s, who spoke often about armies of sensors automatically providing ongoing data to ubiquitous networks to monitor everything from homes to rivers.  That vision is becoming a vibrant reality, if you read Kevin Novak's blog.

Kevin writes Cloud Feedback, Monitoring the Real World with Cloud Computing. It is a terrific source of real time applications of things that talk to us through the cloud.  He begins with the understanding that we can understand things that we once knew nothing about because they were neither measured nor controlled. But when the data is available and reliable, individuals, businesses and governments can achieve greater cost savings, great energy and water efficiency, reduced pollution, and higher levels of cooperation and productivity.

One example Kevin recently cited is  Cantaloupe Systems, a San Francisco company founded in 2002  that provides vending machine operators a device to install inside a vending machine to communicate every transaction the machine performs.  Kevin explains that "The data is sent over cell phone data networks to Cantaloupe’s data centers, allowing operators to schedule visits to the replenish the machines exactly when needed."  The result is cost savings for customers, lower fuel consumption by delivery trucks, improved delivery logistics and more accurate inventory management.

Cloud Feedback also recently looked at BigBelly Solar -- a Needham, MA, company that makes a garbage can for city streets with an enclosed motorized compactor.  Their cans "power the compactor from solar cells, so it doesn’t need an electricity connection.  It also uses sensors to detect and transmit how frequently it is used, and how full it has become.  A cloud computing service records the data and schedules trash collections. The combination of compacting and just-in-time collection saves a lot of fuel and labor; Philadelphia estimates a 70% reduction."
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This is dynamic, groundbreaking change being generated through new ways of looking at ordinary problems.  Armed with the right tools, really smart people can change the world quickly and reverse years of neglect, selective listening and downright ignorance.  When billions of objects -- both organic and man made -- starting talk to us, we can do a better job monitoring and protecting the planet AND improve efficiency and profitability. This could not be accomplished without the cloud.

Here at Beyond the Arc, we sometimes get as overwhelmed as the next person when looking at the massive amount of information about the cloud.  While we are staunch advocates, at times we have to fight our way out of what Gartner Group calls the "the Trough of Disillusionment" and remind ourselves that the future of IT is intrinsically tied to cloud computing  But the magic of the cloud is that just when you think you have had enough, something amazing crosses your path -- something that can only happen through the cloud.

A priest, a rabbi, and a minister...

It happens thousands of times a week all over Silicon Valley. Friends gather after work for a drink at a bar, swap stories about bad bosses or the cool things they’re working on, then they head home. And many times each week, some of these patrons accidentally leave behind a mobile phone on the bar, or at their table.

Unfortunately, when one young engineer from Apple exited a bar in Redwood City last month, it wasn’t just any phone he left behind, it was a prototype of the new Apple iPhone; due out later this summer.

The person who found the prototype phone apparently made several attempts to find the owner, and when he couldn’t, he offered it up for sale to a handful of technology-oriented web sites. Gizmodo.com bought the phone for $5000. That’s their story anyway.

After thoroughly examining and testing the phone, reporter Jason Chen published a long story about it on the Gizmodo web site. Apple was not happy, and demanded the phone be returned. When Chen and Gizmodo initially refused, San Mateo County investigators broke into Chen’s apartment and seized computers, other electronics and credit card statements.

I’m not going to comment on the legality of this action, although I will say that the search warrant used said that the law enforcement officials who stormed Chen’s home were investigating a theft. From what I can tell, there was no theft, only a lost cell phone.

The entire case is getting a lot of attention in legal and journalistic circles regarding what is protected under the First Amendment.

What is more interesting to me about this story is, why is Apple so upset? For decades, Apple and its CEO Steve Jobs have used controlled leaks and sneak peeks, crafting these techniques into a communications art form designed to build buzz and excitement around pending product announcements. So why get so upset this time?

Maybe it’s because the stakes are higher now than ever before. Just today, Microsoft announced a deal with Taiwanese mobile phone manufacturer HTC. Apparently, Microsoft holds certain patents that are used in devices running Google’s Android operating system. So rather than sue HTC, the way Apple did a month early over similar patent issues, Microsoft chose to make HTC a partner. Why?

HTC started out as a maker of phones that ran Microsoft’s Windows Mobile software. But because the Windows Mobile phone didn’t sell well in the market, HTC dropped the Microsoft operating system in favor of Google’s Android OS. Microsoft knows from its past success that he who owns the OS calls the shots. Losing HTC to Google surely left a bad taste in Microsoft’s mouth. So rather than sue HTC over patent violations, Microsoft convinced HTC that partnering was a better path for both companies.

To no one’s surprise, HTC has announced that it will produce new mobile phones that run Microsoft’s next mobile OS, Windows Phone 7.

And in other news this week, Hewlett Packard announced it was buying Palm for $1.2B. It may seem like a curious move at first, but if you look a little deeper, HP has its eyes set on the Palm operating system, webOS, also known as the Garnet OS. The Palm OS is generally considered to be one of the most powerful and innovative operating systems for mobile devices currently in the market. HP, which has already made it clear that it wants to be a major player in mobile computing with netbooks and tablets, needed an OS to compete with Google, Microsoft, RIM and Apple.

Which brings us back to Apple. One of Apple’s core strengths (no pun intended) with the iPhone is its app store. Those apps are developed by third parties, live in the cloud, and are downloaded for a fee by customers. Being able to dictate how those apps are developed may end up being the difference between who wins and loses the mobile phone wars.

So maybe that’s why the bigwigs at Apple are so wound up over the phone that was left at the bar in Redwood City. Just what’s in that new OS anyway?

Time to Cut Through the Cloud Computing Mania

Every few years a new idea representing a fundamental shift in how a task is accomplished or how a certain category of problem is solved, is introduced. Today, in marketing communications this fundamental shift is represented by social media. Social media has turned marketing communications on its head. Communications agencies everywhere are running hard and fast to stay ahead of the opportunities that the new social media channels present. For most agencies, staying ahead of what's new in social media is like drinking from a fire hose. It's exhilarating and exhausting at the same time. But mostly, it's exhilarating.

Today, in the world of technology this fundamental shift is represented by cloud computing. Cloud computing is the big new idea for how companies access, pay for and deploy technology -- from applications, to infrastructure, to computer power, etc.

Cloud computing is turning the technology world, and the business of technology, on its head.

Cloud computing, to me, is the single most exciting thing happening in technology today. Staying ahead of the cloud computing advancements being announced on a daily basis is also exhilarating and exhausting. But mostly exhilarating, if you're a cloud computing bigot like me.

Yes, the advancements in the mobile technology segment are electric. It's a segment that is growing faster than any other and is more imaginative and lucrative than most. And let's not forget the advancements and opportunities that are ongoing in the more established segments that include enterprise IT and semiconductor manufacturing.

But what these technology segments all have in common is the cloud. Whether it's a mobile technology company selling to other businesses or directly to consumers or both, or a global B2B enterprise IT solutions provider or a manufacturer of semiconductor components, they are retrofitting their existing offerings to leverage a cloud computing environment or they are developing new solutions optimized specifically for the cloud.

Some have referred to the cloud computing market as the "Wild West" or another gold rush on the heels of many before it, like the Internet gold rush of the mid-to-late 90's and the networked multitasking operating systems shoot out of the late 80's and early 90's.

At 3Point, we write a lot about cloud computing because we believe that cloud computing represents a broad transformation of the information technology industry. It's a seismic shift in technology and business, like the Internet was 15 years ago. Heck, local small circulation daily newspapers are even mentioning cloud computing on their business pages.

Cloud computing will be around long after many of the companies who are betting the farm on cloud computing will be around. I'm not talking about the big players, like Salesforce.com and Oracle and Microsoft, but the outcrop of new companies who are building their businesses on the cloud computing mania.

The companies that will survive, I believe, will be the ones who battle test their offerings -- of course. But they will also be the companies who communicate most effectively through the hype. They will be the companies who will communicate new ideas that break through the clutter. They will be the companies who educate their markets rather than hype the news. They will be the companies that start with a strong point of view and find ways to take a different perspective. They will be the companies who exploit the new social media channels appropriately and intelligently and not just because it's new and cool.

In the next few weeks, we'll be writing more about cloud computing marketing communications and how cloud computing companies can put social media to work for them.

In the meantime, I'd love to hear your ideas or examples of how you're using social media to cut through the cloud computing hype.

My Top 5 Cloud Computing Apps for the Droid

Earlier this week when the NHL Stanley Cup playoff game I was watching ended in overtime, I started channel surfing. I came across one of my favorite movies from the late 1980s – Lethal Weapon starring Mel Gibson and Danny Glover.

I happened to catch the part where Danny Glover’s character is driving and needs to make an important phone call. He pulls the over to the side of the road on an LA-freeway overpass and gets out of the car to make the call – no hands free in those days.

Glover proceeds to take out a mobile phone the size of a vintage WWII walkie-talkie. The only thing mobile about this contraption was that it could be carried around in a car. Of course in 1987, that was state-of-art mobile technology.

Watching Glover struggle to make a simple connection got me thinking about how dependent I have become (all of us really) on our mobile phones. Like all of you, using my mobile phone for making calls and sending text messages has become only part of how I use it. I use my mobile phone more and more like a laptop than I do a phone.

So I thought I’d list for you my Top 5 cloud computing based applications for my mobile phone (which happens to be a Motorola Droid running the Google Android operating system version 2.1 update 1, over the Verizon network).

In reverse order:

#5 Evernote. This a relatively new application on my Droid, but I can tell already it’s going to be one of my favorites. It allows me to type a note, copy a web page, take a photo, grab a screenshot and then store for easy access later (and it's FREE). I can organize my info into different “notebooks” where it is processed, indexed and searchable. Then using key words I can find my information quickly while on the go. I’ve only used it a couple of times, but I can tell already it’s going to be way more useful than my Three Stooges sound effects app. Well, maybe.

#4 Google Docs. Since the Droid runs on a Google operating system I have access to all of Google’s fantastic cloud computing apps, and I take full advantage of them. Google Docs is one of the handiest ways to access information – from plans to presentations to RFPs – from my mobile device. And the beauty of all Google cloud apps is that I can access my information from any wired PC too. Write a plan at the office, access it while waiting for a plane. Remind me again why I need a laptop?

#3 Google Maps. Yep, another Google app. In addition to owning a Droid I also drive a Prius (I’ll only admit that on Earth Day, however). Even though my car has a built-in GPS system, I find that Google Maps on my Droid proves to be more accurate. Plus, it’s handy when I'm walking around a city where I might be visiting because it will find my exact location and plot a path to where I’m trying to go. A very helpful feature when my Prius is stuck in a parking garage somewhere.

#2 Google Calendar. Yes, that’s now three Google cloud applications in a row. But hey, they’re good and I use them a lot. Calendaring typically isn’t a mind-blowing feature, but having access to it anywhere at anytime is certainly useful. And it is the feature on my phone – minus voice and SMS – that I use second most often.

#1 Gmail. Trust me, I do not work for Google. The thing I absolutely love about accessing email on my Droid is that I can configure the feature so I can open all of my email accounts on one screen (a feature I hear Apple is working to bring to the iPhone). This enables me to check my Gmail, Yahoo, work and other email accounts all at once without having to flip between screens. Since most of my written communication is done via email – including RSS feeds and web site updates – being able to look at all of my email at once is a godsend.

I’d be interested to hear what your favorite mobile cloud computing apps are. You can bet I’ll be checking your replies on my Droid.

For Cloud Computing, the "Plateau of Productivity" is the Light at the End of the Tunnel

Finding trusted information sources on your favorite technology can be a challenging undertaking these days with so many options to choose from. And even more so when your favorite technology is one of the most hyped in the galaxy. The "over-enthusiasm" or hype associated with an emerging technology has almost always been accompanied by an army of people or firms who over night somehow became "experts" in the field.

Today, if you're a devotee of e-book readers, social software suites, microblogging, wireless power, Internet TV, 3-D printing or green IT, then you know exactly what I am talking about.

All of the aforementioned technologies are nearing the top, or are at the top, or are just over the top of The Gartner Group's famous Hype Cycle (now in its 15th year for those of you keeping score at home).

Subsequently, one can easily drown in the fire hose of information that is available on technologies such as these, that are in the "technology trigger" or "peak of inflated expectations" stages of The Hype Cycle.

For many of these technologies, things quiet down when they enter the dreaded "trough of disillusionment" phase of the hype cycle -- the phase when a technology fails to meet the unrealistic expectations the market established for it. Technology categories such as online video, home health monitoring, public virtual worlds, RFID and others are currently trudging through the "trough" phase, hoping to rise yet again once they sled through the "slope of enlightenment" to hopefully live happily ever after in the "plateau of productivity."

Today, the poster child of the "peak of inflated expectations" however, is none other than cloud computing. And it's fitting that cloud computing earned this status this week, for this week is when Cloud Expo takes place in the Big Apple at the convention center everyone loves to hate -- the Javits Convention Center.

It's the same convention center, after all, that hosted the conferences of a number of "overly-hyped" technologies that preceded cloud computing. These include but are not limited to various UNIX conferences (remember UNIX?), such as UNIX/EXPO, and too many Internet and IT expos (like INTEROP) to remember. It's also the same convention center where trying to get a cab back to your hotel following a day on your feet had been next to impossible.

Aside from the vast number of announcements cloud computing companies are making this week at Cloud Expo, and aside from the industry alliances that have been formed and announced at Cloud Expo, it will be interesting to see what tangible customer benefits result from all of this business.

From all appearances, it seems that Cloud Expo has been well attended this week despite corporate America's lock down on business travel. The purveyors of "trusted" information about cloud computing are getting the job done at Cloud Expo and it does appear that cloud computing, given its status as the "peak of inflated expectations" poster child, is living up to expectations.

So far. So good.

With any luck, cloud computing -- like many of its predecessors --will find peace and harmony and practical adaptation in the "plateau of productivity" in the not too distant future.

In the meantime, it will be fun to to pay close attention to the cloud computing paparazzi to learn what they take back from New York City.

Four Cloud Applications Help Level the Playing Field for Small Business

It wasn't long ago, that the idea of a point to multi-point broadband video conferencing system was the exclusive domain of the Fortune 1000.  A low-end system cost at least $10,000 and required specialized videoconferencing hardware from companies like PictureTel and Compression Labs along with widescreen monitors, cameras and controls and networking equipment all tucked into a dedicated room whose layout probably tipped the scales at another $10,000.  Of course, your system only worked with other sites that had the same expensive system installed, and both sides usually required someone from IT to get you set up and stand by throughout the call. 

Today, thanks to the cloud, you can do a point to multi-point call to six separate people or locations with a $20 webcam on your desktop or laptop.  And it is easy enough for a fifth grader to use it. This isn't an instant-message-based system with postage stamp video, but a full-screen, cloud-based videoconferencing system from a company called ooVoo.  Like so many cloud-based apps for small business, it is easy, affordable and it works as promised.  We use ooVoo here at 3Point and have found the video to be smooth, the audio clear, and the experience of working with remote colleagues vastly improved. Our business is not among the Fortune 1000 -- or even the Fortune 5000.  But we can work like them and look like them for pennies with cloud apps like ooVoo.

So that got me to thinking what else is out there that gives small business the outward appearance of big business and helps level the playing field?  I could have listed at least 20 companies, but I'll start with three more in addition to ooVoo and come back to add others in a later blog. 

2. Cloud Collaboration and Project Management
What is so interesting about this topic is that some of the apps we think of as the toolkit of small business are now being adopted by large businesses as well. One such example is Basecamp.  I don't know about you, but I have a hard time believing a person who lives by a Gantt chart.  Life just doesn't work that smoothly, even if you are a certified project manager, of which there are thousands here in the Washington, D.C. area. To make a Gantt chart the essence of management is sort of like making an elaborately crafted grocery list the essence of your family values.  Lists change and evolve, deadlines slip, ideas evolve, budgets get cut, and people like to talk to each other and come up with new ideas. All those nice boxes, colored lines and finely tuned schedules may work in an autocratic command and control system, but in the Collaboration Economy there aren't many autocratic businesses I know that are cited in lists of best places to work. Basecamp is built on a concept of project management focused on communication and collaboration -- the way most of us actually work.  As their website says, "pictures and numbers don't get projects done."  Amen. 

Companies like ours need to collaborate with colleagues around the world and people inside and outside our walls. We need a sophisticated project collaboration tool to set goals, manage and measure projects and collect a whole lot of information to guide our analysis and decision making.  We found Basecamp at the recommendation of our friend, Jay Murphy, founder and CEO of Trionia in Boston. Jay is a really smart digital marketer who uses Basecamp for web projects, software development, client collaboration and a whole list of other core business activities. We got hooked on it quickly in developing a massive proposal for a client prospect that included teams from around the country. It was seamless.  We shared a range of research articles, ideas, drafts, edits, calendars and task ownership and put together a terrific RFP that succeeded in moving us to the next level of the competition. We could not have completed this without Basecamp, and we are not alone. Kellogg's, Patagonia, Adidas, USA Today, National Geographic, Warner Brothers and others are all Basecamp users. At $24 a month, the entry price is well worth it.

3. Ex WebEx
When we first started out, Jay also pointed us toward DimDim.  Have you ever tried WebEx? DimDim is WebEx for the rest of us.  Easy to use and free for up to 20 users, and the people you invite to your meeting do not have to install anything to join!  DimDim lets us do webinars, internal training, shared whiteboard, online conferences and a host of other applications.  We are satisfied customers who look and act like a much larger company thanks to DimDim's use of the cloud.  (But we'd really appreciate a name change to something that doesn't sound like the name of a cartoon character.)

4. Google Apps
Much has been written about Google Apps. Rather than repeat it all, let me just cite a statistic that should make you feel comfortable if you are considering the move: more than two million business run Google Apps and more are joining every day. They use it for email, company calendars and as a replacement for word processors, spreadsheets and other basic needs products. First adopted by individuals, then small businesses, Google Apps is being used by more and more enterprises at the expense of Microsoft Office, Microsoft Exchange and Lotus Notes.  The free versions will handle most basic needs of small business. With Google Apps Premier Edition (annual fee of $50 per user), a customer gets inboxes that store up to 25 gigabytes of messages, a video chat system (not equal to ooVoo in our estimation), anti-virus/spam protection, disaster recovery and a 99.9% uptime SLA. That is why Google can boast enterprise customers like Motorola Mobile Devices, Salesforce.com, Genetech and the District of Columbia. 

So, there you have it.  Four ways the cloud lets you level the playing field and look like a billion bucks for less than your monthly coffee budget.  They may not get you from the Inc. 500 to the Fortune 500, but the playing field is becoming more level every day.

Internet Redux?

I found yesterday’s post to this blog particularly interesting. It highlights once again that while there is a lot of noise being made about cloud computing, no one can quite pin down a definition that works for everyone. In fact, it seems that some people don’t even believe that there is something called cloud computing, claiming it’s nothing more than a fancy way of describing what’s been happening on the Internet for years now.

I think the reality is somewhere in between. Cloud computing is an extension of some of the ways people have used the Internet for many years, but it’s also much more than a new way of looking at old methodologies.

Recently I had separate lunch meetings with two friends of mine who work for Hitachi Global Storage Technologies and VMWare. Both are very large global companies that have deep experience in enterprise IT so I figured that they’d have an opinion about cloud computing. I asked both of them how their companies view cloud computing and how important it is to the future of their perspective companies. Both had very similar responses.

Hitachi has three primary businesses on which it focuses – enterprise, OEM and consumer. According to my contact, the cloud will factor into all three. In the enterprise business, many companies are building their own internal private clouds and need increased mass storage. For those enterprises moving to public clouds, they often want to know what type of storage devices are being used to house their valuable corporate data. Where data resides is an important component to any company’s decision to move to the cloud, for security, compliance and back-up concerns.

Hitachi’s OEM customers put drives into many different types of machines for a variety of applications, but increasingly, according to my friend, the OEM’s are asking specifically about cloud computing applications. “The drives we sell to OEM’s are important, but how we help them custom build systems for their customers is also important. We have to understand the cloud to effectively market and sell to our OEMs so they in turn can sell to their customers.”

As for the consumer business, end users are storing more and more valuable information in the cloud. For instance, one consumer I know had all of her 1000 plus pictures of her young son stored with Shutterfly, which is essentially an end-user application for storing photographs and videos in the cloud. This woman is nervous that all of her pictures were being stored “somewhere out in the ether,” as she called it, so she bought a 500 GB external hard drive to back up all of her photos. Marketing to this type of customer is something Hitachi sees as an important growth opportunity.

In all three instances – enterprise, OEM and consumer – Hitachi has to understand how cloud computing is impacting customers’ behavior in order to effectively market to them. “The cloud isn’t our only focus,” my friend at Hitachi told me, “but it’s rapidly becoming the most important area for our marketing efforts.”

The same thing is basically true for VMWare. Many analyst firms and cloud computing "gurus” often list VMWare as one of the top 5 to 10 cloud computing companies based on its strong position in the virtualization market. They may be surprised to learn that the company didn’t make a decision to go “all in” on cloud computing until December 2009, according to my friend at VMWare,.

“We view cloud computing as fundamentally changing the way business is done, similar to the way the Internet changed business 10 or 15 years ago,” he told me.

That’s why VMWare spent four months hammering out a corporate strategy and corresponding marketing program designed to address cloud computing before it rolled it out to the industry in March 2010. VMWare understands that its customer base is migrating to cloud computing and therefore it must respond accordingly.

“Every aspect of our marketing efforts now take the cloud into account,” my VMWare contact told me. “Be it private cloud, a public cloud solution or some type of hybrid. To ignore the cloud is like ignoring the Internet. That just doesn’t make business sense.”

The debate about the definition of cloud computing will surely rage into the future. What is clear, however, is that cloud computing is real, and that if companies don’t factor it into their marketing programs they are likely to lose customers. Just as those companies in the mid-1990s that buried their heads in the sand and pretended that the Internet was just a “trend” ended up either in the scrap heap or left far behind by more forward-thinking competitors.

Is Cloud Computing Bringing us Back to the Future?

ThoseinMedia, a web site where media professionals connect and blog, has a group on the social networking site LinkedIn where it promotes itself as "THE group for Media Professionals." Its membership includes people working in social, online and broadcast media, advertising sales, PR, SEO and pretty much every other media category you can think of. It's a popular LinkedIn group with thousands of members and as you'd expect, its members are highly engaging. If you work in media and you're not a member, you'll be doing yourself a favor by checking it out. In the spirit of full disclosure, I'm a member.

Exactly three weeks ago, an online marketing and social media strategist for a U.K. provider of domain names and Internet services -- GroupNBT -- posted an open ended question to the ThoseinMedia group on LinkedIn: "Cloud Computing - What's your take on it?"

Three weeks later, group members continue to post responses to Francois Hotte's seemingly innocent question -- though the question isn't that innocent since Hotte's company sells a "Virtual Private Server" which, he says, is a "similar product to Cloud computing." Ok, so he's selling a bit, but I give him credit for engaging the group's membership on a very interesting topic.

What's really interesting to me is that responses to the question are coming from all corners of the world and from a broad range of industries and professional disciplines; and from the very young and the not-so-young. If it takes a discussion of cloud computing to get Gen Y talking with Baby Boomers, then it's a good thing.

One year ago, McKinsey&Company published "Clearing the Air on Cloud Computing" and in it claimed there are 22 separate definitions of the cloud. One year later, and based on some of the opinions reflected by ThoseinMedia group members, it isn't clear if we're any closer to a unified definition. But what is clear and what is important is that the discussion around cloud computing is at a fever pitch. It's become a lightening rod for some of the most stimulating and provocative thinking in technology in recent memory and marketers and communicators everywhere are spending cycles trying to help their customers find clarity in the clutter.

I hope the thread on ThoseinMedia continues. If we keep working on it together, I bet we get to the point where we can agree on what cloud computing is.

Here are a few of my favorite comments from the thread:

"Like many others I hate the term 'cloud computing'. It's BS. The cloud is just the internet."

"I've seen EMC cut huge checks for not being able to protect and serve remote data. IBM shovels cloud computing services like they're going out of style, and they're no experts either."

"The term 'Cloud Computing" may have a marketing connotation, but its widespread adoption by companies offering web-based applications means the 'cloud,' as it were, really is different than just the plain-old Internet."

"The simplest cloud computing I use is zumodrive. It is easy to use and it allows me to access my files regardless of where I am."

"Cloud is not the internet...What Cloud is, is the business model that takes virtualization and makes it a profitable opportunity for infrastructure providers on a 'one to many' basis -- build it once and sell it to many uses."

"Think of the Cloud Server as the mainframe, and each computer connected to it as a 'smart terminal' capable of processing its own data. ...Today's Cloud Computing almost brings us full-cirlce, back to the mainframe-terminal relationship."

"With iPhones, iPads and other devices like these for on the go and on the spot information, 'Cloud computing' is only going to increase. Welcome 2010 (grin)."

And this one from the head of a NYC-based marketing and advertising firm: "With all due reverence to the interesting insights offered above, I would just like to point out that the term 'cloud' in 'cloud computing' is a decades old reference to the original cloud-like diagrammatic representation of Public Switched Telephone Networks."

Is that really true?

An End User's Perspective of the Cloud

It will take a complete newcomer to the cloud about 15 minutes to realize one cloud size does not fit all. Much is written about the enterprise and its concerns over security, governance, compliance and configuration. Despite mounting evidence to the contrary, a declining handful of skeptics still debate whether enterprise cloud computing will fulfill its promise.

But the debate does not encompass the millions of us who have been using the cloud -- knowingly or not -- for years.  In fact, most of us are pretty satisfied customers. In its most basic form, the cloud offers us the ability to store our data somewhere decentralized and access it from anywhere we have an Internet connection. The cloud reduces our worries about where our data is, whether it’s backed up, and where and how we access it.  It also makes it easier to collaborate and communicate.  If you use Gmail, Facebook or LinkedIn, you're in the cloud. Chances are, you use these and other applications from a computing device -- Windows, Mac or Linux and a mobile device -- Android, iPhone OS or Windows Mobile. In most cases, all you need is a password to authenticate yourself, and you have access to information that you store and manage on a range of incredible applications via the cloud.

As an example, I'm writing a draft of this blog on Evernote, a cloud application that I have become dependent on for a number of uses in ways that I would never have envisioned just a few years ago.  I write my draft in Evernote, and Evernote keeps a duplicate of my notes on their web servers and automatically synchs the local copies of my notes. So my information is accessible locally from my MacBook Pro and through the Evernote web interface via my Macbook Pro, my iPad and my iPhone.  In fact, I can install and synch my notes with as many computing devices as I choose.  That is the power of the cloud for an end user and the beauty of Software as a Service (SaaS).  Evernote users don't have access to infrastructure; Evernote does that for us.  All we do is access the application we need -- when we need it on the device we want at that point in time.

Evernote gives me redundancy of my notes and ensures that I will access them consistently over any device.  It lets me share my notes in a variety of ways that I control.  It instantly stores what I create and lets me find it easily the next time I need to access it.

While the debate continues over when and how enterprises will adopt the cloud as a replacement for data centers, millions of us who have had our heads in the cloud for several years would ask what all the debate is about.  The cloud works in ways that opens endless possibilities for us all.

Image reprinted from Cloud Computing Use Cases White Paper, Version 3.0, published by the Cloud Computing Use Case Discussion Group.

Cloud Computing: Risk and Value are Two Sides of the Same Coin

For every report that comes out with research pointing to cloud computing as the new IT panacea for enterprises, is a report with an opposing point of view.

The "he said, she said" nature of some of these reports is reminiscent of the early days of "SNL" and the "Point-Counterpoint" parody made famous by Danny Akyroyd and Jane Curtin. "Jane, you ignorant, misguided ...." .."Dan, you pompous ...."

Ok, perhaps the landscape isn't that contentious -- at least, not yet.

The latest report highlighting the unease many senior IT execs have with cloud computing comes out of ISACA, a U.S.-based organization for information governance, control, security and audit pros. It boasts 86,000 members in 160 countries, so its influence is far and wide. The ISACA tackles the cloud computing question in its first annual ISACA IT Risk/Reward Barometer survey and examines the results in a white paper it collaborated on with the Cloud Security Alliance. Of the 1,809 U.S.-based IT survey pros who took part in the survey, many work for Fortune 500 companies across engineering, financial services, education and health care. And most, apparently, are far from ready to take the cloud computing plunge.

Two key findings:

• only 10% of respondents' organizations plan to use cloud computing solutions for mission-critical IT services, and


• one in four respondents said their organizations have no plans to use cloud computing for any IT services at all.

So even during this extended period of lean IT budgets, a period when CIOs are stretching their IT imaginations and IT staffs, a solution that is battled-tested in many areas is still in the proving phase for many organizations.

In the view of so many IT pros, cloud computing "just ain't there yet." On the other hand, market research firm IDC is saying that spending on cloud computing services will represent more than $44B in IT spending within three years and will outpace spending on traditional IT solutions through 2015.

"The bottom line is people are scared. Companies have failed spectacularly at this model," said Brian Barnier, a member of the ISACA risk IT development team.

Although nearly half of the IT pros participating in the survey are not sold on cloud computing for mission critical data, Robert Stroud, who doubles as international VP at ISACA and head of the service management business unit at CA, Inc., says IT pros need to remember that "risk and value are two sides of the same coin.

"If cloud computing is treated as a major governance initiative involving a broad set of stakeholders, it has the potential to yield benefits that can equal or outweigh the risks," added Stroud.

In a related side note, many of the IT pros said employees put their company at risk levels that exceed the risk of using cloud computing services. Fifty percent of the respondents said their organization's employees do not protect confidential data appropriately, for example.

I think the cloud could do better than that.

Apple v. Google: Battle in the Cloud

I watched with amazement, and some amusement, as more than 300,000 people bought the new Apple iPad on the first day it was available -- and it isn’t even 3G enabled! I find it fascinating to watch people rush to buy the latest and greatest tech gadget the day it comes out knowing full well that it will have glitches and bugs, and will fall far short of versions 2.0 and 3.0 in terms of performance.

I talked with a geeky engineer friend of mine last night who had purchased his iPad last weekend and he gave it a less than glowing review of “it’s OK.” “Wait’ll the next rev,” he suggested.

But who am I to talk. I did the same thing last November when the Motorola Droid, running the Google Android OS on the Verizon network was introduced. I actually contacted Verizon in advance of the Droid launch to place my order. That ensured that my Droid arrived in the mail the first day the new smartphone was available. And guess what? It did have glitches and bugs, and it did fall short of my very high expectations.

Then on December 11 of last year the next rev of the Android OS automatically installed on my Droid and all of the problems I had experienced disappeared. Wait’ll the next rev, I thought to myself.

So I found it a bit ironic that on Tuesday of this week, just 4 days after the launch of the iPad, my Droid once again prompted me to download a new version of the “system software.” Was Google responding to the iPad launch with some vital fixes to the OS, or was it packing new features into it to maintain its lead over the iPhone? I wasn’t sure, but the timing of the operating system upgrade sure was interesting.

It is becoming clear that the future of mobile communications will be a battle in which both Google and Apple will be featured prominently. The iPhone came first, but the Google-driven Droid has proved to be a worthy opponent. And while the iPad hit the market first, there are several similar tablets in the works, including the WePad from Germany-based Neofonie, that will use the Android operating system and access the tens of thousands of apps available in Android Market.

A source no less than Gartner Group is predicting that the Android operating system will surge to 14% of the smartphone market by 2012, putting it ahead of the iPhone, Windows Mobile and the Blackberry; second only to the Symbian OS used in Nokia’s devices which are popular in Europe and many countries outside the US.

And why is Gartner so bullish on the Android OS? The Cloud. Gartner gives Android such an enormous surge in popularity because of a variety of factors, but chiefly because of Google's backing of Android and the range of cloud computing functions and related applications that Google will make available in coming years.

Smartphone applications live in the cloud. Therefore, the smartphone with an operating system designed for cloud computing is likely to perform better, and work more intuitively, than an OS that wasn’t built with the cloud in mind.

To quote Ken Dulaney from that Gartner Group report, “…because Android and Google operate in an integrative and open environment, [they] could easily top ... the singular Apple.”

Yes, Google and Apple will continue to slug it out in both the tablet and smartphone markets. Both companies will make great products and both will market the heck out of them. But the winner may be decided by which of them better understands how to work within a cloud-computing environment. So far, that appears to be Google.

A Brief Investment Perspective of the Cloud

We've written extensively here at Beyond the Arc about the confusion surrounding cloud computing. Like anything with enormous potential, cloud computing is fueled by marketing hype, uninformed dialogue, informed dialogue and overstated expectations.  We only need to look back at last weekend's launch of the iPad to see how this scenario builds to a volume so loud that fact no longer is easily discernible from fiction and product or service delivery becomes the only control a vendor has on the hype cycle.

Who, I wondered recently, cuts to the chase in an objective and measurable way?  Then it struck me that investment analysts might be as much a realist as anyone in the dialogue because, depending on how you look at it, the cloud is either just an evolution of computing as we know it or a sea change in the history of technology and of business. Either way, the implications for investors will be notable. 

One of the more informed articles I found was published recently by Morningstar, the global investment research company.  The article by Sonit Gogia, breaks the market into three commonly known segments:  infrastructure, platform and software as services and then tries to forecast value around each. Imprecise at this early stage, but worthy of consideration, Gogia's analysis suggests the following:

SaaS: Open Competition, Reduced Profitability
SaaS is the most mature of these segments and has proven its appeal, particularly with small and medium enterprises. It already is easy to foresee how changes in the economics of computing driven by the cloud can diminish the impact of enterprise software leaders like Microsoft, IBM, HP, SAP, Oracle and a few others in the same way that the shift from mainframe systems to client server computing in the 1990s threatened the business models of the mainframe market.  With Microsoft Office Web Apps scheduled for release in May, Microsoft already is playing catch up to Google Docs, which was used in 20% of the offices surveyed last year by IDC. While these same vendors are aggressively restructuring their business models toward the cloud, they are joined by many others in offering IT services simultaneously to many customers over the from remote data centers. While creating more choice for customers and weakening the lock-in model that ties some customers to costly, less-than-optimal solutions, SaaS isn't designed to be sticky in the same way long-term licenses and maintenance contracts are currently structured. Until a customer hits a critical mass of users, changing vendors is relatively cheap and easy.  As a result, however, Gongia believes SaaS will limit profitability and returns on capital compared to the levels investors are used to with traditional enterprise software vendors.

PaaS: Less Competition,Greater ROCI
PaaS vendors offer IT departments the ability to develop and deploy software applications in the cloud.  PaaS vendors offer software, servers, storage, networking equipment and management services. Unlike SaaS, the cost of entry is high to providers and the cost of changing vendors can be high to customers.  This is a young, emerging market, but Gogia believes the ultimate number of competitors will be few. IBM and Oracle will be entrants to a market already populated by Google's AppEngine, Microsoft Azure and Salesforce.com's Force.com.  Gongia believes these vendors will deepen the barriers to entry, and he forecasts high returns on invested capital for PaaS vendors.

IaaS: Fast Growth, Becoming Commoditized
IaaS vendors rent out processing power, storage, and bandwidth on-demand. This where Amazon Amazon Elastic Compute Cloud (Amazon EC2) and a few other companies have focused their offering to small businesses, medium businesses and departments of Fortune 500 companies. The appeal of IaaS is that customers can access and pay for computing capacity only when it is needed.  But, Gogia contends, it is destined to become a commodity -- hard to differentiate with low switching costs and, like most commodities, it eventually will migrate to price competition.

If the past repeats itself, as it is often does, computing after the cloud may not be all that different.  But the opportunity for established vendors to reposition themselves, for new companies to enter markets and for customers to gain greater control and flexibility at reduced costs may become  a reality.  Certainly, the opening act has been captivating, and it is exciting to anticipate what happens next.

Not All Created Equal

In the early days of the Internet, say circa 1996, any company that was involved with the “net” was lumped together into the same generic market with every other company during this modern day gold rush.

It wasn’t unusual to see a Newsweek article about the Internet that included profiles of an infrastructure company such as Cisco, a service-based company such as Ariba and a pure-play web-based company such as eBay, as if they all were pursuing similar business strategies.

And the media wasn’t the only entity that failed to discern the significant differences between these new-breed companies. The big Wall St. investment banks were all too happy to guide any company that had a web site through an IPO. Sand Hill venture capitalists were actually advertising on billboards along Silicon Valley highways that they were offering money to any company with a “good idea.” And millions of small-time investors poured so much money into these unknown brands that many of them had billion dollar valuations based on no revenue at all! Then came the dotcom bust, the market settled down, and natural market segmentation finally became the order of the day.

We are seeing a similar phenomenon taking place today around cloud computing, albeit somewhat less frenzied than the "irrational exuberance" of the dotcom era. You are, however, just as likely to read a Wall Street Journal article today that lumps together radically diverse cloud computing companies just as the example above regarding the Internet.

There are some cloud computing companies pursuing an infrastructure-as-a-service business model while others are taking either a platform-as-a-service or a software-as-a-service approach. Some companies are building private clouds. Some are building public clouds. Some are building hybrid clouds. Some companies are building all three varieties for their customers. Yet all of these companies are currently being tagged with one generic label – cloud computing.

Just as there were numerous strategies for using the Internet to conduct and drive business, there are a plethora of ways the cloud is influencing how businesses, especially in IT, are run today.

At 3Point we realize all cloud computing companies are not cut from the same cloth. We know that each company competes in smaller, segmented markets that address specific customer needs. We realize that the way Microsoft is pursuing the cloud with Azure is dramatically different then the way CA is approaching the market, and that VMWare is coming at cloud computing from a different direction than either of them.

Today, cloud computing is at the height of the Gartner Group “hype cycle.” But cloud computing, just as the Internet before it, is here to stay. Cloud computing will, and in many cases already is, changing the way ALL companies do business, including consumer-brand companies.

Understanding the way the cloud influences your business is key to long-term success as this market evolves. We’d love to hear your story on how the cloud is changing the way you look at your business; and the similarities, or differences, you see between the cloud today and the Internet 15 years ago.

IBM Gets the Cloud Opportunity, and Cloud Marketing

IBM wants to team with entrepreneurs to build a smarter planet.

Recently, I've read a number of articles asking if the world's biggest tech companies are still capable of innovation. Included in these discussions are companies such as HP, Dell, Microsoft, Cisco, Intel and Motorola, among others. And, of course, Apple -- which almost never ceases to amaze. It appears that Apple is poised to turn another industry on its head with its iPad, but that's another discussion for another day.

Also included in the discussion of the ability of giant tech companies to innovate is none other than IBM, the granddaddy of them all. In my view, this is another company that never ceases to amaze, that continues to generate shareholder value even during the darkest economic times, that is so self-aware to know almost instinctively what it is great at and what it should shed and moves more quickly than many companies one-fifth its size.

This week IBM announced a brilliant program that fosters the birth of new companies, the growth of emerging companies and the fortification of its Smarter Planet focus areas. To me, that's a win-win-win.

Under the "IBM Global Entrepreneur" program, IBM will support entrepreneurs and their early stage startups, free of charge, with access to industry-specific technologies (smarter water, smarter building, smarter healthcare) in a cloud computing environment. The participating companies must be privately held, have been in business for less than three years and must be building tech solutions that map to IBM's Smarter Planet.

In the early stages of the initiative, the company said it will provide cloud computing resources to the startups by way of Amazon's EC2 Platform but will move some of the applications to an IBM-managed cloud computing platform.

And typical to IBM, the company is covering all the bases by working with a bunch of VCs on this venture so that IBM gets connected to the most promising prospects.

"...it's clear that the company is making a concerted effort to bring unique IT solutions to market," said Mike Vizard, writing for CTOEdge.

Who said a company founded in 1896 and with a $166B market cap can't dance? The cloud is bringing out the best in tech innovation, and IBM is a leader in the pack.

Brilliant.

Using the Cloud to Get Out of Your Own Way

In the late 1990s, an incredible wave of change took place when increased global competition collided with widespread adoption of the Internet. Staid business architectures were capsized in the swell, and the only lifeboats to be found were being manned by IT.

A triage mentality ensued with one common refrain: "How fast can you have something that works available to us?"  The mandate was straightforward: Give us more functionality faster!

Of course, the business side saw themselves as IT's internal customer, disregarding the fact that IT had carefully constructed processes and were trained to follow a methodology of testing and refining creations that were not released until they were deemed perfect. This meant little to business teams in the new environment.  The response from IT was usually, "we can deliver, if we hire more engineers."  But this usually had the exact opposite effect. Projects got bloated and bogged down as more engineers came on board, and both the business side and the IT side were left in chaos.

The economic decline during the first decade of this century took care of some of the problem.  Meltdowns and budget cuts wiped out bloat and shortened the list of projects to be funded.  But it didn't change the need for speed + results.  In fact, it got worse.

Companies rediscovered their customers and flattened out development cycles by defining IT projects from the outside in. This raised the bar for quality and delivery time. The pace of change accelerated, and there was enormous pressure on IT to implement new solutions on legacy systems while not losing a step in maintaining those same systems.

That is about where many organizations are today.  But the bar has been raised again. Social media has fostered a need for transparency to customers (and everyone else). Every aspect of the business is more technology dependent, the pace of change continues to escalate and IT has to work faster and smarter with fewer resources with new software systems and tools on increasingly outdated systems.

The Enemy is Us
The cartoonist, Walt Kelly, who created Pogo, once penned the line, "We have met the enemy and it us."  That is the primary realization driving businesses to the Cloud. There are many compelling advantages to moving to the Cloud.  We have read them so often, we can recite them in our sleep:  increased flexibility, higher ROI, decreased complexity, and the ability to leap tall buildings in a single bound.  But none matter as much as Speed + Results in the Information Economy. Business schools like to call it Time-to-Value.

But how does an organization continue at this pace, when the problem can't be improved by throwing more resources at it?

A new approach is required and the Cloud seems to be the best answer. Yes, there are questions. But, the minute an organization comes to the realization that it can not keep pace with competition because of limitations in its approach to IT, the word "Cloud" sounds forth like a heavenly intonation.

I recently read a white paper from a leading Cloud vendor that put it this way: "Many CIOs struggle to explain to their CEO why implementing ERP took years and cost ten times more than the Cloud-based CRM application that went live within six months, with a comparable number of users, and a much more significant impact on the business."

If a company can implement software as a service in a fraction of the time required for traditional itnernal applications, SaaS becomes the obvious choice -- especially when aggregating internal resources can take months.  The idea of "renting" capacity temporarily for a large, long-term temporary project leads to the same conclusion for infrastructure needs.

Yes, these examples carry with them the inherent, oft-quoted benefits of the Cloud, but the one that matters most is delivering speed and results by letting an organization get out of its own way.

Are You Looking at the Cloud through OpEx-Colored Glasses?

We repeatedly see stories attaching Cloud Computing to what is often cited as a single clear cut accounting advantage. "Cloud Computing enables companies to move the cost of computing from capital investments (CapEx) to operating expenditures (OpEx)."  This phrase is cited so often as a benefit to moving to the Cloud that it almost has become an automatic part of the litany. 

In simplest terms, the discussion comes down to one we all face at various times in our personal lives: is it more advantageous to lease (OpEx) or own (CapEx) something?  In business, it is more common -- and usually more advantageous -- to lease (office space, company cars, etc.). So, it is easy to draw the conclusion that the advantage of leasing computer capacity via Cloud Computing's managed services is a clear benefit. A data center requires up front purchases of servers, software licenses, networking equipment, etc., so the commitment of capital when compared to cloud computing's usage-based payment model can seem like an excessive burden. But is this really a CapEx vs. OpEx issue?

Geva Perry, author of the blog, "Thinking Out Cloud"  suggests we look closer. Perry cites three problems with the oft-cited accounting issue:
1.  First, it's not about OpEx or CapEx at all. Those who make the argument are really talking about cash flow -- do we spend now or over time?
2.  Perry states emphatically that there is absolutely no benefit in moving an expense from CapEx to OpEx, and
3.  The blog adds that the long term cost of renting anything -- hardware, software, server, networking equipment, Volkswagen or condo --  is going to cost more over time than purchasing the same item.

Perry goes on to say that there are many inherent benefits to Cloud Computing that should be considered, but warns us to avoid the automatic accounting assumption because the language describing it is misleading. When looked at as an issue of cash flow, the decision is far less automatic for a business and requires a more careful analysis of the specific needs and situation of an organization.

What do you think?